Fender pulls a Cracker Barrel

#1

volinbham

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#1
Figured this story fits better in the Pub than the Poli forum - move if needed.

Fender Musical Instrument Company is at the center of a self-made PR fiasco. (WARNING: long post ahead)

The short-version first: Fender claims a court in Germany granted them copyright status for the shape of the famous Stratocaster guitar. Dozens of guitar companies from cheap Chinese knock-offs to high end boutique brands have used the "S-style" for decades. Fender sent a cease and desist to most of these companies that sell into the EU with extreme demands such as $250,000 fine, destroy all inventory and pull inventory back out of the distribution channel and destroy it. There was no prior communication from Fender to these companies.

The guitar-o-sphere has reacted as expected - outrage at Fender. Several of the most prominent Youtubers (millions of followers) have sworn off Fender and the forums are full of boycott calls. Virtually no one is defending Fender on this extreme move even though some acknowledge that protecting IP in general is a reasonable tactic.

The backstory: Earlier in the year Fender sued a Chinese (Ali Baba type) manufacturer for IP violation. The action was in a German court (I guess the Chinese company was selling into the EU). The defendant did not show up to the hearing and Fender won on default. This is an important point because the merits of whether the shape was copyrightable were never technically decided.

In the early 2000s, Fender tried to trademark the shape but lost in court (apparently only the headstock shape was protectable) and it was determined the shape was "generic" and public domain. That was a US ruling but presumably was accpeted that trademark was not available.

This tactic was to claim the design was "artistic expression" thus copyrightable. They argue some BS that Leo Fender designed it to mimic the shapes of a woman and that made it applied artistic expression. This claim has not been tested but Fender is using the default judgement to proceed as if it is copyrighted. It seems their bet is the boutique makers will not have the resources for a long court fight and the cheap knock off companies will alter designs or make something else or just not sell into the EU.

Curiously, it's not clear if Fender went after PRS (Paul Reed Smith), Yamaha and a couple other very large companies that also make S-style guitars. Perhaps they avoided them to avoid them saying let's go to court. Notably, PRS makes a dead ringer for the Strat and it's generally considered to be better.

Where Fender (in my and other's opinion) really screwed up is the severity of their actions - no prior contact, extreme monetary demands and demands to destroy inventory. The last one really pisses off the playing community because many of these builders are making handmade instruments that cost many thousands of dollars - the thought of destroying hand crafted products is pretty galling.

All this has gone down in the last week. The word is just now spreading and it's increasingly negative about Fender. I'm a huge Fender fan but it has me reconsidering buying any new products from them.

Interestingly, the guy from Suhr (they make a high-end S-type guitar) says "if Fender made all the Strats people wanted there wouldn't be a market for mine".

Plenty of articles about it out there, here's a recent one:

 
#2
#2
One of the small builders - LSL - has a Go Fund Me to help with legal fees if you have any interest in getting into the fight.
 
#4
#4
Figured this story fits better in the Pub than the Poli forum - move if needed.

Fender Musical Instrument Company is at the center of a self-made PR fiasco. (WARNING: long post ahead)

The short-version first: Fender claims a court in Germany granted them copyright status for the shape of the famous Stratocaster guitar. Dozens of guitar companies from cheap Chinese knock-offs to high end boutique brands have used the "S-style" for decades. Fender sent a cease and desist to most of these companies that sell into the EU with extreme demands such as $250,000 fine, destroy all inventory and pull inventory back out of the distribution channel and destroy it. There was no prior communication from Fender to these companies.

The guitar-o-sphere has reacted as expected - outrage at Fender. Several of the most prominent Youtubers (millions of followers) have sworn off Fender and the forums are full of boycott calls. Virtually no one is defending Fender on this extreme move even though some acknowledge that protecting IP in general is a reasonable tactic.

The backstory: Earlier in the year Fender sued a Chinese (Ali Baba type) manufacturer for IP violation. The action was in a German court (I guess the Chinese company was selling into the EU). The defendant did not show up to the hearing and Fender won on default. This is an important point because the merits of whether the shape was copyrightable were never technically decided.

In the early 2000s, Fender tried to trademark the shape but lost in court (apparently only the headstock shape was protectable) and it was determined the shape was "generic" and public domain. That was a US ruling but presumably was accpeted that trademark was not available.

This tactic was to claim the design was "artistic expression" thus copyrightable. They argue some BS that Leo Fender designed it to mimic the shapes of a woman and that made it applied artistic expression. This claim has not been tested but Fender is using the default judgement to proceed as if it is copyrighted. It seems their bet is the boutique makers will not have the resources for a long court fight and the cheap knock off companies will alter designs or make something else or just not sell into the EU.

Curiously, it's not clear if Fender went after PRS (Paul Reed Smith), Yamaha and a couple other very large companies that also make S-style guitars. Perhaps they avoided them to avoid them saying let's go to court. Notably, PRS makes a dead ringer for the Strat and it's generally considered to be better.

Where Fender (in my and other's opinion) really screwed up is the severity of their actions - no prior contact, extreme monetary demands and demands to destroy inventory. The last one really pisses off the playing community because many of these builders are making handmade instruments that cost many thousands of dollars - the thought of destroying hand crafted products is pretty galling.

All this has gone down in the last week. The word is just now spreading and it's increasingly negative about Fender. I'm a huge Fender fan but it has me reconsidering buying any new products from them.

Interestingly, the guy from Suhr (they make a high-end S-type guitar) says "if Fender made all the Strats people wanted there wouldn't be a market for mine".

