Hyundai Construction Equipment U.S.A., Inc., said it has won a legal challenge against a gray market equipment dealer, with a federal court judgment permanently barring the sale, advertising and marketing of Hyundai "gray iron" and returning approximately $1 million in lost sales plus court costs.
A judge in the U.S. District Court for the Northern District of Illinois ruled that a Macomb, Mich., equipment dealer illegally imported 29 Hyundai-branded wheel loaders and excavators and sold them primarily to U.S. customers.
The lawsuit, filed in June 2005, accused the Michigan dealer of violating federal fair competition and other laws by selling equipment that didn't meet standards of Hyundai's authorized U.S. models. All of the products had altered serial numbers, none had warranty protection and some failed to meet U.S. Environmental Protection Agency diesel emission regulations, Hyundai said. Several also had manuals, markings and gauges in a foreign language, usually Korean, identifying them as being made specifically for Asian markets.
The ruling, which is also the first published decision to deem such sales a violation of the Lanham Act, bars the dealer from importing, selling or marketing any Hyundai construction equipment unless it was purchased from an authorized, U.S.-based Hyundai dealer. The firm also was ordered to turn over all of the illegal equipment still in its possession and to cover Hyundai's court costs.
"We pursued this case in the interests of protecting and strengthening our U.S. dealer network," said John Lim, president of Hyundai U.S.A., Elk Grove Village, Ill. "Gray market equipment sales put our dealers at a distinct competitive and financial disadvantage. It's our responsibility to keep the playing field as level as possible."
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