schneider.gifWestern company sues Chinese firm for patent infringement and loses.Yawns all round. Chinese firm sues western company for patent infringement– and wins. Now, that's a story.

France's Schneider Electric, which makes electrical power components, has agreed to pay more than 157.5m yuan to settle a case with Wenhzou-based Chint Group, with which it has been engaged in a bitter IPR dispute for the past decade.

Chint is one of those sleeping Chinese giants that remains largely unknown outside of China but which has grown to be a formidable player in its chosen market — low-voltage power equipment and electrical controls.

Founded in 1984 by Cunhui Nan, the company has expanded from a family business employing just seven workers to a leading manufacturer of electrical products, with 16,000 employees and offices in seven countries in the west. Mr Nan has been Congressman in the two most recent National People's Congresses and, according to the firm's website, considers himself “spiritual leader” to a group of privately-owned companies in the Wenzhou area.

In 1993, the firms became locked in a series of IPR disputes with Schneider first alleging infringement against Chint. The tables were soon turned and Schneider had to defend itself against IPR infringement suits filed by Chint. This week, a court in Zhejiang ordered Schneider to pay damages for infringing a circuit breaker's patent model.

In an earlier case, a Wenzhou court ruled that Schneider should pay 334m yuan to Chint. This ruling attracted the attentions of the then EU Trade Commissioner Peter Mandelson, who clearly felt the French company was being made scape-goat to demonstrate that it was not just Chinese companies that rode rough-shod over IPR.

The Schneider case threatened to once again take on a political dimension this week as Bernard Accoyer, Speaker of France's National Assembly is in China to thaw relations between the two countries, which have been in the freezer ever since president Sarkozy met with Dalai Lama last year. Nevertheless, as part of this latest ruling, the two companies have apparently reached a “global compromise” designed to end the long-running feud once and for all.

The legal eagles at CPA Online have much more on the Schneider vs Chint case.

The take-home, according to the Economist, is that Schneider fell victim to China's recent enthusiasm for filing “invention” patents covering some modest product development that few western firms would consider worthy of IPR protection. You have been warned.


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