Cold Steel v. CRKT, Part I
NOTE: This is Part 1 of 2 of my take on the Cold Steel suit. First up is a take on the suit from the perspective of the consumer. Next is the legal analysis of the suit.
On June 3, Cold Steel's lawyer filed a lawsuit against CRKT in the Central California Federal District Court. That same day Cold Steel sent out a press release announcing that they had filed the suit. Cold Steel claims that CRKT's language that their lock safeties (the LAWKS, the AutoLAWKS, and the LBS) turn folders in to "virtual fixed blades" constituted false advertising under the Lanham Act.
The lawsuit is strange, but Cold Steel's behavior after was even stranger. At the end of the press release, they included an email address for further questions. I sent an email and got no response. Then I called out Cold Steel on Twitter. I wanted them to release the complaint, the official document that lays out their legal claims. Its part of the court file and the entire file is a public record. There is simply no reason for them to not release the complaint to me, as, by definition, they had to file it to start the suit. But they refused for a better part of two days. Finally, they said that Cold Steel's president, Lynn Thompson was going to address the issue on Cold Steel's site.
The statement was a regurgitation of the press release and more of a marketing stunt. Trying to play the role of dogged reporter, I contacted the Central California Federal District Court and they pointed me to PACER, the electronic court file system. I paid my fees and got access to the documents. Unfortunately, the complaint had not been uploaded, but it was noted in the records. I found the attorney of record and contacted him. He gave me the complaint in about twenty minutes. The runaround Cold Steel sent me on was entirely unnecessary. I have since sent him questions about the suit but he has not gotten back to me.
I have finished reading the complaint and while I have some intuitions about its merits, I want to do some research and read case law before I say anything about the law. Whatever the legal issues are, the reality is simple--this lawsuit is bad for everyone. It is bad for knife enthusiasts, its bad for the knife industry, and it is bad for Cold Steel.
In the past, when Cold Steel was trying to grab the spotlight with its antics like boycotting blade, the gear media was small and diffuse. It was basically two magazines--Blade and Knives Illustrated. Forum boards were in their infancy and the bloggers, like myself and many others, that follow not just the products but the business of gear were few and far between. The community is much more aware and armed with this awareness, the reaction has been swift, uniform, and brutal. Everyone has expressed disdain for Cold Steel's behavior. Since the June 3 press release and legal filings, Lynn Thompson has said that the money damages he is seeking will be donated to Knife Rights, but this seems like backpedaling. One wonders why he didn't just take the money was spent on filing the suit and donate THAT to Knife Rights, if that was his intention all along.
Why its Bad for Consumers
The knife business is full of small companies. The vast majority, including CRKT and Cold Steel, are well less than 500 employees. Only Gerber and KAI USA, both subsidiaries of much larger companies, are real corporate giants. The brands we know and love are almost all 30 or 40 folks (or less) working to make us great stuff at good prices. These are not Apple or Samsung. They do not have near infinite resources. Legal cases are time consuming, prohibitively expensive, and in the civil arena, rarely decide anything of import (most civil cases, and in fact most cases in general, settle before trial and many civil settlements are confidential). If small companies like CRKT, Cold Steel, and others are forced to engage in protracted legal battles they will have less time and money to devote to making, designing, and producing great knives for us.
This suit is bad for consumers.
Why its Bad for the Knife Business
In addition to the divided attention problem I mentioned above, there is also the issue of culture. The knife business, from custom makers to "big" companies is a interconnected and collaborative place. Sure there are some instances of bad behavior, like the ZT0777 and the Matrix, but the reason that story stood out is because of how rare and blatant it was. Thomas, one of the highest ranking officials at KAI USA not only came on Gear Geeks Live, he also did a tour on Utility Talk too. This is a small and welcoming place.
