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How anti-competitive lawsuits by incumbents are killing early stage startups

166 points by garry 14y ago

paulsutter 14y ago
I'm dissapointed that YC isn't more focused on teaching strategy - how to attack an entrenched competitor by being different in a meaningful way. Southwest is one of the great strategy stories of all time. Touch of Modern may be hard working decent folks, but they have no apparent strategy. I understand the intent. You're hoping that New York Times picks this up and writes a trend piece. Yeah, I know, all is fair in love and war. I just hate to see YC turn into a more self-righteous version of the Samwer brothers. At least the Samwers have the good taste to keep their public pronouncements to a minimum. I've never heard the Samwers claim to be victimized.
talmand 14y ago
I'm not a lawyer and cannot comment on the validity of the lawsuit nor the law concerning this; but as a designer I can say that neither site has an original design in any way. They both look like standard modern retail sites to me. Design iterations on retail sites are often driven by the consumers who purchase from them, therefore Fab should sue people who purchase items from retail sites.
blahedo 14y ago
This article tells us that the lawsuits are killing startups, but not so much how they're doing so. I guess we can sort of fill in the blanks, but then why read the article?
- kwekly 14y ago
  Quoth the author: "I've been an advisor to the company for years, and you'd be hard pressed to find a more hard-working, dedicated founding team that has endured every roadblock and frustration a startup can experience. They recently decided to pivot to selling modern design-oriented furniture, art, electronics and housewares aimed at young professional men -- a segment they understood well since it was one to which they also belonged. Things have been going great for them, and I couldn't be happier." He's a party with a vested interest, and is doing his bit to spin sympathetic narrative. With humans, a good story is much more persuasive than facts or content or substance.
citricsquid 14y ago
I guess the true reasoning behind the lawsuit is only known by Fab, but I don't think they're making baseless claims. Whether it's "fair" for them to sue for something like this, I don't know, but this page is absolutely copied from Fab.com: http://tctechcrunch2011.files.wordpress.com/2012/08/tomofab2.jpg http://tctechcrunch2011.files.wordpress.com/2012/08/tomofab2... Also their statement doesn't address the actual claims, they spend 3 paragraphs talking about how they're better than Fab and how Fab is bigger than them, one paragraph is mentions the accusations "All of our design elements utilize open source frameworks and are developed in-house." but doesn't address the issue either...
- Symmetry 14y ago
  It seems to me that the main reason those two pages look so similar is that in the TouchOfModern page the product displayed somehow happens to be the exact same shade of red used in the Fab.com interface.
- wheels 14y ago
  While I do think there was almost certainly some loose copying that happened (from the little I know of such, not enough to cause trade-dress problems, however), your link is a bad example. That could just as well be The Standard E-Commerce Theme. About 90% of e-commerce shops have the exact same elements on every page.
  - citricsquid 14y ago
    It's not the layout or the elements positioning, it's the style. You can clearly see that they've seen style choices fab have made and copied them, for example here is 4 things: http://i.imgur.com/8ONGa.png http://i.imgur.com/8ONGa.png I don't think it's plausible for ToM to have "coincidentally" made identical style choices to Fab, they're just too alike to not be intentional copying.
    - bentlegen 14y ago
      I'm not a lawyer, or a designer, but those examples seem incredibly weak. A generic tag icon next to the item price, in a different color? A "sale ending" notice with different color, location, and font?
powera 14y ago
Second edit: The article reads much better now with commentary about the lawsuit. As it stands, this article is mostly linkbait/self-promotion. The title is very misleading; this article isn't about a trend, it's really about one startup (that the author of the post is an advisor for) getting sued. It's full of meaningless promotional statements like "Touch of Modern actually seeks out modern products exclusively, to the exclusion of the standard bourgeois bohemian hipsterdom of Fab", yet never even comments on what the lawsuit is about. Just because a company is small doesn't mean that anybody suing it is "abusing the system". If you're saying the lawsuit is baseless and designed to just penalize the startup, say SOMETHING about what the lawsuit is, don't just say how awesome your product is.
- garry 14y ago
  Edited: The suit claims violation of trademark and trade dress infringement, improper use of IP (apparently the UI) and ironically, unfair competition. While there are similarities between some pages of the design, I find it difficult to believe Fab can claim all right to the use of Helvetica, or industry-standard design elements like checkout buttons.
  - autophil 14y ago
