Lowden-Avalon Article (Back in 2005)

[silverspear]

I just couldn't resist putting this article down in AGF.. as reference material for those interested in the Lowden or Avalon Guitar history.


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Exit from Avalon
Lowden-Avalon Dispute Hits Climax
by Michelle Loeb

It’s the first thing your parents give to you. It may not always be unique, but it identifies you for the rest of your life. Would you ever sell it away?
Leo Fender did. He became ill and thought he was going to die, so he sold away his company, as well as that most prized possession, his name. The paperwork was clear; his name, Fender, had a new owner, and he couldn't get it back.
However, his story is the exception, rather than the rule. “Knowing many builders, as I do,” said Paul Heumiller, owner of Dream Guitars in Red Bank, NJ, “I would be surprised if a builder would sign away his name.”

George Lowden doesn’t think he did, but you’ll get a different answer if you ask Steve McIlwrath, managing director of Avalon Guitars. The two have been in the midst of a heated battle since the turn of the century regarding the intricacies of an agreement signed in 1989, the year that Lowden's company went into voluntary Chapter 11.

For 16 years, Lowden was contracted to design and approve all guitars made by McIlwrath’s company, and he was paid a royalty for each. Disputes arose as to how closely the designs were being followed, and a lawsuit brought about by Lowden was settled out of court with the dissolution of the licensing agreement.
Since then, the two parties have gone back and forth over who owns the right to use the Lowden name and in which territories. Caught in the crossfire are the dealers and customers who are fans of Avalon guitars, Lowden guitars, or both. Finding out whose designs are available on whose guitars has become a source of confusion in the industry.

Jason Beatty, of Meridian Music in Indianapolis, IN, doesn’t deny his bewilderment. “It was always my impression that the Avalon Lowden guitars were George Lowden guitars,” he said. “It wasn’t until recently that I found out that George really wasn’t involved in the day-to-day operation in that company. I think most of our customers didn’t know either.”

This Name is My Name
“The confusion comes because Avalon is making claims to own the Lowden name—they're making claims to try to own it worldwide,” said Lowden. “I’ve had several emails from individual customers who are confused, and they are writing to me and saying, ‘I was so glad to go on to your website and discover that you are setting up a new Lowden factory, because I had been told by my dealer that there were going to be no more Lowden guitars.’ That’s a story that has happened over and over again.”

McIlwrath would disagree with that statement. From his point of view, it isn’t that he’s using a name he shouldn’t—it’s that Lowden is claiming that his brand carries the same name. “We get frequent phone calls or emails from our dealers in the United States saying they’ve got this communication or that communication from George Lowden, and they want to verify the information he’s giving them.”
In 2003, Lowden had started proceedings to sue Avalon for using a name he didn’t feel belonged to them. Though that particular lawsuit never went to trial, there is a possibility that these actions could lead to the same lawsuit in reverse. McIlwrath did successfully get his U.S. trademark, leaving the door open for future action in America. However, since any future American plans they may have are unbeknownst to Lowden, could he realistically be accused of maliciously interfering with McIlwrath’s business?

According to Beatty, Lowden’s communications were not malicious at all. “The Lowden as we knew it had more or less dissolved,” he remembered. “The first thing that we heard was from Avalon guitars. They said, ‘we’re changing the company. We’re going with a different direction. Our guitars are now called Avalon guitars. Here’s our pricelist. Let us know if you want any.’”

A few weeks later, Lowden sent his correspondence. “They [warned against] falling under the impression that the new Avalon guitars have anything to do with George Lowden, because he is now on his own, making his own guitars,” said Beatty. “There was no encouragement not to buy the other company’s guitars. It was simply an education: he was not involved with that corporation.”

Uncanny Similarities?
Not only are the name changes a source of confusion for dealers and consumers alike, but some dealers feel the guitars even look similar.
Claudia Barry, co-owner of The Music Store in Great Barrington, MA, is a long-time supporter of George Lowden and his designs. Out of curiosity, she brought one Avalon guitar into her store.

“What it looked like to me was a Lowden design from which some of the more extraordinary features had been deleted,” she said. “One of the features of the Lowden guitars is a five-piece neck. It’s probably the strongest acoustic neck in the industry. That had been simplified. The heel, which is gorgeously carved and, again, very dramatically designed, was rounded by Avalon.”
Stan Jay, president and owner of Mandolin Bros. in Staten Island, NY, disagrees with Barry. According to Jay, only one of Avalon’s three lines comes close to resembling a Lowden guitar.

