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Legal arguments about Hypex and NORD licensing

restorer-john

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Oh crap! You are probably right. Reading it again it seems like it has a minimum quantity requirement, rather than resale price. I was wondering why the amount was so precise.

It makes sense that a company like Hypex would not remotely go near what we thought they had said.

Seems like now they let people order in smaller quantities, easing the pain on smaller companies that can't build and inventory a bunch.

Oh, well. :) I put 99% of the blame on John. :D Hopefully the discussion was of some value anyway, although sad to see a member quit over it.
You're a funny man. :)

The post I quoted is pretty clear, it's not referring to minimum quantity, and if it was, our sadly departed mate Samoyed, would have jumped on it. It was posted as an 'interesting tidbit' and meant to stimulate a discussion, not a flame war. I like to think I maintained my composure, as did you.

It was, in my opinion, attempted market manipulation, attempted price point manipulation and hosing down a potential race-to-the-bottom from a lowly component supplier. It was also a tactic to buy time, whilst slathering the audiophile airwaves with puff pieces and effusive reviews, in a failed push to reposition TOTL switching amplifiers as the new black.

When that plan didn't materialize, or took too long, and the anticipated cash-laden gravy train never departed the station, Plan B was activated, where previously restricted upper echelon 'halo' products were released to the masses at reasonable prices.

This is likely close to the mark:
Some announced and canceled too. Weren't Mola Mola power amps based on "optimized" NC1200? My reading of this whole thing would be that BP did not want too cheap competition with its own "high-end" designs and that it was a pure market segmentation decision. Then, since class D amplification at that price level and in that segment hasn't been a success but other segments have exploded, it became a moot point and the pricing restriction was lifted.
My issue was clear. Attempted retail price manipulation by a component supplier through contracts, agreements or a unilateral 'policy' which controls the supply or lack thereof. That, my friends, is black and white in this country. It is illegal.

But on the NC400 front, shouldn't we all be happy it is available to all at a very fair price?
It should be cheap, there's hardly anything in it. In my opinion, it's still overpriced. A huge proportion of the cost is clearly IP. Go look at the schematic (it's out there in the public domain) and tell me where the money goes. It's not in the BOM that's for sure. It'll get cheaper and cheaper and then it'll be copied by the Chinese and sold for a few dollars. I surprised it hasn't happened already to be honest, but that just goes to prove how unimportant in the scheme of things an amplifier module really is.
 
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It should be cheap, there's hardly anything in it. In my opinion, it's still overpriced. A huge proportion of the cost is clearly IP. Go look at the schematic (it's out there in the public domain) and tell me where the money goes. It's not in the BOM that's for sure. It'll get cheaper and cheaper and then it'll be copied by the Chinese and sold for a few dollars. I surprised it hasn't happened already to be honest, but that just goes to prove how unimportant in the scheme of things an amplifier module really is.
Well, even for the IP, it is fair IMHO. Especially when one considers that the field is full of very expensive stuff without an ounce of actual IP or, even worse, fake IP.
 

amirm

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Geopolitics may come into play if one of the companies is Microsoft, General Dynamics or Ford but it doesn't factor into things when you're dealing with litigation between a couple of pissant audio companies -- unless one of those companies is affiliated with a chaebol or in a marginal electoral district. Even then, the way ahead is complicated by all sorts of international agreements on trade, access to markets, etc.
I assume the policy was universal so you could have had very large companies such as Samsung, etc. being told NO if their boxes are too cheap. Indeed this may have happened and one of the reasons the policy is no longer there.
 
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The think I learnt in all of this is the OP was speculative. In the meantime we all got our panties in a knot.

We had access to the module but with a minimum pricing policy of £6.5K decided was to expensive for a boutique manufacture like Nord.
"Minimum pricing policy"

What does this mean, exactly?

Price per unit of NC1200 sold to the OEM? Or price to the end-user/consumer? And if so, why is there an earlier reference to the higher price of £10K? Or is it Minimum Advertised Price? (which, if I'm correct, actually means something in USA)

I think what the OP was insinuating from that quote was that ?some OEMs must price an end-product at £10K, but Nord must price it at £6.5K, but now they (Nord) can price it at lower. But his beef with it is that it should be price a lot lower?

