Laser Update: Equipment Shortages, Name Change, Legal Action & More

Here is an update about Laser class developments in this end of the year 2019, a chaotic year for the Laser, which started with the « termination » of the world’s largest builder - LaserPerformance - in March, followed by a controversial and partially reversed name-change in April and the loss to the RS Aero in the World Sailing equipment trials. Yet the Laser was saved by the insistence by World Sailing member countries to keep the boat Olympic. World Sailing then worked with the Laser class on « proposed arrangements » aimed at getting the class to meet antitrust and other requirements.

4.7 ILCA Sail (4.7 Branding Has Been Removed)
But the controversial « proposed arrangements » of the Laser class remain to be implemented, and undoubtedly to be legally tested. Meanwhile, there is impatience, particularly in Europe, where shortages of equipment are becoming acute, to the point that the European branch of the Laser class - EurILCA - issued an ultimatum to its mother organization ILCA on December 1, asking inter alia for the reinstatement of LaserPerformance, a rapid reform of the class governance and guarantees of a membership approval before any changes to the standard, radial and 4.7 rigs.

At the time of writing this article, there are no signs of any tangible progress towards these 3 core aspects of EurILCA’s demands, and it is suggested here that World Sailing steps in again. Without a resolution, anything could indeed happen, including continuing equipment shortages, an implosion of the class and the loss of the Olympic status for 2024.

Yes, despite appeasing information that can be found in the mainstream sailing media, it is as serious as that.

Growing Shortages Throughout Europe

If there is something lucrative with the Laser, it’s sails. These don’t last long, especially the Radial and Standard sails, and they are overpriced. We have already analyzed that non-class sails, of similar quality, can cost 4 or 5 times less than the « class-legal » sails. Yet despite the lucrative nature of the Laser sail business, there are now shortages in several countries. Why? Because of the « termination » of LaserPerformance by the Laser class, some 9 months ago, on March 28. You can find many non-class sails, from a variety of manufacturers. But for sails with a class button, it’s about impossible in a number of European countries. As competitive sailors use many sails, the shortages are negatively impacting the racing as well as the Laser dealerships.

New Names for the ILCA Sails?

With a quasi-monopoly on class-legal equipment, Performance Sailcraft Australia unveiled a new range of class-approved sails. But these are now ILCA sails, and not Laser sails. This is a development that is just a few days old. The pricing for the sails, that don't even cost US$50 to produce, is apparently set at US$600 - continuing highly lucrative commercial practices at the expense of the sailors. On the bag of the 4.7 sail, there is a surprising mention « ILCA 4 Folded. » This suggests that the Laser class is changing the name of the sails too, probably in view of hoping to avoid trademark issues, as there is a registered trademark by Velum (a company associated to LaserPerformance) on the 4.7 sail. The names of the Radial and Standard sails may also be changed accordingly, to ILCA 6 and ILCA 7 …  These name changes for sails seem to conflict with the Laser class rules, that explicitly refer to the Laser 4.7, Radial and Standard. Note that these new sail names are not to be confused with the mylar sails of the Bethwaite Australian C rigs, that are also being promoted by ILCA, at least its top leadership, and by the remaining Aussie and Japanese builders, namely the C5, C6 and C8 rigs, but which are not (yet?) accepted for racing.

Sails with ILCA Logo to be Used at Laser Worlds in Australia

On December 3, following the annual meeting of ILCA’s World Council, changes were made to the Notices of Race for the 2020 Worlds, both for the Standard and the Radial, to be held in February in Melbourne. The modification of the Notice of Race states … « Supplied sails and battens will be class legal and with numbers applied by the organizing authority. » This is a novel element, as competitors usually bring their own (new) sail at Laser world championships. Why this move? It appears the goal is to promote the ILCA brand, and that the use of sails with ILCA logos will be imposed to the athletes. Remember, at the Youth Worlds in Kingston this year, there were already many Aussie ILCA Dinghies competing - winning 3 out of the 4 world titles in contention - but sailors had brought their own sails, with the usual Laser sunburst logo. The use of the ILCA logo in the sails, even if the Worlds take place in a location where PSA / Global Sailing control the Laser trademark, seems to be motivated by the desire by the Laser class ILCA to promote and rapidly impose the ILCA brand name.

