Sharp, a Japanese electronics manufacturer, has filed a lawsuit challenging a foreign gag order that company lawyers say prevents Sharp from talking about its own brand.

The dispute is rooted in a licensing deal gone sour between Sharp and Hisense, a fast-growing Chinese maker of televisions and appliances. In financial stress a few years ago, Sharp sold one of its factories to Hisense, along with the rights to sell televisions under the Sharp brand in the North American market for five years.

According to Sharp, Hisense quickly lowered its manufacturing quality and started shipping sub-standard televisions under the Sharp brand. In April, Sharp, now owned by Taiwan-based Foxconn, said that it was terminating the trademark licensing deal. Hisense filed a notice of arbitration with the Singapore International Arbitration Center, which is the dispute resolution agreed upon by the parties in their licensing deal. In June, Sharp filed a lawsuit (PDF) in California state court seeking to terminate the licensing agreement.

“First of its kind” case

Shortly after it was filed, the Singapore arbitration took a surprising turn. On May 9, the arbitrator issued an "emergency" interim award preventing Sharp from making any public statements about the dispute.

Now Sharp lawyers are challenging what they call the "gag order" in court, saying that it violates the Constitution. The key portion of the order is reproduced in Sharp's complaint, filed in District of Columbia Federal Court on Tuesday. It says Sharp must refrain from "disparaging [Hisense] and/or disrupting its business, including by making public statements or press releases about this arbitration and/or the dispute" between the parties.

"I've never seen anything like it," Randy Miller, the attorney representing Sharp, said in an interview with Ars. "This is not the way our free market economy works. It depends on vibrant and robust commercial speech. You can point out comparisons, or shortcomings, in a competitor's product—the First Amendment protects that."

Miller believes the gag order would be unconstitutional even if it applied equally to both parties, but the arbitrator only put limits on Sharp's speech. It also specifically prevents Sharp from talking to regulatory agencies like the FCC.

"The idea that we have a muzzle on our face, even when speaking to federal regulators, really seems off into another solar system," Miller said. "No matter how this settles out, it is a first of its kind case."

Sharp's lawsuit asks for a judicial order declaring the gag order "not recognizable or enforceable in the United States."

So what is it that Sharp wants to say, exactly? Miller, who's focused on his client's commercial speech rights, didn't get into that. But court records in the earlier-filed California case give some strong hints.

In June, Hisense lawyers filed a motion (PDF) describing Sharp's allegations about the Hisense-made, Sharp-branded products. Sharp has claimed that the brightness measurements on some products were not as advertised; that the radiation emitted from the products violates FCC standards; that an internal wire harness threatens consumer safety; and that the advertisement of screen size and resolution violates FTC standards.

Hisense didn't respond to e-mailed requests for comment about the lawsuit.