Jim D'Addario Defends His Support Of COICA & Domain Seizures

from the and-a-response dept

I recently posted the list of companies that signed a letter addressed to Attorney General Eric Holder and DHS' ICE boss John Morton, supporting the seizure of domain names that the government believes are involved with copyright or trademark infringement. This included support for both the ongoing "Operation in Our Sites" program by ICE and for the proposed COICA bill which would extend the power of the government to seize domains prior to any adversarial hearings or trials. That list has kicked off some interesting discussions, but Jim D'Addario, the CEO of D'Addario and Company, famous makers of guitar strings, stopped by in the comments to defend his decision to sign onto the list. A few folks asked me to respond, and I figured it would be best to do so in a new post. First, I'll repost what D'Addario said, and then respond:

You really should visit and talk to some companies that are living this experience. There is no way to file a legal law suit in every instance someone is stealing my D'Addario Strings trademark. We are family owned business in the USA with sales of $150 million. Sounds big, and rich and all that!!! However last year we spent $750,000 on legal battles and got nowhere. We would be bankrupt trying to protect the 1000 jobs that we provide here in the USA. We are not General Motors, IBM or NIke. The scale is not there.

If we were allowed legitimate access to the Chinese market and the Chinese were not counterfeiting our product we would be able to create 200 to 500 more jobs in the USA.

Don't paint everyone with a broad stroke of the brush. Telling the companies on the list to work harder is an insult. We work as hard as we possibly can already (its 5:30 AM where i am right now and dont stop working until 6:30 PM.

I have personally visited stores in four Chinese cities to see 7 out of 10 sets of my brand of strings are fake. The packaging is perfect, right down to the American flat and the words "Printed and Made in USA". The strings are shxt.

I wonder how that would make you feel if you started a brand name from nothing in 1974 and built it to the largest in the world only to watch people completely rip it off.

So your suggestioin to me is to work harder and sue everyone? I may as well close up or cash out and watch the 1000 jobs evaporate. Or better, maybe i should move the factory to China and destroy another 1000 US jobs?

Go on Alibaba.com and witness the hundreds of thousands of fake product listings. There is nothing on the site that is real or legitimate. At some point the government has to take some kind of police action. This is not just a civil matter, there are criminal (grand larceny) implications here.

I agree there should be due process before a site is shut down. I dont know what that process should be, but when threre is clear evidence submitted to a government agency that a site is selling fake merchandise the government should have some authority to put a URL on hold until they can defend themselves. Let the theives absorb the burden of defending themselves, don't expect the legitimate folks to foot the bill.

How is possible for the public to ask the legitimate manufacturers to bear the role of the government and police every instance of fraud with a law suit? It would be tens of millions of $$$ a year.

Learn more before developing such strong views and 'black listing' good people.

Jim D'Addario - CEO D'Addario and Company

I can definitely understand where D'Addario is coming from. It's the same position that many of these companies are coming from: they're afraid of the changing marketplace. And, yes, when you see counterfeit products in the market, it's understandable that you would get angry and accuse people of ripping you off. Finally, lawsuits are expensive and time-consuming. But, with all due respect to D'Addario, I think he's making an emotional response to a complex issue without realizing the full implications of the position that he's supporting.

First of all, he overestimates the "damage" done by counterfeit products. We've pointed to study after study that suggest the "harm" done by counterfeits is not nearly as bad as most companies believe. That's because most buyers are not being fooled. They tend to know upfront that they're buying counterfeits, and choose to anyway. In other words, they're not doing so as a replacement, but because they'd prefer the counterfeit (often due to pricing), even knowing that it's of inferior quality. However, the studies have also shown that buyers of counterfeit goods quite frequently later "upgrade" to the real version. The counterfeit purchase is aspirational, rather than a substitution.

So, rather than simply assuming the worst about such things, perhaps a better response is to recognize that this is a sign that a lot of people really like his product and want it. From that, the focus should then be on making the legitimate version available, and really reaching out and connecting with the community of D'Addario enthusiasts (of which there are many), and letting them know where and how they can purchase legitimate D'Addario strings, and even giving people additional incentives to buy the legitimate ones. In other words, out-compete the copycats. If those strings really are crappy, then help people learn how to buy the real deal, and offer them incentives to do so.

And, yes, I know that D'Addario already does quite a lot on this front. It has plenty of community features and works hard to connect with fans. The point then is to trust those fans to actually support you. Time and time again we've seen that companies who treat their fans and customers right and with respect, and don't freak out about "thieves" and "pirates," see quite a nice return. Trust your customers, let them know what's going on and they support you. It seems like that's also likely to be a lot more satisfying than worrying about some copycat.

The fact is some people will always buy some cheap strings out there that may be copycats. Those people were unlikely to buy the legitimate strings in the first place, so why even worry about them?

The part I find most troubling in D'Addario's response is this part:

I agree there should be due process before a site is shut down. I dont know what that process should be, but when threre is clear evidence submitted to a government agency that a site is selling fake merchandise the government should have some authority to put a URL on hold until they can defend themselves. Let the theives absorb the burden of defending themselves, don't expect the legitimate folks to foot the bill.

The first two sentences suggest, at the very least, that D'Addario didn't know what he was supporting in signing. He says that there should be due process before a site is shut down. But the two things the letter supports do not provide due process before a site is shut down. In fact, they barely provide any after the site has been shut down. We're talking about months later before sites are even directly informed about the seizures. The claim that the domains should be "put on hold until they can defend themselves" simply goes against the basic premises of American law, and the concept of innocent until proven guilty. At the very least, if the concern is that the sites should be shut down quickly, then let the government file for a preliminary injunction in which the site can defend itself in a quick adversarial hearing before the site is taken down. The fact that he automatically calls people thieves, despite a lack of conviction, again goes against the basic principles of due process. It's also wrong. These people are not thieves. Thieves steal your actual product so you don't have it any more. They may very well be infringers and counterfeiters, but calling them thieves is incorrect and an emotional response to what is, certainly, an emotional issue.

No one doubts that sites selling counterfeit products is a scary issue for many companies. But that's no reason to throw out the legal books and basic due process, and support gov't-backed censorship of websites on a "guilty until given a chance to prove innocence many months later" process. Yes, this puts some burden on legitimate companies, but that's the price we pay for believing in due process in the US.

I would hope that Mr. D'Addario would reconsider his support for these programs, and instead admit that perhaps he was a bit hasty in supporting efforts that are half-baked and have already resulted in the blatant censorship of legitimate speech in the form of certain blogs. If he truly wants help responding to counterfeiters, at the very least, he should be horrified at what's been done already falsely in the name of stopping counterfeiting and infringement. He should instead, be putting pressure on these officials to focus on more clearly defined laws that actually tackle the problems, rather than broadly worded laws that result in clear censorship.

Filed Under: coica, copyright, counterfeiting, domain seizures, guitar strings, jim d'addario
Companies: d'addario