The first pictures of the "ILCA Sails" are now available. For the 4.7 sail, they completely removed the 4.7 branding, and added orange in the sail - probably as a prelude to completely get rid of the sail and replace it with the also orange C5 color scheme. The look of the sail is similar to that of the photoshop montage the Laser class produuced when it first controversially announced the new name for the Laser on April 25,  in a statement « “ILCA Dinghy” Is New Face of World’s Most Popular Racing Boat ». The statement, which incorrectly claimed it had "completed" the name change for the Laser towards ILCA Dinghy, was so controversial that it was retroactively changed by the Laser class, with some clarification:  « ILCA emphasizes that a vote of the members will be conducted before the changeover will be official. » This also prompted calls for resignations of ILCA’s president and executive director by Laser class associations in Italy and Spain, as well as by prominent sailors such as Robert Scheidt, in the context of a petition signed by hundreds of sailors. Yet, there was no change in ILCA’s top leadership, and when it came time to vote last August, things were not properly explained to the membership - to the point that at the Youth Worlds in Kingston - the mostly minor athletes were asked by the class to « Vote "Yes" to make sure Laser stays Olympic in 2024 and 2028 » while they were in reality voting for the name change to ILCA Dinghy … And then came the Survey Monkey vote, and then the World Sailing approval of proposed arrangements for the 2024 Olympics, and then came the confidential PKF audit, and then came the EurILCA ultimatum …

Active Promotion of the ILCA Name, Yet Use of Laser Name Expected to Continue

The use of ILCA branded sails at the world championships next year fits into the wider context by the Laser class to establish the ILCA brand name. The idea of having ILCA Dinghies, along with Lasers, unbranded boats and boats with even different brands, seems to be something of the past. It seems it was a ploy to avoid scaring those who wanted to keep the Laser name. In its August document « Men and Women’s One Person Dinghy, » World Sailing indicated that new manufacturers could negotiate a trademark license agreement with one or all of the existing trademark holders, but also had « the option to produce and market class-legal boats and equipment under a different brand name. » It appears, however, that new builders will not be recommended to seek a trademark agreement with Velum/LaserPerformance for using the Laser name and logo. Yes the Laser class is definitely distancing itself from one of the most established brand names in sailing - the Laser brand name, which it does not control and has not even sought to purchase from its owner.

ILCA Logo on Spars
The alternative ILCA brand name, which was registered in Europe back in October 2018, following an application in June of the same year, is aimed at circumventing the trademarks for the Laser name and logo - a move that is considered illegal by LaserPerformance and is anticipated to be litigated in court, unless a miracle solution is found to the conflict. In a December 18 2019 announcement, the IlCA Laser class stated that « all new builders will be issued a royalty-free license to use the ILCA trademark in connection with the marketing and sale of class legal boats. » Note that the ILCA name is already found in recent boats, as the name appears on World Sailing plaques, but in this case ILCA refers to the International Laser Class Association, and not the boat. As for World Sailing, the organization is still recognizing the Laser, the Laser Radial and the Laser 4.7 at this time - there is no mention of any ILCA Dinghy in the classes and equipment section of the World Sailing website.

But will the still very much unknown ILCA name be actually used by sailors and the general public? Maybe not, as it’s suggested in a recent article of the Italian online magazine The magazine, in an analysis of the challenges associated with the name change and meeting the World Sailing antitrust requirements, indicated that it would continue to use the Laser name. From the very beginning of the Laser name change saga, the unofficial message by class officials in private conversations was as follows: don’t worry, we just change the name but we will always call the boat a Laser. Remember that there was a short-lived attempt to establish another name - the Gamma - but at the end, it was the « ILCA » that was retained by the International Laser Class Association - ILCA - to replace the Laser name. In reality, it’s widely acknowledged that most people are expected to continue to use the Laser name, and the fact that the class will not change its own name, International Laser Class Association, will likely ensure the perpetuation of the Laser name in the decades to come. In the article, by Michele Tognozzi, it’s made clear that even if there is a name change, the boat will continue to be a Laser and therefore the magazine will continue to use the Laser name. From an intellectual property perspective, all of this is of course anathema, and may contribute to strengthen the argument of LaserPerformance that the name change to ILCA Dinghy is illegal.

