"I'm a sophisticated client now," he said, "and when I buy legal services, if I have to go outside the company, I want somebody who's really good at the narrow area where I have the problem."
Grody had much to learn about the foreign corrupt practices act, employment law, anti-trust work, Occupational Safety and Health Administration law and export compliance. "Almost everything we do here is subject to the international traffic in arms regulations act, or the ITAR, " he said. "The ITAR governs exports of military equipment and technology.
That technology includes the blueprints and the know-how in people's heads. Colt Defense, which in 2011 did $208 million in sales, ships to about 50 different countries every year.
"Every shipment is subject to export regulation from the [U.S.] State Department, since military exports are handled by the State Department, not the Commerce Department," said Grody. "I knew nothing about this when I came here."
Much of what he does is craft agreements to keep Colt's trade secrets and processes proprietary. "A lot of it is the properties of the raw materials," Grody said. "We have a metallurgical lab onsite." If the company used an outside lab, "you don't have control of the technicians," Grody noted.
At times, the intellectual property is more like a secret recipe: "Everything's made of metal, and when it's heat treated, and it's cooked too much or not enough, you're going to have problems."
'Sporting Rifle'
When Colt's Manufacturing spun off Colt Defense in June 2003, the Defense mission was to sell rifles and carbines to law enforcement and military worldwide. "We have no rights to sell any product into the consumer market," Grody explained. Colt Defense can sell Colt-branded handguns to military customers, but Colt's Manufacturing has the rights to sell handguns to law enforcement.
The Defense company can sell other brands, as well. "We can sell Joe Blow's rifles anywhere we want, but people don't want that, they want Colt rifles," said Grody.
More recently, the lines between the companies have been blurred. By 2011, the Army had stopped buying up Colt Defense rifle output. And so the company looked for new customers. It wasn't easy, as competitors had gobbled up the domestic consumer market for what Grody calls "the modern sporting rifle."
The market is huge, he said, "But we weren't in it, because we [had been] making guns for more serious purposes."
In 2011 and 2012, Colt Defense began to sell consumer versions of the military M-16 rifles to the civilian market, through Colt's Manufacturing. The rifle, marketed as the AR-15, is not used for deer hunting, but it's popular for recreational shooting, and hunting prarie dogs and other varmints.
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