“Avalon makes a Legacy line which, although sharing some appointments with the brand name formerly manufactured by the same supervisors and managers, also differs in significant ways from the Lowden design,” said Jay. “Lowden uses the designation ‘O’ for jumbo, Avalon calls it ‘L.’ Lowden uses the designation ‘F’ for grand auditorium, Avalon has their ‘A.’ The instruments have different bridge designs. They sport a single piece mahogany neck on their Standard range, while Lowden’s continue to have multi-ply.”

Whether or not these differences are enough to separate the two brands in the minds of consumers remains to be seen. George Lowden’s company only recently began supplying its dealers, due in part to holdups coming from the constant arguing and suing back and forth between two men who came together to save a failing company in 1989.

Chapter 11
I had started the new factory in 1985, and by 1987 we were undercapitalizing, running short of funds,” remembered Lowden. It was at that point he decided to enter into voluntary Chapter 11.In the United Kingdom, a declaration of bankruptcy can be either voluntary or involuntary. Had he entered involuntary Chapter 11, the creditor would have taken control, and he wouldn't have had any say over what happened to his company. In electing to go the route of a voluntary declaration, he was able to cooperate with the creditor to find a suitable buyer.
“I had known Andy Kidd for some time, and he had wanted to look at buying the assets of the company from the receiver,” said Lowden. “So the end result of that was Andy Kidd bought stock, which is the wood and some guitars that were there and all of the guitar-building equipment. I have the documentation that shows what he bought and how much he paid for it. Good will is not mentioned, and the name is not mentioned.”

McIlwrath has a slightly different recollection of those events. “In 1989, the Lowden Guitar Company was formed to acquire another company called Lowden Guitars International,” he said. “That was a company that had been established by George Lowden in 1985 but went into Chapter 11 in 1988.”

Though the accounts may sound very similar, the discrepancies in rhetoric set the stage for the long battle ahead. There is a big difference between buying a company’s physical assets and acquiring a brand, and, according to Lowden, the terms of the licensing agreement led him to believe that the trademark was not part of the deal.

Mind Your Language
There are two or three clauses that deal particularly with the Lowden name, which are pretty clear,” said Lowden. “First of all, they say that the company, in 1989, agreed to pay me a royalty for any product bearing the name Lowden. There was also another clause where they agreed to pay me a royalty for all such products of my design. That’s very clear that you don't pay a royalty to someone for a name if you yourself own it.”

“If I own a house,” Lowden continued, “and somebody comes to me and says, ‘Well, let me use it for a while and rent it, but whenever I stop renting it I own it,’ it’s a joke.”

In return for the two royalties, Lowden had final approval over the company’s guitars, whether they were his own designs or otherwise. The owners agreed to follow his designs or get his permission before changing them. Lowden was also not allowed to set up his own company to manufacture his guitars.

The thin ice on which the agreement was made soon began to crack. “One of the problems that we had is that during the entire 16-year life of the contract, we never actually received any complete designs from him,” said McIlwrath. “Therefore, it was impossible to determine exactly what the designs were with any degree of accuracy. When we requested designs for new models, invariably we never got them or we developed them with some of our own luthiers and got his approval on them.”

Lowden denies such claims. “When they began to disregard [the obligations stated in the licensing agreement], and I raised the issues with them in the way you would normally, instead of them rectifying the situation, they did the opposite,” he said. “They refused to talk to me basically about the issues.”



To be continued...

[silverspear]

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These issues included changes that Lowden has specifically voiced opposition towards. “On every single Lowden guitar they’ve made for the past four years, they changed the internal truss rod to one that I had specifically said that I did not want used. I can’t have that.” He continued, “If my name’s on the headstock, and it is my design from start to finish, then they have an obligation to follow that design.”

Battle Lines Drawn
In 2001, Lowden instigated a lawsuit against Avalon Guitars—at that time the holding company under which the Lowden Guitar Company was traded—for infringement of contract, which was set to be heard in Belfast high court.

“He was alleging that we were not following the design specifications for his guitars,” said McIlwrath. “Now, we vehemently refuted that, because we had not changed anything from the design aspects of the guitar that we had been following all throughout that period.”

Had the trial gone ahead as planned, perhaps the issues involving the designs and to whom they belonged would’ve been settled then and there. It is unclear when McIlwrath states that the company stuck to the designs if he is referring to Lowden’s designs. If, in fact, he was talking about Lowden’s designs, his claim that he hadn’t yet received a full design from Lowden could be called into question. If he was not referring to Lowden’s designs, he could very well have been found to be in breach of contract for using designs that were not his or approved by him. The case was withdrawn before going to trial.

