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October 23, 2006

Chinese Patent Spats

The Financial Times reports that Chinese companies, learning the ropes, are becoming increasingly assertive about patent rights in the U.S.

Mark Hogge at Greenberg Traurig observes, "Within the past year or two, the Chinese have begun standing up for themselves and testing the limits of intellectual property rights that are asserted against them. They are learning the rules of engagement in the US marketplace and that includes intellectual property litigation."

Historically, Chinese companies have generally been defensive about patent infringement cases, agreeing to settle, design around, or even lose by default as a no-show in court. But that seems to be changing. "Chinese companies are treating intellectual property lawsuits as an effective competition tool in the marketplace," speculated Tony Chen of Jones Day.

Netec, a flash memory maker based in Shenzhen province, earlier this year sued New Jersey based rival PNY in East Texas, possibly the first instance of a Chinese company suing an American one for patent infringement.

Chinese companies have been targets for injunctive relief by American companies before the US International Trade Commission (ITC), but with a mixed track record of success in the past decade. Tom Jarvis at Finnegan Henderson Farabow Garrett & Dunner, who practices before the ITC, notes that American companies have won only about half the ITC cases brought against Chinese companies. But Chinese companies can also use the ITC against American rivals. Jarvis predicts that "within five years the number of patent litigations instigated by Chinese companies in the US will grow exponentially."

Posted by Patent Hawk at October 23, 2006 12:02 AM | International