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October 31, 2005

Hunan's Prince of Patents

Qiu Zeyou has 1,051 utility patents. Why? "I am strengthening my defenses."

Here's a story presenting a Chinese perspective on patents, both in the subject, and the reportage.

There's no telling how long the article will be stored on its host web site, so a local copy is below, for posterity's sake.

From the China Daily:

PRINCE of patents

story by Liu Weiling

He is a man of action. Qiu Zeyou has been extremely busy over the past several years, and the numbers prove it. Qiu is the top patent holder in Changsha, the capital of Central China's Hunan Province.

He has already been granted 2,651 patents, 1,051 of which are invention patents. Qiu filed 1,441 patent applications last year, a quarter of the provincial total. Approximately half were for invention patents, while the others for design patents.

"I am strengthening my defences," says the general manager of privately owned Juxing Building Materials (Group) Co Ltd.

"I want to monopolize the industry."

The 42-year-old Qiu invented the GBF high strength complex slit pipe in 1996. These pipes, and another special technology Qiu invented, help construction workers build houses without girders. This speeds up construction time and cuts cost by a significant margin.

The first building to utilize Qiu's technology was the 180-metre-tall Hunan International Financial Mansion, the highest building in the province. The technology has since been applied in over 1,000 large- and medium-sized projects.

Rapid popularization of the technology didn't bring the profits and benefits Qiu expected over the first several years, however.

"I suffered tens of millions of yuan in losses before I launched my patent blitz," says Qiu. Many other enterprises began copying his technology in the late-1990s without paying any royalties.

A flood of low-quality products then shook consumer confidence and endangered the development of his firm.

The savvy businessman quickly realized he had to patent his technology and fight violators. In 1999, he took the first step by constructing a multi-layer patent net. He applied for patents for all technologies and products related to his inventions.

"I need to defend myself," he says.

"If you only have one patent for your technology, it is very easy for others to introduce other related patents."

Qiu estimates the industry will have a market value of 30 billion yuan (US$3.7 billion) within five years. The only way to monopolize the market is to apply for all possible substitute patents related to his technologies and designs. He believes some of the substitutes might be put into use several years from now.

Writing 1,400 patent applications a year is not an easy thing to do, however.

Qiu accomplished this tough task by establishing his own patent office with a team of professional patent writers. Qiu only writes the rights and requirements for most applications, while the other parts are finished by his patent team.

Qiu has also put his team through Intellectual Property Right (IPR) training classes.

"They all understand my intentions and the work has been done very well," he says.

Patents alone are not enough to protect Qiu from infringements, however. Sometimes other methods are necessary. He sends inspectors to the biannual Guangzhou Export Commodities Fair to find other companies exhibiting technologies and products that are similar to Qiu's patents. They complain to organizers about any violations.

Legal action is a more powerful weapon, however. On August 16, 2003, Juxing launched its first lawsuit against a company based in Xiangtan, Hunan Province. Qiu sued the company for violating five of his patents. After two court hearings, the Xiangtan firm agreed to offer 67 per cent of its stake to Qiu's company as compensation.

That victory encouraged Qiu and Juxing's legal staff. Shortly thereafter, Juxing filed a lawsuit against a Chongqing-based firm that had pirated six patents. The company offered compensation before the court session began, says Zhu Zhiwu of Juxing's legal department.

Juxing has since launched 38 IPR lawsuits. It won all of them, except for those cases in which the defendants proposed out-of-court settlements. Every violator in Hunan Province has been dealt with. The company received more than 10 million yuan (US$1.23 million) in compensation in 2004 alone.

The key to winning lawsuits, Qiu says, is to build a patent net. Another tactic is to simultaneously sue infringers for pirating several patents.

"It is hard to win if you only hit them with one violation," he says.

"Like in war, sometimes one bullet isn't enough to kill an enemy."

Juxing sued one company for violating 32 patents in a single lawsuit.

Wiping out all violators is not Qiu's primary goal, however.

"I want to force enterprises to resort to my patents voluntarily," Qiu says.

He established an industrial alliance in August and put all of his patents into a patent pool. Enterprises that join the alliance can apply to use the patents by paying fees, which now stand at 5 per cent of sales values. The licences are annual, and those that fail to pay the fee for the first year will be unable to renew.

"The patent pool allows all enterprises in the industry to get the technologies at a fair price," Qiu says.

Among the country's 80 enterprises currently using Juxing's technologies, over 60 have agreed to join the alliance. Qiu believes the rest will join soon.

Gong Shiyi, director of the Hunan Provincial Intellectual Property Rights Bureau, says Qiu and Juxing provide a good example for domestic companies eager to use patent strategies to protect their interests.

"Qiu has shown the way," he says. "Few domestic enterprises have as clear an IPR strategy as he does."

The next step is to register Juxing's technologies overseas. The company has applied for three patents under the Patent Co-operation Treaty.

"We did have some projects in Singapore and South Korea, but we have not yet filed patent applications there," he says.

Qiu estimates that the overseas market might not be as large as the domestic industry, because many buildings in foreign countries use steel structures. Concrete structures that make use of Qiu's technologies are more popular in China.

(China Daily 10/31/2005 page9)

Posted by Patent Hawk at October 31, 2005 1:08 AM | International