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The Beijing based electronics manufacturer Aigo, a subsidiary of Beijing Huaqi Information Technology Development Co., Ltd, was recently awarded damages totalling 200,000 yuan (just over 31,000 dollars) after it was ruled that Japanese competitor Toshiba had violated patents that the Chinese company own for the USB Plus technology at the Xi'an People's Court. Toshiba has had to remove some of its netbook computers from the Chinese market. The ruling, while not even close to the amount awarded in the landmark 'Schneider vs. Chint' case, is an important indicator of the maturity and changing landscape of intellectual property protection in China, and will certainly go some way in increasing the concerns of foreign companies, as the last few finally realise that not engaging in the Chinese IP system is a choice they make at their peril.
There is nothing particularly groundbreaking about the fact that a Chinese company has brought claims against a foreign company. The reason why this case will create a stir is because of the relative popularity of the Toshiba brand worldwide. The fact that a large global brand has been ordered to pay damages to a brand which many Europeans and Americans are yet to have come across will not only highlight the changing game status of IP law in China, it will probably pay dividends for Aigo in terms of providing international publicity and brand recognition. According to the Financial Times, the Chinese company also contacted Samsung, Sony and Dell over patent violations, before beginning proceedings against Toshiba and Hewlett Packard.
Aigo's chairman, Feng Jun expressed his happiness with the ruling, stating that it will go some way towards improving public opinion towards Chinese Intellectual Property; no doubt also aware of the publicity that the case will have for the company. The flip side of the ruling is that foreign companies will once again have to reassess their IP strategies, and make sure that they are prepared for the coming years as the Chinese governments devotes itself to the issue as part of its 12th Five-Year Plan.
China's IP playing field changed dramatically in September 2007, when a Wenzhou Intermediate People's Court ordered that a joint venture of France's Schneider Electric must pay damages of 335 million yuan for infringement upon a patent from the Chinese company Chint Group Corp. Schneider later settled in 2009 to pay compensation to the amount of 157.5 million yuan, or 23.05 million dollars. At the time of the ruling, Chint board chairman, Nan Cunhui stated that "suing business rivals for patent infringement is a common resort that some transnational companies use to elbow out competitors and dominate the market". His belief was that the ruling would encourage Chinese firms to use the law to protect themselves; this coming after a sustained effort by Schneider, which filed nearly 20 patent-related lawsuits against a number of Chint products in Germany, Italy, France, and other countries in Europe in order to prevent or delay market entry. Following an unsuccessful attempt to obtain a declaration of invalidity on one of Chint's utility model patents, which it deemed to be weak, Schneider and every other company worldwide was provided with the confirmation that IP in China was now being used to enforce the rights of Chinese companies.1 2 Next