[Archive] Verdict Is In: Chapterhouse vs. Games Workshop

Xander:

From Bell of Lost Souls:

LEGALWATCH: Games Workshop vs Chapterhouse Verdict
Posted by Larry Vela at 6/14/2013 175 Comments

The jury is done and we have a verdict.  Fasten your seatbelts folks - heavy turbulence ahead.

We have a verdict!

Some initial notes:
This is a Jury Verdict, and has not yet become a Final Judgement

Breaking down the counts along the different categories we have:

Copyright Claims
160 claims alleged against CHS
-GW won on 1/3 of the claims, including items such as CHS’ Powerfists
-CHS won on 2/3 of the claims, including the use of the underlying shape and size of GW Shoulderpads.

General Trademark Claims
9 claims alleged against CHS
-CHS won all 9 claims, including either no infringement, or fair use of the GW trademarks on CHS’ website.

Disputed Trademark Claims
21 disputed trademark claims alleged against CHS
CHS won 11 claims
GW won 10 claims

GW Trademarks ruled “Previously Used in Commerce” Claims
61 claims alleged against CHS
CHS won 35 claims
GW won 27

Notable Trends and Individual Products Under Dispute
CHS lost on some individual products including:
-Doomseer
-Dark Elf Arch Tortress

CHS won on some individual products including:
-Jetbike
-Super-heavy walker model
-Lizard Ogre

Damages Awarded:
CHS ordered to pay GW damages of $25,000 USD

Both sides may appeal the ruling.

Thoughts and Implications:
It’s looking like however CHS as an entity comes out of this ruling, the implications for the 3rd party industry are profound.

-The ruling of no infringement for the use of the underlying shape and size of GW shoulderpads is now on the legal record.
-Possibly more important is not guilty verdicts on the use of GW trademarks and terms on the CHS website.
-While certain CHS products themselves may disappear from the Earth in the aftermath of this case, it looks like the verdict may have provided a clear blueprint for the 3rd party accessory bits market. One that allows legal use of certain GW trademarks and terms in a way that goes way beyond what Nottingham themselves ever wished to allow.

Bell of Lost Souls
I’d say this was a pretty dramatic loss for GW. 25k doesn’t seem like that much for Chapterhouse considering they’ve secured legal rights to sell more than 2/3 of their existing products. Meanwhile GW loses many, many claims to their trademarks.

Seems like this has really challenged some of GW’s assumptions when it comes to trying to claim things they didn’t create as their “property”.

Willmark:

Couldn’t have happened to a better company then GW… (snicker, snicker ).

Xander:

More: Press Release from the Pro Bono defence counsel.

LEGALWATCH: Games Workshop vs Chapterhouse Verdict

June 17, 2013

Winston & Strawn Defeats Hundreds of Trademark and Copyright Infringement Claims on Behalf of Pro Bono Client

Cutting-Edge Decision Protects Industries from Litigation Blocking Add-On Products

CHICAGO, IL �?" In a classic David-versus-Goliath battle, Winston & Strawn LLP represented Chapterhouse Studios LLC on a pro bono basis in a cutting-edge federal trademark and copyright dispute in the Northern District of Illinois (Games Workshop Limited v. Chapterhouse Studios LLC 1:10-cv-8103). The verdict of this jury trial, held in June 2013 before Judge Matthew Kennelly, confirms that copyright and trademark law should not be used to block add-on products. Winston & Strawn has litigated the case since 2010, and co-counsel law firm Marshall Gerstein joined the matter in 2012.

�?oThis was a classic case of trademark and copyright bullying by a much bigger Plaintiff,�?� said Jennifer Golinveaux, partner in Winston & Strawn�?Ts San Francisco office. �?oI am proud of the investment made by the firm, and the many attorneys who devoted themselves to making sure the intellectual property laws were not misused to squash a much smaller player.�?�

Games Workshop manufactures Warhammer 40,000, a tabletop battle game that works with armies of miniature figures and vehicles, while Chapterhouse sells customized add-on parts for the figures and vehicles used in the game. The United Kingdom-based Games Workshop, a company with $200 million per year in revenues, alleged more than 200 claims of copyright and trademark infringement against Chapterhouse, a small business run out of an individual�?Ts garage in Texas. Games Workshop argued that it was seeking a complete shutdown of Chapterhouse�?Ts entire business and although Games Workshop initially sought over $400,000 in damages, by the end of the two-week jury trial, the plaintiff dropped its damages demand to only $25,000.

The jury deliberated for more than two days and found that Chapterhouse could continue to make and sell over a hundred products without fear of copyright infringement. The jury also confirmed that Chapterhouse could continue to use most of Games Workshop�?Ts asserted trademarks when selling compatible parts, including all nine of Games Workshop�?Ts registered trademarks. Together with the summary judgment wins, the jury�?Ts verdict confirmed Chapterhouse can continue to make and sell 111 products that Games Workshop hoped to block using copyright laws, and can continue to use 104 words and phrases that Games Workshop said were trademarked.

Imron Aly, lead trial attorney and partner in Winston & Strawn�?Ts Chicago office added, �?oIt was a pleasure to represent a small entrepreneur like Nicholas Villacci of Chapterhouse, who has a passion for his work and wanted to see his business survive.�?�

Julianne Hartzell, partner at co-counsel law firm Marshall Gerstein added, �?oWe are proud that we were able to help protect Chapterhouse against the overreaching claims made by Games Workshop in such a substantial trademark and copyright dispute.�?�

Winston & Strawn

Vogon:

I'd say this was a pretty dramatic loss for GW. 25k doesn't seem like that much for Chapterhouse considering they've secured legal rights to sell more than 2/3 of their existing products. Meanwhile GW loses many, many claims to their trademarks.

Seems like this has really challenged some of GW's assumptions when it comes to trying to claim things they didn't create as their "property".

Xander
I think that they've been seeing this coming for a long time which is why we're seeing more and more stuff in the latest round of releases that they can more justifiably call their own IP.  

The High Elf sky cutters the big gribblies for the WOC and so on.  

I also think that they didn't *really* expect it to go to court when they were sending all their cease and desist letters out thinking that these small companies would just roll over and comply.  Now someone has challenged it they've come unstuck and inadvertently opened the floodgates for anyone to make after market add ons.

Once you step back and look at it it's really no different to all the multitude of companies out there making iPhone covers and marketing them as "iPhone covers".  They're using the iPhone IP to sell something they've made themselves to fit the existing product.

Cheers

Vogon

Xander:

Yep, the phone case/cover market is a very analogous example.

And I agree, GW has tried to make some more unique unit types lately. And they’ve been renaming things over the years to make them less generic sounding.

Willmark:

Copyright and IP is like nuclear weapons. Reason why the USSR and the USA never went to war was because of MAD. Mutually Assured Destruction. Both knew that if either side was stupid enough to actually use their aresenal it would be the end if both.

Copyright and IP are similar in that the power of IP is in the implied threat. The last thing a company wants to do is drag another to court which costs $/£, far better to use you projection of fear to get the other side to give in in IP matters. The problem GW faced is they tried to make it seem that they had an airtight case and labeled a bunch of stuff as "theirs ". Going to an actual trial led to the IP they sought to protect being called into question.

In short GW shot themselves in the foot. $25k? That’s nowhere near what they spent. Ontop of all of those there is now a court case on record that can be sited in the future.

cornixt:

It will be nice to see the breakdown of what was allowed and what wasn’t. If they’d kept the focus narrow then this would probably have looked like a loss for CH and a win for GW, keeping people scared of the big boy with big lawyers. This has opened up the market for a thousand small-scale sculptors to sell their own GW-compatible stuff!

Xander:

This has opened up the market for a thousand small-scale sculptors to sell their own GW-compatible stuff!

cornixt
That's the big takeaway, in my opinion. :)

Grimstonefire:

Finally, I never thought this was going to end!

I must have spent a few hours reading through the legal discussion of all those over the last 3 years, and I never thought it was going to end well for GW.

They were/are arrogant enough to presume they can make up the law on IP and copyrights.

This ruling happens to come in perfectly for anyone who happens to be selling FW compatible items…

thrawn:

Yep, the phone case/cover market is a very analogous example.

And I agree, GW has tried to make some more unique unit types lately. And they've been renaming things over the years to make them less generic sounding.

Xander
I'm not supporting GW but i must disagree with that statement. iphones and iphone covers are completely different.

apple does not make iphone covers, and so does not care if you do. they would care however if you attempted to sell on OS that you can download and use on your iphone as it directly interacts and changes the product.

making shoulder pads is the same as this. it directly interacts and changes the product (from a generic space marine to a particular chapter that has different rules and plays differently). i believe this analogy is incorrect.

i disagree with GW as they should not have taken it as far as they did. they should remember that their hobby started as "we only supply the basics, you must make/sculpt/paint the rest. oh ya, and at times will also have to make your own rules/stateline for models." i understand their frustation as it's taking away sales from themselves and sets a dangerous precedent, but they should have tried to reason with this guy first, and then create some ground rules, now they got strong armed into it.

Xander:

Aside from the fact that apple does make iPad covers, by your logic, if apple started making iPhone cases, then they should be able to stop everyone from doing that. Not sure I see your point of view on this?

gIL^:

Wonder what this means for Chaos Dwarf Sculpters on the web

Geist:

What it means for people like ****, is as long as he does small scale releases for sale the almighty eye of GW will be looking elsewhere.  The fantasy releases and specially CD stuff here in the states does not seem to be a primary concern for GW at this time.  They are mainly interested in all the 40k goodness, because that is the very large cash cow, which currently fantasy is not.  All this being said about the state of affairs of interest and sales here in the states.  Back home in England?  I have no clue what the sales numbers look like there.

snowblizz:

Yep, the phone case/cover market is a very analogous example.

And I agree, GW has tried to make some more unique unit types lately. And they've been renaming things over the years to make them less generic sounding.

Xander
I'm not supporting GW but i must disagree with that statement. iphones and iphone covers are completely different.

apple does not make iphone covers, and so does not care if you do. they would care however if you attempted to sell on OS that you can download and use on your iphone as it directly interacts and changes the product.

making shoulder pads is the same as this. it directly interacts and changes the product (from a generic space marine to a particular chapter that has different rules and plays differently). i believe this analogy is incorrect.


thrawn
No the analogy is quite correct. And this is how it works in every single manufacturing industry on the planet.

My dad's car doesn't have Nissan screenwipers anymore. Do you think that's because
a) Nissan doesn't sell or ever made the $40 wipers for his car
b) he felt the totally legal no-brand $10 wipers Nissan can't stop sales of were just as good
c) Nissan doesn't really care about whether they are selling expensive screenwipers or not, they stockpile them for the lulz

That's a trivial example. For help with picking, consider that using no-brand parts tends to void warranties and that using such parts used to get mechanics thrown out as "licensed mechanics" for car brands.