A few months before the Wenzhou court ruled on the Schneider vs Chint case, in June, Beijing University Founder Electronics Co., Ltd. sued US Blizzard Entertainment Limited for copyright infringement over use of its Chinese typefaces. Founder Electronics eventually sought 408 million yuan in damages only to be rewarded with 1.4 million yuan by the Beijing High People's Court; an amount which did not even cover the 2.08 million yuan worth of legal fees accrued. At the time, Chen Jihong, partner at Zhonglun W&D Law Firm in Beijing said "the case is the latest sign that IP awareness of Chinese companies has grown rapidly from hardly knowing what it is to guarding it with legal tools". And though the eventual sum was much larger than the sum being reported in the Aigo-Toshiba case, the outcome did not translate into the triumph that the Schneider vs. Chint case would soon create. The difference for Aigo, however, is that litigation may well prove to be a valuable component of their advertising both at home and abroad. They have a host of products available to the mass market, as opposed to a company such as Founder Electronics, the provider of Chinese character library products, which had little to gain in terms of publicity from litigation.

The peculiarities of the Chinese IP system are well known. As Judy Chan of Rouse and Co International points out, Trademark and Patent Protection are both territorial, meaning without registering in China, a foreign rights owner has no rights here. Furthermore, a "first to file" system means the law protects the person who first registers the right, rather than the first person to use it. Chan has stated that Chinese companies are becoming ever more alert to weaknesses in the "first to file" system, no doubt using it as an offensive as well as a defensive tool. The Aigo-Toshiba case highlights the fact that foreign companies must become increasingly aware of what those in the domestic market are doing, in terms of prior art and in terms of trademark and patent applications.

And there is a lot of activity to keep abreast of. In 2010, China's international patent filings increased 56%, and following the Schneider vs. Chint case, as Luke Minford, head of Rouse UK, and John Woo, senior patent attorney in the Rouse Beijing office point out, Chinese enterprises have continued their strategy of building utility model patent portfolios. Minford and Woo point out that, according to the State Intellectual Property Office, utility model applications increased 24.4% from 2008 to 2009 and numbered 306,831 in the first 10 months of 2010, representing an increase again of 34%. The pair contrasts this with a minimal rise in foreign applications, totalling less than 1%. This is a telling sign that foreign companies are not necessarily taking the right steps to prepare for China's transition towards an innovation-based economy over the course of the next decade.

A 2009 survey of European businesses revealed that 86% considered IP enforcements to be inadequate. Yet, there has been obvious improvement in the system for foreign firms hoping to safeguard intellectual property. In recent months, a Chinese court held that a shop in Jiangsu infringed on Puma's trade mark rights, which led to a settlement between the two parties. Elsewhere, Castel, Europe's largest wine manufacturer is being sued for trademark infringement by a company that registered the Chinese name which Castel is currently using in the Chinese market; the plaintiff is reportedly seeking damages worth 210 million yuan. These two cases give a far from complete snapshot of the system at present. In April of this year, the Chinese government released a list detailing the top ten IP cases, five of which included foreign enterprises. The decisions which are detailed in the list reveal that the IP system is being applied equally to both foreign and local enterprises. As Huang Jing, head of the IP department at Aigo pointed out, "The (Aigo-Toshiba) case represents an important turning point, from 'made in China', to 'created in China'". Though 31,000 US dollars might not seem like a huge windfall for Aigo, the publicity it has created for the company and for the state of IP in China, has proved much more valuable.

Stuart Wiggin is a news editor at China Radio International. He graduated from Oxford University majoring in modern history and politics.

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn