Klipsch Files Lawsuit Against Multiple Internet Sales Violators

INDIANAPOLIS (January 5, 2004) - Klipsch Audio Technologies, a leading manufacturer of loudspeakers, today announced it has filed suit 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 as well as an injunction to prevent the defendants from inducing authorized dealers to transship Klipsch products, interfering with the contractual relationships between Klipsch and its authorized dealers, infringing on Klipsch trademarks, illegally using Klipsch's copyrighted materials, and otherwise competing unfairly with Klipsch.

"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 vice president and chief operating officer. "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 and damage the quality, integrity and value of the authorized Klipsch dealer network."

Mike Klipsch alleged that all of the defendants remove the official Klipsch serial number labels from the products and have gone as far as to attach 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."

Mike Klipsch said all of these violators illegally use Klipsch's trademarks and copyrighted materials - critical pieces of the positive image Klipsch has projected since 1946. He said the Klipsch brand is registered in over 30 countries and that the Indianapolis-based company would not permit these relative newcomers to damage the global brand image Klipsch has spent 60 years building.

Citing a zero tolerance policy for transshipping 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 Klipsch with shutting down auctions by unauthorized dealers using third party web sites such as Ebay and Yahoo. Klipsch officials said NetEnforcers.com has the bandwidth to continuously and tirelessly investigate Internet sales violations, file the appropriate paperwork with the third party web sites, and remove illegal auctions the same day they are found.

Read Klipsch's Unauthorized Dealer Warning

Klipsch Audio Technologies is a privately held global corporation with worldwide headquarters in Indianapolis, manufacturing facilities in Hope, Arkansas, and wholly-owned subsidiary Klipsch Europe BV in the Netherlands. Klipsch manufactures premium home, commercial, professional cinema, and multimedia loudspeakers under the Klipsch brand name, and high-end amplifiers, preamplifiers, and processors under the Aragon brand name.
CONTACT: Joshua Ryan Hall of Klipsch Audio Technologies, 317-860-8708 or joshua.hall@klipsch.com