Thursday, January 6, 2011

Everybody's Getting Sued!

I'm sure most of you have heard of this lawsuit by now, and with talk of it becoming more frequent within the Warhammer community, I felt like throwing my two cents in.

The background is thus: Other companies and individuals (Chapterhouse Studios and Jon Paulson) are producing kits bearing Games Workshop's trademarked and copyrighted iconography and terminology; GW alleges that this is causing them "irreparable injury" and wants to put them out of business and receive compensation for damages and court costs.

In the past, GW would typically issue a cease and desist order to any company or individual who produced extra bits for their gaming ranges, and that would be the end of it. This time however, they've requested a civil trial by jury (I'll go into the significance of that later) for trademark and copyright infringement.

As with the cease and desist orders, this lawsuit smells like GW trying to drive legitimate competition out of business by using the courts instead of offering a superior product for which gamers are obviously willing to pay. The very existence of Chapterhouse and Paulson Games is proof of this demand. I think the lawsuit also serves as a warning. A ritual execution, sort of a head on a pike outside the Nottingham office of GW as a warning to any who would use their intellectual property without their permission.

Also worth bearing in mind is that there are only a small handful of products that directly copy anything either GW or Forge World produces, the remaining products neither GW or FW makes, which makes GW's claim that the defendants' operations on the whole are infringing on GW's (c)'d and TM'd works almost total bogus, and any "injury" sustained by CH and Paulson doing business certainly isn't "irreparable."

Other companies have similar hangers-on. Apple and Nintendo being two of them. Third parties often use copyrighted works of the aforementioned companies to produce products like "IPod case" and "Wii controller grip." Yet, lawsuits aren't brought against these companies. I think that Apple, Nintendo, and a slew of other companies have realized the value third party accessories have to building interest in these companys' products.

If Paulson and CH are doing anything, it's filling a niche demand, and making money that GW doesn't want to make. If GW wanted to make this money, they could very easily produce kits of far superior quality through FW and trample their competition. Making resin casts isn't that difficult, I do it myself using the same procedure FW does. Resin casting is very, very labor intensive, but the most difficult process is preparing the original sculpt itself. After that, it's just a matter of creating the molds and getting the finished casts to market. FW has recently outsourced a lot of its labor to China, and the lead time on many products has been cut in half. If filling consumer demand instead of maintaining a tidy monopoly was truly their concern, FW could very easily outsource all of the labor to China, turning their office in the UK solely over to the creative process.

In short, GW should be using the small garage businesses as a divining rod to gauge demand within the Warhammer community and offer a superior product. This would serve to secure their intellectual property, eliminate competition, make money, and fill the voracious hunger us gamers have for quality kits, making us happy and willing to spend more money on GW products.

One of the issues brought up by GW is the case of CH implying that they were a part of GW, or at least working for them. CH uses GW trademarked terms in their product descriptions quite frequently, and as far as I noticed, they didn't have a happy little disclaimer indicating that they have no affiliation with GW. Basically, they were asking for it, and it serves as an interesting case of someone not covering their ass. Again, I feel that there's no need to sue them, a simple demand that they stop using copyrighted and trademarked terminology and assert their independence from GW should have sufficed.

What line of logic GW used when dragging Jon Paulson into this is beyond me. Paulson designed CH's Tau Empire super-heavy walker for them, and therefore, he's getting dragged into this. Does that mean that if I choke someone to death with a Space Marine, is Jes Goodwin going to jail with me? Certainly not, but as I've opined previously, this is probably just an excuse to put Paulson out of business.

There are some other peculiarities in the case that my good friend pointed out to me. One of which is the fact that GW has demanded a trial by jury. This may not seem like a big deal, and it is a constitutional right after all, but in this case it's nothing short of a colossal dick move. Trials by jury increase the price tag of the trial by about 33%, and considering that GW is demanding reimbursement for court costs from the defendants who are just some guys working out of their garages, the jury demand is almost definitely a scare tactic to get CH and Paulson to settle, rather than try to fight it in court.

Copyright and trademark cases are pretty interesting. Typically, unless you've made an exact copy and sold it for profit, you're not liable for damages. Even a slight modification can get you off the hook. However, like most civil cases in the US, the outcome of this case is going to depend largely on how many lawyers at what price each side can throw into the fight (if it even goes to court).

