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Interesting points. My view (as a customer) is that a Fender replica wouldn't be a Fender replica without the decal. Mark is not attempting to sell these basses as genuine Fenders even though they have decals on them. However... I'm no legal expert, but a trademark is a trademark and I believe FMIC would be well within their rights to challenge Limelight.
I suppose it depends on whether Limelight become successful enough to come to the attention of Fender and then on how much Fender think that Limelight are damaging their business. But even FMIC don't have limitless resources and they don't go after [i]everyone [/i]who builds Fender replicas. Though they have successfully challenged one or two builders in the USA, I believe.[/font][/size]
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It's not just the logo, the headstock shape is protected too. That's why Warmoth etc have to pay licence fees to Fender on the replacements that look the same.
Copyright law says that the owner of the rights has to be proactive and try to stop infringement otherwise the protection could lapse.
Fender don't have Microsoft money, but they can still afford to go after someone with £400 per hour city lawyers. If you are on the receiving end of that you might as well just hand over the deeds to your house.