    The only thing I got out of this rather lightweight article was "Business models shouldn't be copyrightable or patentable -- yet today's lawsuit seems to indicate that some entrepreneurs believe they are" This insinuates Fab.com is suing because Touch of Modern has a similar business model. However, I now sense this is deflecting the real truth, which is that more than just a business model and the use of Helvetica is being copied.
  - nailer 14y ago
    It's more direct than that, screen shots from the suit: http://techcrunch.com/2012/08/15/fab-lawsuit-touch-of-modern-whitehawk-ventures/ http://techcrunch.com/2012/08/15/fab-lawsuit-touch-of-modern... (iPad app popup warning)
    - 14y ago
staunch 14y ago
What's even worse about this case is that Fab's business was very obviously inspired by companies like Groupon and Pinterest.
erikpukinskis 14y ago
Ironically Southwest went on to use lobbying to shut down Texas high speed rail projects. You either die a hero, or....
learc83 14y ago
To win on trade dress, Fab.com is going to have to prove that the design is distinctive, and that the average consumer associates the design with Fab.com Their design is generic enough that I think it will be nearly impossible to prove distinctiveness. I'm sure that A Touch of Modern can find plenty of very similar sites to prove the design isn't distinctive. Additionally the design elements can't serve a utilitarian purpose--the clock icons next to the timer, and the price tags next to the price, clearly serve a utilitarian purpose. What else would you use to highlight a timer or a price?
- slapshot 14y ago
  > What else would you use to highlight a timer or a price? A different color font, a larger font, a colorful highlight, arrows, bullets, a speech balloon, quotation marks, an hourglass, a dollar sign, a picture of money... there are many other designs available. That doesn't mean that it's an automatic winner for Fab, but there are many other ways that ToM could have designed the site. > the design elements can't serve a utilitarian purpose When courts use "functional purpose" in the trade dress context, they usually mean things like product features that make the product work. For example, courts have ruled that things like the physical design of a conveyor belt can't be protected as trade dress (the "Value Engineering" case). I'm not sure that design elements that highlight certain information are "functional" in the way that a conveyor belt design is "functional." That said, it might not matter: in the "Clicks Billiards" case (2001), the Ninth Circuit held that a _combination_ of functional elements can be protected as trade dress: there, the combination of 37 elements of a billiards hall design were held to be eligible for protection even though some were undeniably functional (the presence of acoustic tiling on parts of the walls and a certain style of "drink rails") and some were pretty generic in isolation (one was "dark mahogany wood finishes"). The court ruled that the combination could still be protected. It looks like Fab is trying to make a similar argument here that the combination adds up to being too similar. (This lawsuit was filed in San Francisco, which is covered by the Ninth Circuit.)
deleted 14y ago
[deleted]
SeanLuke 14y ago
I don't know about the lawsuit, but the landing pages for touchofmodern.com and fab.com are practically identical. http://fab.com/ http://fab.com/ https://www.touchofmodern.com/ https://www.touchofmodern.com/
- sudonim 14y ago
  Gilt has changed their homepage, but Im pretty sure they were both "inspired" by this page: https://img.skitch.com/20120816-dhjgxct5wqjq26413w9j654g8q.png https://img.skitch.com/20120816-dhjgxct5wqjq26413w9j654g8q.p...
- pauldix 14y ago
  as is the landing page for any http://launchrock.com/ http://launchrock.com/ site and a million other web sites on the internet. If that's the criteria for suing someone (which it seems to be), we seriously need to rethink the entire system. Throwing out all patent law sounds like a good start to me.
  - pauldix 14y ago
    although patent law doesn't seem to be the culprit here. Either way, it's shameful that Fab can sue for look/feel.
    - endersshadow 14y ago
      > Either way, it's shameful that Fab can sue for look/feel. Uh, really? You're talking about trademark and trade dress. Why, on this green Earth, should you not be able to protect your marks or dress? Also, this article points to Braniff, Trans-Texas, and Continental suing Southwest as a historical corollary: It's not. Southwest was sued because it was operating outside of federal regulations (which it claimed it could avoid because it only operated in Texas) [1]. Fab is suing based on marks and dress--something wildly different from Southwest's suit. Additionally, trademark law nearly requires you to vigilantly protect your marks. In that way, it protects against selective suits and bullying where beneficial. [1]: https://en.wikipedia.org/wiki/Southwest_airlines#Foundation_.281966-1971.29 https://en.wikipedia.org/wiki/Southwest_airlines#Foundation_...
grabeh 14y ago
I suspect that a slight redesign of the site in question would not 'kill' Touch of Modern.
- talmand 14y ago
  Depends on what "slight redesign" means. Such a change could potentially cost them a great deal of time and money.