And the jurisdictional issue further confuses the matter. For instance, we (where Restorer John and I are from) AU has RRP (Recommended Retail Price) but retailers are free to set prices as they wish.
 
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andreasmaaan

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"Minimum pricing policy"

What does this mean, exactly?
Wouldn't you agree that the next line seems to clarify it?

"A recent change in pricing policy means we are free to price as we feel fit."

So they were previously not free to price it as they saw fit.

Given it is unlikely the module cost 6.5k OEM (their retail product utilising it now costs half that), I find it hard to see how else it could be interpreted.

Except for maybe Apple where all their prices seem to the be the same, in-store, on-line, or from a reseller (OT: what's up with that?)
Good question! This had slipped my mind. My hunch is that there is simply indeed no provision against some forms of the commercial conduct Hypex appears to have engaged in.
 
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The think I learnt in all of this is the OP was speculative. In the meantime we all got our panties in a knot.
Yup.

In Australia we have RRP (Recommended Retail Price) but retailers are free to set prices as they wish.

Except for maybe Apple where all their prices seem to the be the same, in-store, on-line, or from a reseller (OT: what's up with that?)

Nord and Hypex should clarifying between themselves...
This is a job for [drum roll please]... The Spanish Inquisition, Monty Python style.

IMG_1573.JPG


Having lived in Australia for four years, a shopping trip with my surf mates never occurred without some mention of the ACCC. The name of this agency is invoked so often that if I had a dollar for every time I heard it, I could afford to buy better souvies than a Bintang T-Shirt while on holidays in the region.

My hunch is that there is simply indeed no provision against some forms of the commercial conduct Hypex appears to have engaged in.
Your hunch is the same as Samoyed's contention. I suspect you're both right.
 
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"Until recently the Hypex NC1200 was only available to a few Manufactures and with amplifiers costing upwards of £10K. We had access to the module but with a minimum pricing policy of £6.5K decided was to expensive for a boutique manufacture like Nord. A recent change in pricing policy means we are free to price as we feel fit. Without the expensive infrastructure of distributors , dealers, Reps, advertising, shows and other expense we can bring you this exalted amplifier at a reasonable cost."
Look, to me this is marketing blurb. As to why we didn't offer the product in the past, but now we do...

And again, can anyone explain in plain English, why the reference to £10K, and then £6.5K? That doesn't make sense to me.
It's even has errors eg. "to" not "too"


What WAS the old "policy" for OEMs?
What IS the new "policy"for OEMs?

Unless we know it is speculative.

Full disclosure- I am not, and have never been an OEM customer of Hypex and/or subsidiaries.
But I 'was there' near the beginning of Hypex nCore, and I have a very sticky memory.
I can tell you now that one of the very first (if not the first) Hypex nCore1200 based amplifier was from a UK company startup called Acoustic Imagery (now defunct). Their amplifier did NOT cost more than £10K, nor £6.5K

Exhibit A: Acoustic Imagery Atsah- Released 2012. Price £5,700

Reference:
https://6moons.com/audioreviews/acousticimagery/1.html
 
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amirm

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My hunch is that there is simply indeed no provision against some forms of the commercial conduct Hypex appears to have engaged in.
I have quoted US Federal Trade Commision guidelines earlier which says a) it is illegal in multiple states in US and that it would be evaluated on a case by case basis if it arises. I also quoted UK's law where this if this conduct is proven, it is definitely illegal. So not sure how you can feel safe this way. As a minimum, it is a heavily gray area, at worst downright bad policy that can get you tangled with government entities.

Can you think of many examples of this? That if I buy a more efficient headlight for a car it can only go in cars that retail for >$100,000?

Lots of business have the desire to have exclusivity with respect to their technology showing up in high-end products. They usually deploy other approaches than doing what Hypex may have been doing.