Compare that with the world of high tech and big pharma. Not only is the competition voracious, but it has become so vicious that what transpires no longer bears even a passing resemblance to classic capitalism. Instead of making products and trying to outdo each other, big tech and big pharma have basically become addicted to manipulating intellectual property laws and suing each other. Fights over patents are the heart of two enormous lawsuits--Apple v. Samsung and a collection of suits against Microsoft. Billions of dollars are at stake. In each suit a sizable chunk of each company's revenue for the year hung in the balance. Big tech companies regularly buy up vast troves of patents, hoping to land a gold nugget that they can use as shields in the event they are sued in the future. Small firms are gobbled up not for their products but for their patent portfolios. Inventors, the tech/pharma equivalent of custom makers, well, they don't even figure.
If this corporate climate took hold in the knife world, in a few years we'd cease to recognize what we see. We are living through a Golden Age of Gear, with products are at the absolute zenith of the industry coming out yearly, if not monthly. The best is redefined in the blink of an eye. And all of this innovation comes relatively cheap compared to other industries like the bloated watch industry. Compare that with Big Pharma, where the "next big thing" is the extended release version of the pill you are already taking. If the lawsuit mentality takes over, small companies will get crushed and big companies will get boring quickly.
This suit is bad for the knife business.
Why its Bad for Cold Steel
Cold Steel is in a weird place in the knife business. Its not quite as ubiquitous as Kershaw, Gerber, Leatherman, or SOG. They are not in every single Big Box. But it is also not the enthusiast's choice. Cold Steel blades never reach the podium at Blade (though their corporate behavior might have something to do with that--Blade awards are voted on by others in the industry). More telling, they never do well on the secondary market and are rarely in production but out of stock. They are not Zero Tolerance or Spyderco, in other words.
And until SHOT 2015 their offerings were decidedly behind the times. A few years ago, they upgraded to the wonderful Tri-Ad lock, but the blade steels on virtual every knife were state of the art in the 1990s. But in January of 2015, Cold Steel doubled down on their corporate rebranding effort and announced that virtually every knife in their line up would receive a steel upgrade. CTS-XHP would be the steel of choice on their standard bearer Recon Series, by far the best steel on that kind of knife (compare it to VG-10 and 154CM on the Spyderco Delica and Benchmade Mini Griptillian respectively). This was just part of the repositioning. They also announced nearly a dozen new designs including the amazing 4MAX. In short, Cold Steel was reinventing itself.
The 4MAX is not Cold Steel's first foray into the uber premium market. They tried a few years ago with some high polish, high priced knives, but they utterly failed. The aluminum bolsters and AUS8 steel didn't justify the price tags of those knives. But the 4MAX is different. It has the premium blade steel, 20CV, and the custom design provenance to do well. The 4MAX is emblematic of the whole of Cold Steel--there is a lot riding on this repositioning. If the rebranding succeeds Cold Steel could enter that most profitable (on a per unit basis) part of the market--high end production knives. Cold Steel could finally become a true enthusiast brand, with the likes of Chris Reeve, Spyderco, and Zero Tolerance.
But with divided attention and resources caused by this silly lawsuit, all of that hangs precariously in the balance. Lynn Thompson should be making statements about how amazing the 4MAX is and testing some XHP blades, not rehashing a press release that is, itself, a rehash of a document Cold Steel refused to release to the public, despite it being a public document.
Despite its corporate image and criticism from enthusiasts, I like Cold Steel products. Look at my reviews. I really enjoyed the Recon 1. I was positively enthralled by their fixed blade offerings. I am not a fan of any brand, but I think Cold Steel offers quite a few very good knives. If they were fold up shop, I'd be sad because they make some unique stuff and because consumers would have one less option.
This suit is very bad for Cold Steel.
Conclusion
Cold Steel's behavior, by filing the suit and then refusing to release legal documents, shows that its not being forthright in dealing with the public. This action is also in direct contradiction to Cold Steel's corporate ethos--the Warrior Way. Though I am admittedly not an expert in the history of Japanese or Viking legal systems, I don't think samurai and berserkers often resorted to legal pleadings to get their enemies to submit. And no real warrior boasts of their behavior in one instance and then hides what they did the next. But this suit is bad not because of its corporate ethos mixed messaging. Its bad because, in the end, it has the potential to damage everyone. Knife enthusiasts are hurt by this. The knife business is hurt by this. Cold Steel is hurt by this.