“I was informed by my lawyers a couple of weeks before the court case that if I won the court case, there’s a strong possibility that I would be worse off actually than if I settled out of court,” Lowden explained. “Avalon Guitar Company was, and to my understanding still is, strapped for cash. If they had been faced with a large legal bill, which they would’ve been, if I had won the case, they would have gone into liquidation. I would’ve been perceived to put this company into liquidation through legal action.”

Not only concerned with the potential damage to his reputation, Lowden realized that he would’ve been stuck with a bigger legal bill if he let the trial commence. “If I had been dealing with a strong company financially,” he said, “it would’ve been different.”
The two parties negotiated and decided at that point to terminate their licensing agreement.

“We decided at that point that we didn’t want to have George Lowden design guitars for us,” said McIlwrath. “That, of course, was mutual, because he was not in the frame of mind to want to design guitars for us anyway. What the termination of the agreement permitted him to do was manufacture guitars and be able to employ people in pursuit of that activity.”

Messy Breakup
Unfortunately, the clean break both sides were hoping for was far from their grasp. “All they ever had was a license to use it,” said Lowden, speaking of the company name. “Therefore, when the license was terminated, their ability to use it, or their lawful use of it, was terminated also.”

As part of the original licensing agreement, the Lowden Guitar Company agreed that upon termination of the agreement, the company would “immediately cease manufacturing any guitars made to the designer’s design or any design modified with the approval of the designer.” Additionally, the company was expected to “cease selling…any other products bearing the designer’s name other than products on which royalties are paid.”



“I took that at face value,” said George Lowden, who read the clause to mean the company was not able to sell guitars bearing his designs or name anywhere in the world. Steve McIlwrath had other ideas.

“What we agreed to do was not trade as Lowden Guitars in the U.K.,” said McIlwrath, “so we had to find another name for the company. We have two companies, one called Avalon and one called Lowden. Lowden Guitar Company was the trading company, and Avalon was the holding company, so what we did was we flipped those two names so that Avalon became the trading company and Lowden became the holding company.”

By November 2003, the two parties were set to go to court yet again. Lowden had brought another lawsuit against Avalon claiming trademark infringement.

“I instigated legal proceedings against the company to stop them from appropriating the Lowden Guitar Company name to another company they owned because they had agreed to give up the Lowden company name,” Lowden said, referring to the termination agreement that was finalized in February 2003.

Again, the case never went to trial. “I withdrew from that case [because of a] letter that I received and an affidavit signed by them in which they said that they had no intention whatsoever of using the Lowden company name and that their only purpose in taking it was to stop me from selling that company name or using that company name,” Lowden said. “They wrote that they had no intention of using it and that they were going to make that company a dormant company.”

Avalon didn’t want George Lowden to use the company name based on his own name? Once again, Lowden took these statements at face value when it may have been in his best interest to pursue the lawsuit. Given that rhetoric, he may have been setting the stage for the point at which the companies are currently. Avalon has a United States trademark of the Lowden name while George Lowden is looking to distribute the first batch of guitars from his new company, the Lowden Guitar Workshop.

Confused Yet?
Should it come to pass that a lawsuit comes out of the companies’ American activities, the answer is hardly clear as to who would win. Given that the wording of the contract was so vague, perhaps deliberately so, the verdict would come down to the state in which the trial is held. The judge would look back at the precedent set in that particular state to see how a similar dispute was resolved. If McIlwrath was to pursue Lowden in the United States, he would have to find the state where past judgments best mirrored his own intended outcome.

In the meantime, the battle over the Lowden name continues. As Shakespeare wrote in Romeo and Juliet, “That which we call a rose by any other name would smell as sweet.” Does that apply to the guitar industry as well?

“Even if [George] calls it XYZ Guitars, they can’t prevent him from using his own name in all of their advertising and whatnot,” said Beatty. “I think George has the upper hand, because he’s the guy who people identify with that instrument. It may hurt him in the short run that he’s not able to put his own name on the guitars, but I think, in the long run, people will always know what guitars he himself is building.”
While Lowden sees that that may be the case, he isn’t interested in protecting his right to use his own name as much as he is in protecting his name against misuse by others. “I am very concerned that anybody, whether it be Avalon or anybody else, should try and take ownership of a name that doesn’t belong to them and never has belonged to them,” said Lowden. “They could do anything with it. They could go to China and get cheap guitars and put the Lowden name on it. If that happened, there would be serious damage to the Lowden name. I’m certainly not going to sit back and allow 30 years of my work to disappear into the hands of corporate U.K. or corporate America.”


To Be continued...

[silverspear]

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Who Wins?
Heumiller doesn’t care who wins the name in the end, as long as the guitars survive the battles. “I have nothing against either side,” he said. “I just want to see good guitars and help people find them. I’d hate to see delays for my own purposes, but also for the guitar world.”

