Fender loses attempt to stifle competition

[Darryl Hattenhauer]

http://www.azcentral.com/community/scot ... r0410.html

Only fat cats like Fender have the moolah for such a monopolistic venture. There's no practical way to determine what is and what isn't a tele, strat, or p-bass shape. IMHO, it would be like Ford holding rights to anything that looks like a car.

Fender's claim that they want to stop forgeries seems ironic. Like Gibson with Epiphone, Fender bought great old companies like Gretsch, Guild, and Orpheum, then stopped the American production of many of the real quality instruments formerly made by those companies and started putting the names "Gretsch," "Guild," "and "Orpheum" on foreign-made goods often of lower quality. So it seems to me that Fender, in effect, is a monopoly that closes down the competition and sells forgeries of those defunct companies. The small companies that have come along since the 1980s are making instrument styles originated by Fender (and Martin and Gibson) better and cheaper. I suspect that it is such small domestic makers that Fender really wants to stop.

All the looney opinion of HF who doesn't really know squat about law and business.

 

[taabru45]

Whew, thanks Darryl, for a moment there I thought I was going to have to burn my old Peavey preditor. from the 70s...looks a lot like and plays a lot like a Strat.... Steffan
By the way, don't know if its true or not but sometime in my lifetime I heard that someone patented the wheelbarrow successfully... :shock: (too bad it wasn't shaped like a strat) :lol:

 

[coastie99]

On this very rare occasion, I find myself in sympathy with Fender Inc. :shock: :shock: :shock:

Those are very clearly Fender designs ......... why in heavens name weren't they patented / copyrighted, whatever, a very long time ago ??

I do agree with the decision though, that, in effect, it's simply too damned late to claim exclusivity.

 

[capnjuan]

We need to hear from Frono on this; he's in the Intellectual Property business. Agree Gary, they could have trademarked the designs a long time ago ... and of course, for the money they spent on their lawyers, they knew that from the beginning so this was mostly an FMIC exercise in Menacing and Bleeding; menacing FMIC's competition with the loss of business (or coercing royalty agreements) and bleeding them to spend hundreds of thousands of dollars in legal fees to defend a right they already had. If you thought Monster's defense of its apparently valid trademark was ugly, how ugly is defending one you don't have? :evil:

 

[fronobulax]

As presented in the article I think Fender's action was perfectly reasonable and consistent with trying to protect intellectual property. I also agree with the court decision in that the time to claim intellectual property rights on the shapes was 30-50 years ago and this is clearly a case of closing the barn after the horses have escaped. I make a distinction between a "look-a-like" and a fake. The former may give the first impression that it is a Fender guitar but a casual examination will reveal that it is not a Fender product. The latter is deliberately crafted to appear to be a Fender product even after casual examiniation. The logo might say Tender in the same script, for example. Where you draw the line between these depends upon what you have at stake. It is in Fender's financial interest to make sure that the look-a-likes are treated as fakes by the courts because then Fender can use the legal system to reduce competition rather than have to compete with similar products on the basis of quality or price. As a consumer, I obviously want look-a-likes to be legit because doing so gives me more choices.

If we rewind 30 years ago or so, I could make a case that the shapes are somewhat iconic and deserve some kind of protection. However, I would be very careful in defining exactly what was protected beause protecting a Strat body described as "asymetrical, double cutaway" would give Fender leverage to challenge almost every solid body design out there except the Guild JS/S-100/Gibson SG symmetric double cutaway and the Bluesbird/Les Paul single cutaway. So if I approved the trademark, back in the mists of time, I would want to make sure a court could clearly understand and rule that a Rick bass did not infringe on a Precision shape.

As an aside, I'll note that up until the mid-60's or so, if you wanted an electric bass player to gig with, you advertised for a "Fender bass player" or a "fender bass player". Think of the mess that could have been made if Fender had been able to trademark everything back then.

Fender's claim that they want to stop forgeries seems ironic. Like Gibson with Epiphone, Fender bought great old companies like Gretsch, Guild, and Orpheum, then stopped the American production of many of the real quality instruments formerly made by those companies and started putting the names "Gretsch," "Guild," "and "Orpheum" on foreign-made goods often of lower quality. So it seems to me that Fender, in effect, is a monopoly that closes down the competition and sells forgeries of those defunct companies.

