Klipsch Lawsuit Settlement with Brandnamez.com Eliminates Another Aggressive Unauthorized Internet Promoter

INDIANAPOLIS (May 19, 2005) - Klipsch Audio Technologies, a leading manufacturer of loudspeakers, today announced it has settled its lawsuit against Brandnamez, LLC dba brandnamez.com. In its lawsuit filed in the U.S. District Court for the Southern District of Indiana, Klipsch claimed that Brandnamez.com was 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.

Brandnamez.com conceded all five points of the lawsuit and agreed to a lifetime ban that prevents Brandnamez.com, its owners and any future businesses they own from ever selling Klipsch brand products.

Klipsch has also terminated another dealer that was proven to have engaged in transshipping, or providing products to unauthorized resellers in violation of the established Klipsch dealer agreement. To date, Klipsch has severed ties with 19 dealers in accordance with its zero tolerance policy, which represented well over $6 million in business annually.

"Winning our case against Brandnamez.com eliminates another unauthorized Internet reseller that was very visible and harmful to our legitimate dealer network," said Mike Klipsch, executive vice president and chief operating officer. "We will continue to track down and stop any and all unauthorized activity."

FactoryDirectSound.com, another unauthorized web site, has signed a cease and desist agreement with Klipsch that mimics the settlement with Brandnamez.com. FactoryDirectSound.com was one of many web sites infringing on Klipsch's copyrights and trademarks that have removed the brand from their pages, presumably to avoid being named as defendants in a future lawsuit. Klipsch pursued and obtained the additional requirement of a binding lifetime ban on any sales of Klipsch products.

Since January 2004, Klipsch has obtained agreements, settlements or judgments against the following unauthorized Internet resellers:

  1. Syris Holding Corporation, parent company of the web site HomeTheaterPhiles.com
  2. 50TopSellers.com
  3. AuthorizedElectronics.com
  4. TheBestPriceStore.com
  5. Crazyeddie.com
  6. Brandnamez, LLC dba brandnamez.com
  7. FactoryDirectSound.com

"When we began this effort to eliminate unauthorized Internet sales there were more than 80 offenders," said Mike Klipsch. "Today, there are only a few holdouts and we are closing in on them quickly. We have succeeded by educating the public, enforcing our zero tolerance policy and following through on our promise to take legal action against violators."

Klipsch is continuing its relationship with 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. Through April 2005, NetEnforcers has terminated 395 unauthorized Ebay auctions on behalf of Klipsch.