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Federal Court rules in favor of Nautilus Hyosung in dispute with Tranax
May 26, 2010
According to the release, from 1998 to January 2007, Tranax Technologies served as the U.S. and Canadian distributor of retail ATMs made by Nautilus Hyosung Inc., the parent corporation of Nautilus Hyosung America. In the fall of 2006, Nautilus Hyosung discovered that Tranax Technologies had, without authorization, substituted another manufacturer's Cash Dispenser Unit ("CDU") into Nautilus Hyosung ATMs and was selling the altered ATMs under the Hyosung brand name. Despite demands by Nautilus Hyosung to cease, Tranax continued to sell the altered ATMs.
Nautilus Hyosung subsequently suspended shipment of the ATMs that Tranax Technologies was modifying, and Tranax Technologies responded by withholding payment of outstanding invoices. Nautilus Hyosung terminated the distribution contract in January 2007. Nautilus Hyosung and Hyosung America filed for arbitration in August 2007 with the International Centre for Dispute Resolution of the American Arbitration Association.
In February 2010, the American Arbitration Association issued an arbitral award that ruled for Nautilus Hyosung and Hyosung America on all of their contract claims and rejected all of Tranax Technologies' contract counterclaims. The award found that Tranax Technologies' unauthorized substitution of CDUs into Nautilus Hyosung ATMs was a breach of contract that entitled Nautilus Hyosung to suspend ATM shipments and to terminate the distribution agreement. The award concluded that Tranax Technologies had also breached the parties' contract in several other respects and ordered Tranax to pay the full amount of the unpaid bills, plus interest. The award further held that Tranax Technologies had infringed Nautilus Hyosung's rights in the "Hyosung" trademark, but that Tranax Technologies owned the U.S. and Canadian rights for the "Mini-Bank" trademark that Tranax Technologies had used to distribute Nautilus Hyosung ATMs. In response to this ruling, Nautilus Hyosung has stopped use of the "Mini-Bank" trademark in the U.S. and Canada, and is continuing to sell the same ATMs without this mark.
On May 6, 2010, the United States District Court for the Northern District of California issued an order that confirmed the arbitral award and required Tranax Technologies to pay more than $5 million to Nautilus Hyosung and Hyosung America for the unpaid bills. Judgment in this amount was entered on May 25, 2010. Nautilus Hyosung and Hyosung America are taking steps to collect this amount from Tranax Technologies. In addition, Nautilus Hyosung and Hyosung America recently filed a lawsuit against Hantle USA Inc. in the same court that issued the judgment against Tranax Technologies, claiming that Hantle USA participated in a fraudulent scheme to make it difficult to collect the judgment from Tranax Technologies by shifting Tranax's primary assets to Hantle USA.
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Hyosung Americas is a global human experience maker that bridges the physical and virtual worlds. We do this by harnessing our unique combination of a manufacturer’s soul with an innovator’s mindset to build a platform of integrated products, services, and ideas that improve life’s day-to-day interactions for everyone.
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