PSA ILCA Dinghies Available for Purchase in Europe

With the importation of Australian PSA IlCA Dinghies last summer in Kingston, Canada, for the Youth Laser Radial and 4.7 Worlds, there had been an anticipated legal action by LaserPerformance to seize the hulls. This was indeed an importation in a country where the Laser trademarks are held by LaserPerformance. Despite the announcement by the CEO of LaserPerformance, Farzad Rastegar, on Sailing Illustrated, that the boats would be seized, this did not take place, and many of them were rapidly sold to Canadian and USA buyers after the racing. Today, the Laser class seems confident that the name change to ILCA Dinghy allows for the boats to be imported in Europe and other « LP Territories. » This « will allow all builders to sell boats, sails and equipment into any territory » claims the Laser class in its December 18 2018 statement.  The Australian builder, which presently holds a quasi global monopoly thanks to the termination of LaserPerformance, is known to have been seeking dealers in Europe and expand its business there, at the expense of LaserPerformance.

While a number of dealers remain on the fence, given their long-lasting relationship with LaserPerformance and the fear of legal actions, there are at least two companies that have made public their collaboration with PSA, one in Greece and one in the UK. The latter company - - based in Northampton, features prominently on its website the « ILCA PSA Laser » available for sale. « Brand New Australian quality built boats with World Sailing Class Legal Plaque and ILCA QR barcoded spares » states the website, adding « This is the only fully Class Legal boat in the UK. » All these statements will be music to the ears of the LaserPerformance lawyers. The boats are not really discounted, as they were in Kingston, Ontario. Price for a complete boat with composite upper mast, carbon tiller and dyneema lines is £6,300 (i.e. €7,395 or US$8,192), a price about 50% higher than the « Club Edition » (not class-approved) Lasers available from LaserPerformance, and not that far away from the price of a … RS Aero, a boat now becoming more popular than the Laser with many « week-end warriors » including in the very active UK single-handed dinghy market.

LaserPerformance Contemplates its Next Moves

In its December 18 2019 statement, the Laser class indicated that it issued on December 6 2019 to LaserPerformance an « Approved Builder License Agreement, which would allow the company to be reappointed as an approved manufacturer of class legal boats and equipment. » This is nearly 9 months after its « termination » of LaserPerformance, for allegedly having refused an inspection of its facilities, which had not been inspected for several years. Remember, despite this termination, LaserPerformance was able to receive extra World Sailing plaques in exchange for providing, free of charge, boats for the youth worlds in Poland - an arrangement brokered by World Sailing President Kim Andersen. The reinstatement of LaserPerformance was however delayed by slow action by the Laser class to organize an inspection of the LaserPerformance building facilities in the UK, followed by slow action to issue paperwork to re-approve the builder, which controlled until recently over 80% of the world production. The issuance of documents by the Laser class, on December 6, may have been prompted by the ultimatum, issued on December 1, by its European branch, EurILCA, to take all necessary steps to reinstate the builder.

Lasers supplied by LaserPerformance at World Sailing Youth Worlds in Gydnia, Poland

At the time of writing this update, LaserPerformance has not issued a formal statement regarding the situation. Yet it appears that there are several aspects of the « Approved Builder License Agreement » submitted by the Laser class for signature that are not acceptable to LaserPerformance. This is something that was anticipated, as there is still ongoing litigation - relating to the Kirby Torch case - regarding possible design fees to be paid by LaserPerformance to Global Sailing / Performance Sailcraft Australia, as well as trademark issues relating to the use of « International Laser Class Association » and « ILCA » by the Laser class, which would de facto become an « International ILCA Dinghy Class Association. »

Remember, the name change to ILCA Dinghy has been considered, from the very beginning, as illegal by the British builder, and there are probably substantial trademark related issues in the licence agreement documents that have been submitted by ILCA for signature. LaserPerformance has remained silent regarding its legal strategies. Circumventing a well-established and dominant trademark such as the Laser, and keeping the class name as the International Laser Class Association, seems also prone to serious trademark infringements, which could be litigated for years and years, with potentially huge legal costs and penalties for the defendants, including the Laser class and its members …

Another weak aspect for the Laser class is its controversial SurveyMonkey vote that led to the class rule change, allowing for new builders to be appointed. US federal and/or state corporate governance laws, may have been infringed with this membership vote implemented on an ill-suited platform. The (confidential) audit performed by the PKF audit firm may not suffice to convince authorities about the acceptability of the voting process. An invalidation in court of the Survey Monkey class rule change vote would not only make illegal the appointment of new builders but would also jeopardize the Olympic status of the Laser for 2024. Remember, antitrust / FRAND requirements are presently only required by World Sailing for Olympic classes.

