Anthony Maglica
Mag Instrument
By Kemp Powers

(FORTUNE Small Business) – Maglica's life story would make a great movie. He was born in New York City in 1930, but the Depression forced him and his mother back to their native Croatia. During World War II they suffered such poverty that his mother had to pull her gold tooth to buy food. Returning to the U.S. in 1950, Maglica began making machine parts in a garage in Los Angeles, and in 1979 he simplified his business to a single product: flashlights that would hold up to the rigors of police work, yet be attractive enough that civilians would buy them too. Last year Mag Instrument took in more than $100 million in revenue. At 73, Maglica still works 18-hour days, often defending his intellectual property from competitors. —KEMP POWERS

"In the 1950s I got a job at a machine shop in East Los Angeles. It was while I was working there that I learned my foreman had a little side business in his garage making hydraulic fittings. I figured that I could do that, so I went down to Santa Fe Avenue and found a simple Logan metal-turning lathe that would fit in my garage. It cost $1,000, and I didn't have that kind of money. But the guy selling it agreed to take the $125 I had as a down payment and let me pay every month. To hook the machine up, I had to disconnect the stove and run 50 feet of cable to the garage. I worked the night shift at my job, because that shift paid better, and worked on this little lathe in my garage during the day. It was job-shop work, very competitive, and the hardest part was getting paid. I've always had to be economical. Even when my business began to get successful, I didn't have an air-conditioned room and expensive machines. I modified the machines I had.

I knew someone in the 1970s named Don Keller, who later came to work for me, and still does. He had been a policeman, and he knew cops who had problems with their flashlights. The flashlights were flimsy, made of plastic, and if you dropped them, they would break. Keller said that if someone could make these out of metal, they wouldn't break.

He and his friend tried making one out of the metal shaft of a fence post. They packed it with rags and the guts of a regular flashlight. Then they took the design to a tool-and-die shop, but those places don't do high-production. They do ten, 20, 50 pieces at a time. So the flashlights were too expensive. They farmed the work out to me, because I could do higher production, but I couldn't get them to pay me. I also made flashlight parts for another company, but that had problems too. The second company gave me a purchase order for 10,000 lights, so I tooled up, invested all this money, and started making them. They said, stop, slow down, you're making too many. We can't sell these flashlights. They wanted me to make them but only give them to them as they needed, which didn't work for me. I almost got into a lawsuit with them to get them to pay me, but they finally did.

By then I had all this equipment in place. And I thought that I could make a better flashlight than they were making. Better quality. I designed one with a pushbutton switch instead of a slide switch, and an adjustable beam, so you could go from flood to spotlight. And contacts inside that are self-cleaning—when you push the button, the contact revolves and scrubs against the other part. It takes the oxidation off the metal, so you get a better connection. We get letters from customers all the time, with stories about the lights and what they've been through. Like someone losing a light in a lake and finding it the next year, and it still worked.

Since 1979, when we took the first Maglite product on the market, we have never raised our prices. We've increased the quality, but maintained the same price. People say, how do you do it? Maybe you charged too much money to start with. That's not the case. It's the automation and innovations we've created along the way. We've actually added value to the product. We now include batteries and replacement bulbs, things like that.

There are still so many challenges though. It can be hard to compete in this country. First I have to design a product that's better than anything else that's out there. Then I have to find the most efficient way to manufacture it. Then there's protecting your patents, once you actually get them. One patent we applied for took 14 years to get approved. Fourteen years! Ninety percent of the people in this factory don't know what new product I'm working on now. I've spent more than $70 million in litigation to defend my intellectual property rights. Can you imagine what I could have done with that $70 million? More employees, better products, a bigger company. You can't try a patent case in this country for less than $1 million.

I think we've filed more than 200 lawsuits worldwide over the years. Most of the times we settle, and we've never lost a case, but still we have litigation going on all the time. It's pretty easy to find out about products that infringe on our intellectual property. The public often helps us find out. Someone in our warranty department will get an angry letter and a returned product, and it turns out that the flashlight isn't even ours. It's a copycat. Or we see people at the trade shows. I once saw someone with a knockoff at a show, and I explained to him that I spend a lot of money on R&D. He told me, "I spend a lot too. My R&D is my attorney." I sued him and ultimately settled, but it took three years and cost me about $5 million.

We also have sales reps who go to the stores. Infringers aren't shy, and they advertise their products right next to ours. We had one situation where a company in China made a light that was the exact same shape and overall appearance as ours. They were selling it for less than what we paid to buy materials. We couldn't go to China to stop them, but we stopped them here by suing the stores that carried the lights. We've sued virtually all the mass merchandisers, companies like Kmart. They usually become our best customers. They want to sell a competitive product and a good value, and they want to buy American. Usually they get into trouble, and it isn't even their fault. They get talked into selling a product when they don't understand about the patents on mine.

I figure I'm going to have litigation forever. It's not going to stop. But I hope people are smart enough to know that I'm not going to give up, that I'm not going to let them come and take something from me.