A couple of months ago, we mentioned the new Schwinn Scooters just introduced. As a reader pointed out, the Schwinn name is owned by Pacific Cycle which put the Schwinn name on several Chinese scooters. Pacific Cycle is now being sued by CMSI of Seattle for some “interesting” business practices. 2StrokeBuzz has the story:
CMSI alleges that Pacific Cycle requested a meeting with CMSI in January 2004 regarding cooperation between the two companies. A meeting was held in February at which time CMSI revealed their exclusive contract with a undisclosed Chinese supplier, their business model, and their marketing plans to Pacific. According to the court papers, Pacific then notified CMSI they were pursuing a “different direction.” CMSI later discovered that Pacific had located CMSI’s Chinese manufacturer and persuaded them to violate their contract with CMSI, and instead manufacture the same scooters for Pacific, to be sold under the Schwinn name (while no longer selling them to CMSI).
Some of the tooling used to make the scooters was paid for by CMSI and even has the letters “CMSI” molded into the parts! CMSI sells scooters under the Twist N’ Go (TNG ) name. I guess when you market products manufactured elsewhere there’s always the possibility this sort of thing will happen, resulting in lots of legal bills while everyone fights it out.
Thanks to Tom for the tip!