Product liability - a$$ kicked

[Medic]

Hi all,

It's been 2 years since I designed, developed and manufactured an electronic gadget for a niche sport and all is going well.
Last year I covered all my development costs and made 10k profit selling internationally in over 25 countries.
This year i expect to double my profits and maybe more as some magazine are running editorials my product.

Now I'm starting to make money I decided to start an LLC and got some legal advice which has crushed my plans...

The attorney told me even with an LLC I could still get sued personally and lose everything and that I'd be insane to sell anything without product liability insurance.

Well it turns out product liability insurance is very expensive for sports equipment as I could be sued if someone dies whilst using my device (even if it had nothing to do with it). Premiums are also jacked up for every country I sell to as I'd need international attorneys to defend me.

The reason the LLC won't protect me is that I'd need show I operated the company in a safe way by appropriate testing and certification of the electronics (FCC, CE mark, UL etc) are all 10k+ each.
I'm only making a little profit on this anyway and there's no future market that would ever cover the costs involved...

Any thoughts or inspiration greatly appreciated. I worked my a$$ off for two years and now I'm thinking my only option is to shut it down....

 

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[BigBrianC]

Do you own the patent? If so, you could try to license it out to bigger businesses. I don't know what sport it is or what the product itself is, but hit up some of the bigger sports guys (Nike, UnderArmor, Reebok, whatever the leader in your sport/product is) and try to license to them (all of them if you can) and if you don't own the patent, try to flat out sell the business. This way you can still make money but don't take risk.

 

[Medic]

Hey Brian,

It's a me too product with nothing patentable. Besides a patent would be another 10k!
I'm selling well as the product is well featured and cheaper than bigger operators.

My problem must be a problem for anyone in niche product development... Unless the niche can support 50k+ profits I can't see how anyone can afford to operate...

 

[Felix II]

Hi, Medic.

Testing and certification will not be as expensive as you think. You should be able to cover all your bases for less than $10k.

And probably all you really need is a EMC testing (which will run around $5k) and I'm guessing you can self-declare for the CE mark.

You should contact a company like TUV (my recommendation) or Intertek and see what they say.

Source: many years spent as an engineer developing medical devices

 

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