Klipsch Files Suit Against Multiple Internet Sales Violators

Mar 3, 2004 12:00 PM, Editors


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Klipsch Audio Technologies has filed a lawsuit in the U.S. District Court for the Southern District of Indiana against companies operating the following Internet sites: crazyeddie.com, 50TopSellers.com, AuthorizedElectronics.com, TheBestPriceStore.com and HomeTheaterPhiles.com. Klipsch is seeking recovery of damages and an injunction to prevent the defendants from inducing authorized dealers to trans-ship Klipsch products, interfering with the contractual relationships between Klipsch and its authorized dealers, infringing on Klipsch trademarks and illegally using Klipsch's copyrighted materials.

“The unscrupulous procurement, promotion and sale of Klipsch-branded loudspeakers by unauthorized resellers will not be tolerated and we will exhaust every legal avenue to expose their corrupt business practices,” said Mike Klipsch, Klipsch's executive VP and COO. “These free-riders are capitalizing on the hard work and substantial investment that Klipsch and its authorized dealers have made in the promotion of the Klipsch brand identity. We simply will not allow them to hide behind e-mail addresses.”

Klipsch alleged that all of the defendants remove the official Klipsch serial-number labels from the products, including counterfeit labels.

“One purpose of the serial-number labels is to give consumers confidence that they are purchasing an authentic Klipsch product with full manufacturer's warranty,” Klipsch said. “Clearly, the extreme measures taken by the defendants highlights their intent to deceive unsuspecting consumers and capitalize illegally on the Klipsch image. We intend to shine a bright light on these activities and stop them.”

Citing a zero-tolerance policy for trans-shipping as grounds, Klipsch has terminated relationships with 16 of its authorized dealers to date, totaling more $5 million in revenue. According to Klipsch's new president, Paul Jacobs, Klipsch has no problem giving up millions more in revenue if that's what it takes to stop the transshipping.

“We will aggressively protect our brand and tirelessly pursue anyone who engages in activities that diminish the Klipsch brand integrity. The buying experience, product quality, customer and technical services, and warranty promise are essential to Klipsch's premium reputation. Klipsch, and only Klipsch, will choose to whom we distribute our products. Dealers who violate our agreements will continue to be terminated and we will begin meeting these unauthorized resellers in court.”

Klipsch has also retained the services of NetEnforcers.com, a brand-protection company that assists the company with shutting down auctions by unauthorized dealers using third-party Websites such as eBay and Yahoo.

To read Klipsch’s unauthorized dealer warning, visit www.klipsch.com.

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