Plenty of articles about it out there, here's a recent one:

Seems like a huge overreaction. Sending cease-and-desist letters for possible IP infractions is common. They often lay out draconian penalties in an attempt to influence subsequent negotiations that often end up involving payment of licensing fees. Also, a company is not required to enforce IP claims against all companies at once.

I don't see any correlation to Cracker Barrel at all. This is standard business IP stuff.

Could Fender possibly alienate part of its customer base? Sure. That's a ridk. Artists are a wierd lot that often aren't very business savvy.
 
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#5
#5
What's less than a blip on the radar?

Also, WTF does this have to do with Cracker Barrel?
 
#7
#7
Seems like a huge overreaction. Sending cease-and-desist letters for possible IP infractions is common. They often lay out draconian penalties in an attempt to influence subsequent negotiations that often end up involving payment of licensing fees. Also, a company is not required to enforce IP claims against all companies at once.

I don't see any correlation to Cracker Barrel at all. This is standard business IP stuff.

Could Fender possibly alienate part of its customer base? Sure. That's a ridk. Artists are a wierd lot that often aren't very business savvy.

I'll take the last comment first - I agree that artists often aren't very business savvy but that's a bit irrelevant. If artists rebel against the brand right or wrong then that trickles through to the buying public. The influencers have influence. Which leads to the Cracker Barrel likeness - a business decision causes backlash among people with a big microphone and it trickles into the marketplace.

On the IP issue - I also agree that CD letters are common practice. Gibson went through this though not nearly as aggressively and they too suffered a market penalty. One difference is that Gibson had a long history of protecting it's IP. Fender essentially let the market make these products for 30-40 years.

All I can say is that as a Marketing person I live by the saying "a customer's perception is a marketer's reality". It may have been a reasonable IP play (though it is extreme in this industry) and it may be an overreaction but the reaction is what it is and the consequences will be real. Fender could have distinguished between cheap knock-offs and high-end boutique brands with different strategies but they went scorched earth and the initial reaction is bad for Fender. It doesn't help that it's new ownership at Fender (private equity deal) and there's a decided sentiment against perceived corporate greed. Again - deserved or not; the reaction is what the reaction is.
 
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#8
#8
Seems like a huge overreaction. Sending cease-and-desist letters for possible IP infractions is common. They often lay out draconian penalties in an attempt to influence subsequent negotiations that often end up involving payment of licensing fees. Also, a company is not required to enforce IP claims against all companies at once.

I don't see any correlation to Cracker Barrel at all. This is standard business IP stuff.

Could Fender possibly alienate part of its customer base? Sure. That's a ridk. Artists are a wierd lot that often aren't very business savvy.
There’s already a movement from players to boycott Fender. I don’t have to because I’d never waste money on their crap again.
 
#10
#10
I have way too many of their products but I'm satisfied with most of them.
I’ve got my share, but most of them are for nostalgia. The fact is that the other boutique companies make better quality instruments. Better materials. Better fit and finish, and better playability. My only interest in Fender, at this point, would be a vintage instrument. I’d never buy a new one when compared to the myriad of offerings out there. It’s sad wha happened to G&L because that’s a good example.

I get going after the Chinese crap. Domestic Boutique builders like Bluesman Vintage? Come on.
 
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#11
#11
Just an update if anyone is interested. The backlash continues with all the big influencers trashing Fender. Fender took two weeks to respond and they did so by giving a statement to a guitar magazine that carries many of their ads. They say it's all a misunderstanding and are surprised at the social media backlash (idiots if they didn't see it coming). They also claim the social media comments get it wrong but even exaggerate that with red herring claims.

The Wall Street Journal did a story on Thursday (haven't read it yet) and Fender declined comment - only comments have been in statement to mag referenced above.

Interestingly, it has come out that PRS (Paul Reed Smith) was one of the companies that received the C&D letter. PRS has deep enough pockets to defy and go to litigation if it comes to that and are generally seen to have better quality across multiple price points where they compete directly with Fender.

Lots of speculation why Fender would take such a PR risk: 1) their biggest competition is their own used inventory - basically 60 years of guitars that are basically the same; at least in the US, Europe and Japan, 2) stemming from this, the used inventory doesn't exist in emerging markets of China, India, etc but the competitors that are "violating the copyright" also do business there with what can be seen as better quality/better value products, 3) new CEO and private equity mentality may have thought this was the quick way to profit growth as opposed to looking at product line for improvement.

More to come I'm sure.
 
#13
#13
Maybe it's just me, but I see no likeness of an "S" in those guitars.

The 1st, last, and only guitar I ever owned in an attempt to learn was a rose wood accoustical canadian guitar with superb sound and quite affordable when I bought it. However, it was apparently offended that I was trying to learn to play and did nothing for me.

I'm almost positive it was a Seagull, as they were not terribly long in business when I bought mine. Also seem to still be one of the highest rated budget acoustical for upstarts and artists still on a budget. Highly rated for sound, build quality, and cost.
 
#15
#15
Maybe it's just me, but I see no likeness of an "S" in those guitars.

The 1st, last, and only guitar I ever owned in an attempt to learn was a rose wood accoustical canadian guitar with superb sound and quite affordable when I bought it. However, it was apparently offended that I was trying to learn to play and did nothing for me.

I'm almost positive it was a Seagull, as they were not terribly long in business when I bought mine. Also seem to still be one of the highest rated budget acoustical for upstarts and artists still on a budget. Highly rated for sound, build quality, and cost.

the S refers to Stratocaster rather than the physical shape (wasn't sure if that's what you were suggesting). Fender wants to control the "S"tratocaster shape.
 
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