Klipsch Sues China Manufacturers Over Counterfeit Headphones

Klipsch Group, Inc. (KGI), the parent company behind Klipsch, Energy, Mirage and Jamo declared war today, in the form of legal action, against 23 Chinese manufacturers selling counterfeit Klipsch Image S4 and Klipsch Image S4i headphones under the Klipsch brand name. On December 16, 2011, the company received an order from the U.S. District Court for the Southern District of New York allowing the suspension of service to domains and sellers on trade boards selling counterfeit Klipsch headphones. In addition, the order allows for restraint on funds in the payment processing and bank accounts of those selling the counterfeit products. 

Even Obama has agreed to put the offending manufacturers in Gitmo indefinitely... OK, we made that last part up. But Klipsch is alleging that the counterfeiters have violated the Lanham Act, which governs U.S. trademark registration and prohibits trademark counterfeiting and infringement, among other activities. Basically, the Klipsch name has been used illegally across China in order to sell headphones under teh popular name. The accusations involve, specifically, trademark counterfeiting, trademark infringement, unfair competition and false designation of origin.

Klipsch had noticed a dramatic increase in counterfeit activities over the past six months, and decided to take action. Not only is Klipsch alleging that the counterfeiting takes away sales, but they are also claiming that the infringing products are made using inferior components. Under current law, Klipsch can seek up to $2 million per trademark, per defendant, as well as injunctions to take down the relevant websites and seller listings and prevent the defendants from counterfeiting Klipsch brand products in the future. To date, KGI has restrained 20 of defendants' accounts having over $750,000 in funds from the sale of counterfeit merchandise. Yowsa!

Klipsch has been investing substantial funds to fight the counterfeiting problem including purchasing counterfeit products to identify illegal products and retailers, issuing cease and desist letters, training customs agents, and employing private investigators. They also closely monitor global eBay and Amazon sales to remove counterfeit sellers and products.

In what is shaping up to be a pretty large international crackdown, a total of 23 defendants were specifically named in the suit, including at least eight unique websites and 27 seller listings on trade boards, online marketplaces and business-to-business websites. Examples include Focalprice.com and wsdeal.com, and sellers listed on Alibaba.com, AliExpress.com, DIYTrade.com, DHGate.com and Components-Electronic.com. Among the named defendants are two suspected major manufacturers of counterfeit Klipsch brand goods. The number of defendants will likely grow as additional websites and sellers are identified.

Klipsch is taking on China. Now we know what Apple has been dealing with - but they've just kept it out of the news. Klipsch has opted to put it in the open and attempt to shut it down for good - or at least take out the biggest players. Let's hope China gives them an assist and not the cold shoulder.

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