Startex, the Finnish company that sells the Start brand of ski waxes, has obtained a license to make and sell cross-country skis, boots and poles under the Karhu brand. That should enable Karhu to regain ground in one of the product categories that have most strongly contributed to the brand's strength.
The license was previously in the hands of Karhu Sporting Goods (KSG), a Finnish company, as part of a settlement with Karhu Holding, a Dutch firm that acquired the rights to the Karhu trademark except for Iberia. The person behind Karhu Holding is Huub Valkenburg, an international sports executive based in the U.S. For several months the two companies were locked in a bitter dispute involving accusations of fraud and forgery. The settlement reached in 2009 reaffirmed that Karhu Holding held the rights to the trademark, while KSG was given a license for cross-country ski products, for an unlimited period of time.
However, that agreement was challenged again toward the end 2010, when Karhu Holding accused KSG of serious breaches of contract. Karhu Holding then rescinded the ski license to KSG, but kept this quiet while the Netherlands Arbitration Institute (NAI) was asked to study the matter. Representatives of Karhu Holding said that the NAI had ruled entirely in their favor in June, which paved the way for a license to be offered to another party.
As part of the NAI arbitration, Karhu Holding said that it also received all of the damages that it claimed – for the breach of agreement by KSG, and legal fees. Last week, Karhu Holding finally settled its financial claims against KSG. This settlement involved the transfer of ACS patents to Karhu Holding: They relate to the Fulcrum mid-sole technology that is distinctive for Karhu's running footwear, the biggest part of Karhu Holding's business with the Karhu brand so far.
In the meantime, KSG itself has been going through a financial restructuring process, as several other aspects of its business unraveled. It previously held agreements to make several categories of products under the Exel brand, but it has entirely refocused its business on the production of cross-country skis at a plant employing about 30 people in Kitee, in eastern Finland.
Karhu Holding has made sure to avoid any interruption in deliveries of cross-country skis by allowing the KSG plant to continue manufacturing Karhu skis. This activity is now supervised by Harri Kirvesniemi, a Finnish former cross-country ski champion (he won six Olympic medals and a gold medal at the world championships in 1989 but was disqualified for doping in 2001, for which he has sought to make amends).
The damages awarded to Karhu Holding, the settlement of financial claims and the confirmation that the Karhu ski license with KSG could be rescinded marks the end of a toxic relationship: It will enable the owners of the Karhu brand to build on a more constructive relationship with Startex, to explore the leading markets for Karhu cross-country skis.
The license awarded to Startex covers all of Europe excluding Iberia but including Russia, Kazakhstan and Turkey, and Startex also obtained some non-exclusive rights in Oceania and Asia. Valkenburg has his own interests in North America, where his company operates as the distributor of Craft.
Karhu achieved sales of an estimated 30,000 pairs of skis in the last years and Startex aims to rapidly double that. Karhu's cross-country ski boots previously used the Rottefella binding system but with the new licensee it has switched to SNS, the Salomon system.
Startex, which was established by Jukka Järvinen in 1981, sells Start waxes as well as roller skis and cross-country ski poles. The company reaches an annual turnover in the range of €4 million, with about half of the sales coming from exports to 30 countries, from Scandinavia to North America and from Russia to New Zealand. The company has its own wax factory in Hollola, near Lahti, a Finnish town well known by cross-country skiers, which will host the Nordic World Championships in 2017.
Startex has been operating since 2011 as the agent for Karhu's footwear in Finland, working with the Karhu Nordic office opened in Sweden three years ago, which directly covers Norway. In turn, Startex will lean on the Karhu Nordic office to sell Karhu cross-country skis in the region. Meanwhile, Karhu Holding and Startex will jointly seek ways to explore other markets, such as Russia.
While Karhu Holding dealt with the legal imbroglio with KSG, it also continued to build up its running footwear business. It is mostly sold in the Nordics, North America, Germany and the Benelux countries. Taken all together, the Karhu brand recorded sales in the range of €10 million last year. A small share came from a Karhu clothing license and another license for fitness equipment in Finland, but the rest was divided almost equally between running footwear and cross-country ski products.
It remains unclear what has happened to Pertti Keskitalo, the former chief executive of KSG, who has been embroiled in several lawsuits – some of them involving criminal complaints. At the time of writing we could not verify the outcome of the multiple proceedings of which we obtained confirmation in Finland a few months ago.