Baldwin Park, Calif. — Astar Electronics, marketers of LCD TVs, DVD players, GPS devices and digital photo frames, and certain affiliated companies owned by China-based KXD Electronics, were forced into Chapter 7 bankruptcy in late September, as the result of an intellectual property and trademark infringement lawsuit filed by Royal Philips Electronics, according to court documents.
On Sept. 21, Chief Judge Roger L. Hunt of the U.S. District Court of Nevada ordered the immediate incarceration of Astar’s executive VP Jingyi “James” Luo for 30 days for failing to comply with the Court’s civil contempt order, including his failure to pay more than $3 million in contempt sanctions.
The defendants were charged with the unauthorized sale and distribution of DVD players bearing Royal Philips’ DVD+ReWritable and design trademark, according to documents posted by Keats McFarland & Wilson LLP, attorneys for Philips.
For similar violations, Philips also sued Norcent, Amoisonic/Sungale and others in 2006.
On Feb. 14, 2007, after repeated violations of the temporary restraining order and preliminary injunction, the court entered an order imposing severe civil contempt sanctions against the KXD defendants, requiring them to pay more than $1.6 million to Philips, including the posting of a $2 million bond and sanctions of $10,000 per day thereafter.
The suit was originally filed in 2006 against Shenzhen Kaixinda Electronics, KXD Technology, Shenzhen KXD Multimedia, KXD Digital Entertainment, Fusheng Liu, Astar Electronics and Luo, resulted in a default judgment for damages in excess of $93 million for Philips.
The Court further ordered the KXD Defendants to be permanently enjoined from the unauthorized manufacture, sale, importation, distribution or other use or attempt to circumvent Philips’ intellectual property rights in its patented DVD technology.
“On Aug. 1, 2007, the court granted Royal Philips’ motion to freeze KXD’s assets, including all real property and bank accounts. The court also ordered an impoundment of KXD’s entire inventory, an assignment to Royal Philips of the outstanding payments owed to KXD by third-party debtors and the certification and registration for execution of the court’s order for civil contempt sanctions against KXD for enforcement in other jurisdictions,” according to documents posted by the legal firm.
“The court’s findings and conclusions in the order show that defendants should not play loose and fast with the federal courts of the United States,” the legal firm’s documents stated.
As a result of the suits, KXD group filed for Chapter 11 bankruptcy protection, which was denied, forcing it to file Chapter 7, Ross Minion, former Astar national sales manager, told TWICE.
On Aug. 15 Astar laid off many of its remaining employees before closing down at the end of that month. Astar’s assets are currently being liquidated, Minion said. Philips also pursued KXD’s parent company in China, forcing it to shut down operations, Minion said.
Astar, now defunct, has no provisions for handling warranties, returns or service related issues. Consumers with warranty issues are left to the good graces of the retailers who sold the products, Minion acknowledged.
Minion said KXD in China may try to negotiate to revive North American business at some future point, but the status of those efforts was unknown, Minion said.
In the separate, but related, DVD technology and trademark suit by Philips against Norcent Technology, Norcent was found in “willful infringement of Philips patents” by a jury on Sept. 5, 2007, and Philips was awarded $12.8 million. The jury found that the Norcent defendants infringed all four asserted claims from two Philips patents related to DVD players.
Royal Philips representatives did not reply to rquests for comment as this was posted. Norcent declined to comment, citing ongoing discussions with Philips.