China Contract Specificity and North Carolina Blue

Photo from my own office, dedicated to true hoops fans.

Today’s Wall Street Journal has an article entitled, Fifty Shades of Blue: Tar Heels Seek the Truest Hue. The article essentially talks about the important “North Carolina” blue is for North Carolina fans.

It reminds me of a matter I had many years ago, involving a North Carolina (NC) company that called us wanting our international litigators to sue a Chinese company that had provided the NC company with “bad” shirts. The NC company had sent a sample shirt to a Chinese manufacturer for color matching and the Chinese manufacturer in turn sent the NC company a sample shirt back to the NC company. Based on the Chinese manufacturer’s sample, the NC company ordered a million dollars worth of North Carolina blue shirts.

One problem. The shirts that arrived, though Blue, were not North Carolina blue. And as every reader of today’s Wall Street Journal and every college basketball fan knows, the University of North Carolina has its own specific shade of blue. And for reasons normal human beings cannot fathom, there are a horde of people who want only that color in their jerseys and there is no way those people are going to buy an ordinary blue jersey. All of this meant that instead of this NC company being able to sell its jerseys for maybe $30, it would maybe be able to get $3 a shirt. The NC company had obviously suffered major damages.

We turned down the case because we did not want it on a contingency fee basis, nor did we want to charge our hourly rates on a case we did not think could be won. We did not like this case because generally if you are in front of a Chinese court and something is not specifically in your Manufacturing Agreement, in Chinese, and sealed/chopped you are going to have problems. This NC company had only some English-language emails saying it wanted the shirts to be like “the sample.” What sample?

Yes, this North Carolina company could have sued its Chinese manufacturer in a U.S. court and won. However, because China does not enforce U.S. judgments, and because the Chinese manufacturer did not have any U.S. assets, the U.S. judgment probably would have been worth less than one of the wrong color shirts the NC company received. Yes, the NC company was stuck, out nearly a million dollars over a few shades of blue.

And I’m not April fooling you. . . .

12 responses to “China Contract Specificity and North Carolina Blue”

  1. There are some problems here. First, Pantone colors are for ink. Not paint for houses, cars, electronics products, etc. And they are certainly not for textile dyes. If there is a certified document of some sort matching Pantone colors with Federal Color Standard numbers, I’m not aware of it. The problem arises when industrial designers use inks to render products, and these inks have Pantone numbers. When it comes time to paint the product or add dyes to plastic resin, manufacturers can come close to the Pantone ink colors, but may well not be able to achieve an exact match. Second, if one is to have legal standing in China in this situation, then the buyer must specify the applicable China color standards and the relevant China standard color number.

      • Per a former technical manager of mine in Shanghai, the China color standard is GSB05-1426-2001. Please let me know if this information has been useful for you.

        • Haven’t had time to dig in but this is exactly what I’ve been looking for, thanks! I usually use RAL and Pantone since parts of those cover paints and powder coats, but if there is a lack of legal standing b/c non-Chinese that’s a bit troubling. I’ve always thought that a proper contractual agreement citing the relevant RAL would be sufficient.

  2. There are some problems here. First, Pantone colors are for ink. Not paint for houses, cars, electronics products, etc. And they are certainly not for textile dyes. If there is a certified document of some sort matching Pantone colors with Federal Color Standard numbers, I’m not aware of it. The problem arises when industrial designers use inks to render products, and these inks have Pantone numbers. When it comes time to paint the product or add dyes to plastic resin, manufacturers can come close to the Pantone ink colors, but may well not be able to achieve an exact match. Second, if one is to have legal standing in China in this situation, then the buyer must specify the applicable China color standards and the relevant China standard color number.

    • Ward, I’ve been looking for China color standards forever, where do I find them?? Thanks!

      • Per a former technical manager of mine in Shanghai, the China color standard is GSB05-1426-2001. Please let me know if this information has been useful for you.

        • Haven’t had time to dig in but this is exactly what I’ve been looking for, thanks! I usually use RAL and Pantone since parts of those cover paints and powder coats, but if there is a lack of legal standing b/c non-Chinese that’s a bit troubling. I’ve always thought that a proper contractual agreement citing the relevant RAL would be sufficient.

  3. Dan,
    Don’t want to blow up your email. I’m sure you saw this, but would love to get a post digging into details if it’s in the blog’s wheelhouse. I’m VERY curious about why they didn’t file in China, considering all the noise we hear about their new IP policies…
    http://www.engadget.com/2016/04/01/dji-yuneec-patent-infringement-suit/
    http://www.forbes.com/sites/aarontilley/2016/04/01/the-drone-patent-wars-begin-dji-files-lawsuit-against-yuneec/#379ce06358c0
    Cheers,
    ab

  4. Dan,
    Don’t want to blow up your email. I’m sure you saw this, but would love to get a post digging into details if it’s in the blog’s wheelhouse. I’m VERY curious about why they didn’t file in China, considering all the noise we hear about their new IP policies…
    http://www.engadget.com/2016/04/01/dji-yuneec-patent-infringement-suit/
    http://www.forbes.com/sites/aarontilley/2016/04/01/the-drone-patent-wars-begin-dji-files-lawsuit-against-yuneec/#379ce06358c0
    Cheers,
    ab

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