LaserPerformance’s Comments on the Proposed International Laser Class Association (“ILCA”) New Builder Approval Process
Following the issuance of the World Sailing FRAND policy, ILCA prepared a document that provides a two-stage process for New Builders to be approved to supply Laser boats and equipment. The document also outlines specific recommendations on fees and royalties to be paid by New Builders and distributed to ILCA and Trademark Owners. These are LaserPerformance’s comments on this document.
Separation of Commercial Agreement from New Builder Qualification Process:
A. The International Laser Class Association (ILCA) proposal is a merger of two distinct and unrelated topics, these being:
1. New Builder Qualification and Approval Process and Guidelines – incorporating two key areas:
1.1. Application procedures for New Builders
1.2. Technical Assessment and Qualification of New Builders
1.2.1. ALL costs involved with the above are provided for and the Class will be recovering its costs as incurred and in full
2. Commercial Agreement - divided into two main parts:
2.1. Trademark Owners Royalties
2.2. Class related Administrative Expenses
B. LaserPerformance (LP) believes that these should be two separate agreements.
The following is LP’s rational for the separation of the two matters:
o LP agrees in full with the proposed ILCA New Builder Qualification and Approval Process and Guidelines.
o There is no requirement by World Sailing (WS) other than the New Builder Qualification and Approval Process and Guidelines.
o Extraction of commercial elements between Trademark Owners from the New Builder Approval Process will mean that ALL aspects of the relationship of the parties would be final and approved and clears the path for WS confirmation of Olympics status.
The ONLY SINGLE matter holding up this DEFINITIVE designation in the inclusion of unrelated commercial matters in the New Builder Approval Process.
o ILCA has covered all its associated costs in respect of New Builder Applications and therefore there is no need for any other commercial matters to be included in this agreement since ILCA is not party to any such arrangements.
o ILCA’s additional fees as currently sought by ILCA through the New Builder Approval Process should be through the World Council of ILCA and is a separate matter to New Builder Costs. This is a pure budgetary matter for ILCA and should be addressed through ILCA as provided by its Constitution. Any such increase in fees should be through plaque fee increases.
C. ILCA demand for Administrative fees:
a. As stated above, any ILCA additional administrative funding should be a budgetary matter and processed through normal class operations.
b. Imposing minimum fees on New Builders in order to pay for the administrative costs of ILCA is inconsistent with open competition.
i. The proposed annual minimum fee of US$200,000 will be a major obstacle for any new builder to apply. Any imposed barrier to entry runs against the principles of the Olympic Equipment Policy and FRAND.
c. LP has no objection to any increases in plaque fees in order to support a higher level of administrative expenditure, subject to the following:
i. Additional fees for executive remuneration should be tied to term limits for the executives.
1. All democracies have term limits for elected officials and ILCA as a sports body should introduce such term limits.
2. LP proposes two election terms of maximum 5 years each i.e. each elected official can serve up to 10 years.
3. Term limits open the door for new blood and this would be basis to promote and to balance the current deficiency of female and youth representation.
LaserPerformance Fully Endorses World Sailing Olympic Equipment and FRAND Policy
The Policy, reproduced below, is attached as Appendix 2 to the Olympic Classes Contract For The XXXIII Olympiad.
1.1 Any interested party who meets the necessary technical qualifications and regulatory requirements must be able to manufacture and sell Olympic equipment (“a New Manufacturer”). This includes manufacturers of the whole boat or parts of the boat (e.g. in the supply chain).
1.2 It is a requirement that a New Manufacturer must enter into the Commercial Undertakings with World Sailing.
1.3 The Class Association will ensure that there are regular opportunities for any qualified interested party to become a New Manufacturer.
1.4 Where necessary, the New Manufacturer must be granted a licence of any intellectual property rights required to manufacture or sell the equipment on fair, reasonable and non-discriminatory terms (known as ‘FRAND’). This applies whether World Sailing or another person or body is the owner of the appropriate intellectual property rights.
1.5 The Class Association will ensure that the period from when any New Manufacturers’ equipment may be used for racing in the relevant Olympic Class is sufficiently long to ensure necessary testing and integrity of such equipment having regard to the Olympic cycle.
