Feb. 13, 2006 – Jet-powered surfboards: Intriguing new product focus of contentious lawsuit

The battle between two manufacturers of jet-powered surfboards took yet another turn as PowerSki International, makers of the PowerSki JetBoard, filed a lawsuit against Nova Communications, Ltd., manufacturer of the XBoard.
Both companies have been receiving attention for their product in the mainstream media. But as of early this year, neither had yet to make an actual unit available in the United States for retail sale.
Now, thanks to everything from a veritable “he said, she said” volley of legal filings to EPA legislation, it looks like another set of hurdles may have to be cleared before either product takes that crucial last step to the marketplace.
Bad Blood
Not so long ago, the two competitors seemed to be on the path to becoming one and the same, with PowerSki signing a letter of intent to merge with Nova in 2003. According to that agreement, Nova would be the surviving parent company, but keep the PowerSki name.
That plan never came to fruition.
In late December, PowerSki filed a $112 million lawsuit against Nova, its manufacturing/R&D arm Aqua Xtremes, and 27 others in the state of California, alleging 24 causes of action, including misappropriation of trade secrets, tortuous interference, unfair competition, breach of contract and Racketeering Influence and Corruption Organizations Act (RICO) violations.
PowerSki’s complaint alleges that Nova never intended to merge with PSI, and failed to pay even half of a $2 million sum in working capital funding dictated by a memorandum of understanding between the two companies.
At the core of the lawsuit is the allegation that former NOVA Chief Executive Officer Kenneth Owen, current CEO Arthur Robins and other cross-defendants, including several former PSI employees, “conspired and did use stolen proprietary information” to design a substantially similar competing product (Nova’s XBoard), and sought to undermine PSI’s business to eliminate the company as a competitor.
The lawsuit also states Robins instructed a PSI vendor, Premium Allied Tools of Texas, Inc., to stop production on the PowerSki jetboard, and begin construction of NOVA’s own X-Board. PSI also says Nova used confidential information and trade secrets owned by PSI to develop the X-Board.
Same Vs. Different
When asked if he was concerned with the most recent filing, Nova CEO Art Robins was unapologetically blunt.
“Am I concerned about his (PSI owner Bob Montgomery’s) lawsuit? Hell no,” Robins told Powersports Business. “As my wife said, when you lay down with dogs, sometimes you wake up with fleas. Except that he’s a tick, because he’s a bloodsucker.”
As Robins contends, while the two products are similar in concept, they vary in actual execution. Whereas PowerSki uses a two-stroke piston engine, Nova is utilizing a single-stroke rotary design. The two products also use different size pumps, as well as different methods of handling exhaust.
The Nova board also is steerable, and features no skegs on the underside of the hull. PowerSki’s board features skegs, and is ridden with more of a classic surfer-style input.
“When I hear a lawsuit coming in from PowerSki alleging that we stole their proprietary information, I have one question,” says Robins. “What was it? It can’t be the engine, and our board is designed completely different from his. I’m trying to understand why he’s attempting to sue us.”
Counters Bob MacKay, director of marketing and communications at PowerSki, “when you have a house with all the cool stuff, everybody wants to steal something.”
Which company the courts will side with, of course, remains to be seen. This is not the first time, however, the two companies have squared off. In May, Nova filed against PowerSki for breach of contract, claiming the company had no intention to produce the JetBoard. PowerSki’s cross-complaint noted the aforementioned situation involving Premium Allied Tools of Texas.
Not The Lone Hurdle
The ongoing legal battle between the two companies is but one hurdle these two manufacturers have yet to clear. The other is a familiar issue to the big four PWC manufacturers, the emergence of strict Environmental Protection Agency legislation, requirements that have effectively grounded most existing, conventional two-stroke engines.
According to MacKay, EPA legislation is the lone issue keeping the JetBoard from the market.
“Our board is ready,” Mackay said. “It’s beautiful, the electronics and engine are state of the art, everything is up to mass production standards, and its ready for market — except it’s a two-stroke.”
To overcome this hurdle, PowerSki has turned to a familiar name from Sea-Doo’s two-stroke past, Orbital Australia. The company is reportedly currently working with PowerSki on developing a direct-injection version of PowerSki’s 360cc engine that would receive the EPA’s nod of approval. The current timeline, says MacKay, will see the company releasing boards within the United States in six to eight months.
According to Robins, Nova already has its rotary engine in EPA labs, and expects approval by early April at the very latest, meaning the product could theoretically be available in the United States by the summer.
Delays, he says, have been due more to the desire to want to get the product right before it’s released. The company has recently reworked a variety of areas, including improving the ergonomics of the handlebar controls.
The long arm of the EPA does not extend outside the U.S. borders, however, and both companies are reportedly ready to begin distribution in other countries. Still, it’s clear that their focus remains on getting to the U.S. market. Says Robins: “We will be here in the U.S. sooner than later.”
Both companies plan to unveil product at the Miami Boat Show in February, with PowerSki reportedly introducing a second, more sport-influenced model that features a Virtual Engineered Composites hull (the same closed-mold process pioneered by Genmar boat brands like Glastron), rather than the current board’s hand-laid fiberglass. psb

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