When Lawyers and Marketers collide: Why Ford is suing their biggest fans.
By Chirag Asaravala

On May 23rd, 2006 we presented an FMWire story on Ford's efforts to sue companies infringing on Ford's trademarks. We asked you to participate in a poll (see side bar) and submit comments to us in an open format. 92% of you agreed that Ford's attempts to sue businesses using Ford trademarks, like "Mustang", in their business name was detrimental, not beneficial, to Fords image.

On June 6th, 2006 we submitted the poll information and all of your comments to Mr. Jim Cain, Mr. Charlie Holleran, and Mr. Dan Bedore at Ford Motor Company. These are the three key individuals in Ford's marketing, communications, and public-relations departments. We did this as fellow Ford enthusiasts, all the while knowing that we were potenially risking similar actions against this business. After all, FordMuscle uses "Ford" in the name this publication.

We pick up the story today, June 26th, 2006, by stating that we have not received a response from Ford to our submission, which included the passionate contributions of more than 100 FordMuscle readers through the FMWire. However, we are confident that Jim Cain, Charlie Holleran, and Dan Bedore, and many others, on the top floors at 1 American Road in Dearborn, Michigan got the message. And we're quite certain there is a fewd brewing between the law and public relations departments at Ford headquarters.

Dr. W. Edwards Deming said “Profit in business comes from repeat customers, customers that boast about your product or service, and that bring friends with them.”

In the world of today's business, particularly big corporate business, there often exists a force that unknowingly works against a company's efforts to realize Deming's wisdom. As enterprises get larger, especially in a litigious society like ours in America, companies inevitably seek out and often build in-house legal staffs. In fact, it is only in recent decades that most publically traded companies have had a General Counsel position reporting directly to the CEO, and this General Counsel position is typically among the top three salaries paid by the company (usually 65% of the CEO's pay).

Among other things, the role of corporate law department is to protect the company's intellectual property, patents, and trademarks. A company's ideas, if they are profitable, are surely to be imitated (See Port Job.) Companies protect their designs, brands, and inventions using the patent and trademark laws set forth by the US Department of Commerce. Once a company files and receives a trademark or patent they have considerable protection in the US federal court system.

The dilema arises when and how the attorneys choose to enforce their companies trademark rights. This is where you see the disconnect between the commercial interests and legal interests of a company. Often times, as in the case of the Ford Motor Company, it is the public eye that is the first to notice this dichotomy.

Millions of Angry Enthusiasts
With its stock at an all time low, Ford is neck deep in efforts to reinvent itself and maintain a pulse. Various corporate campaigns have been launched by Fords top brass. Euphemistic slogans such as "Way Forward" and "Bold Moves" try to put a positive spin on otherwise well-understood business tactics of job cuts, plant closiers, and product restructuring. In this time of business turmoil, Ford needs you more than ever to continue buying their vehicles.

Oddly enough, Ford has opted to bite the very hands that feed them for over 40 years...their enthusiast base. Ford's biggest marquee (and trademark) is the Mustang. Therefore, it is no coincidence that Ford's biggest fans are often Mustang owners. There are many other Ford fanatics of past and present Ford name plates. Falcons, Fairlanes, and even F-150 enthusiasts amount to an estimated several million customers world wide. These enthusiasts are supported by thousands of businesses who manufacture and sell specific goods and services for modifying, restoring, and maintaining these automobiles. Many of these businesses often use the name of Ford vehicle makes in their own business name or website.

Ford's legal team decided it was time to take action against companies using Ford trademarked brands in their business or publication name, URL, or in advertising. For instance, if you owned a business called "Joe's Mustang Parts and Service", Ford wants you to turnover the name to them and pay a royalty fine based on their calculation of how much your business has earned. It's enough to put most legitimate businesses out of business. In some cases, that is Ford's demand. Shut down or Ford will sue you for more in the Michigan court system and Ford almost always wins in the Michigan court system.

What Ford doesn't realize is that it's not only the hundreds or potentially thousands of business owners that are angry, but rather it is the millions of patrons of those businesses - fans like you and I, who are livid. If Ford is paying attention, that amounts to a very loud and clear message regarding the one thing they care about the most right now - sales.

