Olympics 2024: Who will blink first over Laser's future?
by Richard Gladwell, Sail-World.com/nz 9 Apr 2019 05:57 PDT
10 April 2019
Squally times ahead for what was the Laser class © Richard Gladwell
The row between the International Laser Class Association and its largest builder, LaserPerformance looks set to escalate.
Over the weekend the class association has made it plain that it intends to rename the Olympic single hander, known as the Laser, and to approve new builders in territories that were the domain of LaserPerformance.
In a statement released over the weekend the International Laser Class Association, the class controlling body, released a document purporting to be "Frequently Asked Questions". Such documents are a commonly used public relations device to put information into a market and soften it up for what lies ahead.
However these FAQ's are claimed to be genuine queries, and there is no reason to doubt that, given the numeric size and distribution of the class, that is correct.
On Page 7 of the 11-page document published on the Class Facebook site (click here) the class says that the boat that is currently known as the Laser will be renamed and administered as a new class. That includes keeping its Olympic status for the 2020 Olympic Regatta in Japan, in just 15 months.
"In order to avoid trade mark issues and to comply with the requirements of European competition law, all current and future ILCA-approved builders will sell boats under a new brand name," ILCA wrote.
"ILCA and the current approved builders are finalizing the intellectual property details for the new brand, including fair, reasonable and non-discriminatory (FRAND) licensing rules. ILCA expects to announce the new brand name in the next four weeks."
The International Laser Class Association says it intends to transfer all existing Laser dinghies to the register of the new class.
"All current, class-legal Lasers are and will remain ILCA class-legal. The proposed change simply changes the brand name to avoid trade mark complications. The new system would allow class-legal Lasers (those with World Sailing Plaques) to participate in any ILCA event along with the new, alternately branded boats. After all, it’s the boat that matters, not the brand."
Predominant Builder terminated
LaserPerformance, based in Long Buckby, Northampton, UK is arguably the largest manufacturer of racing dinghies in the World - being the builder of Laser, Laser Radial, Laser 4.7, Sunfish, Laser Pico, Laser Bahia, Laser Vago, Bug, Club FJ, Club 420, 420 Omega and Z420.
LaserPerformance is/was the predominant builder and seller of the Laser class throughout the world having an estimated 85% share of the global market, said to number over 215,000 boats built to date. There are said to be 14,000 active members of ILCA, and 50,000 active Laser sailors.
Until a few weeks ago Laser Performance had the right, granted by the International Laser Class Association to build and sell the Laser dinghy and its accessories in most countries in the world. Performance Sailcraft Australia holds the rights for Australia and New Zealand, while Performance Sailcraft Japan holds the rights for Japan and Korea. These four countries are largely unaffected by the issues between ILCA and LaserPerformance.
In 2008, the designer of the Laser, Bruce Kirby, sold his rights in the Laser boat to a New Zealand company Global Sailing Limited, controlled by the Spencer family, for $2.6million.
Laser Performance, owns the rights/trademarks to the Laser brand-name and the distinctive starburst class emblem outside the four PSA and PSJ countries. LaserPerformance acquired the US rights to the class when it took over the US builder Vanguard Boats and has a well-established dealer network throughout Europe. It uses the trademarked brand "Laser" as part of the name of three other classes, that it builds and sells.
Trademark rights are relatively well understood and are able to be licenced and enforced in a similar way in most countries around the world. Design copyright is more complicated with it being virtually non-existent in some countries and able to be enforced for a set period (up to 25 years) in others. Boat design cannot be patented. It would be very easy to argue that the Laser hull shape designed in 1969, is very similar to the Int. Contender design by Ben Lexcen in 1966, which was in turn very similar to the Flying Dutchman designed by Uus van Essen and Conrad Gulcher in 1960.
The International Laser Class Association brought the current matter to a head in late March 2019 when it terminated a building agreement initially signed in 1989 between itself and LaserPerformance.
