A federal judge in Washington, D.C., heard arguments Friday in a novel case that asks whether a private arbitrator's emergency gag order against Sharp Electronics should be declared unenforceable.

Sharp sued Chinese manufacturing company Hisense and its U.S. subsidiary in August. The two companies are in ongoing arbitration proceedings in Singapore, as Sharp tries to end its licensing deal allowing Hisense to sell Sharp TVs in the United States. An arbitrator in that proceeding issued an “emergency” order preventing Sharp from talking publicly about the dispute, though no such restriction was imposed on Hisense. Sharp also sued Hisense in California earlier this year, accusing the company of poorly manufacturing and deceptively advertising Sharp TVs.

James Boasberg. Photo by Diego M. Radzinschi/ALM

Sharp's lawyer, Venable's Randy Miller, told U.S. District Judge James Boasberg of the District of Columbia on Friday that the gag order is unenforceable under a provision in the New York Convention because it is contrary to U.S. public policy. Sharp wants to communicate with the Federal Communications Commission about possible safety issues with the TVs Hisense is selling, but cannot do so because of the gag order. Miller said the gag order therefore violates the public policy of the United States to allow private entities to petition the government under the First Amendment.

Miller said the “elephant in the room” was that due to the gag order, which Sharp is currently honoring, the company's “speech rights are at minimum chilled” and potentially “destroyed.”

But Boasberg had questions about personal jurisdiction. He pushed Miller on whether the lawsuit could even be brought in D.C. because Hisense is a Chinese company and the arbitration is in Singapore. Miller replied that Hisense both sold TVs in the district and communicated with the FCC in Washington. Sharp also alleges that Hisense is a state-owned entity, and D.C. Circuit precedent restricts the ability of foreign entities to assert a personal jurisdiction defense. But Boasberg appeared skeptical.

“I don't know if you quite get there,” Boasberg said.

Arguing on behalf of Hisense, David Hille of White & Case told the judge that Sharp had multiple other avenues to challenge the emergency order, but that Washington, D.C., was not one of them.

Hille said the plaintiffs could bring challenges in the courts in Singapore, with the emergency arbitrator who issued the order or in the ongoing arbitration. He added Sharp is trying to “manufacture jurisdiction.”

Hille also told the judge that Sharp is simply trying to do anything to get its “brand back” from Hisense, pointing to what he said was a “barrage of litigation” the company has filed in D.C. and California in addition to the arbitration.

“It rings hollow,” Hille said of Sharp's argument.

Boasberg told the parties that he would try to issue a decision in two weeks. He added doing so will not be easy, and that the case presented complex questions he would need to address.