Bloomberg Law
Free Newsletter Sign Up
Bloomberg Law
Welcome
Go
Free Newsletter Sign Up

Gibson’s ‘Pyrrhic’ Verdict Leaves Guitar-Shape IP Status Unclear

June 10, 2022, 9:15 AM

A jury verdict that found willful counterfeiting of Gibson Brands Inc.'s guitar designs—yet awarded virtually no damages—has both sides claiming victory and attorneys raising eyebrows.

The jury said May 27 that Armadillo Distribution Enterprises Inc. knocked off Gibson’s Flying V, Explorer, and SG guitar designs with its Dean-branded guitars. But while rejecting Armadillo’s claims that the shapes were generic, the jury also found Gibson waited too long to sue and ultimately awarded just $4,000 of the $7 million sought by Gibson.

The seemingly counterintuitive outcome provides a reminder of the importance of timely enforcement of rights—and the unpredictability of juries. It also leaves unclear the extent of liability faced by Armadillo and other guitar makers who sell guitars similar to Gibson designs in the future.

If Gibson had failed to rebuff the claim that the guitar shapes have become generic and aren’t associated with a particular maker, it would have been “humongously bad for them,” trademark attorney Jennifer Van Kirk of Lewis Roca Rothgerber Christie LLP said.

“I imagine Gibson is thrilled with this verdict, even though they didn’t get any money,” Van Kirk said. “Gibson will wave this in front of other companies and say ‘Hey, we took this company to the mat, and you aren’t going to be protected.’”

But it’s not clear that the outcome—which both sides will challenge—will help Gibson quite that much, intellectual property attorney Ronald Oines of Rutan & Tucker LLP said. Rulings involving laches—unreasonable delay in bringing the suit—are case specific. But competitors, including Armadillo, could point to the finding as evidence Gibson didn’t sufficiently police the marks, Oines said.

“As far as I can tell the defendants don’t have to stop selling the guitars,” Oines said. He said even newcomers could benefit from “a jury finding that there was a second source of guitars in these shapes for an extended period of time, and Gibson did nothing about it.”

“The longer you wait, the more difficult it is to enforce on anyone.”

‘Horse Trading’?

Gibson accused Armadillo of ripping off eight trademarks—four guitar body shapes, a headstock design, and three word trademarks—in a lawsuit in the US District Court for the Eastern District of Texas. Armadillo argued it had used the designs as early as 1976 and counterclaimed to cancel all of the body shape trademark registrations.

The jury rejected the genericness argument, and found infringement of seven of the marks. It found three body shape marks and one word mark were both willfully infringed and counterfeited. But the jury also said Gibson inexcusably waited too long to enforce rights on the Flying V and Explorer guitar body shapes and Dove Wing headstock. It also rejected Gibson’s counter that Armadillo’s “unclean hands”—unjust behavior related to a claim—negated the laches defense.

“I’m not sure what to make of that. That does seem odd,” Van Kirk said of the notion of a willful counterfeiter with clean hands. She said the long, complex verdict form and jury instructions could have led to confusion.

Oines said there may have been “horse trading” in the jury room to get everyone on board with the verdict.

Intellectual property law professor Mark McKenna of UCLA said Gibson’s win was “Pyrrhic” with regard to Armadillo and others who’ve long made similarly shaped guitars. But he didn’t think it would preclude enforcement against newer entrants.

Gibson’s public takeaway was that its marks were good as gold. A press release said the “win” upheld “long-established and well-recognized trademarks for Gibson’s innovative and iconic guitar shapes.” The marks are “firmly protected for the past, present, and future,” the release claimed, though precedent indicates once-distinctive trademarks can become generic over time.

But Armadillo’s CEO Evan Rubinson said in a statement that the company is “thrilled” that the jury “vindicated Armadillo” by backing its defense of its Dean V guitar, Dean Z guitar, and Evo headstock. Dean “will focus on the three guitar shapes that were deemed not liable for the use of the shape and headstock,” he said.

Questionable Coverage

The ultimate outcome of the case is as uncertain as the ruling’s practical meaning. Oines noted a reversal of Gibson’s 2005 summary judgment win protecting the shape of its Les Paul guitars. The US Court of Appeals for the Sixth Circuit not only undid Gibson’s win but granted victory to Paul Reed Smith Guitars, finding no consumer would be confused.

“There isn’t a lot of good confirmation in case law that these body shapes are going to be enforceable, and that you’re going to be able to prove a guitar player thinks they’re buying a Gibson based solely on the body shape,” Oines said. “I think it’s risky for Gibson to take these cases all the way to trial.”

McKenna also said there’s good reason to think product shapes in general shouldn’t get trademark protection. That’s what design patents—which also cover non-functional designs and expire, unlike trademarks—are supposed to address, he said.

Genericness also ill fit the dispute, McKenna said, as the term generally forecloses word marks that name the product. Aesthetic functionality, meanwhile, bars marks that provide a visual competitive advantage; for example even though soda can be any color, consumers expect orange soda to be orange so the color couldn’t be protected. If consumers expect electric guitars to look like Gibson’s—but not because they want a Gibson—it could preclude protection.

But McKenna said courts struggle with the doctrine. The Texas-inclusive Fifth Circuit in particular “has kind of come close to saying there is no such thing as aesthetic functionality” despite its acknowledgment by the US Supreme Court, he said.

Oines noted that Armadillo’s will to fight might be affected by a dispute over whether its insurance company was bound to fund its defense in the Gibson litigation.

Van Kirk credited laches for the entire failure of Gibson to convert the ruling into money. But she also said what likely mattered most to Gibson was thwarting the counterclaims that “shifted what was at stake” and would have conclusively nixed important assets.

“From the outside, I see both sides claiming victory. But I think it’s true,” she said. “The marks are found enforceable, and the other side didn’t have to cough up $7 million.”

To contact the reporter on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com

To contact the editors responsible for this story: Adam M. Taylor at ataylor@bloombergindustry.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com