Lynn Thompson should do the right thing and withdraw this suit. It is silly, bad for customers, and bad for business.
On June 3, Cold Steel's lawyer filed a lawsuit against CRKT in the Central California Federal District Court. That same day Cold Steel sent out a press release announcing that they had filed the suit. Cold Steel claims that CRKT's language that their lock safeties (the LAWKS, the AutoLAWKS, and the LBS) turn folders in to "virtual fixed blades" constituted false advertising under the Lanham Act.
The lawsuit is strange, but Cold Steel's behavior after was even stranger. At the end of the press release, they included an email address for further questions. I sent an email and got no response. Then I called out Cold Steel on Twitter. I wanted them to release the complaint, the official document that lays out their legal claims. Its part of the court file and the entire file is a public record. There is simply no reason for them to not release the complaint to me, as, by definition, they had to file it to start the suit. But they refused for a better part of two days. Finally, they said that Cold Steel's president, Lynn Thompson was going to address the issue on Cold Steel's site.
The statement was a regurgitation of the press release and more of a marketing stunt. Trying to play the role of dogged reporter, I contacted the Central California Federal District Court and they pointed me to PACER, the electronic court file system. I paid my fees and got access to the documents. Unfortunately, the complaint had not been uploaded, but it was noted in the records. I found the attorney of record and contacted him. He gave me the complaint in about twenty minutes. The runaround Cold Steel sent me on was entirely unnecessary. I have since sent him questions about the suit but he has not gotten back to me.
I have finished reading the complaint and while I have some intuitions about its merits, I want to do some research and read case law before I say anything about the law. Whatever the legal issues are, the reality is simple--this lawsuit is bad for everyone. It is bad for knife enthusiasts, its bad for the knife industry, and it is bad for Cold Steel.
In the past, when Cold Steel was trying to grab the spotlight with its antics like boycotting blade, the gear media was small and diffuse. It was basically two magazines--Blade and Knives Illustrated. Forum boards were in their infancy and the bloggers, like myself and many others, that follow not just the products but the business of gear were few and far between. The community is much more aware and armed with this awareness, the reaction has been swift, uniform, and brutal. Everyone has expressed disdain for Cold Steel's behavior. Since the June 3 press release and legal filings, Lynn Thompson has said that the money damages he is seeking will be donated to Knife Rights, but this seems like backpedaling. One wonders why he didn't just take the money was spent on filing the suit and donate THAT to Knife Rights, if that was his intention all along.
Why its Bad for Consumers
The knife business is full of small companies. The vast majority, including CRKT and Cold Steel, are well less than 500 employees. Only Gerber and KAI USA, both subsidiaries of much larger companies, are real corporate giants. The brands we know and love are almost all 30 or 40 folks (or less) working to make us great stuff at good prices. These are not Apple or Samsung. They do not have near infinite resources. Legal cases are time consuming, prohibitively expensive, and in the civil arena, rarely decide anything of import (most civil cases, and in fact most cases in general, settle before trial and many civil settlements are confidential). If small companies like CRKT, Cold Steel, and others are forced to engage in protracted legal battles they will have less time and money to devote to making, designing, and producing great knives for us.
This suit is bad for consumers.
Why its Bad for the Knife Business
In addition to the divided attention problem I mentioned above, there is also the issue of culture. The knife business, from custom makers to "big" companies is a interconnected and collaborative place. Sure there are some instances of bad behavior, like the ZT0777 and the Matrix, but the reason that story stood out is because of how rare and blatant it was. Thomas, one of the highest ranking officials at KAI USA not only came on Gear Geeks Live, he also did a tour on Utility Talk too. This is a small and welcoming place.
Compare that with the world of high tech and big pharma. Not only is the competition voracious, but it has become so vicious that what transpires no longer bears even a passing resemblance to classic capitalism. Instead of making products and trying to outdo each other, big tech and big pharma have basically become addicted to manipulating intellectual property laws and suing each other. Fights over patents are the heart of two enormous lawsuits--Apple v. Samsung and a collection of suits against Microsoft. Billions of dollars are at stake. In each suit a sizable chunk of each company's revenue for the year hung in the balance. Big tech companies regularly buy up vast troves of patents, hoping to land a gold nugget that they can use as shields in the event they are sued in the future. Small firms are gobbled up not for their products but for their patent portfolios. Inventors, the tech/pharma equivalent of custom makers, well, they don't even figure.