1.6 World Sailing will not recognise any New Manufacturer, including authorising its equipment for racing, unless it enters the required Commercial Undertakings and meets all technical and regulatory requirements required by World Sailing.
1.7 The Class Association is responsible for co-ordinating the implementation of this Policy within the Class, and is encouraged to consult with World Sailing from time to time and whenever deemed appropriate or necessary.
1.8 World Sailing will provide relevant information and assistance to the Class Association in its functions.
1.9 World Sailing will monitor and validate compliance with this Policy. In the event of non-compliance, World Sailing may exercise its remedies under the World Sailing Constitution and Regulations, Olympic Classes Contract and Commercial Undertakings.
And Seeks Further Clarification From World Sailing on LaserPerformance Rights as Trademark Owner
The proposed Commercial Undertakings and Class contracts already incorporate the rights of trademark owners. However, LaserPerformance is seeking further clarification as to how these two contracts and the fee requirements all tie together, as it relates to the rights of the trademark owner. The constructive dialogue continues, and we are hopeful that all pending issues can be clarified with World Sailing before the August 1 deadline.
PSA-owned Global Sailing aim is to create Laser Monopoly and Kill Competition
26 April 2019
ILCA has issued a document that “requires that each builder and sublicensed builder must also have a current license agreement with Designer,” and adds that “the Laser Construction Manual Agreement (LCMA) to include Global Sailing as a party in place of Bruce Kirby.”
Global Sailing and Performance Sailcraft Australia (PSA) have common ownership, hence PSA, which was quoted in ILCA’s 25 April 2019 announcement, that it was “gearing up to maximize production of the newly-branded ILCA Dinghy”, maintains that it also controls the design rights of the Laser. If this is not the definition of monopoly then what is? Indeed, giving licenses to other entities where the license governs the terms of engagement does not withstand FRAND or monopoly tests either.
ILCA’s management has obviously acceded to this non-competitive strategy and the illegal initiative to change ILCA’s name. Coupled with the ILCA/PSA/PSJ secret alliance to replace the Radial and 4.7 Laser boats with C series rigs, it becomes clear why ILCA refused to meet with LaserPerformance to negotiate a new license agreement in its territories (the world except Australia, New Zealand, Japan and Korea).
It is doubtful that Global Sailing even owns any rights. In June 2008 Bruce Kirby sold his “expired” design rights to Global Sailing. In 2009 Global Sailing informed LaserPerformance that it was the owner of the rights to the Builders Agreements, but subsequently World Sailing informed Global Sailing that the sale was invalid because it did not receive WS approval. Indeed, in litigation in the USA initiated by Bruce Kirby and Global Sailing, they represented to the US courts that Global Sailing had no such ownership interest.
This is the context in which LaserPerformance is proposing:
A. ILCA move back to Europe where the majority of Laser sailors live and sail.
B. ILCA appoint a professional executive team to run the class operations paid for by increased plaque fees charged to the builders.
LASERPERFORMANCE RESPONSE TO ILCA STATEMENT OF
27 MARCH 2019
2 April 2019
LASERPERFORMANCE (“LP”) finds the recent events deplorable as well as potentially catastrophic for the Laser sailors and the class organization as configured today. It is important to know the background to the current dispute.
The falsehoods and misrepresentations contained in the official ILCA announcement are disturbing since they reflect on the class organization and bear on the credibility of governance of the class.
LP makes the following statements and responds to ILCA’s misleading statements:
■ LP has granted ILCA certain rights to use the Laser Trademark for its activities pursuant to an intellectual property license dated February 1998 (the “1998 Agreement”).
■ LP has been seeking a renewal of the 1998 Agreement which expires after multiple extensions on 31 August 2019.
■ ILCA has steadfastly refused to enter into a renewal agreement of like substance and has refused to have any meetings with LP on the matter.
■ 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 given that they are the ultimate authority for compliance and the issuance of the boats’ plaques.
■ ILCA has not shared any of this with the sailors nor have they proposed how it would operate without a valid license from LP after August 2019.
■ ILCA is not legally able to seek new manufacturers for Laser products in LP territory without LP’s consent. LP territory covers the world excluding Australia, New Zealand (PSA) and Japan, Korea (PSJ). This is a simple matter of ownership of intellectual property and LP will enforce against any party who attempts to violate LP’s intellectual property rights.
■ ILCA can indeed appoint new builders in Performance Sailcraft Australia (PSA) and Performance Sailcraft Japan (PSJ) limited territory; however, neither of them can supply boats into LP territory without LP’s consent.
■ PSA has tried in the past to import illegally into LP territory by a variety of schemes. LP has successfully enforced its property rights against PSA and will continue to enforce its rights against PSA and any collaborating dealers or persons. The last of such legal action was in Belgium and it was adjudicated in favor of LP with the dealer involved filing for bankruptcy to avoid payment of award pursuant to the court judgment.
■ PSA is unable to supply LP’s output even if they could legally sell into LP territories. Indeed, the last time PSA agreed to support a class event – also a World event – was the Youth Worlds 2016 in New Zealand with 105 boats which ended up in PSA withdrawing its support three months before the event.
■ PSA’s withdrawal meant cancellation of the event except for WS reaching out to LP to step in both to save the event and to prevent the adverse effects a major cancellation impacting the Olympics standing of Laser.
■ The 2024 Olympic is in Paris, France – an LP territory and LP can be the only authorized supplier of Laser boats at such event.
■ ILCA decertifying the most established and the original manufacturer of Laser sailboats will not end the supply of LP Lasers to our markets. However, it will signal to the Olympic authorities that the most popular Olympic sailing event has poor governance and leadership, leading to unpredictable supply.
■ LP, in partnership with its outstanding dealership network, has consistently shown that it is the only supplier that can consistently provide support to events and sailors at a global level.
LP proposes the following to prevent the implosion of the Laser class organization:
A. ILCA sign the renewal agreement to the 1998 Agreement in order to continue to use the granted trademark rights.
B. ILCA move back to Europe where 75% of Laser sailors live and sail.
C. ILCA appoint a professional executive team to run the class operations paid for by increased plaque fees charged to the builders.
2 April 2019
Julian Bethwaite Spills the Beans on ILCA/PSA/JSA
Project to Replace Laser Radial & 4.7
9 April 2019
On March 6, 2017 the following was posted by Australia-based boat designer Julian Bethwaite available here http://forums.sailinganarchy.com/index.php?/topic/206410-laser-c5-rig/LASERPERFORMANCE
9 April 2019
ILCA Turns Blind Eye While PSA Builds Illegal Laser Boats
9 April 2019
In 2014 LaserPerformance received complaints that PSA-built Laser boats sold to sailors and used at the 2014 Santander ISAF Sailing World Championships were built differently than the Laser Construction Manual (LCM) and thus sailed faster. LaserPerformance acquired PSA Laser boats, measured and weighed them and cut them open for inspection. The examination by LP revealed that PSA was knowingly building boats that did not conform to the Laser Construction Manual. This was reported to ILCA which sent their Technical Officer to inspect PSA boats. In a written report to ILCA, LaserPerformance found:A PSA hull is lighter and can be purchased below minimum weight by specifying the weight/lowest weight possible they are seeking at the time of order. Weights of 56.2Kgs were reported by the sailors.
B PSA advertised that hull mast rakes can be pre-ordered to sailor’s preference, with much more rake than LCM target.
C PSA hull is stiffer in front section.
D Upper mast is much heavier and stiffer that LPE supplied upper mast.
ILCA’s Technical and Measurement Committee reviewed LaserPerformance findings and reported the following:
“The meeting reviewed CH spread sheet on LCM option differences adopted by the 3 builders, the results from sample plaques received from the builders and an LP teardown report comparing a PSA to an LP boat.
The major differences in construction were agreed as a. An extra layer of CSM in the bow area of the PSA boats, b. The use of foam blocks that are glued in with expanding foam on PSA boats (alternate to Cubitainers), c. Use of Plywood ilo grommets to fasten the grab rails. d. Some oversize CSM patches on PSA boats. “
ILCA did not admonish or decertify PSA for breaking the LCM Agreement. Instead, ILCA agreed that the other builders follow the PSA laminate schedule, thus making all previous Lasers technically obsolete. No notification of the breach in protocol was reported to ISAF/WS or the Laser community at large.