Towards a Global Over-Capacity and an Equipment Arms Race

As we previously analyzed, while there are currently acute equipment shortages of hulls, sails, parts etc., there is an anticipated over-capacity, in terms of boat production, in one or two years. The August World Sailing document referred to at least 3 additional manufacturers before the end of 2019, each with an initial annual capacity of 400 - 800 boats. This meant 1200 to 2400 boats per year. To be added to that is an estimated 1400 to 1700 boats capacity of PSA, a figure that is possibly exaggerated yet is stated in the World Sailing document, bringing the annual production to 2600 to 4100 boats per year, i.e. the double of the annual production until LaserPerformance got « terminated. »

An annual production of 2,000 boats seems indeed what is needed in the years to come, unless there is a dramatic decline in the price of the boat, or a dramatic regain of popularity - both scenarios that appear unlikely. The production capacity that may arise within years may be several times larger than what is required. The December 18 2019 announcement by the Laser class suggests that there could be up to 18 new builders. « 18 applicants were determined to meet the minimum requirements to move forward in the process and those potential builders are now being invited to participate in a more detailed, formal license application assessment … » « ILCA can reveal that, of the 18 builders invited to proceed with the new builder approval process, there are five from Europe, five from Asia, four from North America, three from South America and one from Oceania. » Probably because the Laser class is now under the scrutiny of the European antitrust authorities, the statement adds: « ILCA cannot determine the number of builders that will be eventually approved. »

The corollary to a multiplication of builders is obviously the lack of consistency in their production. Even with 3 builders, huge consistency issues have arisen, including the production of the non-compliant « Fast Aussie Lasers, » undetected during several years, by the Aussie builder who now enjoys a quasi global monopoly. The multiplication of builders will not only prevent them from achieving proper scale economies and cost controls, increasing therefore production costs and retail prices, but will also generate substantial supervision / inspection costs by the class to attempt achieving some consistency.

And remember, the report by the World Sailing Equipment Committee, following the World Sailing Valencia sea trials, had insisted that the specifications in the Laser Construction Manual should be revised to reduce tolerances and strengthen controls, to improve the consistency among builders, and within the manufacturing units. There are however no indications of steps taken to revise the construction manual, so that consistency issues, and an associated « arms race » for the fastest boat are to be anticipated in the coming years - a trend that will be contrary to the very central tenet of the Laser class constitution, according to which the Laser is to be the « epitome » of strict one-design dinghy racing.

What’s Next?

In the short term, what will be important to monitor is how EurILCA will act. The January 1 2020 ultimatum by the European branch of ILCA covers 3 main items:
  • re-appointment of LaserPerformance as an approved builder, to alleviate equipment shortages and avoid a collapse of the well-established network of dealers in Europe
  • change in the governance of the class, to avoid conflict of interest and achieve a better representation of European countries, where the vast majority of Laser sailors live
  • consultation, testing and membership vote on any new rig for the boat
EurILCA December 2019 General Assembly in Rome

From the information that is presently available, it seems that little, or no progress will be achieved on any on those fronts by January 1, 2020. The LaserPerformance situation remains mired into contractual / legal issues as well as substantial distrust among the parties, while from a technical viewpoint, the builder is fully operational and continues to produce markedly cheaper (non-class approved) equipment. There is no indication of any steps by those controlling the Laser class - mostly from USA and AUS - to relinquish power or to remove conflicts of interest. The rig issue was not covered in the December 18 update by the Laser class, but it’s no secret that those controlling the class want the Australian C rigs to prevail.

Recently, the President of World Sailing, Kim Andersen, declared that the organization did not want to interfere into ILCA’s « internal affairs, » while it actually had done so, with some limited yet real success last spring, when an arrangement was found to secure extra sailing plaques for LaserPerformance as well as free charter boats for the youth worlds in Poland.

Maybe it’s time for the President of World Sailing to step in again, and resolve the situation once and for all.

Because without a resolution, anything could happen, including an implosion of the class and the loss of the Olympic status for 2024.

Popular posts from this blog

Green, White, Blue & Red Fleets: What is it all about?

20 Reasons to Choose the Laser 4.7 (part 1)

Laser or ILCA Dinghy: Which One is Fastest?