Pressure Builds On Hisense To Give Up Sharp TV Brand

The ongoing battle between Foxconn-led Sharp Electronics and Chinese TV maker Hisense continues unabated as Sharp piles on litigation. Sharp has filed complaints against alleged Hisense product development practices as well as claimed misuse of the Sharp TV brand that Hisense licenses in the U.S. market.

At the same time, further pressure on Hisense is mounting as Sharp/Foxconn seeks favor with the U.S. Trump administration. The company is dangling promises of building a large display-panel production facility in Wisconsin as a huge “jobs generator.” The latest legal salvo from Sharp/Foxconn is an infringement allegation that Hisense TVs sold in the U.S. include unauthorized use of Sharp Wi-fi intellectual property. This resulted in a complaint to the International Trade Commission (ITC)—one it hopes will halt the importation of certain Hisense and Sharp-branded smart TVs that allegedly use the unlicensed Sharp Wi-Fi technology. In the IP world, this is viewed as a hardball tactic because the ITC is speedier than protracted litigation in the court systems. If the ITC rules in Sharp/Foxconn’s favor, an injunction cuts off Hisense’s ability to sell select products in the U.S.

In its rebuttal to the ITC action, Hisense said blocking the importation of Hisense-made televisions would reduce competition, possibly leading to a shortage of televisions for consumers—and potentially push prices higher. More concerning for Hisense, however, is if the ITC rules in favor of Sharp/Foxconn, it could effectively force Hisense out of the licensing deal.

A representative for Sharp told us that Sharp has filed a patent litigation complaint that is “looking for an injunction and monetary damages sufficient to compensate Sharp for Hisense’s unlawful infringement of Sharp’s innovative Wi-Fi technology.”

As previously reported here, Foxconn bought a majority of Sharp in March 2016, a few months after the former management of cash-strapped Japanese electronics manufacturer licensed the rights to the Sharp TV brand to Hisense for a five-year period, ending in 2019.

After gaining controlling interest in Sharp, Foxconn chairman Terry Gou and various new ranking executives tried to re-acquire the Sharp TV marketing rights from Hisense through arbitration and other means. Undeterred, Sharp—under Foxconn control—declared it was ending a previously arranged LCD panel supply arrangement with Hisense. This forced Hisense to find panel supplies from other sources and kicked off a string of legal challenges.

Hisense declined to comment to the press on the pending IP litigation charges, but it previously vowed to fight a separate Sharp lawsuit claiming that certain Sharp-branded televisions made by Hisense were allegedly in violation of U.S. regulations concerning electromagnetic emissions and for advertising inaccurate screen sizes. The lawsuit is seeking a return of the Sharp TV brand rights because the Hisense-made Sharp TVs were “shoddily made” and displayed substandard picture quality that would damage the reputation of the Sharp TV brand before the five-year licensing term expires.

Concerning the ITC complaint, Sharp/Foxconn told us certain “smart” appliances or devices sold by Hisense in the United States appear to infringe the Sharp Smart Wi-Fi patents. A Sharp representative supplied us with a list of Hisense televisions purported to be carrying the infringing technology including the following Hisense TV models: 65H10, 65H8, 65H7, 65H6, 55H8, 55H7, 55H5, 50H8, 50H7, 50H6, 50H5, 50H4, 48H4, 43H7, 43H6, 43H5, 40H5, 40H4 and 32H5.

A Sharp representative told us the company was unable to comment on pending litigation or complaints filed against Hisense prior to the Wi-Fi patent infringement complaint.

After the Foxconn acquisition, Foxconn and Sharp executives indicated that they wanted the Sharp TV brand rights to begin a global rebuilding effort behind the Sharp television business. The proposed plant in Southeastern Wisconsin would is reportedly part of the company’s plan to become a leader in what Gou has called “an 8K/5G ecosystem.”

Meanwhile, the State of Wisconsin recently authorized the start of negotiations for a contract that would allow Foxconn up to $3 billion in incentives to build the proposed $10 billion LCD display fab that was strongly advocated by President Donald Trump last July. Will Hisense be able to keep its Sharp TV licensing deal given the protracted attacks from its licensor? Stay tuned.