166 points by garry 14y ago

I'm dissapointed that YC isn't more focused on teaching strategy - how to attack an entrenched competitor by being different in a meaningful way. Southwest is one of the great strategy stories of all time. Touch of Modern may be hard working decent folks, but they have no apparent strategy. I understand the intent. You're hoping that New York Times picks this up and writes a trend piece. Yeah, I know, all is fair in love and war. I just hate to see YC turn into a more self-righteous version of the Samwer brothers. At least the Samwers have the good taste to keep their public pronouncements to a minimum. I've never heard the Samwers claim to be victimized.

talmand 14y ago

I'm not a lawyer and cannot comment on the validity of the lawsuit nor the law concerning this; but as a designer I can say that neither site has an original design in any way. They both look like standard modern retail sites to me. Design iterations on retail sites are often driven by the consumers who purchase from them, therefore Fab should sue people who purchase items from retail sites.

blahedo 14y ago

This article tells us that the lawsuits are killing startups, but not so much how they're doing so. I guess we can sort of fill in the blanks, but then why read the article?

kwekly 14y ago
Quoth the author: "I've been an advisor to the company for years, and you'd be hard pressed to find a more hard-working, dedicated founding team that has endured every roadblock and frustration a startup can experience. They recently decided to pivot to selling modern design-oriented furniture, art, electronics and housewares aimed at young professional men -- a segment they understood well since it was one to which they also belonged. Things have been going great for them, and I couldn't be happier." He's a party with a vested interest, and is doing his bit to spin sympathetic narrative. With humans, a good story is much more persuasive than facts or content or substance.

citricsquid 14y ago

I guess the true reasoning behind the lawsuit is only known by Fab, but I don't think they're making baseless claims. Whether it's "fair" for them to sue for something like this, I don't know, but this page is absolutely copied from Fab.com: http://tctechcrunch2011.files.wordpress.com/2012/08/tomofab2.jpg http://tctechcrunch2011.files.wordpress.com/2012/08/tomofab2... Also their statement doesn't address the actual claims, they spend 3 paragraphs talking about how they're better than Fab and how Fab is bigger than them, one paragraph is mentions the accusations "All of our design elements utilize open source frameworks and are developed in-house." but doesn't address the issue either...

Symmetry 14y ago
It seems to me that the main reason those two pages look so similar is that in the TouchOfModern page the product displayed somehow happens to be the exact same shade of red used in the Fab.com interface.
wheels 14y ago
While I do think there was almost certainly some loose copying that happened (from the little I know of such, not enough to cause trade-dress problems, however), your link is a bad example. That could just as well be The Standard E-Commerce Theme. About 90% of e-commerce shops have the exact same elements on every page.
- citricsquid 14y ago
  It's not the layout or the elements positioning, it's the style. You can clearly see that they've seen style choices fab have made and copied them, for example here is 4 things: http://i.imgur.com/8ONGa.png http://i.imgur.com/8ONGa.png I don't think it's plausible for ToM to have "coincidentally" made identical style choices to Fab, they're just too alike to not be intentional copying.
  - bentlegen 14y ago
    I'm not a lawyer, or a designer, but those examples seem incredibly weak. A generic tag icon next to the item price, in a different color? A "sale ending" notice with different color, location, and font?

powera 14y ago

Second edit: The article reads much better now with commentary about the lawsuit. As it stands, this article is mostly linkbait/self-promotion. The title is very misleading; this article isn't about a trend, it's really about one startup (that the author of the post is an advisor for) getting sued. It's full of meaningless promotional statements like "Touch of Modern actually seeks out modern products exclusively, to the exclusion of the standard bourgeois bohemian hipsterdom of Fab", yet never even comments on what the lawsuit is about. Just because a company is small doesn't mean that anybody suing it is "abusing the system". If you're saying the lawsuit is baseless and designed to just penalize the startup, say SOMETHING about what the lawsuit is, don't just say how awesome your product is.

