Avoid the IP Trap

At the Spring Canton Fair in 2003, China Buyang Group Feishen Bicycle Industry Co., Ltd. exhibited several of its newly designed electric scooter models, hoping to attract orders with new products and new designs. But less than a day after the exhibition, a French company raised an objection to Feishen on the grounds that the design of this style belongs to its own registered patent. After friendly negotiation between the two parties, Feishen finally agreed to remove the new product from the booth, and the other party said that it would not pursue any further investigations.

Intellectual property disputes like this are no longer an unfamiliar topic for Chinese exporters. From scooters to DVDs, from design to industry standards, Chinese companies have gone through several years of intellectual property disputes. Hualiang from the German Kelon Exhibition Company said that after China's accession to the WTO, China has assumed more intellectual property responsibilities and obligations, and export enterprises have become more and more mature after encountering more and more traps and disputes. Intellectual property has been regarded as an important part of the development strategy of many Chinese export enterprises, and has become an important weapon for enterprises to enhance their competitiveness.

Initially involved in patent turmoil

In fact, it is not the first time that Feishen Motors has encountered intellectual property disputes. When Yang Ming, the manager of the foreign trade department, talked about this issue, his tone was full of confidence. Regarding the disputes at this year's Canton Fair, he said that the company was actually prepared for it. "The controversial scooter, in fact, the company has made preparations before, and the R&D department has made some changes to the appearance of the product. Strictly speaking, it is no longer in the category of infringement, and the other party is well aware of this. But consider Since there is still the possibility of cooperating with the other party in the future, we took the initiative to make some concessions. If we copied their designs 100%, how could our competitors be so happy, maybe they would create more trouble."

Feishen Motors Co., Ltd. is affiliated to China Buyang Group, which started with anti-theft doors and has developed into a leader in the industry. Around 2000, the company extended its products to the scooter industry by using its years of manufacturing experience and the rich hardware supporting environment in Yongkang area, and subsequently established Feishen Bicycle Industry Co., Ltd. Since then, intellectual property disputes have always been with companies.

The scooter is a special product. Like other light industrial products, on the basis of reliable quality, the design has become its biggest selling point and the focus of patent disputes. Many companies realized that this new product has low technical content and simple production process, so they rushed forward, hoping to grab a piece of cake.

The scooter first started in Japan, but it has been carried forward by companies in Taiwan and the United States, and most of the patents on product design are monopolized by these companies. When new products are not yet mature and industries are not yet formed, these companies allow plagiarism. Once the market becomes bigger, they will use the "sword" of intellectual property rights such as patents to attack competitors and seek their own interests. Export enterprises have unknowingly fallen into the "trap" they have carefully designed, making it difficult for enterprises in mainland China, especially Zhejiang, to guard against them. For a time, the customs detained the goods, some factories were closed, and the whole industry panicked. Since then, everyone has realized that intellectual property is so powerful!

You can only see the rainbow after experiencing the wind and rain. These lessons are a vivid lesson for export companies in mainland China. Some companies acted immediately, some cooperated with patent owners and paid a certain fee; some improved their original products so that competitors could not grasp the handle; some increased their R&D efforts and applied for patent registration in the target market themselves Want to taste the sweetness of "patent owner".

Reasonably Avoid Traps

Dr. Deng Xu from Shanghai Institute of International Trade and Economics has been engaged in international trade law research for a long time and has a deep understanding of intellectual property disputes in export enterprises. He explained that Chinese exporters have issues with intellectual property, including patents, trademarks and copyrights. The infringement is mainly concentrated in three aspects. The first is to use the brands or trademarks of internationally renowned companies at will, which is what we often call counterfeit goods. Export enterprises plagiarize other people's manuals, etc.; third, export enterprises plagiarize other people's achievements in design, which is especially prominent in the light industry that emphasizes design, such as gifts, toys, sporting goods and other industries. In order to reasonably avoid the trap of intellectual property, enterprises must firstly be familiar with the international definition of "infringement", and then have a deep understanding of the products and the industry itself. The former requires the assistance of professional institutions, while the latter mainly relies on the long-term and unremitting accumulation of the enterprise itself.

Yang Ming agrees. He mentioned that the rapid development of Feishen in recent years relies on this method. Not only cleverly avoided all kinds of traps, but also made competitors take the initiative to seek cooperation. From the ordinary scooters at the beginning to the current electric scooters, pneumatic scooters, recreational vehicles and scooters for the elderly, the annual export volume of hundreds of thousands of scooters and the export value of more than 10 million US dollars has been achieved, in a sense It can be said that it is the result of successfully dealing with intellectual property disputes. And these are all groped out through painful practice.

Yang Ming introduced that since the scooter itself is a new product, many standards and regulations are still immature, so there is a lot of space for companies to understand, understand and use them rationally. Regarding the patent issue, in general, it can use its "invisibility, proprietary, geographical, time and reproducibility" characteristics to cleverly avoid the trap.

Initially, Feishen Company adopted the simplest method - paid use. That is, enter into a written contract with the patent owner to pay the patent owner royalties. This is the easiest and most direct method. For example, one of the company's pneumatic scooters uses a mechatronics starting device that uses the patents of other companies, and each one pays a certain patent royalty.

Although the operation of paying the patent fee is simple, it increases the cost of the product after all, which is not conducive to the long-term development of the enterprise. In order to enhance its competitiveness, the company has increased its research and development efforts on the one hand, and also sought the opinions of legal experts.

The company's marketing and R&D departments work closely together to first look for lost patents, ie those that are outdated and expired. In the process, the company discovered that due to the low technical content of the scooter industry, many patents such as tricks are owned by individuals. Patents have a certain time limit, and individuals are often easy to forget after registration. Enterprises can take advantage of this gap to register themselves or use them for free.

There is also the territorial nature of patents. The patent right is obtained by the right holder applying to the patent authority of a country, and the patent right has legal effect only within the scope of the country. When determining whether the infringement is infringed, only the "nationality" of the patent is recognized. However, the "nationality" of a patent is often confused with the nationality of the patentee (including legal persons-enterprises). But in fact, the "nationality" of the patent must be consistent with the country where the infringement occurred, irrespective of other factors.

In view of this, Feishen's foreign trade and R&D teams have conducted extensive research on the patent situation of the products in the target market, and adopted the strategy of "focusing on attacks and inserting needles". Yang Ming introduced that since the company has markets on five continents, if a certain patent has been registered in one market, the company will immediately adjust its strategy and attack other markets. At this point, it is too late even for competitors to react, because the patent has a "first use" principle. The company engages local legal counsel for registration and consultation.

Accurately grasping the criteria for "infringement" is critical. Yang Ming said that according to international practice, in terms of product design, as long as there is a 30% change, it is not considered infringement. After referring to the original versions of various products (many are provided by customers), Feishen's own R&D department makes improvements based on the needs of the target market.