Santos Electronics Inc., dba OSD Audio, and Outlaw Audio LLC – both direct-to-consumer (DTC) brands – have settled all claims between them in their dueling lawsuits that began back in 2022, according to court filings from earlier this year. In that order from the court, I learned that the entire action was dismissed “with prejudice” – meaning it cannot ever be revised or otherwise litigated again (on these issues).
See more on the end of OSD Audio v. Outlaw Audio, and vice versa
OSD’s lawsuit and Outlaw’s countersuit were both filed in the United States District Court in the Central District of California, Southern Division with Judge James V. Selna. Sharp-eyed Strata-gee readers may recall Judge Selna played – and continues to play – a key role in the Masimo v. Apple litigation.
In an order titled, “Order Dismissing Entire Action With Prejudice On Stipulation Of Parties,” Judge James V. Selna noted: 1) The original complaint by Santos (OSD) “is dismissed against all defendants, with prejudice;” 2) The counterclaims by Outlaw Audio “are hereby dismissed in their entirety”; 3) Each party will “bear their own respective attorney’s fees and costs;” and 4) “…the Court retain[s] jurisdiction to enforce the Confidential Settlement Agreement.”
And just like that, two years of wrangling came to a close.
A Confidential Settlement Agreement
As item number 4 above denotes, there is a confidential settlement agreement between the parties. The details of that settlement were not revealed in public court filings. However, it is pretty clear that OSD Audio was the party that approached Outlaw Audio about settling.
I reached out to Jonathan Lederman of Outlaw Audio and asked him about the settlement. Lederman would only say, “The terms of the settlement are confidential – all I can do is confirm the matter is settled.”
Terms of the Settlement to Remain Confidential
On the other side, I also spoke with OSD Audio CEO Dave Chai who also confirmed the settlement. Like Lederman, Chai declined to share the terms of the settlement, noting that they remain confidential. However, Chai did want me to know that OSD Audio settled the matter.
There were many competing issues in this case which centered around a line of amplifiers each company offered that came from the same manufacturer, but modified for each individual brand. Initially, OSD had filed an action against Outlaw Audio based on the Digital Millenium Copyright Act (DMCA). OSD alleged that Outlaw was abusing a provision of the DMCA that allowed copyright holders to demand that online retailers such as Amazon instantly remove an item from its website when there is an allegation of copyright infringement.
A Case of Copyright Infringement, Among Other Things
The crux of the issue was that OSD Audio was selling amplifiers that utilized an owner’s manual that was allegedly modified unlawfully from an Outlaw Audio manual to be used for the OSD Audio amplifier. Outlaw Audio countersued for, among other things, copyright infringement. Outlaw additionally claimed that OSD Audio was engaging in false advertising, relative to an allegedly falsified specification.
Dave Chai told me that OSD Audio had been given misinformation by the manufacturer of their gear – who also manufactured the Outlaw Audio models. Of this settlement, Chai told me:
Once we found out the true story of the lawsuit, we settled it.
Dave Chai, OSD Audio
OSD Audio is Now Suing Homni Enterprises
Before reaching out to Chai, I also did a scan of court records and discovered Santos Electronics Inc., dba OSD Audio, has filed a new lawsuit against Homni Enterprises Co. Ltd. – the Taiwanese manufacturer of the amplifiers in question. The text of this lawsuit tended to confirm what Chai told me verbally.
OSD Audio’s new lawsuit offers a picture of what was happening behind the scenes between itself and its supplier Homni. Here is a condensed chronology of some of the allegations in the OSD Audio lawsuit.
A List of Allegations in This New Matter
- Homni provided OSD with an owner’s manual template for the amplifiers in question to which they were free to add their own logos and branding.
- OSD was accused of copyright infringement by Outlaw Audio in March 2022
- OSD discovered Outlaw had a “near duplicate” amplifier that was obviously derived from the same source
- Dave Chai contacted Homni leaders who “dissembled about the template’s origins but promised to investigate”
- Because Homni failed “to disclose such material facts surrounding the source of the template” OSD hired a legal team and filed suit against Outlaw, accusing it of the above DMCA abuse claims and of making “deliberate false statements about its ownership” of the rights to the owner’s manual (and other things)
- Outlaw Audio responds with a countersuit accusing OSD of its own violations of the DMCA, copyright infringement, trademark infringement, unfair competition, interference with economic relations, and false advertising
- OSD CEO Chai again contacted Homni, seeking to confirm the origin of the owner’s manual in dispute. Homni’s executive told Chai it did not want to get involved in any litigation between OSD and Outlaw. Chai pressed for the original documents that proved Homni created the manual. Homni told Chai the originals were lost in a flood at the factory
- Outlaw Audio moved for a preliminary injunction and offered substantial factual backup to their claim of ownership of the manual in question
- OSD offered to enter into settlement negotiations
OSD Audio Says It Has Suffered ‘Significant Injury’
OSD says that Homni’s actions have caused them “significant injury.” The company lists the damages as:
- Legal fees for the Outlaw Audio lawsuit – $348,266
- Settlement payment to Outlaw Audio – unspecified due to confidentiality agreement
- Lost profits of at least $720,000 on lost sales of more than $1.8 million; figure will continue to rise over time
- Unspecified additional ancillary losses due to the terms of the confidential settlement agreement with Outlaw Audio which can’t be divulged in the pleading but will be revealed at trial
As a result of all of the above, OSD Audio is suing Homni for: Breach of Contract, Fraudulent Concealment, Negligent Interference With Prospective Economic Advantage, Contribution and Equitable Indemnity, and Implied Contractual Indemnity. On each of these claims, OSD is asking for an award “in excess of $1.5 million.”
Homni has yet to respond to their summons.
Nice to See You Again, Your Honor
One last interesting note on this case – the case was initially assigned to District Judge Michael W. Fitzgerald. But then it was reassigned based on existing assignment practices when there is a related case. That related case is the Outlaw Audio matter and the new judge in this case will be the same one as in that related case, Judge James V. Selna.
Learn more about OSD Audio by visiting osdaudio.com.
See all that Homni offers at homni-elec.com.
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