Apparently, Fender has sent a cease & desist (C&D) to Cool Old Guitars (COG) in Australia. They are making extraordinarily broad claims about COG misusing Fender’s trademarks. The problem? From what I can see, COG is doing nothing wrong.

A Disclaimer

I am not a lawyer, I just play one on the internet. What I write here does not constitute legal advice, nor is it a legal opinion. I am, at best, an experienced amateur.

The Claims

Fender is claiming a couple of things. First, they are saying that COG is using Fender trademarks, even though COG has no formal relationship with Fender, and is not a Fender distributor. Fender says that this is not allowed.

Second, they are saying that COG is misusing the Fender trademark and causing customer confusion with COG’s search function. The claim is that a search for “Fender Stratocaster” turns up a number of S-type guitars that are not from Fender.

The Problems

The first claim (that COG has no relationship with Fender to allow them to use Fender’s trademarks) is pure rubbish. COG does not have to have a formal relationship with Fender to use those words, because their use is about search. Moreover, COG only deals in used product, and Fender cannot legally put any limitations on what happens to their product after it is sold. The only exception is to enjoin the initial buyer as part of the original sale contract. But that contract does not apply to anyone that the original purchaser sells the product to. It’s known as first sale doctrine: the manufacturer only has control the first time their product is sold. After that, they no longer get to impose any terms on subsequent buyers or sellers.

The key comes back to “search”, which also goes to the second claim. COG is allowing people to use the formal and informal use of words to find items on their store. Trademark law does not apply in this case. If it did, no search engine could ever be in operation. In the same way that I can ask another person in a music store “do you have any Strats or something like them?”, an individual can type that same question into a search bar. COG is allowed to provide results, including links to Strat-like guitars, because these searches are not “commercial use” in the sense it applies in other situations. These are words used by people to describe something. Fender cannot put limitations on that.

The only way Fender might be able to make this argument stick is if they can show they have sent a C&D to every company operating any kind of a search engine. Moreover, Fender’s parent company owns Reverb, a used music gear site. It, too, would have to do the same filtering. Unless, of course, someone took the time to craft a licence agreement between the two companies. Having the same owners isn’t sufficient. Basically, Fender has to show they have made significant efforts to protect their trademark. If they look even slightly lax, they could lose it entirely.

Public Inconsistency

Fender’s new CEO has claimed that people calling guitars “S-type” is “whitewashing the issue”. In a presentation to distributors and retailers, he said that they should be calling these copies “Stratocasters”. But their C&D says to stop calling them Stratocasters or they’ll sue. Which is it?

The CEO can’t say “well, my remarks are just my personal opinion”. No, sir, they are not. Not in that context. You were not speaking as “Bud Cole, individual”. You were speaking as Edward Cole, Chief Executive Officer of Fender Musical Instruments Corporation. Those remarks were you speaking on behalf of the corporation, not on behalf of yourself. Your statements represent the official opinion and position of the company.

The company cannot have it both ways. Those statements could be (loosely) interpreted to mean that Fender is admitting they actually don’t have the trademark anymore. So suing people over a trademark that you publicly walked away from would be illegal. Fender and their CEO need to pick a lane, and stay in it.

Too Little, Too Late

COG, or any other retailer receiving a similar C&D, can argue that Fender waited to long to hope to enforce these terms. Why? Because Fender’s last meaningful attempt to protect trademarks was back in the early 1970’s. And it does not appear they’ve done anything since. Defendants could push to have the trademarks revoked because Fender didn’t do enough to protect them. That would mean they now fall into the public domain. Just ask Bayer how that works, since they lost protection for the word “Aspirin” decades ago for not defending it. And yes, Aspirin is the generic name. The formal name is acetylsalicylic acid or ASA.

This is the reason why Disney has, for decades, been ruthless in going after anyone for using Disney trademarks. It may seem mean, or greedy, but the reality is simple: protect it or lose it. Anyone who holds trademarks that have value know that if they get lax, then it’s over.

