LASER: Assessment and update on current state of affairs for the Class to remain in the Olympics

[Tracy Usher (USA, accompanying photo) is the President of the International Laser Class Association. The views expressed below are his and not necessarily those of Sailing Illustrated. Regardless, we appreciate very much Mr Usher penning this piece to update our readers on the ever-changing Olympic Laser landscape. Your Ed. remains a strong supporter of the Class, and believes it would be another blow to Olympic sailing if World Sailing were not to confirm the class for the 2024 Olympics. –TFE ]

MONTARA, CA (#1170) – With the 2020 Tokyo Olympics now just a year away, this year’s Laser events will see sailors from around the world looking to qualify for the games - making it an exciting time to be following the major regattas!

At the same time, World Sailing is going through the process of filling out its slate of events for the 2024 Olympics with the primary focus, at the moment, on the one-person dinghy events and the International Laser Class Association (ILCA).

At issue are new policies World Sailing has put in place that will require changes to the way ILCA and its commercial partners have operated in the past. How these changes are implemented has garnered a fair bit of public attention, with ILCA pursuing two approaches aiming to ensure our class is retained as Olympic equipment.

In the past few years World Sailing has understood that the procedures it had been following in the selection of equipment for its Olympic events could give rise to antitrust action under European Union law. An investigation into antitrust issues that started in Italy several years ago has now been referred to the EU, and EU Commission enquiries with World Sailing are ongoing to help ensure an acceptable solution.

To address the antitrust issues, World Sailing has modified its procedures for selecting Olympic equipment and also adopted a new policy (the “Olympic Equipment Policy”) that requires all Olympic classes to put in place procedures that would enable any interested and qualified party to become an “approved builder” for that class and to have access to markets with no territorial restrictions.

Complying with World Sailing’s new policy is now a requirement for any class wishing to be considered for inclusion in the 2024 Olympic program. For some classes, such as the Laser Class, this may require a change in the business model for some of the builders and suppliers.

These days, change and controversy seem to go hand-in-hand, and such is the case now as ILCA and the various commercial parties seek to understand and conform to World Sailing’s antitrust policy in order to retain Olympic status for 2024 and beyond.

Of course, some may reasonably question the importance of Olympic status for a highly successful class like the Laser.

It is true that only a fraction of the class members are directly involved in sailing at the Olympic level, but in the modern era of our sport, the one-person dinghy class chosen for the Olympics gains a unique position in sailing which gives it much potential for future growth.

First, for the Laser Class with its three rig variants (Standard, Radial and 4.7), the Olympics provides the pathway for legions of youth sailors to progress through singlehanded sailing as they grow. Through this pathway, some may go on to campaign for the Olympics, but many more will become lifelong Laser sailors – the foundation of our class.

Second, being selected as the Olympic one-person dinghy class opens the door to growth in the emerging economies of the world. Given that 80% of the earth’s population lives on the continents of Asia and Africa, there is tremendous opportunity for growth as the emerging economies in these regions look to showcase themselves on the Olympic stage – and with over 200,000 boats on six continents, the Laser class is uniquely positioned to take advantage of this potential. This not only benefits our class, but also benefits the sport of sailing as a whole.

In short, Olympic status is important to our class not because of the 1% of our sailors who are actively working towards the Olympics, but rather because it represents future growth potential, both in emerging economies and in youth sailing around the world.

The good news for ILCA is that, during its mid-year meeting this past May, the World Sailing Council voted to select the Laser Standard and the Laser Radial classes as equipment for the one-person dinghy events for the 2024 Olympics in France.

But this selection is contingent on the class and its trademark owners putting in place a FRAND compliant procedure by August 1, 2019 in accordance with World Sailing’s Olympic Equipment Policy.

In fact, ILCA has known that this would be a requirement since last November, after the World Sailing Council adopted its Olympic Equipment Strategy by a unanimous vote at its annual conference in Sarasota, Florida.

Since that time, ILCA has been working to help develop a suitable procedure, but unfortunately without the engagement of all the trademark owners. However, with World Sailing’s conditional Olympic selection in May, it seems there may now be an incentive to get engagement from all the parties, but time is now very short.

That the trademark rights have been split up into territories is an accident of history. Originally, there was a single company that owned the Laser trademark for building and selling boats, sails and related equipment around the world.

This trademark owner licensed a number of builders to produce and sell boats and equipment in defined territories under the Laser brand name. Unfortunately, the original trademark holder went bankrupt in the early 1980s with the result being that several of the licensees bought the Laser trademark in their respective manufacturing territories.

Over the next several decades there have been various closures and consolidations resulting in what we see today – a situation where one company owns the trademarks for Japan and South Korea, another for Oceania and the third for the remaining 85% of the world.

This has not necessarily been a smooth process and currently several regions of the world are experiencing significant issues with access to equipment as the largest trademark owner tries to supply its vast multi-continent territory from a single factory in the United Kingdom.

Given this situation, the preferred approach for complying with World Sailing’s policy is to work with the three owners of the Laser trademark to implement a procedure which enables new builders to enter the market while respecting the current trademark.

