"GW vs. Chapterhouse lawsuit...." Topic

Interesting for third parties…
From BoLS…
link

… and lawyers

nice to see GW get their legal heads handed to them, mostly, for once.

however I do worry that $25,000 USD could still end up closing him down. that is a lot of scratch for a company run out of a garage.

They might well be done for, but the precedent set is going to make GW very unhappy when dealing with similar companies in the future.

You mean the precedent they can point to and say:

"The last company that stood up to us ended up with a judgement against them for $25,000. USD They also paid lawyer fees. Then went out of business."

I'm not sure that gives most small companies a warm and fuzzy feeling that they can defy GW.

Even when a ruling is made, if GW flexes their legal muscle, they can drive most companies out of business just in legal fees.

Wow…

Even when a ruling is made, if GW flexes their legal muscle, they can drive most companies out of business just in legal fees.

Which is exactly the point.
You do not have to win, or even think you are in the right. All GW needs to do is turn their lawyers loose on "enemies".
GW can afford the battle. The little guy cannot.

Don't expect a flood of similar products very soon, unless they have Donald Trump or Warren Buffett backing.

GW is busy driving their own IP into the ground. No need to add a wheel to the bus.

nice to see GW get their legal heads handed to them, mostly, for once.

sounds to me like they pretty much won

The legal fees CHS has t pay can be done over time, not all at once.

Also, $25 USDK isn't that much over time when you make $100 USDK/year.

CHS isn't going under at all, if anything they'll probably get bigger now that the lines have been made clearer as to what they can and can't do.

I think this will also enable other 3rd party bitz makers to grow as well.

I think this will also enable other 3rd party bitz makers to grow as well.

How much of market is that?

1. GW's IP protected. Check.
2. Rights of aftermarket producers to state a product is intended for use with GW products confirmed (no different than aftermarket products for a Ford truck, etc.). Check.
3. GW denied "copyright" or "trademark" or "IP ownership" of generic concepts and/or terms ("jetbike" "walker tanks" "ogres"). Check.

Got no problem with this. Where CHS violated GW's IP, CHS should have to pay.

But this doesn't mean that GW is free to "law attack" third party companies that do 2. and 3.. In fact, it reduces the likelihood that GW will attempt such things, as it increases the ability of those third parties to win a judgement (and acquire representation). It's called a "legal precedent," and lawyers love cases where the legal precedent is in their favor, and hate cases where it is not. It won't end the C&Ds, but GW's going to hesitate to spend $$$$$$$ on court cases they'll lose on precedent rulings. If I were a third party after-market add-on manufacturer, I'd feel encouraged. (IANALNDIPOOTV.)

EDIT, by the way, GW spent a heck of a lot more than $25,000 USD on this case, and they know it. Even with what they won, they lost. Big time.

Meh. The more things change, the more things stay the same. I agree with Crucible Orc. Chapter House is going to take there lumps to the tune of $25 USDK.

GW is not likely to get one cent of that $25 USDK because of the easy way out for Chapterhouse. They file for bankruptcy GW gets nothing, They pay the real bills off slowly and keep selling their stuff. This is what happens to most judgements against small companies, and no money gets to the winner of said judgement.

They file for bankruptcy GW gets nothing, They pay the real bills off slowly and keep selling their stuff.

What if the guy wanted to stay in business? This is not an optimal way out. Sure it denies GW money but at the cost of his own business?

Saying $25 USDK isn't much when you have revenue of around $100 USDK isn't a very nuanced analysis IMHO. Of that $100 USDK, lets say it costs $50 USDK in overhead, supplies, and other sundries, leaving a profit of $50 USDK a year. I have heard the owner "pays" himself $36 USDK a year as a paycheck, leaving $14 USDK left over to re-invest in the concern. Once you start looking at it that way, the owner now has to choose whether he should cripple his company's expansion potential, or take a hit in the money he uses to live on, pay personal bills, etc. From that perspective the fine seems quite a bit more harsh.

Of course the numbers there (except for yearly revenue and personal pay) are speculative, but you get the idea…

Damon.

Garand/Damon -you beat me to it.

I think GW still considers this a minor victory since 1/3 of their claims were affirmed and they got a monetary award. Corporate attys are paid whether they are schmoozing clients on a golf course or whether they are litigating a case, so the cost of paying attorneys is just the cost of doing business at their level. They are not looking at the cost of a trial now, they are looking at the cost of allowing CHS (and every other garage manufacturer) to run unchallenged for the next ten years. GW will continue to intimidate/eliminate competition because it is in their best interest to do so, both for their brand and their bank account.

Yeah, GW spent more on the case but so did CH and they still have to pay.

It's not the winning or losing it's the cost to file the multiple rounds of paperwork that occur in almost any legal case. A precedent only means if you spend enough money to show it applies to this situation, you will win.

GW may decide losing the occasional lawsuit is just a cost of doing business. If it keeps the 3rd party market limited, it might be the right move from their viewpoint.

So, bankruptcy is the answer? Not really, because then GW just comes in, buys the IP at a fraction of it's worth to satisfy their Judgment – and the business closes down. Bankruptcy is not a good solution if you want to save the business, because it means PAYING THE DEBTS – ALL of them – soon. So, there are many other options, including taking out a loan, or other methods of satisfying the judgment. The case is far from over. I expect an appeal.

Yeah, GW spent more on the case but so did CH and they still have to pay

According to the press release, CH was a pro bono client.

CH had no legal fees.

Thank you, Mr. Elmo. I was just going to point that out.

My mistake about the legal fees. Not sure it alters the point. Unless you think every company GW goes after will get a free lawyer.

