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Targeting Target

Robbin Lacy knows he's up against a giant opponent that scarcely admits his presence.

His small Southern Oregon clothing company is no match for Target Corp., one of the world's largest retailers. Yet there's enough bulldog in Lacy to at least growl and snap at an unwelcome intruder.

Stymied and ignored, Lacy and his attorney are telling the world that Target and one of its Chinese vendors are thieves.

Sunday Afternoons, Lacy's company on Highway 99 in Talent manufactures sun-protective wares, including an "adventure hat" that won Organic Gardening magazine's 2007 Editor's Choice Award.

In the spring of 2007, Lacy's daughter, Acacia, discovered a dead-ringer knockoff on sale for a fraction of the price at a Target store in Santa Cruz, Calif. After getting a call from his daughter, Lacy drove to the Medford Target and found the same product on the racks.

Sunday Afternoons' adventure hat retails for $38. Lacy said it costs $9.50 to cover labor and material, and it wholesales for $18. Target's Chinese knockoff sold at the register for $6.97.

"It was an exact replica of the hat, but very poorly done," Lacy said. "They copied every single feature, a violation of our patent (awarded in September 1997)."

Sunday Afternoons began selling at craft fairs, open-air markets and trade shows in the early 1990s. The firm has grown into a thriving enterprise, designing and manufacturing high-end sun protective hats and clothing that have drawn attention from the New York Times and "The Today Show" over the years. Sunday Afternoons has sold more than a million hats and its wares are found at REI — the mega outdoor cooperative and retailer — and Sportsman's Warehouse, among others, as well as direct via the Internet.

Target wasn't among the retailers selling Sunday Afternoons' product line.

On April 9, 2007, Jerry Haynes, Lacy's attorney, sent a cease-and-desist letter along with a copy of the patent to Target's Minneapolis, Minn., headquarters. Lacy said Target representatives initially admitted it was a problem, but simply referred him to Starite, a vendor that imported the offending sun hat from China. That set off a series of e-mail, postal and telephone exchanges that have yet to resolve anything more than a year later.

"The retail hat selling season usually begins in April and flourishes through July," Lacy said. "Then they put the stuff on the sale racks to make room for the school stuff in August. We asked for immediate removal, and of course they didn't comply. My gut feeling was that they wanted to make it through the selling season and then liquidate or destroy the remaining inventory."

Indeed, the hats were still on the Target racks in July despite Lacy's efforts to spur Target and its vendor to action.

A Target spokesperson didn't address the delay when responding to a reporter's questions about the matter.

"Target does not believe that there is any validity to Sunday Afternoons' claim," senior communications manager Lena Michaud wrote in an e-mail. "Nonetheless, our vendor (Starite), who was responsible for the design and manufacture of this product, worked directly with Sunday Afternoons about its concerns. The vendor and Sunday Afternoons negotiated in good faith, and the vendor took and acted on one of the options proposed by Sunday Afternoons, which was to pull and destroy the remaining product. All remaining product was then pulled and destroyed. Both Target and the vendor therefore consider the claim to have been fully satisfied."

Lacy said Target attorneys implied that Sunday Afternoons failed to mark the hats with its patent number.

"I spent $8,000 to have a foolproof patent made," he said. "Target stores took their time in acknowledging this patent by choosing to continue selling throughout their season."

In his original letter, Haynes warned Target of possible legal action, including damages for willful patent infringement. He also told Target that Sunday Afternoons would be willing to license the patent. That went unheeded, as did later overtures from Lacy.

A licensing proposal to Starite met with unacceptable terms.

"Starite was willing to give us 38 cents a hat," Lacy said. "That wouldn't even buy a brim support. The fact is they knew all along they were in hot soup and they were just going to make a token payment."

A $100,000 payment would have been in the ballpark, Lacy said.

Target claims to have destroyed the last 8,000 of the infringing hats, instead of selling them, Haynes said. "Of course we have not been able to independently verify that."

Haynes asserts that Target continued to sell the hats until it ran out of inventory.

Lacy contends that marketing his company's patented product without offering a reasonable settlement fee is stealing — plain and simple.

"Their vendor took our locally made product, had it reproduced in China at a fraction of the cost, and sold big numbers in all the Target stores," Lacy said. "We could not make this hat for what they were selling it for. Sunday Afternoons retailers were calling us and complaining as they thought we were selling the hat cheaply to Target."

Efforts to communicate with Target have likewise been rebuffed.

"Mr. Lacy and I made various attempts to communicate both by phone and in writing to try to settle this matter and we have got nothing but delay and deception from Target," Haynes said.

Lacy said he even resorted to sending certified letters — at least 15, he recalled — to top Target Corp. executives and board members, drawing a sharp rebuke from the retailer's legal staff.

Potential legal exposure to Target from Sunday Afternoons' claim is so small relative to the corporation's financial and legal resources, that it is not taking the claim seriously, Haynes said.

While Target considers the game is over, Lacy vows to keep putting on pressure.

Going to court isn't really financially feasible. There are advocacy organization willing to back patent infringement claims, Haynes said. "But the threshold is $1 million in recoverable damages and we're only talking tens of thousands of dollars. It would really take an angel (investor) to go to court."

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com.

Robbin Lacy's Southern Oregon clothing company manufactures sun-protective hats. Lacy is pressuring Target to settle their dispute over what he says is a clear patent infringement involving its adventure hats. - Jamie Lusch