Retail Revolution   /   May 7, 2020

SmileDirectClub is trying to patent its entire retail ‘experience’

As the tele-orthodontics wars heat up, SmileDirectClub is wielding some new patents.

The DTC teeth-straightening company just announced that it got approved for a new patent, which it claims covers its entire retail “concept.” The series of patents, approved in late April, focus on the space of home orthodonture and the ability for users to scan their own teeth and request appointments at brick and mortar locations. In SmileDirectClub’s case, this patent approval gives it the go-ahead to sue competitors that also offer retail locations. The company said it plans to file cease and desists against competitor Candid and try and force it to close all existing shops.

This is the latest attempt by SmileDirectClub to further dominate its market. Over the last few months, the company has been hit by many setbacks; states have tried to stop the service from operating in their borders and customers have made claims about the brand’s safety. With other competitors coming to the forefront, SmileDirectClub is trying to use this newly-approved patent to maintain any competitive edge it once had.

While the patent is narrow, the intention — as SmileDirectClub describes it — is quite broad. The company is claiming that others in the tele-orthodontistry space are likely infringing on its intellectual property if they offer an online portal that assesses customers’ teeth at home and then connects them with a physical retail component. With that, since Candid offers both tele-orthodontics and has stores, SmileDirectClub says the competitor is in direct violation of its intellectual property. Candid declined to comment due to pending litigation.

According to SmileDirectClub, this is a longstanding war. “Everything about Candid has been copied from our model from day one,” said Susan Greenspon Rammelt, SmileDiretClub’s chief legal officer.

In her estimation, the way SmileDirectClub onboard a customer digitally and then uses that to have them visit a retail location is proprietary. “What makes it unique is the entire process,” said Rammelt. “It’s not that we have a retail store where you can do these things, it’s how we have created the flow.” That is, she alleges that because the retail stores are now part of a customer’s digital journey with SmileDirectClub, competitors offering similar retail environments risk infringement.

According to Alan Behr, an intellectual property attorney at Phillips Nizer who once served as Atari Inc’s General Counsel, the devil is in the details. The patent, he said, is about orthodonture and dental alignment. “It’s a medical dental technology, which is not retail technology.”

Often, companies try to define their patents very broadly to ward off competitors — whether this is the case with SmileDirectClub can only be known once a judge hears the case. “This speaks very clearly to how to get new models for for your teeth made and how you interact with a dentist to get it done,” said Behr.

Candid isn’t the only company SmileDirectClub has gone to war with. In 2016, the company partnered with the dental technology company Align to use its technology. The two forged a non-compete agreement, with Align’s products being offered to orthodontists and dentists and SmileDirectClub’s offerings focused squarely on the direct-to-consumer market. When Align opened up retail stores, SmileDirectClub went to court with the company, which resulted in an arbitrator forcing Align to close twelve of its locations in 2019. Now, SmileDirectClub is trying to expand this litigiousness beyond already-made agreements to newly-minted patents.

It’s not uncommon for businesses to try and make their intellectual property as broad as possible to inhibit competition. Behr remembers receiving a letter while working at Atari from someone who patented a broad computing process and claiming it covered every computer game ever made.

“We do see that a lot,” said Jeff Lesovitz a partner at the firm BakerHostetler. But this SmileDirectClub claim is especially interesting because it could push the envelope for what a patent covers. They are intended to cover “anything that is a new or novel process,” said Lesovitz — including machines, manufacturing processes, compositions or any other improvement to these types of applications. Patents, however, do not cover “abstract ideas or mental processes.”

In some ways, SmileDirectClub could be going into that area of abstraction by claiming any tele-orthodontic company that bridges the physical and digital retail environments. In 2015, for example, the telehealth company American Well sued competitor Teledoc claiming it had a patent that allowed it to be the only company connecting customers to a digital consultation with healthcare providers. A federal judge threw out the patent claiming it too abstract.

This is why it’s especially hard to implement such legal maneuvers for ubiquitous concepts like retail environments. “You can’t get a patent claim on something that has been done in the past,” said Lesovitz. “If you simply claim a store, there’s nothing novel in terms of the technology or some technological process.”

SmileDirectClub needs as many wins as it can get to stay afloat. States like California have been going against the company’s direct-to-consumer model, potentially make it unable to sell its products to customers in those states. Meanwhile, an NBC News report from February showcased users claiming lacking customer service, undue pain from the products and shoddy results. The stock price is now half what it was three months ago.

With that, the brand seems to be trying to assert its dominance as a countermeasure. To do that, it is trying to own the direct-to-consumer orthodontics market — and thus, have a monopoly over those with retail environments. The patent, said Rammelt, isn’t just about the scans used and the fact that SmileDirectClub can make assessments without a doctor physically present; “it’s about the customer journey.”

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