Fender appointed a new CEO recently, and that CEO has decided to unleash the lawyers. The company has sent cease and desist letters to a number of guitar manufacturers that are either in the EU, or sell product in the EU, that make S-style, or Stratocaster-style, guitars. It was done on what may be very sketchy legal ground. Others have covered the saga in more detail. I’m here to talk about some of the legal issues. And I’ve seen people talking about things that are, as I understand them, actually wrong.
A Disclaimer
I am not a lawyer, I just play one on the Internet. I am not an expert on contract and intellectual property law in a common law setting. I am, however, an informed amateur, having been involved in drafting and reviewing contracts, trademark applications, and patent applications. This does not constitute legal advice. If you have questions, consult a real lawyer, because that isn’t me.
A Shaky Foundation
Fender acted shortly after receiving a default judgement in a German court. The lawsuit involved Fender claiming they had a copyright on the Stratocaster body design. This was their basis for suing a company in China for violating that supposed copyright. The defendant, however, never showed up or provided a statement of defence. As such, the court had no real choice but to grant default judgement. This is normal in a civil suit: if the defendant doesn’t show up, then the court awards the plaintiff judgement.
However, to use this to claim that they now have a copyright on the Stratocaster body shape is a pretty big stretch. Why? Because the judge didn’t rule on the merits of Fender’s case. The court followed procedure. A default judgement is generally not considered a “win” in the sense that the party that showed up was right. They “win” because they were in the courtroom and the other party wasn’t.
No Actual Review of the Merits
There was no opportunity for discovery. No evidence was presented for examination. There were no witnesses called to be questioned and cross-examined. There was no expert testimony. The judge did not hear any citations of prior law or rulings. Neither party presented any sort of case to back up their claim.
Again, the default judgement was entirely procedural. It cannot be considered a statement or position on the merits of Fender’s claim. Thomann, a German retailer and owner of the Harley Benton brand, is taking Fender to court after having received one of these cease and desist letters.
Their goal is to force Fender to defend their claims, and present evidence. It will result in a discovery process, where information will have to be disclosed. There will be evidence, witnesses (expert or otherwise), and an opportunity for them to be examined. It does not appear that Thomann is interested in settling this case.
This is Civil Law
Any before anyone tries to claim that the ruling is wrong because the defendant should be considered “innocent until proven guilty”, I have some bad news. This is a civil case. The rules are different.
Both parties are required to present their case and argue why they should prevail. As such, the defendant must provide an affirmative defence. The burden isn’t just on the plaintiff. It falls on the defendant too.
It also isn’t about guilt or innocence. No one is “at jeopardy” here, with fines, jail time, and a criminal record all potentially resulting. There isn’t a “conviction”. The judge finds in favour of one party or the other. If only one of the two parties shows up, they win. Otherwise, the judge (or jury) uses a standard called “preponderance of evidence”. Which side presented more compelling evidence to support their case. It is not about “reasonable doubt”.
Some Misinformation
I have heard at least one person on Youtube claim that the German court’s ruling does not have effect outside of Germany. For some types of intellectual property claims, this would be true. Patents, for example, are only enforceable within the borders of the country that issued them. Copyright and trademark, however, are a different story. They do, in fact, apply internationally.
Germany, the United States, and about 180 other countries have signed something called The Berne Convention (the full name is The Berne Convention for the Protection of Literary and Artistic Works). This convention was first drafted in 1886, and went into effect in 1887. It has been updated from time to time, and still carries legal effect. The gist of the convention is that all signatory nations will recognize copyrights from the other signatory nations. It allows people from one participating country to sue someone from another signatory country for infringement of copyright or trademark.
This means that Fender, an American company, can hypothetically sue a Swedish company for violating their copyright. Fender could use a proper precedent-setting judgement from a German court to bolster their case. This would affirm that Fender holds a copyright in Germany, and therefore essentially has it in all the other nations that have signed the convention.
Some US Protection, But Not Comprehensive
Fender has tried to protect the Stratocaster design, with limited success. Fender did receive a design patent (US Design Patent Number 164,227) which was granted on August 14, 1951. Obviously, that patent has long since expired. As a US patent, it only had protection in the US. Any international patents would also have expired, if they existed.
