Patent Attorney and Founder
Veronica: Wow, you could have bed bugs in your home and not even know it. That’s why we created Buggy Beds,
Maria: A bed bug glue trap that is an early detection system. It’s designed to attract and trap bed bugs dead. Simply slide and hide Buggy Beds between your box spring and mattress, under your couch cushions, and Buggy Beds will provide peace of mind for everyone.
Maria & Veronica: Sleep tight and don’t let the bed bugs bite.
Mark: Well, let’s see who’s going to bite.
Barbara: Can we have a look at the product?
Veronica: Absolutely.
Maria: Sure. Veronica’s going to hand you our travel pack. You can take it with you to hotel rooms.
Mark: How long have you guys been doing this?
Maria: We launched the product about six months ago. The reason we’re here is we have a weakness. The weakness is in big box distribution and retail stores.
Demon: Oh, so you want help in getting retail distribution?
Maria: Correct.
Demon: Does this eradicate all of the bed bugs?
Maria: This is designed as an early detection system.
Mark: Is your vision that I would go to a hotel with one of these, put it under my bed, and say, “Whoa, I’ve got to change rooms. There are bugs in here”?
Veronica: We’ve actually even had that happen.
Maria: Everyone keeps asking the same question: why are we so infested? Because there is no really good early detection system.
Barbara: Is it tested and proven, or is this your claim?
Maria: We’ve tested it and worked with a couple of entomologists and dermatologists, as well as myself, to come up with a formula. We just had a Housing Authority request a sample. We sent them a case of 144 traps three months ago, and they just placed an order last week for 22,000 traps because of the successful results.
Mark: Wow. It’s not toxic in any way?
Veronica: No, it’s non-toxic and pesticide-free.
Maria: Buggy Beds is patented in 34 countries. The trademark of the name Buggy Beds and the logo itself are in 42 countries. The utility is pending in 50 countries.
Mark: Who is doing the manufacturing for you?
Maria: We’re taking it in-house now, 100%. It’s very cost-effective and easy.
Demon: What is the suggested retail price of each of those?
Veronica: The two packs are $6.99 to $8.99.
Demon: And what is your cost of making it?
Veronica: $1.35.
Mark: What are your sales right now?
Veronica: Currently, our sales are $150,000. We started with Home Depot’s website, and they just picked us up for 60 of their stores, which we just shipped out this week.
Mark: You never said that before with this product?
Veronica: Correct. We also just got a purchase order from 75 Burlington Coat Factories as well.
Maria: Can I say one other thing? On the $150,000 in sales, we have $100,000 of profit.
Mark: Nice. For six months since you’ve introduced it?
Veronica: Correct. $150,000 for six months.
Demon: You’re valuing the company. You’re asking for $125,000 for 7%, correct?
Veronica: Correct.
Demon: You’re saying the company is valued at around $1.75 million. Why are you valuing the company at that?
Maria: That’s a great question. Before we launched, I was offered $5 million for the trademarks and the patents from a company.
Demon: Wait a minute, and you turned that down?
Maria: Yes.
Demon: What? Shame on you!
Maria: I’m Mrs. Wonderful in business. I know what we have here. I know the value. We did the test market in 29 stores at ShopRite. They contacted us, and the entire corporation sold out in 10 days in 29 stores. We just had a Walmart local manager look at it, and the first thing he said was, “Wow, this is eye candy. You can have an end cap in front of the register.”
Mark: I like her.
Demon: Wow. You two, bed bugs are the real deal. I think we know you guys are the real deal. I’m itching to do this deal.
JD: What? A million dollars?
Matt: That’s a lot of money for never going to market something.
JD: My number one thing was, and I watched the show, they actually had a pretty cool story. They had five sharks going on a deal with them.
Matt: How about young Mark Cuban, by the way?
JD: 2011, 2012, brand new season 4, maybe 2013?
Matt: Yeah, you can see a hard decade got some great um…
JD: Yeah, that’s a lot of money. I kind of call BS.
Matt: Agreed.
JD: So I dug up what they did have. There might have been some bugs in the system. They had one issued patent, a design patent. A design patent is about a three-dimensional object that can be manufactured. They did get it issued, and design patents are only good for 14 years as opposed to 20 years on the utility side from the date of grant. So, 2012 plus 14 means in a couple of years that thing is going to be expired. But they’ve been in business for a while. They do have this novel BB, which is distinctive and probably unique enough to get them the design patent rights. But unfortunately, the utility patent went abandoned. They must have given up. They had a lot of office actions. They did assign it to their LLC, but it never got issued. So they didn’t respond to what probably was a pretty significant rejection. So the design patent is still there, of course. And yes, there are ways to go through the Hague agreement to get industrial designs granted in different countries. The one thing I always look at when it comes to patents is to say, “Is there any way to design around this thing?” And design patents certainly are vulnerable to that because if you change any significant part of that three-dimensional shape, just use two different letters, you’re no longer infringing. So I think given that, it’s very unlikely that someone is willing to give up $5 million for just the two-letter-shaped bug trap. So that might have been a little bit of a deception, a little bit of persuasion on the spot. So that’s my major critique on the patent side. They came up short in terms of what they were able to get the rights on and were limited to just one design patent. But they did get the sharks to come on board, and I think they’ve been doing well. They’re still in business. They’ve got a website up, Buggy Beds.
JD: Any comments or reviews, critiques on the trademark side?
Matt: Yeah, I mean, so they do have a pretty extensive portfolio of trademarks, both word marks and design marks. This is the first one that I’ve taken a look at internationally for this client because she mentioned she had like 40 or 50 different countries.
JD: Yeah,
Matt: And I believe it. They’re registered in the US, EU, Mexico, Canada…
JD: Wait, class one, the first class?
Matt: Class 21.
JD: Oh, 21. Okay. I was like, the first class they created was insect bugs?
Matt: Australia, New Zealand, United Kingdom. I mean, they spent a fortune on trademark registration.
JD: Okay, so maybe that was the part where there could have been an initial offer based on the market. But that’s a lot of trademark applications.
JD: Okay, yeah, alright. So maybe that’s a good point. I guess that’s a good argument in the other direction. Maybe they did get a significant offer.
Matt: Yeah,
JD: But they were talking about how they’re steadfast. They think this is a multi-million dollar company. They wanted to be business owners, and she called herself Mrs. Wonderful on air.
JD: Yeah, the older woman from New Jersey.
Matt: Gosh, I love that accent. I miss that New Jersey accent and that attitude, that New Jersey/New York attitude.
JD: She would hit you in the face. I mean, no doubt a solid businesswoman, very impressive overall. Aside from those couple of critiques I have on the patent side, I think they had a good pitch there.