�David Welch and Elis­a­beth Behrmann

Bloomberg Businessweek (North America) - - Companies/industries - By Karen Weise

Model 3 in late 2017. “Tech­nol­o­gy­wise, things will prob­a­bly move back to the U.S. to an ex­tent af­ter Europe was the cen­ter of pre­mium car­mak­ing for the past 30 years,” says Volvo’s Sa­muels­son. That’s in part why Porsche said in De­cem­ber that within five years it will build its Mis­sion E, a fastcharg­ing, four-door luxe sports car that will tar­get Tesla’s Model S sedan. Audi plans to build its elec­tric E-tron Quat­tro SUV as a di­rect ri­val to Tesla’s Model X SUV. And Mercedes is plan­ning four EVS to take on Tesla.

Tesla doesn’t have to sell huge num­bers of the Model 3 to be­gin hurt­ing both de­mand—and prof­itabil­ity— of tra­di­tional lux­ury brands. That’s be­cause un­til the Ger­man mar­ques launch their com­pet­ing EVS, they may have to cut prices to avoid los­ing mar­ket share to Tesla or trim pro­duc­tion to match lower de­mand.

Com­pe­ti­tion from the Model 3 might prompt Ger­man car­mak­ers to drop some prices as much as 10 per­cent to de­fend their U.S. mar­ket share, says Stu­art Pear­son, an an­a­lyst at Ex­ane BNP Paribas. Tesla is aim­ing the Model 3 at “those look­ing to spend roughly $40,000 on a car, and that’s the core tar­get mar­ket for BMW and Mercedes ba­si­cally,” he says. “The fact is they don’t really have an an­swer to the Model 3 un­til the next decade.” suf­fered at the hands of a U.S. flower breeder and mar­keter in a re­cent trade­mark and patent in­fringe­ment law­suit.

Westhoff de­vel­oped a flower called Candy Bou­quet, a ma­genta-and-yel­low va­ri­ety that looks like a small petu­nia. In a law­suit filed on May 4 in fed­eral dis­trict court in Pitts­burgh, Westhoff claims Cal­i­for­nia-based dis­trib­u­tor Proven Win­ners copied the va­ri­ety, then in­ter­fered with Westhoff’s sales ef­forts, de­rail­ing a deal to sell the flower to Home De­pot, the world’s largest home-im­prove­ment chain. In the process, Westhoff al­leges that Proven Win­ners ma­ligned the Ger­man breeder’s rep­u­ta­tion.

Candy Bou­quet is a va­ri­ety of the South Amer­i­can plant called cal­i­bra­choa, in­for­mally known as “mil­lion bells” or “lit­tle petu­nia” be­cause of its re­sem­blance to the bet­ter-known an­nual. The plant is gain­ing in pop­u­lar­ity, with $44.6 mil­lion in sales in 2014 in the U.S. for cal­i­bra­choa, com­pared with $29 mil­lion in 2009, ac­cord­ing to U.S. De­part­ment of Agri­cul­ture fig­ures. The flow­ers are con­sid­ered easy to grow, come in a va­ri­ety of col­ors, and pro­duce blooms from spring to fall.

Flow­ers and other plants Proven

that ap­pearp in na­ture can’t Win­ners’ Holy Moly be patented.pat In­stead, com com­pa­nies de­velop var va­ri­eties through graftin ing or bud­ding and ob­tain patents un­der the 1930 Plant Patent Ac Act for ones that pro pro­duce asex­u­ally, with with­out seeds. Mo More than 375 patents ha have been is­sued for c cal­i­bra­choa va­ri­eties, ac­cord­ing to data com­piled by B Bloomberg. Westhoff has 28 of those, in­clud­ing the “Wesca­candy” Westhoff’s

patent for Candy Bou­quet Candy

is­sued last De­cem­ber. Bou­quet Af­ter un­veil­ing Candy Bou­quet at Home De­pot’s ven­dor show in Fe­bru­ary 2014, Westhoff claims the re­tailer’s reps ex­pressed in­ter­est in be­ing the ex­clu­sive seller of the flower in North Amer­ica. Ac­cord­ing to the com­plaint, Westhoff says Proven Win­ners, hav­ing seen the flower at the same trade show, tried to trade­mark the name Candy Bou­quet. The ap­pli­ca­tion,

12.4% 11.6% 11% 10.6% 10.4% 10% 9.6% 8.5% 8.5% 8.3% 7.6% 7.5% 7.5% 7% 5.9% 4.9% 4.7% 19.3% 19.2% 17.2% 16.3% 16% Ger­man lux­ury cars 23.2% 20% 27.6%

filed in Septem­ber 2014, was ini­tially re­jected and then aban­doned, ac­cord­ing to U.S. Patent and Trade­mark Of­fice doc­u­ments. Then, the law­suit claims, Proven Winn Win­ners de­vel­oped its own va­ri­ety, Holy Moly, work­ing with a U.S. breeder named Plant21, and told sev­eral g grow­ers and Home De­pot that Wes Westhoff’s ver­sion was a knock­off. Prov Proven Win­ners threat­ened to “take ac­tion” against any­one grow­ing Candy Bou­quet, the law­suit says, cut­ting­cut off po­ten­tial sup­pli­ers.

Westh Westhoff seeks compensati­on for the al­leged patent and trade­mark in­fringe­ment, as well as un­spec­i­fied dam­ages for the lost busi­ness. It’s also ask­ing for a court or­der to stop Proven Win­ners from fur­ther in­fring­ing its patent and mak­ing false state­ments about Candy Bou­quet.

Proven Win­ners was started two decades ago by three grow­ers who wanted to cre­ate a na­tional brand name for plants. Through Ex­ec­u­tive Di­rec­tor Mark Broxon, the com­pany de­clined to com­ment on the law­suit. Home De­pot, which is not a party to the law­suit, also de­clined to com­ment.

Home De­pot and its ri­vals have be­come in­creas­ingly im­por­tant to the gar­den sup­ply in­dus­try’s breed­ers, grow­ers, and dis­trib­u­tors. The big-box re­tail­ers have squeezed out mom and pop gar­den stores, and there’s been con­sol­i­da­tion among dis­trib­u­tors and breed­ers as well. An­nu­als such as the cal­i­bra­choa, petu­nia, and be­go­nia are the mon­ey­mak­ers for gar­den sales, although growth has started to slow in re­cent years, says Marvin Miller, mar­ket-re­search man­ager of Ball Hor­ti­cul­tural in West Chicago, Ill., a global gardening com­pany not in­volved in the law­suit. With fewer, big­ger com­pa­nies and slower sales, there could be more flower fights. “Peo­ple are not gardening the way ththey used to,” Miller says. “The play­ers re­re­al­ize that when they want to grow, ththey have to do it at the ex­pense of a com­peti­tor.” �Su­san Decker and Mmatthew Townsend

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