Ningbo Hailun Musical Instruments Co. Ltd. - Dispute Creates Crisis in North American Market, AGG Succeeds in Obtaining Injunctive Relief in International Arbitration Forum
AGG’s client, Ningbo Hailun Musical Instruments Co. Ltd., is a rapidly growing China-based manufacturer of high quality pianos sold through a worldwide network of independent distributors. The company’s initial US distributor, with which it had an exclusive distribution agreement, failed to remit payment for millions of dollars of inventory. When the manufacturer took steps to appoint a replacement distributor, the initial distributor filed a state court suit seeking to enjoin the manufacturer from appointing a replacement distributor. In addition, the initial distributor refused to release the manufacturer’s inventory, refused to relinquish control over websites utilizing the manufacturer’s trademarks, and engaged in a course of communications with US retailers that created confusion as to which distributor was the legally authorized US distributor of the manufacturer’s pianos. The dispute created a crisis that threatened the manufacturer’s access to the North American market, and imposed obstacles to a pending initial public offering of the manufacturer’s stock.
AGG stifled the distributor’s state court lawsuit by filing an arbitration proceeding before the International Centre for Dispute Resolution while simultaneously moving to dismiss or stay the distributor’s state court lawsuit. AGG filed a motion in the arbitral forum for an emergency injunction barring the distributor from further use of the manufacturer’s trademarks and from continuing to hold itself out as an authorized distributor of the manufacturer’s products.
AGG succeeded in obtaining injunctive relief in the international arbitration forum, and effectively stayed the distributor’s state court lawsuit. Subsequent settlement negotiations led to a prompt resolution of the dispute, enabling Ningbo Hailun Musical Instruments to resume distribution through its new North American distributor, securing the manufacturer’s exclusive control of the relevant internet domain names and US trademarks, and eliminating further market confusion as to the authorized source of the manufacturer’s products.
- Kevin B. Getzendanner
- Glenn P. Hendrix
- Edward A. Marshall