Protecting Intellectual Property in China has been a challenge for… well… pretty much forever. Knowing this, a proactive strategy for protecting patents and copyrights in China is part of the service Avela Consulting provides for our clients.
It takes government engagement to enforce IP protections, however, and this is one of the sticking points in current US-China trade negotiations. It becomes an even greater issue as the Chinese market opens to more foreign imports. China needs both US trade and imports to sustain the booming Chinese middle class resulting from its capitalist private sector economy.
Nevertheless, many have questioned how serious the Chinese government is going to be about enforcing IP protections in China. After all, knockoffs, copycats and other forms of copyright infringement have been a staple of some Chinese businesses for many years.
Well, a recent Beijing Chaoyang District Court decision suggests the China government is getting very serious.
In 2016 Jaguar Land Rover filed a lawsuit in Chinese court against China’s Jiangling Motor Corporation over the Jailing Landwind X7. JRL charged that the X7looked an awful lot like its compact SUV crossover Range Rover Evoque.
It did. And the X7 sold for about a third of the price of the Evoquein China.
Few thought a foreign company like JLR stood much of a chance in bringing the suit against any Chinese company in a Chinese court. Chinese copycat vehicles are the scourge of foreign automakers and most have come to consider the knockoff competition as an unavoidable business calculation. (Honda Motor Company failed in a 2004 lawsuit against Shuanghuan Auto for copycatting the CR-V.)
To the surprise of many, the court ruled in favor of JLR on March 22, demanding that Jailing cease all manufacturing and sales of the X7 and pay compensation to JLR. The amount of the compensation hasn’t been announced as of this writing.
This is huge and seen as a victory for both the foreign automaker and the Chinese consumer. (While their products are priced less, the makers of counterfeit products in China rely on spreading confusion and inferior goods among Chinese consumers.)
This is indeed a landmark decision, but there are some precedents involving IP protection in China.
On November 5, 2018 the LEGO Group, makers of the globally-known building sets, prevailed in the Guangzhou Yuexiu District Court in its unfair competition lawsuit against the manufacturer of copycat LEPIN building sets. In that case the counterfeit manufacturer was order to cease production and sale of 18 products and pay RMB 4.5 million in damages. Staunch in it defense of its intellectual property rights, LEGO Group has also prevailed in other Chinese copyright infringement cases.
Congratulations is due to these companies. Protecting intellectual property rights is good for global business, good for China and good for Chinese consumers. Basically, the only ones who don’t profit are the copycats.
Protecting IP rights in China will continue to be a challenge, however, and Avela Consulting will continue to advise clients on building safeguards into their strategies for marketing in China’s continually changing business landscapes.
Contact Avela for more information on how we can help you enter the China market with success.
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