Offshoreonly.com - interesting reading about hull splashing

THE HONORABLE HOWARD COBLE, CHAIRMAN

HOUSE JUDICIARY SUBCOMMITTEE ON COURTS

AND INTELLECTUAL PROPERTY

ON

PROPOSED LEGISLATION ON THE PRACTICE OF HULL SPLASHING

OCTOBER 23, 1997

BY

J.J. MARIE, ZODIAC OF NORTH AMERICA, INC.

MR. CHAIRMAN, and members of the Subcommittee. I am J. J. Marie, President of Zodiac of North America, Inc. We are located in Stevensville, Maryland, where we distribute inflatable boats, life rafts, rigid-hulled inflatable boats and associated safety equipment and supplies. Zodiac of North America is a wholly-owned subsidiary of Groupe Zodiac, which is headquartered in Paris, France. Zodiac was founded in 1896 as an airship manufacturer and expanded into the marine field in 1937 with the introduction of the world's first inflatable boats. Today, Groupe Zodiac has more than 2,300 employees in the U.S. and operations in more than 10 states with products being supplied to the U.S. military, aerospace, marine and leisure markets. These are United States companies, producing products for the U.S. markets and, in many cases, exporting and supplying foreign markets. We are currently building a new factory in Mississippi where we will be producing fiberglass hull boats. We build approximately 50,000 recreational and professional boats a year.

Zodiac of North America supplies boats and related safety equipment to the U.S. Navy, U.S. Army, U.S. Coast Guard and state and municipal agencies, as well as to the leisure market. These markets are serviced through approximately 250 local dealerships and service locations throughout the country.

Zodiac inflatable boats are used by all the U.S. Special Forces.

Thank you for holding this important hearing and for the opportunity to testify on the need for federal protection against the practice commonly known as "hull splashing". The boating industry is very interested in this legislation. For the layperson, the term "hull splashing" refers to the process by which both boat molds and the finished product are made and is defined as the practice of copying a particular boat hull design through the "direct molding process" or "hull splashing".

Of the recreational boats in use, nearly 80% of the boats in the market are fiberglass boats, the remainder being aluminum, inflatable or wood boats. First, I will briefly explain how boats are made.

Most recreational boats today are made from fiberglass and resins in a molding process. Typically the process starts with engineering drawings and research leading to development of a hardwood male mold of the boat hull configuration, full scale, referred to as a plug. The plug is carefully hand-built and finished. A fiberglass and resin skin is fabricated over the plug and, when hardened in the curing process, the plug is removed. The inside of the fiberglass wrap-around, now a rigid mold itself, is used as a female mold for building the actual product.

The female mold receives a spray coat of "gel" which becomes the outer skin of the actual boat. Next, layers of fiberglass and resin are applied over the gel coat and chemically bonded together. Interior bracing, flooring, etc. are added. A deck mold, also fiberglass and produced in the same manner from a plug is used to make the top half of the boat. The two parts are fastened together and you have a boat. Typical costs for engineering and building a boat mold is upwards of $50,000 for a small boat.

Our problem is that the finished boat itself may be used as a male plug by unethical competitors. For example, these competitors can copy a design and hull and then undersell the originating company which must charge more for its boat because it must amortize the cost of engineering and building the original mold in its prices. The unethical competitor often recognizes the popularity of a new design and is frequently unable to resist the temptation to merely acquire a production boat and use the originator's boat as a plug to fabricate a new set of production molds from which he can then use to immediately enter the boat market with boats that are exact duplicates of the originator's design. This mold becomes the template for more boats. The competitor clearly does not have the costs that a manufacturer does in producing a new design and boat. While construction of the original plug is expensive and may take many months, the cost to lay up or "splash" the mold from the production boat amounts to only a fraction of the cost of building the plug. This process can be accomplished in only a couple of days thus placing the imitator at a tremendous advantage, both in the time lag for introducing a new model and in the original cost. Clearly this a misappropriation of the work of another and clearly a practice which we seek to stop by means of some type of federal relief.

Splashing is an inexpensive and easy way to build a fiberglass boat without hiring an architect or engineer to design it. The design, tool-making and testing of a 20-foot fiberglass hull can cost from $50,000 to $100,000. Splashers can reduce that investment to what they pay for the original boat, if that. And, so the original boat manufacturer loses not only his design costs, but the profits from the sales of future boats as he is now in competition with a cheaper model of his own design.

An inflatable boat is made from a flat piece of fabric. You make a pattern from an existing boat. The fabric is flattened out, cut and glued together. Anyone can trace and reproduce an inflatable boat. And the same is true to aluminum boats. One could spend will in excess of $100,000.

Apart from these costs are other factors -- the safety factors that are often ignored by a "splasher". Consumers of copied or "splashed" boats are defrauded in the sense that they are not benefiting from the many aspects of the hull design, other than the shape. The splasher can make some real mistakes that end up in performance or handling problems, or using the wrong engine that hasn't been tested for a certain boat. Aspects of quality and safety are important aspects taken into consideration by a manufacturer in the business. It is very likely that consumers are unaware that a boat has been copied from an existing design. Moreover, if manufacturers are unable to recoup at least some of their research and development costs, they may no longer invest in new, innovative boat designs that boaters eagerly await.

To conclude, hull splashing is a consistent, yet unheralded problem affecting the boat manufacturing industry. The industry and my company supports your efforts, Mr. Chairman, in working to find a solution to this problem. Finding a federal solution that provides a legal framework for an aggrieved manufacturer to bring suit or seek legal redress against another is the solution that the recreational boating industry is seeking. Even the threat of an injunction can be highly effective. In a day and time when the paperwork burden is already onerous, however, we would hope that the solution is one which is "friendly" to our industry. Thus, the registration or notice requirements are areas which we hope the Chairman and the subcommittee will reconsider and discuss further with us.

Thank you for the opportunity to testify today. I look forward to assisting the Subcommittee in any way possible on this legislation. I would be pleased to respond to any of your questions.