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BIZCHINA> Center
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Battery maker wins lawsuit on IPR
By Diao Ying (China Daily)
Updated: 2008-06-02 14:44 The lawsuit caught the seven Chinese companies by surprise. Wang Jianhao, general manager of Zhongyin, dismissed Energizer's claim. "We had the technology to produce mercury-free alkaline batteries back in 1993," he was quoted by the Xinhua News Agency as saying. "The Hong Kong-based Jinshan Group, which owns my company, was able to produce alkaline batteries three years before Energizer had begun to apply for patents," Wang said. The mercury-free compound for the batteries is like wheels for a car, and everyone knows that a car needs four wheels, says Wang. "We saw this technology as common knowledge, rather than an invention belonging to a single company," says Wang from the association. "In comparison with other trade measures such as anti-dumping, a Section 337 investigation could have more severe consequences since similar batteries made by all Chinese companies would never be allowed to enter the US market," he said. Chinese battery makers thus worked together to fight the suit. According to experts from the association, fees for Section 337 investigations are very high and therefore companies stand to gain when they share the legal costs. According to Hogan & Hartson, the law firm that helped Chinese enterprises with the case, the patent claims were unfounded. The US Court of Federal Appeals for the Federal Circuit in late April affirmed a previous ruling by ITC that Energizer's claim was not valid. It is the final decision on the case since it was the second time Energizer appealed. Energizer had asked the Chinese manufacturers for $1 million for patent fees, plus 2 to 3 cents on each battery sold. "That was unacceptable since we earn only 1 cent on each battery," says Wang from the battery association. The outcome was greatly encouraging for Chinese battery companies and protects the industry's export interests, the BIA's Wang says. With Section 337 cases increasing, the legal victory was a good example for other disputes involving Chinese companies, Wang adds. The Section 337 investigation has been a hot issue in Chinese legal and trade circles because of the severe penalties involved. An adverse ruling means that it isn't just the accused companies whose exports are affected: it also applies to other enterprises in the same sector, even though they might not have engaged in any violations. The US last year initiated 17 Section 337 investigations against Chinese enterprises. The products included recorders, digital TVs, memory cards and media players. Ding Liang, a Beijing-based lawyer, attributed the increase of actions involving Chinese companies to the restructuring of Chinese industry and the rapid growth of high-tech Chinese exports to the United States. Gong Bohua, a law professor at the Shanghai-based Fudan University says that there were signs of Section 337 investigations being abused by American companies in recent years. "In lawsuits concerning Section 337, the time for investigation is relatively short and the cost to institute the investigation is low but the punishment against companies ruled to be violating patent rights is very severe. So American companies make easy use of it," Gong says. A recent report released by the Ministry of Commerce said Chinese enterprises are facing increasing trade barriers. Yu Benlin, deputy chief of the ministry's bureau of trade fairs for imports and exports said earlier that enterprises should take the lead in dealing with these suits and protecting their interests. Legal experts have also urged Chinese companies to raise their awareness of patent rights and to draw up their strategies regarding intellectual property rights. "Many domestic companies failed in international law suits because they don't pay enough attention to the development, application and protection of patent rights," says Zou Guorong, a lawyer from Hogan & Hartson. (For more biz stories, please visit Industries)
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