Tag: legal

PE industry places bets

chinese-shanghai-yuan-505x300What are the hottest sectors in China for attracting private equity investors?

Ravenous energy demands and chronic environmental problems have, not surprisingly,  put alternative energy, energy saving and environmental protection firmly on the radar screen as favorite areas for PE  investment. (continue reading…)

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China gets tough on customer data

data_protection-280x300China’s consumer boom has also created a boom in trafficking in personal data. US business information firm Dun & Bradstreet reportedly was fined RMB1m and had four of its Chinese employees jailed earlier this year for buying the personal data of Chinese citizens. (continue reading…)

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EU seeks level playing field

euchamberchina.jpgThe lack of adequate IPR protection and the leakage of confidential information are hindering technology transfer to China and souring trade relations with European businesses.

So says the European Union Chamber of Commerce in China in the latest edition of its annual position paper on EU-China trade relations.

The paper lists a litany of issues that obstruct free trade, many of which will be well known to any western business that has been in China for any time.

(continue reading…)

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Solid Oak sees solid IPR case

solidoaksoftware.pngAs predicted, China's plan to install internet filtering software on PCs to protect consumers from internet porn has attracted a huge amount of attention in the west.

The software was first condemned for its Big Brother connotations, then branded as dangerous because of its security vulnerabilities.

Now it appears, the software may not even be Made in China but a ripoff of a western commercial product.

Solid Oak Software, a small Silicon Valley software house, claims that parts of its CyberSitter program have been used in the Chinese filtering software, called Green Dam-Youth Escort.

Similarities found include a list of CyberSitter serial numbers and an update that makes the software compatible with an old version of CyberSitter, the company said.

Researchers at a US university back up Solid Oak's claim and found similarities between the two programs, particularly in the blacklist of sites to block.

Solid Oak's president, Brian Milburn, plans to seek an injunction to stop US companies such as Dell and HP from shipping PCs with the Chinese software.

However, lawyers interviewed by the Wall Street Journal claim that the firm faces an uphill struggle to enforce its claim because the software will only be sold in China and so does not violate US copyright law. Solid Oak would thus have to engage lawyers in China to pursue the case under Chinese law.

Western companies much bigger than Solid Oak know to their cost that Chinese courts often have a generous interpretation of IPR that allows Chinese companies to continue selling “copycat” products that are wholly or partly derived from those of western rivals.

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Schneider settles with Chinese rival

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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Rolls-Royce not flattered by Geely GE

geely GE.jpgIt has been a while since we ran a Chinese copycat car story, so step forward Geely to take this month's prize with its “copycat Roller”. The Geely GE, on show at this week's Shanghai Auto Show, is a carbon copy of a Rolls-Royce Phantom, the favoured runabout of British aristocracy and oil sheiks.

With an estimated price of around $44,000 for the Geely GE — it stands for Geely Excellence — against $365,000 for the British-made Phantom, I suspect that few potential buyers are likely to be fooled.

Nevertheless, Rolls-Royce is consulting its lawyers after seeing the copycat Roller displayed “just feet away” from the Rolls Royce Phantom at the Shanghai show. A Rolls-Royce spokesman told the Daily Mail:

Our colleagues in Shanghai are taking a serious look at it. Rolls-Royce Motor Cars is very protective of its brand image and takes seriously any attempt to imitate its products. Rolls-Royce is currently keeping its options open and is in consultation with its legal advisers.

The Geely GE even sports a winged figure on its hood, similar to the famous Flying Lady mascot that adorns every Rolls-Royce.

To cater for the aspirations of Shanghai's upwardly mobile, the The Geely GE comes with such essential features as an oxygen bar, cigar storage, wine cabinet, refrigerator and a “starlight” interior roof — a key feature on the original Phantom.

The take-home from this story is not so much that a Chinese company has once again copied a western brand but rather that Geely sees a market in China for such a politically incorrect vehicle. Despite its obvious drawbacks — its big, costly to run and clearly not the Real Thing — the Geely GE has a glass interior divider between the front and back, so catering for China's nouveau riche who want to ape British aristocracy by having a chauffeur drive them around.