“The result of the recent litigation is that now we shall have two fine companies to do business with,” said Jay, seconding Heumiller’s point. “The consumer now has a choice of products; we get to represent two superb brands. From our standpoint, everyone benefits.”

Claudia Barry disagrees with the idea that everyone comes out a winner. What she would like to see is Avalon develop its own place in the market and leave the Lowden legacy where it is.

“I think Avalon guitars are lovely instruments, and there is a niche for them,” she said. “I sold only that one that we had a chance to see, and the seller who bought it has come into my store every year and said, ‘So are you getting anymore Avalon guitars?’ So clearly, I don't think they need his name.”

She continued, “I think it’s a very bad idea and, from my point of view, is below the dignity of what has been a very dignified and reasonable company to try to continue to use his name without permission. I think that’s just not very classy at all.”

As Sean Barry, co-owner of The Music Store with his wife, recalled, there have been other instances of companies stepping out of the shadows of their former owners and becoming successful in their own right. About five years ago, the Gibson Guitar Company moved its operations from Arizona to Tennessee. The 13 employees at that factory got together and decided they didn’t want to leave their homes. As a result, Gibson found a new crew, and the group of 13 luthiers formed Weber Mandolin Company.

“They didn’t put Gibson on the headstock,” said Barry. “They put Weber. And they have created a niche for themselves in the hearts and the hands of fine musicians. They don't have to say, ‘I used to work for Gibson.’ They say, ‘I work for Weber.’”
“Avalon Guitars doesn’t need to be another George Bush,” Sean Barry continued. “This isn’t a political statement, but George Bush was identified with his father. So a lot of people who voted for the father voted for the son, but the son has a whole different lifestyle, a whole different perspective than the father does. We can’t expect to benefit by our father’s actions. Avalon doesn’t need to have George Lowden’s reputation. They need to establish their own.”

Should Avalon get in the way of George Lowden’s legacy and livelihood, Claudia Barry knows just what he should do. “I would think it would be a very good time for George to find an absolutely marvelous, equally elegant, but much more outgoing PR person to inform the world about what has happened,” she said.
“Ultimately, the educated consumer and the educated music store owner will collaborate to make sure that people are actually buying what they think they're buying.”

McIlwrath, like Lowden, is willing to fight with every last breath to defend what he considers to be his property. However, he holds out hope that a final resolution can be reached without a long, drawn-out court battle that may rack up hefty bills and drag reputations through the mud on both sides.

“I have to say that our desire in this is not to go and litigate,” he said. “We would rather have not had to deal with it in this way, and if we can resolve it in an amicable way, that would be our preference. We’re not gung ho about wanting to ride up into the courtroom, because I can assure you we’re not. The only people who win in that situation seem to be the attorneys and the lawyers.”



END OF ARTICLE

[stevecuss]

Fascinating article, thanks for posting it. I played a 'Lowden' guitar in 1993 in Nashville and it was the first high end guitar I'd ever played and it took my breath away. I've been a Lowden fan ever since.

I knew George and Avalon had their differences, but I'd never understood the timeline or key issues. What I do know is that George Lowden is one of the great modern innovators and he builds superlative guitars. I understand why he'd want to protect his name against others' use.

I play a Mcilroy guitar and it is a stunning instrument. I would be interested in Dermott's perspective on all this - I believe he was shop manager for a decade.

[Malcolm Kindnes]

Originally Posted by stevecuss

Fascinating article, thanks for posting it. I played a 'Lowden' guitar in 1993 in Nashville and it was the first high end guitar I'd ever played and it took my breath away. I've been a Lowden fan ever since.

I knew George and Avalon had their differences, but I'd never understood the timeline or key issues. What I do know is that George Lowden is one of the great modern innovators and he builds superlative guitars. I understand why he'd want to protect his name against others' use.

I play a Mcilroy guitar and it is a stunning instrument. I would be interested in Dermott's perspective on all this - I believe he was shop manager for a decade.

I think Dermot has more sense than to get involved!

[RoseAdi]

After playing many, and owning a Lowden for the past 10 years, I can understand George's perspective.

Avalon seems to have come into it's own after a somewhat rocky start and I'm glad they came through it. I played my first Avalon two months ago and came away with the impression that they are world class guitars. So I'm happy to see they have made their niche.

I also own a McIlroy and I would place all three makers in the same quality ballpark and have to feel George Lowden's ideas and standards of build made a big impact on the other two.

While I feel for the various parties involved, I'm pleased that we now have three outstanding Irish builders to choose from. Me? I'm trying to figure a way to justify an Avalon to add to my Irish stable.

[silverspear]

Glad to see Avalon and Mcilroy owners chipping in on this thread!

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