If it comes out that Hypex was trying to protect related companies from competition, then it becomes another issue of concern.
 

amirm

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Look, to me this is marketing blurb. As to why we didn't offer the product in the past, but now we do...
Seems to me some pain must have been associated with that for them to get so specific with respect to what Hypex had told them. I imagine they really wanted to build this product and were unhappy they could not.
 

Jaimo

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Someone help me understand what all the fuss is about. Why would any self respecting engineer or self disrespecting lawyer get so passionate over such a high powered amplifier for domestic use?

I get that it’s specs are great and that it even uses magic “blue fuses” and fancy schmancy OFC power cables but why the need for 400W amplifiers? Shirley this is inefficient from a System standpoint and points to a need for better efficiency loudspeakers.

Just how much better in real terms is the Hypex NC1200 and it’s SMPS? Just asking...
 

andreasmaaan

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I have quoted US Federal Trade Commision guidelines earlier which says a) it is illegal in multiple states in US and that it would be evaluated on a case by case basis if it arises. I also quoted UK's law where this if this conduct is proven, it is definitely illegal. So not sure how you can feel safe this way.
See the context of my quote. It was a reference to Apple's apparent ability to force all retailers of their products to charge the same prices in Australia, so nothing directly to do with US or UK law.

Re: the Guidelines, I understand you've posted them and I've read them, but honestly, they are not law, they are merely a policy document published by an enforcement agency, and most importantly, that agency is at pains to use the word may (as opposed to is) in respect of all the practices mentioned.

For example, "antitrust concerns may arise" is a far cry from "is a breach of antitrust law".

Furthermore, the cases cited in section 5.2 are from 1911 and 1942, and Samoyed seemed reasonably well able to explain why they were no longer of general application.

But as I've said earlier, I've never practised in this area, least of all in the US, so my opinion is not worth much :)

EDIT: I suppose my main point here is that the idea that a non-lawyer (or even a lawyer not specialised in this particular area) could unravel what exactly is and isn't a breach of law in circumstances like this, particularly in a common law jurisdiction where one really needs to be abreast of changes on a month-by-month basis, would seem a tall order to me. I don't pretend to have any idea myself. All I can say is that the case has been made reasonably plausibly IMHO that the practice - if it did indeed occur at all - may not constitute a breach of law.
 
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andreasmaaan

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Look, to me this is marketing blurb. As to why we didn't offer the product in the past, but now we do...

And again, can anyone explain in plain English, why the reference to £10K, and then £6.5K? That doesn't make sense to me.
It's even has errors eg. "to" not "too"


What WAS the old "policy" for OEMs?
What IS the new "policy"for OEMs?

Unless we know it is speculative.
I 100% agree with you. There are three parallel discussions going on here, each absurdly speculative:
  1. What on earth does Nord mean in the first place?
  2. If they mean what it's been assumed they mean, are they factually right?
  3. If so, has Hypex breached any laws?
Exhibit A: Acoustic Imgary Atsah- Released 2012. Price £5,700
Reference:
https://6moons.com/audioreviews/acousticimagery/1.html
Good find!
 

amirm

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I 100% agree with you. There are three parallel discussions going on here, each absurdly speculative:
  1. What on earth does Nord mean in the first place?
  2. If they mean what it's been assumed they mean, are they factually right?
  3. If so, has Hypex breached any laws?
There is a (4) that says it is a bad idea from cross-section of legal, business, PR and marketing. It is this that is causing this discussion. We are not talking about litigation between two companies.
 

amirm

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Re: the Guidelines, I understand you've posted them and I've read them, but honestly, they are not law, they are merely a policy document published by an enforcement agency, and most importantly, that agency is at pains to use the word may (as opposed to is) in respect of all the practices mentioned.

For example, "antitrust concerns may arise" is a far cry from "is a breach of antitrust law".
Did you read this post: https://www.audiosciencereview.com/...out-hypex-and-nord-licensing.7783/post-184947



There is no "may" here.

Their opinion is also the only one that applies to the situation at hand:



Intellectual property/licensed technology. Case law presented as far as manufacturer and retailer would be harder to apply to this case where NORD is licensing something to build into a product.