To Summarize the Defence

A defence would have, as I see it, the following main arguments:

1. Fender waited too long to defend these trademarks, and as such, should not be entitled to protection.
2. Use of trademarks for the purposes of search would fall within fair use. They are not being used for purely commercial purposes.
3. The new test, of a “moron in a hurry” would clearly demonstrate that a reasonable person would find no confusion in terms of how these relate to Fender. Further, it does not demonstrate, or even imply, that Fender is involved with or endorsing any aspect of the business. The names in this case are simply technical terms that apply to the items in question.

You Can’t Litigate Marketshare

Fender seems to be doing this in a vain attempt to shore up sales. All they are doing is driving customers into the arms of their competitors. Even if all of the recipients of these letters complied, the damage is already done. Fender will have potentially buried their brands, and done all the others a huge favour. Certainly, the names Stratocaster and others won’t disappear overnight. But they may, over time, be relegated to the dustbin of history. Think that can’t happen? Well, no one calls making a photocopy “xeroxing” anymore, unless you’re old enough. I grew up with the term, and I haven’t used it in decades.

The issue, based on what I’ve seen in the music world as an enthusiast, is that Fender has damaged its own brand through its own actions. The quality of their instruments (real and perceived) has declined, and as a result, made room in the market for superior product. And it isn’t just the quality. It is the price. Fender has continued to increase prices without making any material improvement in terms of quality.

There’s Also a Risk

If it turns out that Fender’s trademark is revoked because they didn’t do enough to protect it, and these actions are too late, now Fender has a problem: antitrust. If Fender is trying to use their dominant position in the market to harm competitors, that could open them up to governments or courts ordering them to pay fines, and to possibly be divested from their current parent. Anticompetitive actions that harm competitors, stifle innovation, and increase consumer costs, are highly frowned upon in many nations around the world.

It doesn’t appear that Fender or its management care about this. They seem to be determined to not just set fire to their brand equity, they want to completely vaporize it. Nothing they are doing is going to help their business financially. This is all money spent to reduce how much they can sell. There are few Youtubers I follow that have made it clear that they won’t buy another new Fender product. None have said they will dispose of what they have. But they won’t be buying any new stuff. Many won’t be reviewing new Fender product. The consensus appears to be to basically render Fender invisible on their channels.

Can Fender Fix This?

I don’t believe that Fender has passed the point of no return, but they are fast approaching it. There are some immediate steps to take, and they will be extraordinarily painful.

Step one is to walk their new CEO to the door. He’s the public face of this PR disaster, and he will have to wear it. Fender cannot hope to fix this by keeping the person who appears to have started this mess around. Any apologies he might make (if he felt so inclined) will be to help him get his next job. His time at Fender is done.

Step two is to withdraw all of the C&D’s they’ve sent. Admit that they misinterpreted what the ruling in Germany actually meant from a legal standpoint (and perhaps publicly fire some of the lawyers involved).

Step three (this is the painful one): put the Stratocaster, Telecaster, and other names formally in the public domain. Make it clear that the company is going to compete on quality, features, and price. The names have already gone past any control Fender might have had. This is Fender giving back as part of the mea culpa.

Step four is to build better instruments. Pay attention to quality. Bring prices back into some semblance of normal. They don’t have to match the copies. But the prices are too high relative to the products being sold. Making them better will allow a premium price to remain. But it can’t be an outrageous price.

Short-term Pain for Long-term Gain

These steps are going to cost money. They are going to hurt Fender. But it will be a short-term hit. People won’t necessarily forget what happened, but they will also remember a meaningful apology and an actual turnaround in improved product.

Continuing down their current path has the very real risk of damaging Fender permanently. The value of the brand is plummeting, and will continue to do so. The private equity owners will discover that they now own something of greatly diminished value. Do they really want to own a brand that becomes another Altec Lansing? Aiwa? Kenwood? A brand that used to be one of the top names now applied to cheap, disposable product? That could very well be the fate of Fender if they keep this up.