Best Buy and Wal-mart sued over typical Chinese knockoffs

Back in the 1970s, a Japanese car would be laughed off the road in America as a cheap poor man’s vehicle. But thins changed. Remember the Datsun 240Z? That was a car that showed us the Japanese were for real.  Datsun became Nissan and spawned Acura Infiniti, steadily moving up the chain toward even the luxury category.  Eventually Nissan, Toyota and Honda became car brands of merit in the United States – along with their luxury spin-offs Acura, Lexus, and Infiniti.

Today, it is ‘cheap Chinese knockoffs’ that are the common refrain if one thinks of Chinese products in America.  But, perception lags reality because this is changing…drastically.  In fact, when it comes to patents and copyright, the Chinese are now suing the Americans in order to enforce Chinese companies’ intellectual property.  It is the Americans who are selling the knockoffs and the Chinese who own the legal rights they are trying to protect. Wal-mart and Best Buy have gotten caught up in the fray.

The Sydney Morning Herald reports.

Best Buy, Wal-Mart Stores and other companies were sued over dashboard mounts for navigation devices in a rare instance of a Chinese company trying to enforce patent rights in a US court.

Changzhou Asian Endergonic Electronic Technology, based in Changzhou, China, claims the retailers are infringing its patent on a design for the dashboard mounts by selling products made by a rival. It wants cash and a court order to prevent further use of the design. The patent was issued in March.

The closely held company is trying to build a market in the US and filed the complaint to deal with ”the typical Chinese knockoff,” said Changzhou Asian lawyer Chad Nydegger. The company also is suing the manufacturer in China, accusing it of infringing two Chinese patents, he said.

The complaint, filed July 2 in US District Court in Texarkana, Texas, reflects the rising use of the US patent system by Chinese companies. US patent applications by residents of mainland China, which excludes Hong Kong and Macau, surged 12-fold between fiscal years 2000 and 2008, according to the US Patent and Trademark Office.

”The Chinese are becoming sophisticated enough to take advantage of the patent system in the US,” said Brian Nester, a lawyer with Fish & Richardson in Washington who often represents South Korean companies in US patent fights. ”You will see more Chinese companies filing suit in the US.”

You might say what is good for the goose is good for the gander because the United States is famous for trying to protect patents, copyright and intellectual property abroad.  I do know that U.S. diplomats also lobby on behalf of American firms wishing to protect their valuable patents and copyrights.  Now the Chinese government is assisting its companies as well.

”The Chinese government is taking steps to assist companies into enforcing their patent rights both inside China and elsewhere,” Nydegger said. ”My client’s view is China is starting to emerge as a first-world country. There’s been a significant influx of technology and they are starting to make improvements — they are becoming innovators, not just copiers.”

As for the case at hand, look at it as a test case, a beach head for future Chinese legal rights in the U.S.

This may be the case of a Chinese company ”dipping a toe in the water” to see how the US legal system deals with intellectual property issues, said lawyer Robert Krupka of Kirkland & Ellis in Los Angeles, who has represented Japanese companies in US courts.

”They’re very carefully picking and choosing their battles,” he said. ”This is a licensing play, not a real desire to go to court.”

How this case is decided will set a precedent that will be an important step for the Chinese as they seek industrialised first-world status going forward.