As China continues to implement its commitments to World Trade Organization, disputes over intellectual property rights (IPRs) remain a source of friction with other countries and regions.

It is usually a Chinese company that is the defendant in IPR lawsuits.

But this year may have been a turning point.

Late last month a ruling in an IPR lawsuit case between two long-standing competitors making electric products saw a domestic firm prevail over an international giant.

On September 27, Chint Group, China's top maker of low-voltage electric apparatus, won a patent infringement lawsuit against French company Schneider Electric and its Chinese sales agent.

The Intermediate People's Court in Wenzhou, East China's Zhejiang Province, ordered Schneider Electric, a major global maker of medium- and low-voltage electric equipment, and its authorized distributor Leqing branch of Star Electric Equipment Co Ltd in Zhejiang, to stop selling five products that were found to be based on the patents owned by Chint Group.

Schneider was ordered to pay 334.8 million yuan within 10 days to compensate Chint for economic losses.

The large award is believed to be a new record in the nation in intellectual property disputes.

The biggest significance of the ruling is that Chint - which has been the defendant in a decade-long IPR dispute with Schneider - for the first time won a lawsuit.

In November 1997, Chint Group filed an application with the State Intellectual Property Office (SIPO) for a patent on a miniature circuit breaker, which was granted in March, 1999.

Chint Group then began manufacturing and sales of the NB1 series of circuit breakers. According to Chint Group, five models of Schneider Electric's products fell within the protected scope of Chint's patent.

Chint said that Schneider's unlicensed sales of these products totaled 883.6 million yuan and generated a profit of 334.8 million yuan between August, 2004 and July, 2006.

Chint requested the court to order that the defendants immediately stop infringement.

Before the court ruling, SIPO declined Schneider Electric's application to invalidate the disputed technology, which is "a crucial step for Chint that confirms the legal foundation of the case", says Xu Zhiwu, Chint's legal representative.

Schneider tells China Business Weekly that it will "definitely appeal" and not pay compensation at this time.

According to a statement on September 30 the company says it "is disappointed with the verdict by Wenzhou Intermediate People's Court, but Schneider Electric intends to appeal the decision and is taking other action to invalidate Chint's utility model and it will be some time before a final decision is reached".

"The dispute will last for a long time," says Luo Yun, a lawyer with Zhejiang Zeda Law Office.

IPR efforts

Although the dispute is not yet resolved, Chint's winning lawsuit is an IPR milestone for Chinese companies.

"Domestic companies are paying more and more attention to protecting their own rights and interests," says Liu Daochen, a lawyer of Beijing-based Han Ding United Lawyers.

"It's a remarkable development and could mean Chinese companies are embarking on a new path."

This April, Zhejiang-based wireless communications firm Holley Communications filed a lawsuit against Samsung Electronics alleging it infringed on Holley's GSM/CDMA dual-mode mobile phone patent.

In May, a little-known Chinese company Lanye Liquor in Zhejiang won trademark infringement litigation against drinks giant Pepsi Cola.

The People's Supreme Court of Zhejiang Province ruled that Shanghai Pepsi Co Ltd, one of Pepsi's joint ventures in China, infringed on Lanye's rights on the Blue Storm trademark, and ordered Shanghai Pepsi to pay 3 million yuan in compensation. It also ordered a public apology from Shanghai Pepsi to be published in a Zhejiang newspaper.

On June 11, Chongqing-based Loncin Group reached a compromise settlement on a trademark infringement case with a French motorcycle sales company, receiving 60,000 euros in compensation.

The cases show that Chinese companies are not only paying more attention to patent applications but also protection of their legal rights.

Yet Chinese companies are still far behind their foreign peers in numbers of patent applications.

Patent applications in China are now one-eighth the number of those in Japan, one-fifth of those in the US and half the applications filed in South Korea.

Many foreign companies have divisions specialized in legal issues, but it's not yet a common practice for domestic firms.

The situation could change with an increasing number of Chinese companies winning IPR lawsuits against their foreign counterparts, helping increase awareness of patent applications and protection.

(China Daily)

2013-07-17