I recently had an opportunity to address several hundred patrons of one prominent classic "Mustang" business at their annual car show and meeting. I conducted a quick survey by show of hands. First I asked how many of them owned a classic Ford vehicle. All hands were raised. Then I asked how many planned to buy a new Ford vehicle this year, or had bought one within the last year. Just about all of the hands went back up in the air.

It should be no surprise to anyone, including Ford, that enthusiasts of classic vehicles buy new vehicles of the same brand. Repeat customers and brand loyalty, it is the proverbial slam-dunk in any business and no amount of thirty-second marketing on American Idol can bring it back once it is gone.

The Left and Right Hand
We're not sure why now, at the depth of their troubles, Ford decided to take action. We do know however that this isn't the first time Ford has proceeded in this manner. In the 1990's, at the peak of the dot-com boom, Ford and many other companies realized the internet represented a huge yet uncontrollable, marketing and public-relations medium. Anybody and everybody could register a domain name and start a business, or a publication, and effectively say or sell what they wanted with very little regulation and oversight. Before many of the "old world" corporations could react to this new medium, savy twenty-something web developers had snatched up domain names such as Ford-Trucks.com and Volvo-Parts.com. Ford and many other companies realized they were missing out on capitalizing on these domain names themselves and decided to wield their strength by calling in the lawyers.

Sometime in 1999 or 2000 the webmasters of several "Ford" enthusiast websites were sent invitations to fly out to Dearborn to meet and dine with Ford representatives - all expenses paid. Most assumed it was a PR effort, Ford's attempt to thank those that were promoting their products, perhaps even a chance to discuss advertising and promotional support. Instead, the day following a lavish dinner the night before, the guests were brought into a large meeting room on the top floor of Ford's headquarter building. A team of suits walked in with stern faces and presented each of the website owners with a demand letter. The letter demanded each of them to immediately sign over the domain name, as it was a trademark infringment to use Ford or Mustang in their URL name, or otherwise face a lawsuit. They were asked to sign the letter right there and then, there was no attempt to resolve the situation by licensing the use of the names.

Most of the people in that conference room walked out without signing, betting that the whole situation was a bluff and Ford wouldn't follow through. After all, could a company really be so stupid to shut down websites that draw tens of thousands of their customers and encourage them to be loyal to Ford products? Their gamble paid off and Ford quietly retracted their efforts. FordMuscle was not a part of the round-up, but many of the sites which were part of the initial attempt were never contacted again by Ford. In fact, some of the sites now display Ford advertising, or sell Ford Racing products - a clear sign that the left hand at Ford often doesn't know what the right hand is doing.

Scars run Deep
Ford isn't doing the wrong thing by protecting their brands and trademarks. But companies have to choose their battles, and weigh the public-relations consequences that aggressive litigation can bring. Ford perhaps is reeling in past losses to exclusive rights to brands such as GT40 and Futura. Safir Engineering owned the original rights to "GT40" and decided not to grant licensing to Ford when they announced plans to build the new GT supercar. When Ford wanted to ressurect the Futura nameplate for what they now call the Fusion, they learned Pep Boys had obtained the trademark since Ford had not used it in over three years. Carroll Shelby also lost considerable potential revenue by not aggressively securing the Cobra and Shelby brands. The Cobra replica kit-car is the most reproduced vehicle in kit form, and Shelby perhaps lost milllions in royalties. Or, it could be argued, he made millions by not interfering with the development of a worldwide enthusiast following.

Where does it stop?
The internet in particular changes the landscape of trademark enforcement. Take for instance how you use search engines, and how companies use textual advertising like Google Adwords. Lawyers are now arguing in court that buying keyword based search engine ads with a trademarked name constitutes infringement. If you search for "Mustang parts" and a bunch of paid ads show up above the search results, they argue that is infrigement and dilution of the brand. How far do they want to take it? Perhaps we should cover up any and all Ford brands and identifiers because they haven't given us explicit authority to display them?

What is detrimental is the effects of consumers taking a stance against unreasonable business practice. Go after the real infringers, the ones who sell counterfeit goods or use logos and brands for sole profit and no tangible benefit to Ford. Manufacturers and retaliers who have helped cultivate and build the very brands that Ford is trying to protect are not the ones who should be put out of business.

Ironically, it was also Deming who warned post-WWII American automakers that shoddy products and poor quality would be their demise. They didn't listen but the Japanese did, and quickly grasped a foot-hold in the American economy. All signs seem to indicate Ford is about to ignore his advice again.