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article imageSharp sues Hisense over 'shoddy' TVs that will 'destroy' its name

By James Walker     Jun 12, 2017 in Technology
Sharp has claimed that Chinese electronics manufacturer Hisense is ruining its brand and reputation by selling poorly built televisions that wear its name. Hisense has a license to use Sharp's brand but is allegedly putting it on poor quality products.
Sharp and Hisense signed the deal in 2015. It allows Hisense to sell products with the Sharp name in the U.S. after Sharp itself withdrew from the market. After selling its brand for just $27.8 million – Sharp was later bought by Foxconn for $3.5 billion – the firm is now trying to get back into U.S. electronics. This requires it to reclaim the rights to use its own name in the country.
In an unusual turn of events, the company has filed a lawsuit against Hisense which alleges it is tarnishing the brand by selling "shoddily manufactured" TVs. As the BBC reports, defects that claim to have been found on Hisense products include false advertising around picture quality, defective displays and rule-breaking over U.S. electromagnetic emissions regulations.
In its filing, Sharp told the court that it believes its brand could be "destroyed" by the apparent poor quality of Hisense televisions. However, there is not currently any evidence to confirm the company's claims. For its part, Hisense is predictably denying any wrongdoing, stating it "categorically" contests Sharp's claims. The firm said it's in "full compliance" with the licensing agreement and will be representing itself in court.
"Hisense will continue to manufacture and sell quality televisions under the Sharp licensed brands," it told the Wall Street Journal.
Although unconfirmed, it seems likely Sharp is pursuing Hisense in a bid to reclaim control of its name. The sale of its market presence to Hisense came at a time when the company was short on money and abandoning several of its businesses. In the two years since, Sharp has made a significant recovery, enabled by the sale to Foxconn and subsequent cash injection.
It is thought that Sharp is now regretting the sale of its core assets in overseas markets. With its name licensed off to Hisense, it cannot make another entry into U.S. electronics, a product category it was once successful in. As the company embarks on a substantial rebuilding program, it will need its name back if it's to start expanding again. It is already seeing some success, having reported its first quarterly profit since 2015 earlier this year.
There's currently no date for when Sharp and Hisense will meet each other in court. It is unclear what the penalties could be for Hisense if Sharp's claims are found to hold water. Conversely, it's possible Sharp could be investigated itself if Hisense demonstrates the allegations are without merit. With the five-year licensing deal still a long way off expiring, it's becoming increasingly clear that Sharp wants to make a name for itself again, including in the all-important U.S. market.
More about Sharp, hisense, Televisions, Electronics, TV