Nikken and Amway Sue Each Other

Two of the world’s largest direct marketing networks are suing each other, each contending the other copied its design for therapeutic body magnets.

Amway Corp. struck first, filing a patent infringement lawsuit against Irvine-based Nikken U.S.A. Inc. on June 22 in federal court in Nashville. Amway, based in Ada, Mich., alleged that shortly after it introduced a line of magnetic pads that purportedly block pain signals from reaching the brain, Nikken and partner Nu-Magnetics Inc. of Port Jefferson, N.Y., began marketing similar products.

Nikken filed a countersuit three days later in U.S. District Court in Santa Ana, accusing Amway of improperly interfering with its business. Nikken has been selling magnets for 20 years, while Amway entered the market only months ago, Nikken’s chairman said in a prepared statement.

“We believe Amway’s action to be an expression of frustration over its inability to compete with us in the marketplace,” the statement said. “It’s no secret that Amway sales have dropped dramatically in recent years, and the launch of the magnetic product appears to have been underwhelming.”

Nikken and Amway sell products through massive networks of independent distributors who earn commissions on retail sales and get additional money from sales by people whom they recruit to join their networks.

Nikken, which had about 35,000 U.S. distributors in 1996, according to industry observers, was founded in Japan in 1975 and opened its American headquarters in Irvine in 1989. The privately held company sells nutritional supplements and relaxation products such as mattress pads and pillows as well as magnets. Nikken’s lawsuit says the company has sales of about $1 billion a year.

Amway has about 2 million distributors worldwide and had sales of about $7 billion in 1997.