Sharp's ITC Complaint Part of Bid to ‘Undo’ 2015 US License Pact, Says Hisense
Sharp’s Aug. 29 Tariff Act Section 337 patent infringement complaint at the International Trade Commission seeking an import ban on Hisense smart TVs (see 1709050045) is part of a “scorched-earth campaign of litigation” alleging “anything and everything” in an attempt to “undo” the 2015 license agreement that gave Hisense rights to sell Sharp-branded TVs in the U.S., Hisense said in comments (login required) posted in ITC docket 337-TA-3246. Foxconn bought a majority of Sharp in March 2016, months after a financially ailing Sharp licensed its TV brand to Hisense for the U.S. market in a deal that runs out in 2019 (see 1608240031).
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After the Foxconn acquisition, “Sharp and its new owner had second thoughts about the relinquishment of the Sharp brand for the U.S. market and began a multifaceted effort to recover or undermine the rights that Hisense acquired,” Hisense told the ITC. Hisense-Sharp tensions have been building for months. Those tensions gained added notoriety in July when Foxconn announced plans to build a $10 billion LCD display fab in Wisconsin as the centerpiece of a Foxconn-Sharp commitment “to build in America this most advanced 8K ecosystem" (see 1707270017).
Analysts speculate that's part of a Foxconn campaign to remake Sharp into a top-tier global TV brand if only it can wrest control of Sharp's fate in the U.S. market before the licensing deal expires in two years (see 1707280054). Legislation authorizing Wisconsin to negotiate a contract that would pay Foxconn up to $3 billion in cash incentives to build the display fab cleared the Assembly Thursday. Gov. Scott Walker (R) signed the bill into law Monday afternoon.
Sharp is misusing the ITC “as a pawn in its strategy to force Hisense to give back the brand Hisense rightfully licensed,” Hisense told the ITC. Its efforts to do so “raise several public interest issues that warrant close consideration,” including “concerns about competitive conditions” in the U.S. economy, the company said.
An import ban on the Hisense TVs at issue in the Sharp complaint would harm consumers, said Hisense. The company is “one of the world’s largest TV manufacturers,” it said. “In the event of an exclusion order, consumers will suffer from fewer choices among smart TVs and some may not be able to get products with the features offered by Hisense.” A decrease in supply of smart TVs “may also cause prices to increase,” it said. “Sharp does not even offer its own competing consumer TVs and is seeking to use an exclusion order as a hammer to wrongfully force Hisense to return the brand name it dealt away.”
On a unit-share basis, Hisense, excluding the Sharp-branded product it distributes, controlled 3 percent of the North American TV market in the first half of 2017, said Paul Gagnon, IHS Markit director-TV sets research, Sunday. That was down sequentially from its 3.8 percent share in 2016's second half, but up from 2.4 percent in first-half 2016, he said: “So seasonally, their share us up about half a percent compared to a year ago.”
It’s “telling” that the only Sharp-branded TVs still in U.S. circulation that Sharp itself designed and built “are several years old (developed in 2014) and are no longer being sold to consumers,” said Hisense. “These LCD TVs are outdated and do not compete with the cutting edge LED TVs offered by Hisense.” Sharp representatives didn’t comment Monday.
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"Today's one of those days we savor," Walker told a ceremony Monday webcast live from Gateway Technical College in Sturtevant, Wisconsin, moments before he signed the Foxconn bill into law. "Sometimes, people ask me, 'Will Foxconn live up to their promise'" of creating 13,000 jobs at an LCD display fab in southeast Wisconsin? said Walker. The legislation just enacted -- "we even strengthened it the other day -- gives even more tools to ensure that we only pay to grow," he said. "My belief is, having seen this new 8K technology" at a Sharp facility in Osaka, "and thinking about it being built right here in the state of Wisconsin, I'm more than confident that this is going to happen," he said.