Bloomberg News

Gun Patents Set 35-Year High in U.S. in Quest for Better Shooter

December 02, 2013

Smith & Wesson Pistol

Smith & Wesson Holding Corp. reported record sales of $588 million for the fiscal year ending April 30, up 43 percent over 2012, according to a June press release. Photographer: Tim Boyle/Bloomberg

Gunmakers such as Smith & Wesson Holding Corp. (SWHC:US) and Sturm Ruger & Co. (RGR:US) are boosting firearms sales by building weapons that are more accurate and easier to use, with gun-related U.S. patents at a 35-year high.

Demand is growing as more states allow people to carry concealed weapons and lawmakers discuss limiting sales after mass shootings at public venues like schools and movie theaters. Ownership is rising among women and the elderly.

Manufacturers are competing for sales with improvements such as magazines that increase a bullet’s accuracy or are lower in cost. Of 6,077 patents issued since 1977 in the firearms class, 19 percent were in the past four years, with a record 370 issued last year, according to the U.S. Patent and Trademark Office.

“There’s money to be made and everybody wants to protect their moneymaker,” said Larry Hyatt, owner of Hyatt Guns in Charlotte, North Carolina, which has been in business for more than 50 years and carries more than 7,000 guns. “There is a huge amount of technology going into these products.”

Recent innovations include patents issued for voice-command shooting, rifle scopes and a new trigger system. Not all are for the weapons themselves: there’s a gun rest that could attach to a hunter’s leg and a pistol holder for next to the bed. The rise in patents has brought on litigation, with at least eight lawsuits filed since the start of 2013.

Booming Sales

By many measures, U.S. firearms sales are growing.

Background checks, conducted every time a buyer attempts to purchase one or more firearms, surged 54 percent from 2008 to 2012, with a record 19.6 million checks completed in 2012, according to Federal Bureau of Investigation data.

Sturm Ruger, of Southport, Connecticut, the largest publicly traded U.S. gun maker, reported a 45 percent jump in third-quarter sales this year due to high demand for new firearms including the LC380 pistol, the SR45 pistol and the Ruger American Rimfire rifle.

New owners were helping to drive sales, Chief Executive Officer Michael Fifer said in a conference call with analysts Nov. 6.

Smith & Wesson reported record sales of $588 million for the fiscal year ending April 30, up 43 percent over 2012, according to a June press release. President James Debney credited “innovative new products” and “robust consumer demand.”

The results come despite a push by President Barack Obama and some state legislators for gun-control measures following shootings including the deaths of schoolchildren in Newtown, Connecticut, theatergoers in Aurora, Colorado, and government workers in Washington; and the wounding of former U.S. Representative Gabrielle Giffords in Tucson, Arizona.

Defending Patents

Magazines, which hold the bullets and can affect the trajectory, are a source of dispute among gun manufacturers. Browning Arms Co. sued in April, claiming Sturm Ruger is infringing a patent for a magazine that’s smaller and improves the accuracy of the bullet’s flight.

Smith & Wesson, based in Springfield, Massachusetts, has a patent for a low-cost AR-15-style rifle magazine that can use .22 ammunition, and accused Plinker Arms LLC of copying it.

“We are always looking at innovative, better ways to manufacture and to bring products to the market place,” said Paul Pluff, spokesman for Smith & Wesson. “Any time you patent a product, it is absolutely in the company’s best interest to defend the patent.”

Smith & Wesson said in its annual report that it will “vigorously pursue and challenge infringements of our trademarks, copyrights and service marks.” Starting in 2011, it added the word “patents” to that warning.

Three-Year Fight

An increase in patents and litigation happens in any industry seeing growth, like the smartphone battles between Apple Inc. and Samsung Electronics Co. If there’s an iPhone that transformed the firearms industry, it was when Glock GmbH began selling a handgun with a polymer frame rather than metal in the 1980s.

Other gun manufacturers thought it would never take off, Hyatt said. That changed when sales shot up, and police departments around the country started buying them. It prompted a three-year patent battle between Glock and Smith & Wesson that was settled in 1997.

“It didn’t jam and was easy to operate,” Hyatt said. “A lot of gun companies wanted to copy it.”

Gun-patent battles date back as far as 1852, when the forerunner of Smith & Wesson, the Massachusetts Arms Co., tried unsuccessfully to break Colt Manufacturing’s hold on handgun manufacturing for civilians, according to a display at the Virginia Military Institute Museum in Lexington, Virginia.

Settling Disputes

Modern patent fights are resolved more quickly. Smith & Wesson’s case against Plinker was filed in April and settled by November. Plinker now has a license to produce the patented magazine, General Counsel Eric Rogers said in e-mail.

A lawsuit in which Sig Sauer Inc. challenged a patent for a bolt carrier owned by Uzi maker Israel Weapon Industries Ltd. was filed in January and settled a month later.

The gun patent boom shows no end. Sturm Ruger’s “core business strategy” is to “introduce new products to drive demand,” Fifer said during the analysts’ call.

Military and border officials also are looking for new weapons and related products, said Scott France, chief operating officer of Military Systems Group Inc. The Nashville, Tennessee, company got a patent Nov. 12 for an accessory mount, which can be used for weapons, lights or even sonic devices.

“There are a lot of people making weapons and nobody is filling the niche of how do you mount them,” France said.

Gun Frenzy

Other innovations are for products to appeal to the recreational shooter, the hunter or new owners.

During the peak gun-buying frenzy in early 2013, Brian Rafn, director of research at Morgan Dempsey, a 25-year investor in Sturm Ruger, visited Gander Mountain’s Gun World store in Milwaukee. A sign outside said: “Limit two assault rifles per day per customer.”

Customers were piling shopping carts high “like a hurricane was coming,” Rafn said in a telephone interview.

While the buying frenzy may have abated since then, the threat of a crackdown on gun sales will keep them strong, gun-shop owner Hyatt said.

“You tell somebody they can’t have something, they’d want 12 of them,” Hyatt said.

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net; Caroline Chen in New York at cchen509@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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Companies Mentioned

  • SWHC
    (Smith & Wesson Holding Corp)
    • $9.8 USD
    • -0.24
    • -2.45%
  • RGR
    (Sturm Ruger & Co Inc)
    • $48.36 USD
    • -0.59
    • -1.22%
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