Harry's Rosenbloom, of Medley Music, based in Ardmore, Pennsylvania, was manufacturing handmade guitars under the name "Elger." By 1965 Rosenbloom had decided to stop manufacturing guitars and chose to become the exclusive North American distributor for Ibanez guitars. In 1971 Hoshino purchased Elger Guitars, renaming the company "Hoshino U.S.A." and retaining the company headquarters in Bensalem, Pennsylvania as a distribution and quality-control center.
The lawsuit was brought by the "Norlin Corporation", the parent company of Gibson guitars against Elger/Hoshino U.S.A. in 1977, and was based on an Ibanez headstock design that had been discontinued by 1976. Hoshino settled out of court, and by 1978 had begun making Ibanez guitars from their own designs
After the so-called lawsuit Hoshino Gakki abandoned the strategy of copying "classic" USA electric guitar designs and moved to the popular superstrat era in the mid-1980s. The newer Ibanez models began incorporating more modern elements into their design such as radical body shapes, slimmer necks, flatter 2-octave fingerboards (which allowed for faster playing), slim pointed headstocks, higher-output electronics, humbucker/single-coil/humbucker pickups, locking tremolo bridges and more colourful finishes.