In its letter, ILCA withdrew its permission for LaserPerformance to use the Laser Construction Manual, which is the primary mechanism for ensuring all boats in the then Laser class were built to the same specification. Construction in compliance with the Construction Manual ensures that all Lasers built are a strict one-design.
ILCA claimed their reason for the termination of the agreement with LaserPerformance was because of "the builder's refusal to allow inspection of boats being built in their manufacturing facility [in accordance with the Construction Manual] as required by that contract."
LaserPerformance (LP) responded: "LP refused to have ILCA undertake an inspection of LP’s facilities five months before expiry of 1998 Agreement and after three years of ILCA refusing to renew its license under the 1998 Agreement. LP does not and has not refused inspection of its manufacturing facility or its products by other legitimate regulatory bodies. Indeed, LP has formally requested World Sailing to inspect LP’s facility...."
At the end of its response to ILCA's original assertions, LaserPerformance proposed a three-part solution to the issue namely that "ILCA sign the renewal agreement to the 1998 Agreement in order to continue to use the granted trademark rights; ILCA move back to Europe where 75% of Laser sailors live and sail; ILCA appoint a professional executive team to run the class operations paid for by increased plaque fees charged to the builders."
Making friends with FRAND
ILCA's response over the weekend has been to push ahead and appoint new builders in the territories.
"..We are seeking is a worldwide network of existing and new builders that are selected on a fair, reasonable, and non-discriminatory (FRAND) basis in accordance with World Sailing’s strict equipment policies. ILCA is currently working with our existing builders and World Sailing to establish the details of the criteria by which we name new builders.
"ILCA and World Sailing are very aware of the problems which might be caused by “boutique” builders and have agreed to establish criteria, including minimum volume thresholds, to address that issue. ILCA has extensive technical and inspection experience and will work closely with the World Sailing technical department to ensure boats are built to the highest uniform standards worldwide."
The International Laser Class Association said that it would consider signing a new agreement with LaserPerformance but "it would need to enter into new arrangements with ILCA and the remaining parties to the agreement. Any reapproval would be under the same FRAND terms as will apply to all other builders."
In a sailing context, the purpose of FRAND, or RAND as it is known in the USA, is essentially to prevent monopolistic practices and in the case of the building of classes used at the Sailing Olympics, to have multiple builders able to supply boats to various territories to a one-design class specification and with competition on price.
In response to European Union Anti-Trust requirements, World Sailing has decreed that all classes selected for 2024 Olympic competition, and beyond, must be FRAND compliant.
However, since 1992 World Sailing has been moving away from its proven licenced builder model which has been in place for over 50 years, to a single manufacturer one design model. The Laser was the first class to be selected, as a strict one-design, and was used for the 1996 Olympic Sailing regatta. The change was controversial at the time. However the then International Sailing Federation was under pressure to include the 4.2metre singlehander.
It was accepted at the time that the Olympics needed the Laser more than the Laser needed the Olympics, and the class was given to green light to not conform with the open licenced builder model.
Now, with the advent of FRAND, World Sailing must do an about-face and head back to a more traditional multi-builder, arms-length, licencing model, that was the standard pre-1992.
However as highlighted by the action proposed by the International Laser Class Association, without mutual agreement, there is no easy pathway for parties to transition commercially from Single Manufacturer One Design model to one which has multiple, competitive builders.
Just three of the existing current ten Olympic classes - the Finn singlehander and 470 doublehander - the two oldest Olympic classes - are the only classes which are currently FRAND compliant. Of course, the Finn is to be dropped from the 2024 Olympic Regatta, and the 470 at best will have only the Mixed Two Person Dinghy event - making World Sailing's issues even more acute.
In many ways, it would be easier to select new classes and negotiate new FRAND compliant terms for classes which are suitable as Olympic Equipment, than to transition the existing classes, which are not FRAND compliant, to the new building model.
One hull and two classes?
With the support of World Sailing, the international class associations control the boats allowed to compete in class events by the issuance of building plaques. A unique numbered plaque is attached to each boat and a fee paid. The Building Plaque system is long established and is administered by World Sailing on behalf of the class associations.
