When Josh Hon - son of Dahon founder Dr David Hon - founded new folding bike company Tern, there was clearly going to be fights over patents, copyrights, and issues over staff leaving one company to work for another.
A lawsuit has been long expected from Dr David Hon and confirmation of it has arrived today in the shape of a press release, copied below in full.
Dr Hon is seeking a restraining order on the company founded by his son and estranged wife. Tern is led by Josh Hon, the face of Dahon for 20+ years.
Some background on the ownership of the intertwined Dahon companies is provided after the press release. Josh Hon has been forwarded the press release and has said:
"My father, Dr. David Hon, has done a tremendous amount to further sustainable transport. Obviously, the decision to separate was not taken lightly. I myself have spent virtually my entire working life building the Dahon brand. It has always been my wish, my mother's wish, and the entire Global team's wish to let my father continue with the Dahon brand with dignity. That is why we took the hard road of starting a new brand. My father has a legacy to be proud of and we don't want to see that legacy tarnished.
"Sadly however, it seems that this is not to be. It is true that a lawsuit has been filed by Dahon North America. We believe that the suit is entirely without merit. In addition, we believe that the press release announcing the suit is misleading, inaccurate, and defamatory. We are preparing an appropriate legal response.
"Although you can imagine that I have plenty to say, since we are currently in litigation, it's better to let our attorney's handle additional statements. Meanwhile, we're all busy getting ready for Eurobike and getting the new Tern bikes ready for shipment - there are lots of customers waiting who just want good bikes."
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Dahon Files Lawsuit Against Former Officers
Lawsuit charges Joshua Hon and Florence Hon for breaching their fiduciary duties as officers of Dahon and unlawfully using company assets, resources and intellectual property to start a competing company
Duarte, California, July 21, 2011 - Dahon North America Inc. (“Dahon”), the world leader in folding bicycles, today announced it has filed a federal lawsuit in the United States District Court for the Central District of California against two former officers (Joshua Hon and Florence Hon) and their unlawfully competing businesses (Mobility Holdings, Ltd. and Tern Bicycles).
Dahon sued Joshua Hon and Florence Hon for wrongfully seizing control over Dahon’s Taiwan subsidiary (Dahon and Hon Industrial Labs, Ltd.) and related Dahon intellectual property, including the Biologic brand and the dahon.com website, and for using those assets and property to unfairly compete with Dahon. In addition, since Joshua Hon and Florence Hon started competing with Dahon while officers and employees of Dahon, they have acted in breach of their fiduciary duties owed to Dahon and to Dahon’s shareholders.Dahon welcomes lawful competition in the marketplace. However, as alleged in Dahon’s complaint, the actions of these former officers are unlawful, and their refusal to cease their unlawful behavior has necessitated the instant lawsuit.
A number of false, misleading and self-incriminating comments regarding their departure from Dahon have been made public by Joshua Hon and Florence Hon. In particular, Dahon disputes allegations that any entity other than itself has ownership of intellectual property rights, copyrights, trademarks and patents relating to the Dahon brand and Dahon branded products. Also, statements by these former officers that they continue to represent Dahon either individually or through their fictitious company “Dahon Global” are simply untrue. “It is one thing to make unsubstantiated claims on the internet and through alternate channels, but it is another to provide documented evidence and make statements in a court of law under oath" said Dr. David Hon, CEO of Dahon.
Dahon pioneered the market for the modern folding bicycle more than 30 years ago and is the world’s leading manufacturer and marketer of folding bicycles. Dahon’s technologies, which include over 220 patents, form part of the industry standard for folding bicycles the world over. Dahon remains a strong and successful company today, and boasts more than 1,000 employees internationally, including a team of over 70 engineers. Perpetual innovation and reinvention continue to be the guiding principles that customers have come to know and expect from the Dahon brand.
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WHO OWNS DAHON?
Dahon is not one contiguous company. It has three intertwined entities: Dahon & Hon Industrial Labs (also known as Dahon Global), Dahon China, and Dahon North America.
According to Josh Hon, Dahon & Hon Industrial Labs has handled all sales, marketing, product development and a majority of manufacturing for twenty years. Dahon China has manufactured a majority of Dahon frames and a minority of complete bikes. Dahon North America handles distribution for the North American market.
Josh Hon and his mother own 100 percent of Dahon Global, a Taiwan-based company. Mother and son continue to work at Dahon Global, and the company continues to operate.
Dr David Hon owns and manages Dahon China and Dahon North America.
There are five factories assembling Dahon bicycles: one in China (Dahon China), one in the Czech Republic, two in Taiwan, and one in Macau. All of these factories, with the exception of Dahon China, will build Tern bicycles. None of the assembly factories will continue working with Dahon China next year.
Tern has the rights to use all the intellectual property owned by Dahon Global, says Josh Hon. "And that includes most of the technology coming out of Dahon within the last five years. That includes a lot of stuff that is either patented, trademarked, or copyrighted. Dahon China will not have rights to use this intellectual property. Tern will not use any intellectual property owned by Dahon China. And Tern has some good new technology to show off. We’ve already filed for eight new technology patents this year."
Dr David Hon disputes that the Biologic trademark was transferred from Dahon California to Dahon Taiwan and then to Mobility Holdings. Dr Hon calls this transfer - signed by John Hon and his mother - "fraudulent."
Dr Hon disputes many of the ownership details above and is also fighting to recover administrative access to Dahon.com which Dr Hon claims was registered to his son's name and not to Dahon North America.
On the forum of Dahon.com, Josh Hon said:
"My mother and I lead a company called Dahon & Hon Industrial Labs. For almost twenty years, this company has been responsible for all Sales, Marketing, Distribution, and Product Development of the Dahon brand. The company is based in Taiwan but also has an amazing team distributed in satellite offices around the world — in Bend, Oregon; Humboldt, California; Austin, Texas; Turku, Finland; Stuttgart, Germany; Schaffhausen, Switzerland; and London, England. This has been the Dahon Global team.
"My father, Dr. David Hon, founded Dahon and manages Dahon China, the Chinese factory. This factory builds many Dahon frames and does some of the assembly. The assembly of most Dahon bikes has always been outsourced to bicycle assembly factories in Taiwan, China, Macau, and the Czech Republic.
"The long and short of it is that these two companies that make up Dahon will stop cooperating on the Dahon brand next year. My mother and I own Dahon Global — the Taiwan company — and it will continue to operate in markets where it owns the Dahon trademark. So reports that we have “left” Dahon are factually incorrect. The Chinese factory will be responsible for the Dahon brand in the United States, Japan, most of the EU and of course, China.
"It’s a very unfortunate situation as you can imagine. My mother helped start Dahon and I’ve spent 19 years working at Dahon so you can be sure that our decision was not taken lightly. The other team members have also spent years, and in some cases decades, working at Dahon. In some ways the reasons for moving to Tern can be quite complicated. But it is also very simple, and it boils down to “direction”. The Global team felt that Dahon was not headed in the right direction.
Our goal, the Global team’s goal, is quite simple: we want to build a product that’s good for a sustainable future, to enjoy the journey of developing those products, to share the fruits of that work among the team, and also to have enough at the end to give back to social and environmental causes.
"So the entire Dahon Global team is moving forward with the Tern brand. Our small team has been hard at work for the last eight months and last Saturday, launched the brand globally at an event in Taipei, Taiwan. We flew in over twenty members of the international cycling media to cover the event. To say the launch went well is a bit of an understatement. After the main event, the editors joined us for a ride on the new bikes and we’ll let them report on their impressions.
"So we’ve launched and we’re getting ready to fly, with Tern."