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Klipsch Cites Victories In War On Transshipping

4/02/2004 09:18:00 AM Eastern

Indianapolis - Five Web sites and their owners agreed to a lifetime ban on selling Klipsch products after Klipsch filed lawsuits against them for unauthorized sales over the Internet.

The owners also agreed not to sell Klipsch products through any other companies they start in the future.

The web sites named as defendants in the suit were Crazyeddie.com, 50TopSellers.com, AuthorizedElectronics.com, TheBestPriceStore.com, and HomeTheaterPhiles.com.

In January, Klipsch announced plans to seek an injunction against the sites to stop them from "inducing" authorized dealers to transship Klipsch products, interfering with contractual relationships between Klipsch and its authorized dealers, infringing on Klipsch trademarks, illegally using Klipsch’s copyrighted materials, and competing unfairly with Klipsch. The company also claimed that all of the defendants removed official Klipsch serial number labels and attached counterfeit labels.

Besides going after the sites, Klipsch has also taken action against transshipping dealers, some of whom were sources of some Klipsch products for the unauthorized web sites, a Klipsch spokesman said.

In January, Klipsch said it terminated 16 dealers throughout 2003, forsaking $5 million in annual business. The company recently terminated two more dealers for transshipping, sacrificing another $1 million in annual volume.

EVP/CEO Mike Klipsch said the company would continue to enforce a zero-tolerance policy against transshippers and "give up millions more in revenue if that is what it takes to stop the transshipping and prevent the unscrupulous procurement, promotion and sale of Klipsch-branded loudspeakers by unauthorized resellers."

"Going after people whose business practices include deceiving unsuspecting consumers and illegally capitalizing on the Klipsch image is not easy and it is very, very costly," he continued. "We spent over six figures without even stepping into a courtroom, and even that doesn’t come close to the millions of dollars worth of revenue we chose to give up by terminating dealers that transshipped Klipsch products."

Within two weeks of filing the lawsuit, crazyeddie.com had closed its doors, and the other four web sites had completely removed Klipsch products from their offerings, he said. About 20 other unauthorized web sites voluntarily removed the brand from their pages after the suit was announced, he contended.

When it filed the suits, Klipsch retained the services of NetEnforcers.com, a brand protection company that assisted Klipsch with shutting down more than 125 auctions by unauthorized dealers using third party web sites such as Ebay and Yahoo. Mike Klipsch said Klipsch plans to continue its relationship with NetEnforcers.com for as long as it is needed and he indicated that more lawsuits would be filed if necessary.

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