That is one way to look at things but I doubt that any lawyer would take your case because Fender owns the intellectual property. They are within their rights to build a guitar in China or Mexico and brand it "Guild". It's only a forgery if they try and call it "Gibson" or "Epiphone". The fact that the "new" Guilds or Gretschs don't come up to your standards does not, alas, make them forgeries in any practical, enforcable sense.

I think we are all in violent agreement that Fender is being a poor steward of the Guild brand and legacy but that, in my opinion, is not a matter for the courts.

We need to hear from Frono on this; he's in the Intellectual Property business.

At the risk of undercutting my credibility, I'm just a software geek and that is the source of my income. However, I have backed up Expert Witnesses in software related lawsuits, worked for companies that were sued or suing because of software intellectual property issues and done a fair amount of research in ways to protect my work and ideas. I know enough to be dangerous and to appear smarter than I am until a true expert shows up. I also have friends who have lost their jobs because software piracy put their company out of business and so I can generate a bit of emotion on the subject

 

[chazmo]

Frono, good summary! I agree with pretty much everything that was done and what happened. Way too late for this, but not unreasonable to try.

That said, there is definitely irony here, as Darryl pointed out. It's too bad there *isn't* a law to protect acquired companies from their parents! It may be within the rights of the parent to own the brands and protect them, is it *really* in their right to bury them in lieu of their own parent brand? I don't know. I wonder if there's ever been a test case on that.

 

[gilded]

Hey Gang,

I know one of the Parties and have a copy of the lengthy decision by the US Trademark & Appeal Board in this matter. I am reading it. When I get through it, I'll drop a line on what it really says, that is, if I can actually understand it.

My understanding is that there really isn't anything for Fender to appeal. That doesn't mean that Fender won't appeal it, or pursue other remedies, but at some point in this Current Economy, even Fender will have to decide if it's worth shelling out the dough.

 

[Steelpickin']

Yes...as much as I love my Teles I agree its much too late.
Here is a favorite pic. Click on it

 

[Darryl Hattenhauer]

Gilded,

Could you make a guess at what this case has cost Fender in legal fees?

hf

 

[capnjuan]

Thank you Frono. Back in 1985, I paid $235 for a copy of Lotus 1-2-3 ... not sure which version (wk1 file extensions). A year later, I bought a copy of 'The Twin' for $50 out of a software mag. Except for the fact that the command menu was at the bottom of the screen and a few missing advanced math functions like Trig, it was a thinly-disguised but complete knockoff of Lotus. Mitch Kapor (?) and the Copyright police got after them pretty quick. I hung onto The Twin (it was only $50 ) until I no longer had a pc with a 5 1/4" drive .... but The Twin could have ruined Lotus.

However, if FMIC was after US-based companies selling Tele- and Strat-shaped guitars, I respectfully disagree that it was within its rights. If the court concluded that it didn't have a trademark after the fact, then it couldn't have had one before the fact. What it would have had was an argument, likely based on some other case with similar facts, in which a party in FMIC's position prevailed. Either one of two conditions is true; the attorneys for FMIC took the case on a contingency and financed it themselves or, if not, advised FMIC that the court could rule against them for precisely the reasons that it did. In either case, the economic 'chilling effect' on competitors plus forcing them to burn up legal fees in defense of what apparently what was already their right was what FMIC was after in the first place. I wonder if FMIC will be required to pay the winning parties' legal fees? They would in FL.

I yield to the Gentleman from Tejas and look forward to his remarks. J

 

[fronobulax]

It may be within the rights of the parent to own the brands and protect them, is it *really* in their right to bury them in lieu of their own parent brand?