If this corporate climate took hold in the knife world, in a few years we'd cease to recognize what we see. We are living through a Golden Age of Gear, with products are at the absolute zenith of the industry coming out yearly, if not monthly. The best is redefined in the blink of an eye. And all of this innovation comes relatively cheap compared to other industries like the bloated watch industry. Compare that with Big Pharma, where the "next big thing" is the extended release version of the pill you are already taking. If the lawsuit mentality takes over, small companies will get crushed and big companies will get boring quickly.
This suit is bad for the knife business.
Why its Bad for Cold Steel
Cold Steel is in a weird place in the knife business. Its not quite as ubiquitous as Kershaw, Gerber, Leatherman, or SOG. They are not in every single Big Box. But it is also not the enthusiast's choice. Cold Steel blades never reach the podium at Blade (though their corporate behavior might have something to do with that--Blade awards are voted on by others in the industry). More telling, they never do well on the secondary market and are rarely in production but out of stock. They are not Zero Tolerance or Spyderco, in other words.
And until SHOT 2015 their offerings were decidedly behind the times. A few years ago, they upgraded to the wonderful Tri-Ad lock, but the blade steels on virtual every knife were state of the art in the 1990s. But in January of 2015, Cold Steel doubled down on their corporate rebranding effort and announced that virtually every knife in their line up would receive a steel upgrade. CTS-XHP would be the steel of choice on their standard bearer Recon Series, by far the best steel on that kind of knife (compare it to VG-10 and 154CM on the Spyderco Delica and Benchmade Mini Griptillian respectively). This was just part of the repositioning. They also announced nearly a dozen new designs including the amazing 4MAX. In short, Cold Steel was reinventing itself.
The 4MAX is not Cold Steel's first foray into the uber premium market. They tried a few years ago with some high polish, high priced knives, but they utterly failed. The aluminum bolsters and AUS8 steel didn't justify the price tags of those knives. But the 4MAX is different. It has the premium blade steel, 20CV, and the custom design provenance to do well. The 4MAX is emblematic of the whole of Cold Steel--there is a lot riding on this repositioning. If the rebranding succeeds Cold Steel could enter that most profitable (on a per unit basis) part of the market--high end production knives. Cold Steel could finally become a true enthusiast brand, with the likes of Chris Reeve, Spyderco, and Zero Tolerance.
But with divided attention and resources caused by this silly lawsuit, all of that hangs precariously in the balance. Lynn Thompson should be making statements about how amazing the 4MAX is and testing some XHP blades, not rehashing a press release that is, itself, a rehash of a document Cold Steel refused to release to the public, despite it being a public document.
Despite its corporate image and criticism from enthusiasts, I like Cold Steel products. Look at my reviews. I really enjoyed the Recon 1. I was positively enthralled by their fixed blade offerings. I am not a fan of any brand, but I think Cold Steel offers quite a few very good knives. If they were fold up shop, I'd be sad because they make some unique stuff and because consumers would have one less option.
This suit is very bad for Cold Steel.
Conclusion
Cold Steel's behavior, by filing the suit and then refusing to release legal documents, shows that its not being forthright in dealing with the public. This action is also in direct contradiction to Cold Steel's corporate ethos--the Warrior Way. Though I am admittedly not an expert in the history of Japanese or Viking legal systems, I don't think samurai and berserkers often resorted to legal pleadings to get their enemies to submit. And no real warrior boasts of their behavior in one instance and then hides what they did the next. But this suit is bad not because of its corporate ethos mixed messaging. Its bad because, in the end, it has the potential to damage everyone. Knife enthusiasts are hurt by this. The knife business is hurt by this. Cold Steel is hurt by this.
Lynn Thompson should do the right thing and withdraw this suit. It is silly, bad for customers, and bad for business.