Reviewers have fawned over surround-sound speakers from Energy, a unit of the Klipsch Group.
Two years ago, CNET's Matt Moskovciak dubbed the Energy Take Classic 5.1 system "the best budget speaker system we've reviewed." The sound from the speakers is incredible, he wrote, and the $399 price tag unbeatable.
It was, anyway. A few months ago, upstart online retailer Monoprice debuted its 5.1 Hi-Fi Home Theater Satellite Speakers & Subwoofer system at $249. The speakers aren't just similar to the Energy system, and they don't just have the same dimensions and sound quality. Other than the logos, the two systems are virtually indistinguishable.
"Nearly everything -- from the finish, to the placement of the drivers, to the positioning of the speaker connectors -- is identical," Moskovciak wrote in a February review. Everything, that is, except the price.
Cue the lawyers. On March 15, Klipsch and its subsidiary, Audio Products International, which makes speakers under the Energy brand, filed a suit against Monoprice in federal court in the Southern District of Indiana, accusing the retailer of patent infringement. In a recent interview, Monoprice CEO Ajay Kumar, interviewed before CNET became aware of the suit, insisted the company "never purposely" sells products that infringe on another company's patents. Monoprice subsequently declined to comment on the litigation.
The Klipsch lawsuit isn't the first time Monoprice has been hauled into court for allegedly infringing on a patent. In 2010, it was among a group of defendants in a suit over the sale of printer cartridges that allegedly used a patented technology. Jeffrey S. Boyles, an Orlando lawyer representing the plaintiff in that case said his client dismissed claims against Monoprice last April after reaching a confidential settlement.
Monoprice got its start in 2002, when founder Sean Lee started selling cables from his apartment on eBay. Average consumers may not know much about Monoprice, but techies have come to revere the company for selling ultra-affordable accessories like its signature HDMI cables -- which retail for as little as $3.50 -- compared with equivalent models from Monster Cable, which cost as much as $90 at Best Buy. And as CNET has written, Monoprice's less expensive cables work every bit as well as their pricier rivals.
So how does Monoprice do it? Kumar attributes the price difference to Monoprice's strategy of sourcing the cables with windows 7 ultimate product key directly from Asia, and selling them directly to consumers.
"We wipe out a whole layer of markup in the supply chain," Kumar said.
That cut-rate pricing and the loyalty it's engendered has helped Monoprice soar financially. According to Kumar, privately held Monoprice is profitable, and its revenue has grown at a compounded rate of 38 percent over the last five years. In 2012, the 250-employee company, based in Rancho Cucamonga, Calif., generated $121 million in revenue, a 26 percent jump from 2011.
That success led Monoprice's brass to expand the company's product line, so it moved into audio products, such as the surround-sound speakers. But a handful of its new products, ones that carry the Monoprice brand, are virtually identical to those sold by other companies.
In the Klipsch lawsuit, the speaker maker alleges Monoprice has copied more than the look of its speakers. Klipsch alleges the Monoprice speaker system infringes on a surround-sound patent issued in 2004. Klipsch has even accused Monoprice of copying the "substance" of its owner's manual. (One customer noted in the user review section on the Monoprice product page that the manual replaced "Energy" with "Monoprice" in "most places" but still included a reference to "your Energy subwoofer." The site adminstrator for Monoprice replied with a request for the specific citation in order to "forward this accordingly.")
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