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| Chinese companies sues Wal-Mart over patent |
| Bloomberg / Washington Jul 17, 2009, 00:24 IST |
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Cos sues in US to block ‘Chinese knockoffs’
Best Buy Co, Wal-Mart Stores Inc 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 Co, 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”
Wal-Mart spokeswoman Michelle Bradford said the company hasn’t been served with the complaint, and had no comment. Best Buy spokeswoman Kelly Groeler didn’t return messages seeking comment on the suit.
Nester said the case may be the first time a Chinese company has sued in the US over a patent obtained by a Chinese resident. Lenovo Group Ltd, China’s biggest maker of personal computers, has sued companies over patents it acquired when it bought International Business Machine Corp’s PC division in 2005.
Nydegger, of Workman Nydegger in Salt Lake City, said Changzhou Asian, which makes Sianbag GPS mounts, lost a bidding war to a company, which he didn’t name, that makes the Nav-Mat mounts sold by the retailers. He said his client is willing to negotiate with the stores.
“They were bidding against this other company that has copied their design,” he said. “Their goal is to capture US market share.”
Nydegger said his client predicts there will be more patent-infringement lawsuits by Chinese companies in the US.
“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.”
China’s applications for industrial patents rose 22.5 per cent to more than 110,000 last year, according to Lou Qinjian, China’s vice minister of Industry and Information Technology.
Chinese residents filed 5,129 US patent applications in fiscal 2008, according to preliminary patent office figures.
That puts it eighth in the number of filings by residents of foreign countries, behind Japan, Germany, Korea, Taiwan, Canada, the UK and France. 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.”
Krupka pointed to both the location of the court where the suit was filed and the types of companies that were sued —retailers are frequent targets of patent-infringement complaints over products sold in their stories. Other companies named in the complaint include Target Corp, Office Depot Inc, RadioShack Corp, Staples Inc. and TomTom NV.
Staples spokesman Owen Davis and Office Depot spokesman Brian Levine said their companies don’t comment on pending litigation. An e-mailed response from RadioShack’s media relations department said the company doesn’t comment on pending litigation. Taco Titulaer, a spokesman for Amsterdam-based TomTom, didn’t return messages seeking comment.
Target spokesman Joshua Thomas said in an e-mail that the company has “yet to be served with a lawsuit so it would be inappropriate for us to provide any comment.”
Richfield, Minnesota-based Best Buy, the world’s biggest electronics retailer, has been named in nine patent-infringement suits this year. Minneapolis-based Target, the second-biggest US discount retailer, has been sued eight times over patents in 2009 and Bentonville, Arkansas-based Wal-Mart, the world’s biggest retailer, five times.
Changzhou Asian filed the complaint in Texarkana, Texas, part of the Eastern District of Texas, the most popular jurisdiction for patent-infringement litigation.
There were 322 suits filed there in the year ended September 30, or 11 per cent of all new patent suits in the US, according to the Administrative Office of the Courts.
Patent owners have won 77 per cent of trials in the district’s court in Marshall, Texas, compared with a 59 per cent win rate nationwide, said Greg Upchurch, director of research for St Louis-based LegalMetric Inc, which compiles litigation data for law firms and companies.
The Changzhou Asian patent, with two Chinese residents listed as inventors, is for a unique, non-functional design and so has a shorter term of protection than a patent on an invention.
The case is Changzhou Asian Endergonic Electronic Technology Best Buy Co, 09cv95, US District Court for the Eastern District of Texas (Texarkana).
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