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IPR boot on other foot

boot2.pngWestern brand-owners know only too well the headaches of doing business in China where enforcement of intellectual property rights often leaves much to be desired. But it turns out that China's own multinationals are starting to experience similar problems when they expand overseas. Touché, as they say.

According to the Financial Times, two Chinese individuals have applied for trademark registration in Canada for the names and logos of more than 60 Chinese companies.

The victims include Nasdaq-listed internet portal Sohu, drinks company Wang Laoji, as well as financial firms China Investment Corp and Bank of China.

According to one IPR expert interviewed by the FT, every large or well-known Chinese company that prepares to expand overseas faces the risk of having its trademark registered by someone else in that market first.

Often the motivation is to stymie a Chinese company's overseas expansion on behalf of a direct competitor. In other cases, customers, distributors or retail partners make the application for registration, or individuals apply with the aim of selling the trademarks back to the company.

The Chinese government wants home-grown firms to fight harder for their trademarks overseas as part of an effort to combat the widespread perception that it is only western businesses that suffer IPR infringements at the hands of Chinese.

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China woos copyright trade

musicnotes.jpgA case of poacher turned gamekeeper perhaps. China's largest copyright trade centre opened in Beijing today, in a bid to attract — legitimate — trade in music, software and other intellectual property.

The Beijing International Copyright Trade Centre will provide one-stop services for those who want to register copyrights or conduct copyright business, investment and trade.

Five databases have been established, including text, pictures, music, video and software. The centre has so far attracted over 100 copyrights of books and 100 copyrights of animations, films and TV series.

It seeks international collaboration and has already signed a deal with Metro Music Productions of the US.

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Danone JV may end in tears and lower sales

Danone's long-running and increasingly bitter dispute with its Chinese partner, Wahaha, is likely to have an “unfavourable impact” on future sales of the French food group.

Rumours emerged in the stock market last week that Danone had briefed analysts, asking them take the negative impact of the legal dispute with Wahaha into account in their earnings forecasts. In the new spirit of glasnost that now governs these analyst briefings, the French company has promptly disclosed what was said.

For those who haven't been following the case, Danone filed a lawsuit in California this year accusing it Chinese JV partner of breach of contract by using the Wahaha brand on products sold outside their joint ventures.

The Chinese company, for its part, wants to terminate the 10-year-old agreement between the two companies that saw the Wahaha trademark transferred to Danone and made Wahaha the leading brand of bottled water in China. But the Chinese company believes it got the short end of the stick in the deal and is now at a great disadvantage.

For good measure, Zong Qinghou, the founder of the company, also accuses the French giant of not understanding the Chinese market — see this EngagingChina story for more.

In the most recent development, Danone has managed to oust Zong from the chairman's chair at the JV and replaced him with a Danone executive.

In an ideal world, the two companies would have gone their separate ways long ago. But Danone wants to continue selling water under the market-leading Wahaha brand and it needs Wahaha's sales and distribution network in China, even if that network is also used to sell rival products — which is what Danone alleges is already happening.

Wahaha, meanwhile, sees the JV as a straight-jacket and has decided the only way to break free of it is to create so much bad publicity that the French company will choose to sue for peace.

There are painful lessons to be learnt here for all western companies contemplating or already operating JVs in China.


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Murky waters

evian.jpgFrench food giant Danone has had a shipment of Evian mineral water seized by Chinese customs officials who found excessive levels of bacteria.

Of course, it is hard not to see this as a retaliatory move by China following the recent outcry in the west about the numerous cases of adulterated food and drugs that have been exported from China.

But Danone says this is not the first time that China has blocked deliveries of Evian water. The bacteria are harmless, Danone maintains, and the problem is due to conflicting local and international health regulations on the permissible quantities. The French company says it used to encounter the same issue in the US before it adopted the WHO's food safety standards.

To complicate the matter further, Danone has been involved in a long-running dispute with its local JV partner, Wahaha, which it accuses of undermining their alliance — see this EngagingChina story. The French company says this dispute is unconnected with its current problems with customs officials.

More on Danone's water worries in this Financial Times story.

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