Fiat Chrysler escalates fight with Mahindra in US3 min read . Updated: 18 Sep 2018, 10:55 AM IST
Fiat Chrysler says Mahindra is seeking refuge in a legal interpretation of a contract signed between the two companies in 2009
New Delhi/Mumbai: Fiat Chrysler Automobiles NV (FCA) has escalated its effort to bar Mahindra and Mahindra Ltd from selling its off-road utility vehicle, Roxor, in the US, claiming that the Indian auto maker is seeking refuge in a legal interpretation of a contract signed between the two companies in 2009. FCA, in its petition, asked a court in Michigan to reject an injunction sought by Mahindra in the case where the former has alleged that the Mumbai-based company infringed on the intellectual property rights of the Jeep design. A copy of the petition was reviewed by Mint.
Selling the Roxor is key for Mahindra as it would mark the culmination of its 14-year-old endeavour to crack the lucrative US market. The latest dispute with FCA threatens to put a spanner in the works for Mahindra as the Italian-American auto maker is disputing the design of the Roxor’s grille, which Mahindra said had been designed and developed in the US, with the grille itself sourced from third-party manufacturers in Michigan.
Mahindra has argued that the grille used in the Roxor is made in the US, and not imported by the company as knocked-down kits, as stated by Fiat, and that Fiat’s complaint before the International Trade Commission (ITC) is a breach of contract between the two companies signed in 2009 of not asserting “infringement claims against a Mahindra vehicle using the Approved Grille Design".
“But that is not what the language (of the agreement) says," FCA said in its petition.
“Instead, the 2009 agreement says that Chrysler will not bring ‘any claim for infringement... based on: (1) a grille having the Approved Grille Design; or (2) a vehicle containing or using the Approved Grille Design’," Fiat said. It said the company never agreed to forego any and all claims “against" a vehicle using the Approved Grille Design that are based on other components of that vehicle that infringe FCA’s intellectual property.
“Neither Mahindra nor this Court may re-write clear terms of the 2009 Agreement—changing ‘based on’ to ‘against’—under the guise of interpretation," FCA added.
FCA claims that Mahindra broke the 2009 pact, which let the latter use “the Approved Grille Design", whereas the Roxor grille is not the approved design.
A Mahindra spokeswoman said FCA’s claims were without merit. “They are incorrect on the facts and on the law. The dispute continues to be addressed," she said by email.
Mahindra had to abandon plans to introduce the Scorpio pickup truck in the US, after Chrysler Group LLC—later acquired by Fiat--objected in 2008 to the design of the vehicle because Chrysler claimed a trademark in grilles with seven parallel vertical slots. After a long negotiation, Mahindra agreed to incur the costs of a redesign and change to the distinctive approved grille design.
Fiat meanwhile wants the ITC to hear the case whereas Mahindra wants its defence to be heard at the eastern court of Michigan district, where the grille is manufactured by the Indian car maker, through third-party manufacturers.
ITC deals with unfair trade and intellectual property practices of foreign companies.
Mahindra said FCA aims to derail “the first new vehicle from a start-up American automobile company". It said that FCA does not explain why it failed to contact Mahindra to relay any legitimate concerns.
FCA however claimed that Mahindra has been designing the Roxor since 2015, made an “enormous investment" in the Roxor, and spent “millions to advertise and market" the Roxor. “Yet never once before launch, during its three years of development and purported investment, did Mahindra consult FCA on whether the Roxor would fall within the 2009 Agreement," FCA said.
Mahindra in its reply said that Fiat does not dispute that its actions place the employment of US workers at risk—and that is clearly is against the public interest.
“First impressions are lasting impressions, and Fiat is eroding the confidence of dealers and customers just as Mahindra is launching its business," it said.
The US International Trade Commission (ITC) has said it was initiating a patent-related investigation and has not decided on the merits of the case. Within 45 days from Tuesday, a target date would be set to complete the investigation, it said.
FCA said that if Mahindra’s interpretation were permitted to stand, as argued, the short 2009 Agreement would prohibit Chrysler (or now FCA) from asserting any claim “against" any vehicle using the Approved Grille Design—including, for example, a claim for infringement of a utility patent for engine technology, even though that claim would be totally unrelated to the grille.
“No language in the 2009 Agreement supports this contention," it said.