Also, the notion that an enforcement agency is grumpy about such practices is enough to stay away from it as a business. Who wants to have a business plan to win such enforcement after it happens?
 

andreasmaaan

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Did you read this post: https://www.audiosciencereview.com/...out-hypex-and-nord-licensing.7783/post-184947



There is no "may" here.

Their opinion is also the only one that applies to the situation at hand:



Intellectual property/licensed technology. Case law presented as far as manufacturer and retailer would be harder to apply to this case where NORD is licensing something to build into a product.

Also, the notion that an enforcement agency is grumpy about such practices is enough to stay away from it as a business. Who wants to have a business plan to win such enforcement after it happens?
All of these excerpts you've posted - which as I've said before, are not law - show that even the enforcement agency acknowledges that there are a wide range of circumstances in which the practice is legal.

I don't see how you can draw from all these excerpts that there "is no may" here. May is possibly the most-used modal verb in this policy document.

Moreover, the agency's promise to "apply a rule of reason analysis to price maintenance in IP licensing agreements" suggests that it tolerates the practice in some circumstances and does not in others.

I'll certainly grant your point that a risk-averse business might choose not to expose themselves if there is a risk of prosecution. However, I don't think it's been established that in this particular (speculative) case there is such a risk, nor that Hypex is risk-averse. But the business side is even further from my area of expertise...

Sorry Amir, I really don't want to get dragged further into this debate. I feel that I've given my point of view and acknowledged its limitations. I don't think there's much more constructive that I can add here.
 

amirm

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I don't see how you can draw from all these excerpts that there "is no may" here. May is possibly the most-used modal verb in this policy document.
It can't be more clear than this with regards to state law:



Where is the "may" in this? Precedent is listed including strong language of prohibition.

Here is a blog from an antitrust attorney that lives in San Diego, California: https://www.theantitrustattorney.co...ents-per-se-illegal-california-antitrust-law/

1560397159563.png


This is the main point I have been making. You do not want to base a business plan on winning such litigation.
 

andreasmaaan

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It can't be more clear than this with regards to state law:



Where is the "may" in this? Precedent is listed including strong language of prohibition.

Here is a blog from an antitrust attorney that lives in San Diego, California: https://www.theantitrustattorney.co...ents-per-se-illegal-california-antitrust-law/

View attachment 27614

This is the main point I have been making. You do not want to base a business plan on winning such litigation.
How does Californian law apply to a (supposed) arrangement between a Dutch manufacturer and a British retailer?

How do you know that Hypex isn't one of the companies that would not be "most" (and therefore - clearly - not all) of that Californian lawyer's clients?
 

amirm

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How does Californian law apply to a (supposed) arrangement between a Dutch manufacturer and a British retailer?
It doesn't. But our departed attorney kept saying US laws are relevant here hence the quotation.

What it goes toward is the ill-advised strategy for Hypex which sells products globally, to have terms which are in conflict in major markets for such designs/products.
 

amirm

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How do you know that Hypex isn't one of the companies that would not be "most" (and therefore - clearly - not all) of that Californian lawyer's clients?
They would have to have a business plan that is so profitable as to withstand litigation and potential of losing and paying out damages and penalties. Let's both agree that Hypex would not be a suitable candidate here as such fines could easily bankrupt them.

While we are asking such questions, how do you know Hypex did not back off from this policy because they faced/realized the very legal threat?
 

andreasmaaan

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It doesn't. But our departed attorney kept saying US laws are relevant here hence the quotation.

What it goes toward is the ill-advised strategy for Hypex which sells products globally, to have terms which are in conflict in major markets for such designs/products.
Were any Californian manufacturers incorporating NC1200 modules into their products prior to the publication of Nord's announcement? If not, what terms of the Californian market were they in conflict with?

They would have to have a business plan that is so profitable as to withstand litigation and potential of losing and paying out damages and penalties. Let's both agree that Hypex would not be a suitable candidate here as such fines could easily bankrupt them.
I agree. I just don't think it's been established that in any of Hypex's known (or even speculated) conduct, there was any significant risk.

While we are asking such questions, how do you know Hypex did not back off from this policy because they faced/realized the very legal threat?
I don't.
 
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