If you're not guitar gear nerd, you might be unaware: Fender doesn't make the best version of its various guitar shapes (with one debatable exception)[1]. If you want an off-the-rack "S-Style" guitar (Stratocaster) there's a handful of premium, smaller brands that will make an objectively better guitar than any of Fender's offerings, including their premium "Ultra" series: Suhr, Anderson Guitarworks, James Tyler Guitars, Seuf, Shabat, LsL, Mario Martin, etc.

If Fender gets the industry to capitulate and abandon its shapes, there's a very real chance it does long-term reputational damage to the brand. Not due to lawsuit outrage but due to something much simpler: consumers and musicians no longer associating new production S-style guitars as great electric guitars. Today, the boutique builders Fender is suing do quite a bit to uphold the reputation of those shapes. Without them they're just designs of a legacy brand that mostly sells mid-market import guitars.

[1] That possible exception are Masterbuilt-tier instruments made by Fender's Custom Shop https://www.fender.com/pages/custom-shop The wait time is several months and the price starts around $8K USD and quickly pushes into 5 figures.