Legal Action Threatened by Processor Distributor

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Well then, this juicy story just keeps getting better and better. This morning we’ve learned, courtesy of Hot Hardware and TechEYE.net that the distribution company that reportedly supplied these fake/counterfeit/demo sample (whichever you choose to believe) CPUs to Newegg has begun threatening legal action against at least two web sites that published their involvement. To wit, here’s TechEYE.net’s quote from the firm they say represents D&H – Creim, Macias, Koenig & Frey:

“It has recently been brought to our attention that you are responsible for publishing on the internet, and specifically on your websites, untrue  statements  respecting allegedly counterfeit Intel Core i7 processors which you allege were sold to Newegg by D&H.

“This letter places you on notice that these statements are false.  You have no basis for publishing these false and malicious statements about D & H.  These false allegations are defamatory and disparaging to D&H”s business and business relations and have caused grave and irreparable damage to our client.

“IMMEDIATELY (i) cease and desist posting such defamatory material about D&H.; (ii) remove the contact and any reference to D&H from your website; and, (iii) post an immediate retraction and apology which shall remain posted for not less than thirty days.

“If you fail to do so by 5 p.m., pst., on March 6, 2010, D&H will pursue all of its rights and remedies, including, without limitation, an action for libel, will seek full recovery for the damages caused by your untrue statements including punitive damages, as well as seek injunctive relief.”

Yikes.  Looks like somebody’s knickers are in a wad over this whole thing! Add that lovely cease and desist letter to the fact it appears individuals that posted at our forums have been told to keep quiet by an unknown legal force and a juicy scandal just turned ridiculous.

So let’s sum up.

From oddity to downright silly in the time it takes to run SuperPi 1M. Our editor mdcomp is in contact with Newegg PR and they assured us we will be in the loop on future releases. We’ll continue to work to keep you up to date on this developing scandal.

UPDATE – Overclockers.com contacted Intel directly and they are sticking with their standard press release. Here’s what they have to say:

Intel has been made aware of the potential for counterfeit i7 920 packages in the marketplace and is working to [find out] how many and/or where they are being sold. The examples we have seen are not Intel products but are counterfeits. Buyers should contact their place of purchase for a replacement and/or should contact their local law enforcement agency if the place of purchase refuses to help.

Intel is getting samples to inspect and until then we can say that everything in the package appears fake. Some of the photos of the processor look like it is a casting and not even a real processor of any kind. Newegg has moved quickly to replace the suspect units.

hokiealumnus

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Discussion
  1. I truly hope Newegg puts these distributors in their place, i know what I would do with my distributors if they do this to my customers...fire them !!!
    Edit...Excellent writeup and summary of events on the front page Hokie:thup:, you must do this editing as a full time job my friend :)
    Ed, I think the true problem comes in with knowing where to place blame at this point.
    Newegg is huge. By nature, their distributors are huge. Intentionally taking this action and distributing counterfeit hardware is a definite impossibility anywhere down the line - no one would be dumb enough at the corporate level to take such an action and risk jeopardizing their client relationships.
    But many hands touch product and are involved in the supply chain. Somewhere something went wrong - the initial reaction from Newegg has been stellar, they are just making it right for their customers and figuring out the details in the background. There was a lack of control somewhere however along the supply chain, and that uncertainty is leading to a lot of guessing from readers and web publishers.
    The legal threats to quell rumors and such are unfortunate, and frankly I think its garbage. The best solution to the problem of people making accusations and spreading rumors, is being open and honest about what is currently understood about the problem and what is being done to understand it better. Once everyone knows what went on, and there is transparency about where the problem initiated, this story will be old news. Naturally, the rumors and quacks making accusations without any facts will subside at that point.
    Newegg has been transparent and forthcoming with the information they have, and I believe this, along with their great customer service record, is the reason why the focus/blame quickly shifted off of them.
    I.M.O.G.

    The legal threats to quell rumors and such are unfortunate, and frankly I think its garbage. The best solution to the problem of people making accusations and spreading rumors, is being open and honest about what is currently understood about the problem and what is being done to understand it better. Once everyone knows what went on, and there is transparency about where the problem initiated, this story will be old news. Naturally, the rumors and quacks making accusations without any facts will subside at that point.
    Newegg has been transparent and forthcoming with the information they have, and I believe this, along with their great customer service record, is the reason why the focus/blame quickly shifted off of them.

