The End of Semroc?
 

We received a disturbing packet via courier today. It was from DrinkerBiddle & Reath LLP, representing Hobbico Inc. and Estes-Cox Corporation. It states that it has copyrighted their designs over the years and we are violating copyright and trademark law by replicating any "pictorial, graphic and sculptural elements" of their designs.

They say they own any design pictured in any publication they distributed throughout the years. They single out 17 from their 1974 catalog as an example. I understand how they own the pictures for the Laser-X, Starfire and others, but they also say we have to stop making the Little Joe II, Arcon and Aerobee-350, since they copyrighted them as well. Also in the same catalog were the Saturn 1B and Saturn V as examples of "well-known and popular copies of existing spacecraft." They mention our plans to sell additional models subject to these and other Estes-Cox copyrights.

They also state that we use their logos in a manner that implies authorization, affiliation, license and association with them. Evidently, we have not been clear enough over the years that we did not have anything to do with Estes-Cox.

The complaint is broad enough to cover any products they have depicted in the photos in their catalogs. This would likely include their nose cone shapes, body tube design, rings, chutes, launch lugs, and most of the other 2200 parts we have online. Since most of our revenue comes from parts sales, that would kill us as a company. If they think they can copyright a Little Joe II, then they certainly can "copyright" a BNC-60L design.

From my discussions with an attorney in the past, this complaint is without basis. The intention of the copyright law is not to stifle commerce by allowing a company to copyright a picture of a product and prevent anyone else from reverse-engineering and improving the original product. We have been careful over the years to avoid patent infringement, trademark infringement, and copyright infringement.

We do not know how this is going to play out. I do not respond well to bullies. If they do pursue this and drive us into bankruptcy, it has been a fun ride for all of us. It is futile to defend ourselves against a company that Barry Tunic estimated to be two hundred times our size. It is even more so to go against a company that owns it that is thousands of times bigger than us. We cannot afford a lawyer; we cannot even afford a good meal for a lawyer. The amount of money we have taken in over the years is miniscule, believe me! They just want us to go away. We have been content for the last eight years snacking on the “crumbs” they were not interested in keeping. Our mission has been to provide the models, parts, and services that they were not interested in providing.

We will not re-kit any of the “infringing” products until this is resolved. We have until August 19, 2010 to “resolve this difference amicably,” so when the existing stock is gone, it will probably be gone. It is hard to go out of business “amicably.”

Thanks to all our friends for everything you have done for us!

It could very well be to resolve it amicably, you opt not to contest and admit their copyrights, but nonetheless agree to operate within limits they "permit".

Since it is clearly true you are tiny and not competitive from a business perspective, their motive is clearly to not forsake any rights they would have so long as they enforce them.

You should give them what they legally need, by saying without specifically what you are referring to, that you presume many of the items you sell either violate their property or confuse the consumer you might be. You should come up with a mutually agreeable "disclaimer and admission" that you in no way make claims to such ownership, but that you simply sell parts and kits that resemble the wonderful work they do/did and in the event they release a "similar product" on a mass basis they reserve the right to ask you to withdraw that particular product from market for the period of time Hobbico is actively selling it.

One thing you could do is volunteer to pay a license fee, perhaps 5% of net, to Hobbico as an active and ongoing admission of their property rights. It wouldn't be much money, but it would have the legal standing they require.

Barry said in his YORF interview he was simply not enforcing against you but declared you in violation and reserved the right to sue. That public claim is another variant from the technique Hobbico used.

My advise is to make a license offer along the lines of what I just said.

What nobody wants to see is Estes lose their rights and a cheap, crappy Chinese clone come out of Tridents and Interceptors and Goblins and everybody lose out.

One thing I know about you and everyone here, we all love Estes and wish Hobbico the very best.

Your niche seems to be a cross between "after market" and "tribute".

Jerry

I sure hope you can resolve this Carl, you and your family are some of the best people in the industry

Do different parts types and construction techniques provide enough separation between prior designs and your work? FSI and others are not covered by the Hobbico claim. You could, if capital permits so the SLS route with a fair number of the designs and probably be far enough off for protection. If necessary, the royalty route may be the way to go with a nominal payment per kit that you could pass on to the buying public.

Estes/Hobbico would be destroying the recent goodwill that they have created over new engine releases and old kits if they tried to put you out of business.

Malcolm Smith
NAR & TRA L2

The End of Semroc?
 

WOW!

This is disturbing news Carl.

I have enjoyed your Semroc products and the thought of "The End of Semroc" leaves an empty feeling in my stomach.

Thanks for what all of you have done at Semroc..............

:mad:

Jim

I want to say I'm in shock Carl, but I'm not.

A year ago my little sub-S corporation had a conflict with a much bigger more powerful corporation. An extremely unethical lawyer representing them realized they had a position of leverage over me in a dispute we had, and even though my own legal consul stated we would probably prevail, the legal fees to fight them and the disruption to my business would come back to cost me much more than they were trying to leverage out of me. I was forced to make a deal with the devil even though I KNEW I was right and they were WRONG.

I hope Hobbico comes to their senses and realizes SEMROC is a DRIVING force in making models that consume THEIR main product, ENGINES. A HYDRA 7 consumes 7 at once! They should be sending you a royalty check for goodness sake!

I suspect if they persist, the momentum of good will they have been basking in lately will dry up rather quickly. Talk about cutting off your nose to spite your face!

What a sad turn of events following NARAM. I hope this situation plays out better for you than it did for me.

Maybe it is time to dust off that old engine making machine you have stored in the back room. That'll get their attention. ;)

Carl,

How many and which of your kits are not immediately impacted by this threat? It may be time for me to build inventory for my great-great grandchildren.

Malcolm Smith

In addition to the license agreement they may also be wiling to offer you a wholesale purchase agreement that puts you in a favorable position for niche retail sales of in-production Estes product over the internet.

Jerry

I'm at a loss of words. Where is GH?

This is a most unpleasant turn of events.

I hereby declare a moratorium on the purchase of Hobbico and Estes products (rockets, motors, planes, tools, etc.) on my part until this particular issue is favorably resolved.

Who's with me?