garry 14y ago
Edited: The suit claims violation of trademark and trade dress infringement, improper use of IP (apparently the UI) and ironically, unfair competition. While there are similarities between some pages of the design, I find it difficult to believe Fab can claim all right to the use of Helvetica, or industry-standard design elements like checkout buttons.
- autophil 14y ago
  The only thing I got out of this rather lightweight article was "Business models shouldn't be copyrightable or patentable -- yet today's lawsuit seems to indicate that some entrepreneurs believe they are" This insinuates Fab.com is suing because Touch of Modern has a similar business model. However, I now sense this is deflecting the real truth, which is that more than just a business model and the use of Helvetica is being copied.
- nailer 14y ago
  It's more direct than that, screen shots from the suit: http://techcrunch.com/2012/08/15/fab-lawsuit-touch-of-modern-whitehawk-ventures/ http://techcrunch.com/2012/08/15/fab-lawsuit-touch-of-modern... (iPad app popup warning)
  - 14y ago

staunch 14y ago

What's even worse about this case is that Fab's business was very obviously inspired by companies like Groupon and Pinterest.

erikpukinskis 14y ago

Ironically Southwest went on to use lobbying to shut down Texas high speed rail projects. You either die a hero, or....

learc83 14y ago

To win on trade dress, Fab.com is going to have to prove that the design is distinctive, and that the average consumer associates the design with Fab.com Their design is generic enough that I think it will be nearly impossible to prove distinctiveness. I'm sure that A Touch of Modern can find plenty of very similar sites to prove the design isn't distinctive. Additionally the design elements can't serve a utilitarian purpose--the clock icons next to the timer, and the price tags next to the price, clearly serve a utilitarian purpose. What else would you use to highlight a timer or a price?

slapshot 14y ago
> What else would you use to highlight a timer or a price? A different color font, a larger font, a colorful highlight, arrows, bullets, a speech balloon, quotation marks, an hourglass, a dollar sign, a picture of money... there are many other designs available. That doesn't mean that it's an automatic winner for Fab, but there are many other ways that ToM could have designed the site. > the design elements can't serve a utilitarian purpose When courts use "functional purpose" in the trade dress context, they usually mean things like product features that make the product work. For example, courts have ruled that things like the physical design of a conveyor belt can't be protected as trade dress (the "Value Engineering" case). I'm not sure that design elements that highlight certain information are "functional" in the way that a conveyor belt design is "functional." That said, it might not matter: in the "Clicks Billiards" case (2001), the Ninth Circuit held that a _combination_ of functional elements can be protected as trade dress: there, the combination of 37 elements of a billiards hall design were held to be eligible for protection even though some were undeniably functional (the presence of acoustic tiling on parts of the walls and a certain style of "drink rails") and some were pretty generic in isolation (one was "dark mahogany wood finishes"). The court ruled that the combination could still be protected. It looks like Fab is trying to make a similar argument here that the combination adds up to being too similar. (This lawsuit was filed in San Francisco, which is covered by the Ninth Circuit.)

deleted 14y ago

[deleted]

SeanLuke 14y ago

I don't know about the lawsuit, but the landing pages for touchofmodern.com and fab.com are practically identical. http://fab.com/ http://fab.com/ https://www.touchofmodern.com/ https://www.touchofmodern.com/

sudonim 14y ago
Gilt has changed their homepage, but Im pretty sure they were both "inspired" by this page: https://img.skitch.com/20120816-dhjgxct5wqjq26413w9j654g8q.png https://img.skitch.com/20120816-dhjgxct5wqjq26413w9j654g8q.p...
pauldix 14y ago
as is the landing page for any http://launchrock.com/ http://launchrock.com/ site and a million other web sites on the internet. If that's the criteria for suing someone (which it seems to be), we seriously need to rethink the entire system. Throwing out all patent law sounds like a good start to me.
- pauldix 14y ago
  although patent law doesn't seem to be the culprit here. Either way, it's shameful that Fab can sue for look/feel.
  - endersshadow 14y ago
    > Either way, it's shameful that Fab can sue for look/feel. Uh, really? You're talking about trademark and trade dress. Why, on this green Earth, should you not be able to protect your marks or dress? Also, this article points to Braniff, Trans-Texas, and Continental suing Southwest as a historical corollary: It's not. Southwest was sued because it was operating outside of federal regulations (which it claimed it could avoid because it only operated in Texas) [1]. Fab is suing based on marks and dress--something wildly different from Southwest's suit. Additionally, trademark law nearly requires you to vigilantly protect your marks. In that way, it protects against selective suits and bullying where beneficial. [1]: https://en.wikipedia.org/wiki/Southwest_airlines#Foundation_.281966-1971.29 https://en.wikipedia.org/wiki/Southwest_airlines#Foundation_...

grabeh 14y ago

I suspect that a slight redesign of the site in question would not 'kill' Touch of Modern.

talmand 14y ago
Depends on what "slight redesign" means. Such a change could potentially cost them a great deal of time and money.