Boost for IP enforcement in China

Bridgestone’s latest decision to take action to enforce its intellectual property rights in China sends a clear message to domestic producers that such rights must be taken seriously. For other international corporates, it also reinforces the point that such action can and does pay off.

Rival tyre maker, Qingdao Genco Industrial Group Co, which operates in China’s Shandong Province, was found to have included a tyre featuring Bridgestone’s registered truck and bus tyre tread pattern in its catalogue. Bridgestone subsequently filed and won the design rights infringement claim in Qingdao City Intermediate People’s Court.

This is a significant win, given that until recently, IP rights owned by both domestic and multi-national companies have been perceived as difficult to enforce in China. However, it now seems that the tide is turning.

Although intellectual property rights have been acknowledged and protected in China since 1979, there has been a lack of knowledge around how best to approach enforcement and confidence that western companies are operating on a level playing field. And despite there being a better regulated and more robust domestic legal framework in place to protect such rights, there is still some room for improvement.  Increasing grass roots awareness, both of the need to avoid infringement and the consequences of infringing, is therefore vital.

As a result of facing legal action following alleged infringements, a number of Chinese companies have undoubtedly had to learn from bitter experience. Furthermore, the watchful eye of IP rights owners is undoubtedly encouraging more Chinese companies to tow the line. Bridgestone’s vigilance in terms of spotting the design rights infringement and taking action against it sends a clear message to other manufacturers in China that such copycat engineering will not be tolerated by leading corporates.

According to the latest WIPO statistics, design rights registrations in China rose by 23.8% between 2010 and 2011 and patent applications by 34.6% in the same period, indicating the country’s growing interest in and respect for intellectual property. In particular, design rights registrations are increasingly sought after by Chinese manufacturers, with 97.3% of 2011 applications coming from domestic applicants.

On enforcement, the statistics also bear out the improving situation.  As far back as 2004 there was more patent litigation in China than anywhere else, with 98% of it being made up of Chinese Company against Chinese Company.  Currently, when foreign companies do go after infringements in China, they have a 90% win rate - far higher than in the US and other western courts.

Bridgestone’s latest win, combined with the fact that other leading corporates have successfully enforced their intellectual property design rights in China in recent years, means there is no longer any excuse not to take enforcement action. Indeed, earlier this year, Bridgestone Corporation successfully sued another Chinese tyre manufacturer, Guanghou Bolex Tyre Ltd, for trade mark infringement. For automotive and automotive components manufacturers, this is particularly encouraging, given the critical nature of such products within highly competitive global supply chains.

The real message for western innovators is “you have to be in it to win it”.  Often when the facts of the apparently most egregious infringements are looked at in more detail, it turns out the company had never obtained any protection in China, so the Chinese company was quite within their rights to use the technology of a particular product.

So whilst in certain areas, issues with IP enforcement in China may remain, if you come to the shootout with a peashooter, you’re going to come off worst, whatever happens!  

Paul is a partner at UK patent and trade mark attorneys Withers & Rogers