Car dealerships sue Indian truck company over trade secrets

In a highly competitive global economy, litigation is an important arrow in any business's quiver. In a perfect world, businesses would not have to protect their proprietary information through the threat of litigation. However, New Jersey entrepreneurs understand that reality sometimes necessitates legal measures.

For example, car dealerships in several states including New Jersey recently sued an Indian company, Mahindra & Mahindra Ltd., and its American counterpart, Mahindra USA Inc,. in federal court. The car dealerships claim that the Indian truck manufacturer and its American counterpart committed fraud, misrepresentation and conspiracy.

Specifically, the car dealerships' lawsuit alleges that Mahindra told hundreds of auto dealers that it had light trucks and SUVs ready for the U.S. market, but then delayed certifying the vehicles after it had received dealership fees and trade secrets in order to look for other U.S. partners.

According to the lawsuit, Mahindra repeatedly assured the dealers that the certification process was on schedule. But according to the suit, the manufacturer did not submit the necessary documents to regulators in a timely manner because it wanted to use the delay as a pretext for terminating its agreements.

In addition to providing Mahindra dealership fees and trade secrets, the car dealerships allege that they hired more staff and conducted marketing as well as building showrooms, showcases and display platforms for the vehicles at Mahindra's request.

The dealerships estimate that Mahindra received at least $9.5 million in cash, $100 million or more in dealer trade secrets and significant amounts of free promotion due to the dealerships' marketing efforts.

Mahindra declined to comment, but denied all of the car dealerships' allegations of fraud, misrepresentation and conspiracy.

Source: The Washington Post, "US auto dealers in 5 states sue Indian truck manufacturers alleging fraud, misrepresentation," June 6, 2012

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