Earlier this year Sail-World understands that ILCA instructed World Sailing to stop issuing building plaques for the Laser class to Laser Performance, and that the latest batch application for building plaques by LP was returned along with the payment.
Last month, as part of a review covering seven of the ten 2020 Olympic classes, World Sailing ran a 2024 Olympic Equipment Evaluation Trial with three singlehanded existing classes plus the Laser. The boats were tested by an evaluation team working in conjunction with a World Sailing tasked Evaluation Committee. They are due to report their recommendations in six weeks, to the world body's Mid Year Meeting in London. That timeframe could not accommodate a lengthy legal battle over the issues between ILCA and LaserPerformance.
The situation facing the Laser class is unprecedented in the sport.
A hard-line and intransigent attitude by all parties could see two classes spun out of the pre-2019 Laser class.
LaserPerformance could produce a new singlehander very similar in shape and appearance to the existing Laser but built to an improved internal specification, sold as a Laser by LaserPerformance, and raced as a Laser class. Ostensibly boats in the current Laser class could also be eligible for post-2019 Laser class championships.
The new ILCA singlehander will be built to the current Class Builders Manual owned by the ILCA. The ILCA class say they will include all existing Laser class boats. In an extreme situation, pre-2019 Lasers could race in ICLA organised regattas one week, and in LaserPerformance regattas the next.
The sailors themselves are safe from any bully-boy tactics from heavy-handed sailing administrators. Under a 2017 decision from the European Commission, it was deemed to be a breach of EU antitrust law when a sports body tried to impose sanctions on athletes that participated in competitions that were not authorised/sanctioned by that body. Click here for the EU decision
World Sailing authorises class associations to organise world championships, and in its Q&A document, ILCA expects that "the class will continue to operate as usual. All regions, districts and fleets should also continue operating as usual. ILCA has obtained confirmation that changing the brand name of the boat will NOT affect our class status with World Sailing." This, of course, assumes that the current Laser sailors will wish to transfer to the new ILCA class and association.
For its part, LaserPerformance could initiate a series similar to the Star Sailors League with substantial prize money. Under the EU decision, Laser sailors could compete on both the Laser and ILCA circuits without sanction.
Litigation likely
Sadly, the Laser class is no stranger to litigation. A long case by Bruce Kirby Inc against Laser Performance Europe Ltd over non-payment of royalties began in 2013 and was not finally dismissed in favour of LPE, until 2016. However, construction and competition in the Laser class continued unimpeded while the matter was heard in the Connecticut District Court (USA). The International Laser Class Association is domiciled in Texas, USA.
In the current situation, LPE would appear to have a strong case over the use of trademarks, and the development of markets for the class within Europe in particular. For ILCA the way ahead would appear to be quite fraught, with the risk of legal action having the potential to stall the move.
Indeed the European International Laser Class Association (EurlILCA) representing 60-70% of the Laser sailors who are also part of ILCA, weighed into the argument on April 3, 2019 with an open letter which sought to calm the waters, but was also quite supportive of Laser Performance.
"EurlLCA understands that there are supply issues in South America and that North American Laser dealers have difficulties getting parts. However. the situation is different in Europe where there are no supply problems and there is a great network of dealers. In Europe, we have a strong relationship with the Laser dealers in each country and the class was built with a good long-time relationship with Laser Performance."
The supply of 2019-Lasers for the 2020 Tokyo Olympics in fall within the domain of Performance Sailcraft Japan. However, in its response, LaserPerformance notes: "The 2024 Olympic is in Paris, France – an LP territory and LP can be the only authorized supplier of Laser boats at such event."
Whether World Sailing can select the Laser/ILCA as Equipment for the 2024 Olympics against this legal backdrop remains to be seen.
Clearly, it is in the sailors' best interests for there to be a negotiated arrangement between the parties without the brinkmanship evident in the current standoff, and for the class to transition to a FRAND compliant builder network.
The alternative is a Sailing Brexit from which there are no winners.