Chinese businesses are worrying that a multi-million-dollar
intellectual property rights (IPR) waris looming after a spate of
lawsuits over alleged infringements inrecent months.
Late last month, the Beijing-based New Oriental Education Group,
China's leading private English language school, was ordered by a
local court to pay 10 million yuan (1.2 million US dollars), in
compensation to two US plaintiffs for copyright and trademark
infringements.
In mid October, the China Music Copyright Society lodged a claim
against TCL, one of the country's largest mobile phone
manufacturers, for 12.8 million yuan (1.55 million US dollars) for
the unauthorized use of music under copyright protection. The case
has yet to be decided.
Meanwhile, the Guangdong-based Kelon Electric Appliances Co. has
decided to take legal action against Haier and Xinfei, both name
brands in the Chinese home appliances market, for copying the
patented designs of its refrigerators. Kelon is seeking 10 million
yuan (1.2 million US dollars) in compensation.
This case, the first of its kind in China's refrigerator
industry, is scheduled to go to court in Foshan city of south
China's Guangdong province in November this year.
"As an imminent IPR and patent war is looming large, domestic
companies should learn to do business in the long term," said Prof.
Zhang Chu, a noted Beijing expert in IPR law. "You may make some
money by infringing upon others' copyrights and patents in the
short term, but sooner or later you will have to pay dearly for it.
"Many local enterprises lack IPR and patent awareness, and have
ignored the protection of patents and copyrights for years," said
Zhang.
In January 1997, industry and business administrators in the
Chinese capital confiscated from the New Oriental Education Group
illegal copies of original test questions of the US-sponsored
TOEFL, GRE and GMAT exams. The group confessed to its copyright
infringement in a written document, but failed to stop the
practice.
Some prestigious Chinese law experts acknowledged that it is
quite common for businesses at home and abroad do business with the
unauthorized use of copyrights, patents or trademarks, though they
know it illegal.
Chinese manufacturers of DVD players have to pay additional
4.5US dollars for each DVD player they produce to Hitachi,
Matsushita, Toshiba and other Western firms which own patent rights
on essential technologies.
To date, they have paid a total of 3 billion yuan (some 360
million US dollars) in patent licensing fees.
Quite a few domestic firms have incomplete and incorrect
understandings of the law. In New Oriental's case, the most
controversial point lay on the issue of whether used test questions
should enjoy the copyright protection. Law experts noted that it is
legal to acquire public information via public channels,
nevertheless it will involve copyright infringement to use
exclusive, private and other non-public information, such as test
questions, for profit-making purposes.
TCL also voiced dissent on related legal problems in its case.
The company held that it only illegally used episodes of musical
pieces as its cellphone rings, which should be differentiated from
the piracy of whole songs on CDs. And it argued that the claimed
compensation should be below 500,000 yuan (about 60,500 US
dollars).
Patents, a major form of intellectual property rights, have
aroused increasing attention from overseas investors.
"Multinationals, such as Matsushita, IBM and Nokia, have all
flocked to apply for patents covering fields of wireless
telecommunications, photoelectricity and information technology
onthe Chinese mainland since 1999," Yuan Jianzhong, a member of a
Taiwan-based institute for the information industry.
Experts on IPR are concerned that foreign firms may wage a new
round of patent warfare against domestic companies later this
yearor next year.
"China should intensify the IPR awareness among the whole
society and further improve the enforcement of laws in protection
of the legal rights and interests of intellectual property owners.
Domestic enterprises are encouraged to innovate technologies on
their own and to apply for patents quickly," said Zhang Qin, deputy
director of the State Intellectual Property Office.
Zhang stressed that the building of policies and regulations on
IPR protection in China should be strengthened to meet the common
international standards.
Enterprises should incorporate a sensitivity to IPR into their
own operations and management, Zhang noted, adding that companies
with big market shares were likely to be caught in lawsuits if they
copied the main technologies on market without their own
patent.
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(Xinhua News Agency October 24, 2003)