    I cannot agree with you more here Matt...transparency and communications are key in situations such as these...and how it is handled can tarnish or boost a company's reputation. Newegg has done an eggcellent (;)) job in handling the situation, it is not always easy to control your distributors and or supplier for that matter. Hope this will blow over quickly so we can get back to benching :comp:
    PS...this is not stopping me by no means to place my order at Newegg for yet another motherboard this morning :)
    +1 to all of the above, I was supprised to see Newegg getting a lot of stick after claiming the CPU's were "Demo" ones. As is with these sorts of cases, you have to be very careful where you point the finger. Exspecially when your a big company such as new egg.
    Newegg is doing the most important thing, putting the customer first and replacing the "Demo/Fake" CPU's. I think Newegg should be praised on their quick responce to satisfy the customer. You can't expect them to publicly point the finger at this early stage.
    Im sure (hope) the truth comes out in the end.
    EDIT: I also hope that D&H can't get away with the "Legal action" that their representative claims they will be pursuing. I don't think its right.
    jmdixon85
    EDIT: I also hope that D&H can't get away with the "Legal action" that their representative claims they will be pursuing. I don't think its right.

    At this point, its clear they are trying to protect their name and reputation, albeit their legal methods of doing so won't resound well across the community who just wants answers.
    I am hopeful D&H will realize the best way to protect their interests is to offer greater transparency into what they know about the issue. In the absence of good fact, speculation is rampant. It is not fair to D&H, whose exact involvement is not known, however its a function of human nature.
    Rather than working against the grain and trying to change human nature via legal action, they'd likely experience more success by working with the community and being forthcoming regarding what they know at this point. Its an opportunity to engender good will amongst the community while they are in the spotlight, and it could be leveraged to their advantage. Newegg has set a good example with their response, anyone else involved should follow suit.
    Brolloks

    Edit...Excellent writeup and summary of events on the front page Hokie:thup:, you must do this editing as a full time job my friend :)

    Thank you kindly. :)
    Newegg has done right by their customers, and that's what's important to me in their regard. I don't know what exactly the D&H lawyers are thinking, but they're certainly not very good at PR!
    Those that work for corporate firms would agree that in a crisis situations things go hectic, some overreact where others freeze up. I was part or a multi million dollar claim a few years back and we worked around the clock for several days trying to figure out what to say or rather what not to say to the end user, it dud cost us $5 mill in claims which we fortunately got back from our supplier...this reminds me of that, I'm sure the damages will be far less that what we had to fork out.
    Legal's 1st advice is to protect the company and suppress any bad or incriminating press, that is their job, however the client is the party who directs them, so in this case it is not the lawyers fault per se but the client who advised them to go bark at the online editors.
    None of us were interested in D&H Distributing and their role in the fake processor scandal. We were focused solely on NewEgg, and the frankly splendid job they were doing to correct the situation.
    Now the issue has blown up thanks to an idiot lawyer that has dragged D&H Distributing into the center of this and made it an issue about freedom of speech and evil lawyers who try to silence a clearly wronged party.
    If I were D&H, I'd immediately seek new representation, and post an apology on their Web site stating that they have fired the lawyers who made such an amateurish mistake.
    Otherwise, many of us will take our business to places who don't get their chips from D&H distributing.
    MicroCenter (http://www.microcenter.com) sells the i7 920 for $199 in store only, which is $89 less than NewEgg charges.
    Well done Hokie... :thup:
    I've always admired Newegg's dedication to customer service, and still do. But, I must admit, I was very disappointed with them when they released the "demo" cover story. However, in light of these new legal developments, I now wonder if C&D threats were the motivator for this.
    Ok, so Newegg is now retracting the "demo" cover story?
    At 5PM Friday, Newegg Support communicated to me that they were aware the products were counterfeit and Newegg was actively addressing the problem for their customers. That isn't to say everyone at Newegg at the time was on the same page, or had an equal understanding of the nature of the problem.
    I quoted their exact words here:
    http://www.overclockers.com/forums/showpost.php?p=6425640&postcount=2
    So the "Demo" comment was a preliminary comment, made initially when understanding of the issue was just beginning to develop. Some people are getting too hung up on that, and don't realize it was a comment made very early on when this issue was identified. As early as 5PM friday however, it's clear a better understanding of the problem was already developing at Newegg and they were forthcoming about what little information they did have.
    We haven't received anything retracting it. It would seem from the PM to IMOG that they have simply moved on. The initial press release was exactly what my instinct was that happened until noticing the misspellings. It could be that someone innocently assumed that was the case and put out a release too soon. I don't think they were trying to deceive anyone; it looks like they just tried to get ahead of the news cycle and it bit them.
    Thanks guys. I guess my initial impression when they released the demo statement was that they were trying to cover things up a bit. I understand issuing these kind of statements can be done in haste and in error without any malicious intent towards deception. And as long as they don't reiterate that claim without evidence, I'll be happy to give them the benefit of doubt.
    :)
    georanma
    Ya, I like that there are threats of legal action over speculation. Grow up and welcome to the age of information.

    Don't they have to prove willful intent as well as the offending statements to be false to make libel/defamation stick? Guess it's a moot point since these tactics are often just used for intimidation to great effect. But yea, slinging these out due to mere conjecture seems pretty sleazy to me.
    Newegg needs to get all their reps in one room with their comms officer so all on the same page:grouphug:...more confusion leads to more speculation:blah: