Protecting IP in China

Despite China’s questionable record in defending IP, the experience of British business Strix suggests officials are increasingly recognising the importance of protecting company’s rights.

Strix, which owns patents to technology that enables kettles to switch off automatically when they boil, last year won two ‘landmark’ patent cases against Chinese companies.

The Isle of Man-headquartered company, which has been in China for 13 years, took the businesses, Leqing FaDa Electrical Appliances and Zhejiang Jiatai Electrical Appliance Manufacturing, to court after discovering some of their products were based on Strix technology.

After a year of court action, the Beijing Number One Intermediate People’s Court in February last year found both guilty of stealing Strix’s intellectual property (IP) and ordered the two companies to pay a total of RMB 9.1 million (£800,000) in damages. Strix has since settled with Leqing FaDa after they agreed to stop producing offending products, however, two further actions have been launched against Zhejiang Jiatai which has appealed against the judgement.

‘It was a landmark decision that shows the change in China and how intellectual property is being taken a lot more seriously,’ say Mark Finnie, group marketing director of Strix, which holds more than 400 patents and employs 600 of its 1,000 staff in China.

‘It is a strong indication that you can protect your IP in China and that the country has become an improving landscape for international companies.’

Finnie adds that the scale of the payout also demonstrates the importance being placed on the issue by the Chinese judiciary and shows that judges will not only protect international companies, but their own local investors and innovators as well.

He continues, ‘The value being placed on invention and R&D is becoming much more significant in China, and our cases show complaints will be judged on their merits rather than on the nationality of the plaintiffs.’

The cases weren’t the first patent court actions for the company, which have been involved in a number of successful and unsuccessful appeals. Also, China isn’t the only country where Strix’s IP rights have been infringed. Finnie says the company has had cases in Turkey, Australia, and the UK. However, the recent Chinese cases have been the most significant because the large amounts awarded set a precedent.

‘The fact that we are prepared to go through to the courts, is enough to persuade people not to go through with copying an idea,’ he continues.

Finnie adds that the experience has not deterred the company from continuing to grow its presence in the country, which accounts for nearly a quarter of revenue, and he encourages others to follow in Strix’s footsteps.

‘We see the opportunity in China and the growth in that market outweighing the costs of pursuing intellectual property through the courts. When launching operations in China, the first thing to ensure is to have IP rights in place, particularly technical products, and as thoroughly as possible. And, I suggest businesses be in it for the long haul.

‘Businesses need to be prepared to protect their IP rights, and that may take time and it certainly takes some expense to do, but the payback is significant. It is a long game.’

See also: Five top tips for UK businesses that want to sell into China

Nick Britton

Nick Britton

Nick was the Managing Editor for when it was owned by Vitesse Media, before moving on to become Head of Investment Group and Editor at What Investment and thence to Head of Intermediary...

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Intellectual Property