<VEER>
In the world of Beltway Bandits (or consulting companies or professional service firms) it is quite common for companies to get bought. The motivations vary but usually the buyer wants the contracts the target already holds, the people working for the target or some intellectual property owned by the target. I worked for a small (max ~75 people) company I'll call H. The founders of H had given an ownership stake to G which was privately held and in the 500+ range. So effectively, G was H's parent company. However H was operated as a separate entity. The owner of G wanted to do something else so he sold G (and thus H) to a large 5000+ publically traded company M. M almost immediately started making organizational changes so that the former differences between G and H were blurred. After about a year, M started carving out pieces of the former G and aligning them with existing organizations. I left, but last I heard G and H had been integrated into M and if you hadn't worked for one of them you would not even know the companies existed. So we have a clear cut case of the new parent obliberating the child "brand".

As an employee of H this was "wrong" for me and I eventually walked. However as a stockholder of M this is exactly what I wanted because it offered a better return on my investment. My capitalist/libertarian streak has to accept that the owner's rights need to prevail here.
<\VEER>

 

[fronobulax]

However, if FMIC was after US-based companies selling Tele- and Strat-shaped guitars, I respectfully disagree that it was within its rights.

I saw a soapbox and climbed up so fast that I missed that part. As a general rule companies have to take actions to protect their trademarks and suing to protect a trademark is an acceptable business practice even if companies like Monster Cable are overzealous. Given that Fender screwed up in not obtaining trademark protection years ago, one strategy to obtain such protection today would be to litigate as if they were protecting something. That establishes that Fender is "serious" about the intellectual property. However, in my perfect world where things are done my way, as soon as it was ruled that there was no trademark protection not only would Fender be ordered to cease and desist from lawsuits attempting to enforce a non-existant trademark but the targets would be allowed to counter-sue for legal fees and limited damages.

As a fly on the wall in Fender's Corporate Boardroom I would imagine the strategy of suing the competition was considered a win win because it supported the belated attempt at trademark protection and it kept some of the competition too busy to compete. And, as always, the risk of being counter-sued is acceptably small because Fender's pockets are deeper.

Botom line for me is that before the trademark ruling the lawsuits were in a gray area. They obviously had some legal merit or they would have been thrown out almost as soon as they were filed. But once the trademark ruling came down, future lawsuits became wrong and the prior lawsuits look an awful lot like harrassment. capn' - I think we agree

 

[capnjuan]

But once the trademark ruling came down, future lawsuits became wrong and the prior lawsuits look an awful lot like harrassment. capn' - I think we agree

We're good; FMIC owns what it owns and they are entitled to the fruits and benefits ... and they don't own what they don't own ... and could have found that out by looking in their own files. A famous man once said: "Don't Fear The Veer" ... my fear is that if he doesn't get that expression trade- or sales-marked, well ... I think you see where I'm going ....

 

[jp]

Interesting discussion and analyses presented. Good points made frono, especially considering how support of Fender's claims can easily become a slippery slope. Initial reading absolutely brought the tirelessly litigious actions of Noel Lee, owner of Monster Cable to mind. And just as you describe, the action does not always reveal true objectives. Fender's steps are most probably thought through 10 moves ahead, with a cost-benefit analysis calculated for each scenario.

Perhaps I should think twice now about my newly launched burger franchise selling huge burgers in the shape of popular guitars--Monster Fender Burger.

"I'd like a Monster Tele Combo with Twin fries, and my son will have the Blues Junior Mustang meal with a Squier soda."

 

[fronobulax]

Perhaps I should think twice now about my newly launched burger franchise selling huge burgers in the shape of popular guitars--Monster Fender Burger.

"I'd like a Monster Tele Combo with Twin fries, and my son will have the Blues Junior Mustang meal with a Squier soda."

:lol: :lol: :lol:

Actually I think you would be safe as long as you did not advertise on your local cable TV franchise...

 

[guitarslinger]

Tele's and Stratocasters certainly qualify as iconic designs. But look back even further. What if Gibson had been able to make the same argument in 1939 and succeeded? Would we then be unable to play a cutaway guitar that wasn't made by or licensed by Gibson? No Guild's with a cutaway!? The popularity of "look-a-likes" or "fakes" is, at least in part, a product of Fender's own corporate philosphy of building stuff that looks like something it's not. In addition they profit from licensing their products to those who are doing the same thing. They've helped popularize the trend and profited from it. I wonder if they would have named Leo in the suit (if he were still alive) for his work at G&L.

