CRA Business News – USA
By Repairer Driven News on February 28, 2020
Hyundai claimed victory on Wednesday after it and importer Direct Technologies International reached an agreement to end lawsuits against each other related to a grey-market parts dispute.
DTI had been importing Hyundai collision and service parts from abroad and selling them in the U.S., according to Hyundai. The OEM sued DTI in 2017, alleging that the importer represented the grey market components in a manner likely to create confusion and either steal or harm the reputation the OEM had created with the authorized U.S. parts supply chain.
DTI had originally denied Hyundai’s allegations and countersued, alleging counts of illegal restraint of trade, illegal monopoly, exclusive dealing, false advertising and unfair competition at the federal level, and unfair competition under North Carolina statute and common law. Part of its case keyed off of a Hyundai warranty message referencing parts that drew a warning from the Federal Trade Commission.
DTI agreed to pay Hyundai $5 million in attorney’s fees and damages, less than the $8.49 million Hyundai had alleged in DTI gross revenues and lost Hyundai profits related to the parts. DTI also said it would quit importing or selling “Non-genuine Hyundai parts,” which were “defined as Hyundai-branded parts that are not sourced through Hyundai Motor America and its Authorized Chain of Distribution as defined in the Complaint.”
The importer also accepted a ban from representing those unauthorized parts “as genuine, original, OEM, OE, or Optional/Opt OE, or in any way mispresenting the warranties that apply to or cover in whole or in part, Defendant’s Non-genuine Hyundai Parts.”
DTI admitted to each of the causes of actions brought by Hyundai, which included trademark infringement and dilution, two counts of false designation of origin, unfair competition, interference with contractual relations, and violating the North Carolina Unfair and Deceptive Trade Practices Act.
“DTI has served the automotive community since 2013,” DTI attorney Tom BenGera wrote in an email Friday. “DTI is extremely satisfied that the parties were able to negotiate a mutually beneficial settlement agreement, which resolves all disputes between the parties, including DTI’s counterclaims against Hyundai for antitrust and anticompetitive conduct. DTI is not otherwise able to comment on the parties’ confidential settlement terms.”
The reference to “Opt OE” is interesting in light of the collision repair industry discussion around such parts. Hyundai mentioned the concept again in a news release Wednesday.
“This case is a win for Hyundai owners who want peace of mind that Hyundai-branded parts used on their cars are approved by Hyundai Motor America and have gone through its quality control,” Hyundai Motor America Chief Customer Officer Barry Ratzlaff said in a statement. “These days, it is easy for owners and even dealers to be confused by the sales tactics of gray market parts sellers. The internet is filled with examples of listings that appear to be for Hyundai Genuine Parts, but in reality, those parts are not coming from Hyundai Motor America and are subject to unsecure supply chains without appropriate safeguards against introducing counterfeit, reject, and defective parts. Especially in the context of collision parts, we are seeing clever ways of deceiving customers and body shops by companies that describe their non-genuine parts as ‘optional OE’ or ‘OEM surplus.’ If the deal looks too good to be true, it is probably an indication to look carefully at whether the parts are truly Hyundai Genuine Parts sold by an authorized Hyundai dealer and backed by Hyundai in the U.S.” (Emphasis ours.)
Hyundai’s lawsuit and the order suggested that only parts sold through the authorized U.S. supply chain could be considered Hyundai Genuine Parts.
“HMA only sources parts for sale to Hyundai authorized dealers through Hyundai’s authorized chain of distribution for the United States, and only those parts sourced through that authorized chain of distribution are recognized by HMA and the industry as Genuine Hyundai Parts, covered by the applicable Hyundai warranties as described below,” Hyundai’s lawsuit states.
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