The company was denied a trademark for the Stratocaster design in 2009. The reasoning was that the design had become generic. This is supported, to some degree, by two things. First is the long timeframe between when the design patent expired (which would have expired in 1971) and when the trademark application was submitted. During that time, the design would have fallen into the public domain, absent Fender making reasonable efforts to protect it. If you don’t make an effort to defend a trademark, you lose it.
With the patent expired, and the trademark denied, that would only leave copyright as the sole way to potentially protect the design. However, legal events would conspire against that method as well.
Not helping Fender is a 2017 US Supreme Court ruling against copyright applying to some “useful articles”. The case was decided March 22, 2017 (Star Athletica L.L.C. v. Varsity Brands, Inc.). Both companies make, among other items, cheerleading uniforms. They have hundreds of copyrights on design elements of the uniforms (colours, stripes, chevrons, etc.) . Star apparently began making uniforms that Varsity believed were similar to their own. Varsity sued Star for copyright infringement.
Ultimately Varsity won, but in their ruling the Supreme Court outlined the two tests that were required for copyright to apply to a “useful article”. The first test was “separability”: can the design be separated from the article and still be perceived? If it can, is the design, absent the article, something that is entitled to copyright protection? In the case of the uniforms, the design was separable and could stand on its own without the clothing.
Not Protectable or Protected
This ruling, though, could be seen as invalidating any kind of claim to copyright by Fender. The shape of the Stratocaster body is the entire design. There is no separate, identifiable design without the physical body.
While this is a US Supreme Court ruling, it could be argued that the Berne Convention isn’t just about recognizing copyrights across all participating nations. It could also be argued that not being eligible for copyright would also apply, absent some significantly different law in another country. Essentially both the protection and it’s inverse, no protection, would both apply.
The result would seem to be simple and straightforward: once the design patent issued by the US Patent and Trademark Office expired, the design passed into the public domain. Patents grant creators a temporary monopoly on their idea or design. Once that monopoly period expires, it can never be patented again. The inability to receive a trademark, and being ineligible for copyright further supports the assertion the design is in the public domain. Thus, if the design is public domain in the US, it should by extension be in the public domain everywhere else. This was never tested in the German court in its default judgement.
Setting The Brand on Fire
Considering that the new CEO, Edward “Bud” Cole, has spent his career expanding the presence and reach of brands such as LVMH, Pernod Ricard, and Fender, this is a massive self-own. Fender is one of two legacy brands that have been under some fire for product quality and inflated prices, so this does not strengthen the brand, it weakens it. As legendary guitars like the Telecaster, Stratocaster, Jazzmaster, and Mustang get further and further out of reach financially, others are filling that gap. Fender doesn’t like it, but here’s a reality check: Fender doesn’t make instruments that compete in some of those price points. Moreover, players aren’t just looking for instruments at a good price, they want instruments that are also well-built. The quality on some of Fender’s most expensive guitars has been rather hit-or-miss.
What isn’t helping are comments from Cole regarding this fiasco. He has, in some cases, misrepresented what Fender is doing. For example, at a dealer’s meeting, he claimed that Fender is trying to reach out to the Strat clone makers, and work with them. He also claimed that Fender has not asked anyone to recall instruments or destroy stock they already have. These are in direct contradiction to the wording of the letters sent. The letter explicitly demands companies recall instruments and destroy them along with unsold stock. The letter makes no effort to indicate Fender wants to work with them. At this point, Fender’s CEO is nearing rock bottom, and breaking out the dynamite to start blasting.
Can They Fix It?
That is a good question, and one without any clear answers. Some have called for Bud Cole to resign over this, and it may come to that. It depends on how the company’s board feels about all this.
Fender could try to withdraw all the cease and desist letters. This would kneecap the Thomann suit. But it avoid the likely loss for Fender’s claimed copyright. Fender has erased a lot of goodwill that has been built since 1946. Players have been complaining more frequently about product quality and price. Acting like an asshat just makes things worse.
This won’t destroy Fender. But it will cause some financial harm in the short term. Contrition and a “sacrifice” (pushing out the new CEO) could help at least stop the bleeding. It would take the spotlight off the company. But they have a lot of work ahead of them to rebuild their brand and reputation.