 

[chazmo]

[ ... ] As an employee of H this was "wrong" for me and I eventually walked. However as a stockholder of M this is exactly what I wanted because it offered a better return on my investment. My capitalist/libertarian streak has to accept that the owner's rights need to prevail here. [ ... ]

I guess this is the crux of it, frono. You state it eloquently.

This is the excuse that the big companies always use when they consume and destroy little companies. It's the same excuse that the liquidators ("investment bankers") of the '80s used to use. Really, when is a company worth more dead than alive? It's not so obvious to me. There's something wrong with owner's rights here, but I can't quite put my finger on it.

[biggerVeer] I'll tell you what comes of this ... companies that are "too big to fail." That really burns me up. Corporations should not require bailouts from the government (i.e., my pocket) when what they've done is gobble up the competition to get where they are. It's just wrong. Sorry if that's a political statement; it's how I feel. Again, something is wrong.[/biggerVeer]

 

[jp]

[biggerVeer] I'll tell you what comes of this ... companies that are "too big to fail." That really burns me up. Corporations should not require bailouts from the government (i.e., my pocket) when what they've done is gobble up the competition to get where they are. It's just wrong. Sorry if that's a political statement; it's how I feel. Again, something is wrong.[/biggerVeer]

Don't get me started! That's absolutely the problem Chaz. This country's economic system is a minefield of contradictions--classic cognitive dissonance. On one hand big corp boards of directors push for deregulation and on the other hand, their greed and lack of corporate responsibility is supposed to be propped up by a taxpayer funded safety net. It's seems pretty black and white to me. :evil:

 

[chazmo]

Tele's and Stratocasters certainly qualify as iconic designs. But look back even further. What if Gibson had been able to make the same argument in 1939 and succeeded? Would we then be unable to play a cutaway guitar that wasn't made by or licensed by Gibson? No Guild's with a cutaway!? The popularity of "look-a-likes" or "fakes" is, at least in part, a product of Fender's own corporate philosphy of building stuff that looks like something it's not. In addition they profit from licensing their products to those who are doing the same thing. They've helped popularize the trend and profited from it. I wonder if they would have named Leo in the suit (if he were still alive) for his work at G&L.

I agree about the iconic design thing. Had these companies protected their designs at the time, they might not be such icons today!

The interesting thing (from an intellectual property standpoint) is that all musical instrument development is based on what came before. I mean there's always fringe products which may be revolutionary, but all the mainstream stuff is evolutionary. I'm not talking about just guitars here... But, e.g., can Martin claim that every acoustic dreadnought is a theft of their design? I mean, to some degree it is, but where do you draw the line? In the late '70s, the American guitar makers were getting pissed off at the Japanese for building clones. In these cases, you're talking about very close look/feel (intentionally). I think Norlin (Gibson) threatened Hoshino (Ibanez), and thus ended the lawsuit era. I don't even think it went to court (maybe I'm wrong about that).

Competition is what makes greatness out of goodness. If you stifle it by burying it (or gagging it with lawsuits), then I think you end up with lesser products in the marketplace. Just my opinion.

 

[count_scrofula]

Well, it's bee years since my IP classes in law school, but what the heck...

There are differences between trademark and patent. If someone today introduced the first cutaway guitar, that would be a very nice patent! Iirc fender has successfully defended some aspects of the guitars in questions as trademarks/trade dress, in particular the headstock. A few folks mentioned fender "sleeping" on defending the design, which certainly is a factor...the ridiculous lawsuits by the monster morons are great examples. Even though they know full well they are going to lose the challenges to the use of "monster" in areas not related to cables, it helps insure they could never be accused of relinquishing the mark.

There was also a rash of guitar mark design litigation back in the 70s/80s...remember the Tokai "Love rocks" LP clones? A few years ago there was a korean knockoff rick clone called a "riff" that was sold a number of places including jc penneys...It as a fairly nice Rick 330 clone and didn't last long when john hall and the rick lawyers attacked. Rick is so zealous in defense of their marks that they regularly search ebay and shut down private sellers of old rick clones.