The current proposal on the table contains two parts. The first part describes the process a potential builder would go through to in order to become approved by ILCA and World Sailing as required by the Class Rules.

The second part describes the process for granting to these new builders a trademark license on a fair, reasonable and non-discriminatory basis (where the term “FRAND” comes from) and without territorial restrictions. This second part can get quite complicated very quickly.

But at the same time this FRAND licensing policy is the foundation for the entire process of complying with World Sailing’s requirements. If there was no clear process to guarantee that a qualified builder could obtain a trademark license under fair and reasonable terms, there would be no point for a new builder to even attempt the approval process, particularly given the expense to tool up and produce the requisite number of sample boats needed to gain final approval.

At the time of this writing there seems to be general agreement between the parties on the first part, the process for approving new builders, but no agreement on the second part, the fair and reasonable terms under which the trademark licensing would occur.

In particular, the issue of guaranteeing a Laser trademark license to an approved and qualified new builder remains unresolved, and ILCA is not aware of any negotiation or discussions taking place the three trademark owners on this topic.

It should be noted that the ILCA Class Rules currently require a builder to have rights to use a Laser trademark in order to produce class-legal equipment, so this issue is critical.

Given the positions being staked out and with the clock ticking, there are definitely questions about whether the parties can come together to an agreement in the short time that remains.

In fact, a recent statement to the parties sent on behalf of the World Sailing Board confirms that “the Board is very concerned that much work needs to be done…to meet World Sailing’s deadline of 1 August.”

The ILCA World Council is similarly concerned, and the sailors who care about our class remaining in the Olympics should be also.

So what happens if the trademark owners fail to implement a procedure for complying with World Sailing’s policy?

At World Sailing’s Mid-Year Meeting the answer was made quite clear: If the class fails to meet World Sailing’s Olympic Equipment Policy by the August 1 deadline then it will be removed from consideration for the Olympics in 2024 and beyond.

This would be an unacceptable outcome for ILCA and its members, made worse because it is a situation over which we have no direct control. We need our three trademark owners to work together and jointly agree on the process for licensing new builders in a fair and reasonable manner. ILCA can assist where possible, but it is really up to the trademark holders to reach an agreement.

So if the Olympics is such a good thing for the growth of the class, one might reasonably ask why the builders and trademark holders won’t just come to an agreement that would allow the class to remain in the Games.

Unfortunately, history suggests that there may be little hope that this can really be achieved, particularly given the very tight timeline issued by World Sailing.

Here it is worth remembering that two of the main parties involved are also engaged in ongoing litigation in U.S. Federal Court that has already spanned most of this decade and that shows little sign of an amicable resolution.

Given this backdrop, it’s difficult to see how the parties will suddenly put aside their longstanding differences and agree to a joint licensing scheme within the next few weeks.

To address the real possibility of no agreement being reached, ILCA has developed a contingency plan for complying with World Sailing’s policy that would essentially “un-brand” our Class Rules.

Historically the class’ fundamental rule contained two provisions tying it directly to the commercial interests. The first, already removed by member vote in 2011, required a builder to have an agreement with Bruce Kirby, Inc. The second requires an approved builder to have the rights to use a Laser trademark.

The contingency plan in front of the membership now is simple: If the class and our Olympic future is being restricted by a trademark, we propose to remove the trademark requirement in the Class Rules and essentially make our rules brand neutral.

If approved by the members, and if no agreement with the current trademark owners is reached, the rule change would enable a FRAND compliant process for approving a builder to go into place.

Once approved, a qualified manufacturer could build and sell boats under an alternate brand name, but since the boats would be built strictly in accordance with the construction manual they would be legal for class-sanctioned events.

If so inclined, a new builder would also be free to negotiate with the trademark owners for rights to use the name Laser and the sunburst symbol, but this would not be required in order to produce class-legal equipment.

In addition, the current builders could continue to build and sell boats under the Laser name, just as they do now. In the end this would be similar to, say, Formula 1 racing, where various manufacturers race their branded cars on equal terms under the F1 banner (and its rules).

As stated previously, change does not come without controversy and there has been much misinformation circulating on social media and even in the sailing media.

My hope is that this article will help my fellow sailors to understand that the top priority for ILCA is to try to convince the current trademark owners to enter into a fair and reasonable trademark licensing scheme to satisfy World Sailing’s policy using the Laser brand.

But as an insurance policy, in case this does not happen by the August 1 deadline, the ILCA World Council is asking the class members to support the proposed change to the Class Rules to decouple our class from the trademark owners and allow it to comply with World Sailing’s policy to approve new builders.

Even if the trademark owners are able to come to agreement on a licensing scheme, we believe it is still in the best interest of the class to pass this change – the experience of the dysfunction between the commercial parties has shown that our class needs to remain strong and independent in order to control our own future.

This is an important moment in the history of this great class and a critically important vote for our sailors and for our sport.

To secure our future, the ILCA World Council urges all class members to support this proposal by voting “YES” for the rule change. Voting is open until July 31 and the online member ballot can be found here: https://www.surveymonkey.com/r/2019ILCARuleChange