I was thing the same thing. This guy lucked out big time with a pro bono lawyer; most won't be so lucky.

"Corporate attys are paid whether they are schmoozing clients on a golf course or whether they are litigating a case, so the cost of paying attorneys is just the cost of doing business at their level."

This is wrong, by a lot. Corporate attorneys (by which you mean in-house counsel) don't litigate cases. GW had (high-priced) outside representation on this, and their fees were no doubt very substantial. GW *easily* ran up a legal tab on this that exceeded their $25 USDK verdict by *an order of magnitude.*

This went to trial, man. The 25K was a *jury* verdict. From a pure dollars-and-cents standpoint, GW got crushed on this.

They file for bankruptcy GW gets nothing, They pay the real bills off slowly and keep selling their stuff.

What if the guy wanted to stay in business? This is not an optimal way out. Sure it denies GW money but at the cost of his own business?

I was under the impression that it is entirely possible for a business to declare a certain level of bankruptcy and still remain in business. So bankruptcy in and of itself might not mean that a business is gone. And I believe Chapterhouse is an LLC (Limited Liability Corporation)? Does that have any bearing?
In any case, there's no reason that Chapterhouse or its owners couldn't arrange for loans to cover the cost. A home equity loan would likely be sufficient. If the business truly is profitable, and the loans can be paid off, the judgment is entirely survivable. Still a hit, and yes, Chapterhouse had a lesson to learn, IMHO. But so did GW. I think both sides have learned it.

Both of them were wrong (one a bully, the other an IP infringer), both of them got told they were wrong, both of them are going to pay for it.

In-house counsel can certainly litigate cases. Specialists may or may not be hired. Regardless, it is the price of doing business.

Just out of idle curiosity how big business is this custom GW style stuff?

As I understand it Forgeworld are ok in GW's eyes, even part of their business. They seem to have it stitched up.

You'ld have to sell a hell of a lot of shoulder-pads and hand flamers to recoup the loss.

Good luck to them, but maybe they have their own concept they could do.Like Mantic did/do.They should perhaps break free and create their own market. They have the machines I'm assuming.

"In-house counsel can certainly litigate cases. Specialists may or may not be hired. Regardless, it is the price of doing business."

People who TRY intellectual property cases -- not people who draft C&Ds, but serious attorneys who take these cases to TRIAL, in federal court -- cost a fortune. A tiny hobby company anything like GW cannot possibly afford to keep such people on staff. So no, this case was not litigated by GW staff attorneys, and *could not have been* because nobody with that kind of expertise would, in 40,000 years (see what I did there?), ever *be* a GW staff attorney.

GW was represented in this case by outside counsel. This is not a statement of opinion, but rather public record.

GW is out *real* legal fees here, not salaries they'd already be paying. Those fees certainly run into 6 figures, maybe even approaching 7. (I don't know about that, but it's been speculated.) You can call that "price of doing business" if you like, but it doesn't sound like it to me. Every other miniature company in existence has managed to do their business for the entire history of the hobby without paying a price in that nature.

You can't really be comparing GW to any other miniature company can you?

I'm willing to bet GW knew exactly how much they were spending on litigation. They only asked for $400 USDk to start with. So the alternatives is that GW got in too deep and spent far more than they ever hoped to win OR they knew exactly what they were doing and felt that spending money on this litigation would be the better long term approach.

Yeah, I know, they are GW so they are idiots. Right. Any one of us could do better if we were running the company.

Greywing wrote:
'Every other miniature company in existence has managed to do their business for the entire history of the hobby without paying a price in that nature.'

But other miniatures companies are involved with the wargaming hobby – GW is involved in what it chooses to call 'The Games Workshop Hobby'!

They file for bankruptcy GW gets nothing, They pay the real bills off slowly and keep selling their stuff.

What if the guy wanted to stay in business? This is not an optimal way out. Sure it denies GW money but at the cost of his own business?

I was under the impression that it is entirely possible for a business to declare a certain level of bankruptcy and still remain in business. So bankruptcy in and of itself might not mean that a business is gone. And I believe Chapterhouse is an LLC (Limited Liability Corporation)? Does that have any bearing?
In any case, there's no reason that Chapterhouse or its owners couldn't arrange for loans to cover the cost. A home equity loan would likely be sufficient. If the business truly is profitable, and the loans can be paid off, the judgment is entirely survivable. Still a hit, and yes, Chapterhouse had a lesson to learn, IMHO. But so did GW. I think both sides have learned it.

have you ever seen a company go out of business by filing for bankruptcy????.look at how many times the airlines have done it. bankruptcy just means they don't have to pay all of their bills or in this case the judgment. also nothing need to be up for sale that GW can buy out the IP is not true. I have been on GWs side of a judgment and the car dealership filed bankruptcy. I got nothing and they are still in business and bigger then ever…. I got nothing.

The analysis in the legal, never-heard-of-gaming world, is that GW took a bath on fees (this suit easily cost $250 USDk to take to trial in legal fees, given the firms involved at $750 USD/hour biiling) just to provide a legal roadmap for what companies can get away with in producing Warhammer and 40k products.

Sure, chunks of GW's IP rights were upheld, but now GW will be hard-pressed to write meaningful cease-and-desist letters on many types of products.

Can't wait to see how that cost vs return is spun in the next annual report.

What those lawyers don't realize is that providing a legal roadmap only makes a difference if the people who might benefit from that roadmap can afford to hire them when/if the company is targeted.

99% of the companies in the industry can't.

So did they pay too much to fight 3rd party knock offs? I don't know. But it seems that at some point you need to take a stand or your C&D letters aren't going to be meaningful anyway.