Zhejiang Dongzheng Electrical Co Ltd (Dongzheng) is facing the same patent lawsuits that Chinese network equipment manufacturer Huawei Technologies and domestic MP3 device maker Actions Semiconductors faced as they expanded into the US market.

Four US enterprises dominate Ground Fault Circuit Interrupters (GFCI) manufacturing. Dongzheng entered the US market in 2003, but in April 2004, Leviton, one of the four major manufacturers, filed several patent (US6246558B1) infringement lawsuits against Dongzheng's clients in the United States. These lawsuits have been highly publicized in China.

Dongzheng is a specialized manufacturer of GFCI and GFCI-related products. All of these products are exported to foreign countries such as the United States and Canada. The company says Underwriter Laboratories Inc (UL) and Canadian Underwriter Laboratories Inc (CUL) have approved all of these products.

A GFCI is an electrical safety device required by the US government. According to the US National Electrical Code, GFCIs must be installed in every household and must be changed every two years. This has created a big market for GFCI in the United States.

As a large-scale export enterprise, Dongzheng has paid great attention to its patents. The company has obtained three invention patents and one outward design patent in the United States, as well as 18 invention, outward design and practical patents in China, says Chen Wusheng, president of Dongzheng.

From April 2004 to July 2004, Leviton filed a number of infringement lawsuits for its patents in New Mexico, Florida and California. These lawsuits were filed against four of Dongzheng's mahor US clients, including Nicor..

Dongzheng has denied allegations of patent infringement, and has claimed that Leviton filed these lawsuits out of fear and retaliation. It says Leviton intends to wear Dongzheng down with litigation costs and hassles in the United States, in the hopes it will retreat from the US market.

Chen says that unlike the other four US manufacturers, which offer conventional mechanical and electrical technologies, Dongzheng pioneered the leakage protective principle of electromagnetic movement setups. This technology meets and exceeds UL Laboratories' latest requirements, for which Dongzheng has gained a patent.

Chen says its products break through the limitations of conventional technologies and leave technical space for future far distance controls and communication controls. Leviton's conventional mechanical and electrical technologies can't achieve this, so Dongzheng's technology could revolutionize the leakage protection sector.

The company says its technologies are far more advanced than those of its US competitors, and are popular with American consumers, which is why they are rapidly taking over the US market. It says Leviton simply wants to use its patent rights as a tool to stifle competition.

Chen says that because Dongzheng operates solely in North America, the inaccessibility of the US market throughout the litigation process could severely impact its business. The company claims that its partners in the United States could also suffer.

In other patent lawsuits over DVD chips and MP3 chips, importers and distributors have tended to stay away from Chinese products in order to avoid the risk of infringement proceedings. Dongzheng claims that this is the reason Leviton chose to sue Dongzheng's clients in the United States instead of suing Dongzheng itself.

Chen says Dongzheng has always stressed the importance of innovation, and has employed several experts from the Chinese Academy of Science as technical consultants. It has also employed experts from Underwriters Laboratories Inc in the United States for testing purposes, and has established long-term technical partnerships with Shanghai Jiaotong University and Fudan University in East China's Shanghai Municipality.

Chen admits that the lawsuit has significantly affected its business. Sales have plummeted sharply, the company is suffering heavy losses, and has had to pay hefty legal fees. The company has vowed not to back down, however, and will fight Leviton to the end.

(China Daily 02/13/2006 page9)