Frequently Asked Questions Concerning ILCA’s Actions
10 April 2019
According to EurILCA, over 70% of the class members are in the European region. As discussed at the 1998 ILCA World Council meeting the management of ILCA, it was felt by representatives of this region that their needs and priorities were being neglected. LP proposes that ILCA be moved back and a full-time professional management team lead ILCA paid by builders through increased plaque fees.2. What is the 27 February 1998 Agreement?
This is a licence agreement between Performance Sailcraft Europe Limited (since renamed as LaserPerformance Europe Limited) and ILCA, giving certain limited rights to ILCA to use the Laser intellectual property according to ILCA’s constitution. A copy of the 1998 Agreement can be found here (LINK to: 1988_02_27 Trademark Agreement between ILCA and PSE ).3. Why is LaserPerformance requiring a new license agreement?
• In 2010 ILCA moved to the USA under a new entity incorporated in the State of Texas.
• In 2016 LaserPerformance group was re-organized globally. Consequently, LPEU ceased to operate effective 31 December 2016 and will cease to exist from 31 August 2019.
• The 1998 Agreement does not have any provisions for succession rights and as such, as of 31 August 2019 the contract will extinguish on its own terms. Therefore, a new replacement and like agreement is needed in order for ILCA to continue to operate as before under the 1998 Agreement.
• ILCA have known about this and have been given multiple extensions under the 1998 Agreement for the past three years but they have refused to enter a new and like agreement.
• Without a new like license, ILCA will not be able to hold events or use the Laser mark in connection with its authorized activities from 31 August 2019.4. What is ILCA’s view about the 1998 Agreement?
ILCA refuses to acknowledge that the Agreement will expire and a new agreement is required with the successor parties, whilst in private meetings they acknowledge LP’s rights to its intellectual property.5. What has LP’s response been to ILCA’s actions?
LP has consistently asked to meet with all parties to resolve this issue as well as other pending issues. The last such attempt for an “All Parties Meeting” at the November 2018 ILCA World Council where LP requested that such a meeting be organized at the Dusseldorf Boat Show in January 2019. ILCA refused to respond even after several subsequent reminders of the importance of such a meeting. LP is still prepared to meet with ILCA and WS.6. Why has LP not allowed inspection of Laser manufacturing facilities
• It should be noted that ILCA has not inspected LP manufacturing since June 2015.
• LP has refused access to ILCA for inspection in March 2019 given the expiry of the ILCA license from 31 August 2019.
• LP has offered and World Sailing has agreed to participate in inspection of LP manufacturing by ILCA.
• The issue is not about non-compliance by LP, it is about ILCA’s lack of a proper inspection regime.
• It is an absolute responsibility of the class to inspect its builders. ILCA have not done so for the past four years whilst issuing plaques to LP. This attests to the strong compliance culture and commitment of LP to One Design.7. Is LP cooperating with World Sailing?
LP has met with World Sailing and has fully briefed and discussed its position. They have indicated that they would be willing to participate in a meeting with ILCA. WS has also confirmed that it stands ready to participate in an inspection of LP manufacturing.8. What is LP’s position about competition and FRAND?
LP has prepared a note on its position on this subject (LINK to: Laser Antitrust Doc Final ). This has been discussed with WS who indicated that in general LP position is in line with their requirements.9. What has been the reactions been to ILCA’s recent actions?
A selection of class response can be found here (LINK to: Comments about ILCA Action Against LaserPerformance )
ILCA’s Illegal Change of Laser Name to “ILCA Dinghy”
26 April 2019
Today ILCA announced that it has changed the Laser boat name to “ILCA Dinghy”. These actions are illegal but more importantly they totally disrespect the members. ILCA is neither builder-led nor US-led. It is a member-led organization for its members of whom over 70% are in Europe.
LP reiterates its call to membership:A ILCA move back to Europe where the majority of Laser sailors live and sail.
B. ILCA appoint a professional executive team to run the class operations paid for by increased plaque fees charged to the builders.