To conclude, I feel that GW is taking advantage of its ability (and the defendants' inability) to pay the costs to judiciate competition out of business, rather than competing with them honestly for consumer dollars. My prediction is that this will be settled out of court and CH and Paulson will fold.

Hopefully, that isn't the case.


Tylermenz said...

Sorry, but i need to play devil's advocate here.

I would not compare the Chapterhouse/GW relationship to one like Apple/Case Makers. When looking at An Ipod case vs. an Ipod there are major construction and fabrication differences. For apple to start making full lines of cases would require completely different production facilities and major capital investments. For GW to start a line of bits would require...almost not capital investment beyond design, and in fact they already at one point had the bits infrastructure and have a minor one now.

The niche market that chapterhouse is in right now falls firmly under GW's larger market. GW sells Chapter Specific shoulder pads on its website, and chapterhouse is selling chapter specific shoulder pads, using GW terms and iconography...sounds like a ripoff to me.

Legitimate competition to GW is not chapterhouse, its privateer press, mantic, etc.

Irrepreable Damage is actually really easy to see and justify. GW has already shown through bits packs that it is willing to make chapter specific packs. Chapterhouse is directly taking future sales away from GW. Even if they were to change all the names now, everyone would still refer to all the packs by their original names.

Also, by not stopping chapterhouse now, GW essentially gives a market that is rightfully theirs to chapterhouse. Customers will become loyal to chapterhouse and gw would be unable to sue chapterhouse if it came out with a similar product.

The idea of GW using small businesses as a divining rod is completely right. That IS what they are doing. They have seen that it works and that there is a market for it, so chapterhouse is only taking away profits that in the future could be GW's.

Lastly how is taking terms and designs (which a company has spent years developing and nurturing into a profitably)and creating items from them and using those terms to sell for your own gain competing fairly? If they really were fair they would be dreamforge, or another company with its own IP.

Myles said...

I think the comparison is appropriate, especially considering that Apple sells cases iPods from their online store. Investment capital is a big deal for how a company moves forward, but in terms of copyright court, it's largely irrelevant. And the low cost, I think, only supports my point that it would be more beneficial, overall, to GW to make superior products instead of suing small-time companies.

I agree that specific parts of CH's market fall under GW's copyrighted IP, and those products that conflict specifically, GW absolutely has a right to try to eliminate through the courts. The remainder of the merchandise bears such tenuous resemblance, I think GW would have a more solid case trying to sue makers of Russian heraldry for using double-headed eagle motifs.

Again, I disagree. Although, I am curious how PP and others would respond to third parties making add-ons for their models.

I don't see the irreparable part, or even damage part outside the bits that directly reproduce GW copyrighted iconography, which should be taken down, and shouldn't have been made in the first place (CH was asking for it, there). Half of the shoulder pads, GW had never produced, and the iconography isn't copyrighted.

The argument that it affects future sales works great in court, unfortunately, but it's an excuse that's lamer than the BA Razor-spam. To me, that sets the precedent that I can sue someone for making something I don't, claiming that I was going to get around to it, sooner or later. Like I said, if GW wanted to make money on stuff like CH makes, they'd be doing it. Quite a bit better than CH, I'd bet. Part of the suit is CH's specific use of copyrighted GW terms, if they change the names the products are sold under, that part of the lawsuit is irrelevant, regardless of how customers refer to them.

Again, I disagree. GW still holds copyrights to their products, and they have the facilities to produce any of what the smaller garage businesses produce, in greater quantities, with better quality and better marketing. CH represents a third party maker of add-ons, only a couple of their products can stand alone, making the purchase of many CH products useless without the core GW products. Companies like CH represent a tiny, tiny fraction of the over-all community, and loyalty to these companies, to me, is still loyalty to GW.

I agree that GW is using garage companies as an indicator, to a point. By that I mean, if CH or any others put out a Tyranid drop pod, Forge World should get their design team on making the exact same product. Customers obviously want it and are willing to pay for it, and I know that I would be much happier with a FW resin kit or even a GW plastic kit than having to risk doing business with a third party. On the other hand, to many gamers, a product from a third party is better than no product at all, and who knows if GW will ever produce that model at all?

Taking terms and designs isn't fair competition, it's copyright infringement. My point is that a large portion of CH and other garage companies products don't conflict with GW's IP and can be used for other 28mm wargames. CH spent the time to develop a product that nobody else sells (direct copyright infringing products non-withstanding), and are filling a niche. If GW doesn't want to service their customers' demand, why shouldn't CH?