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China Bogged Down in IPR Dilemma
China's motorcycle manufacturers are being urged to develop new technologies and products with independent intellectual property rights (IPRs) to ensure they survive cut-throat international competition from China's World Trade Organization (WTO) accession.

"In order to grab as much market share as possible, mighty foreign rivals, with advanced technologies and optimized-management models, may plot against domestic manufacturers by all means, especially IPRs," an official of the State Intellectual Property Office (SIPO) said.

Chinese motorcycle manufacturers, for example, face strong foreign challenges in IPR cases, despite their dominance in the Southeast Asian market.

Domestic motorcycle makers' lack of concern over IPRs could leave them at a disadvantage when facing such disputes, the SIPO official said, on condition of anonymity.

Japan's Yamaha Motor Co Ltd last week won a 900,000 yuan (US$109,000) court judgment against Tianjin Gangtian after accusing the Chinese company of producing and selling copies of its motorcycles.

That was one of the largest settlements in a Chinese copyright-infringement case.

Tianjin Gangtian was also ordered to stop making motorcycles under Yamaha's name, and to apologize through local newspapers to Yamaha.

Japan's Honda Motor Co Ltd on July 25 filed a petition through the courts to have a patent reconfirmed.

Honda argues SIPO wrongfully rescinded the patent.

The complaint is being contested by SIPO's Patent Re-examination Board.

There was no decision by Beijing No 1 Intermediate People's Court following the first hearing.

SIPO's board announced last year that Honda's right to produce a "mini motorcycle" was invalid because a patent had already been issued for a similar design.

Honda had received the patent in 1994.

Court sources said the board had reached its decision after studying evidence provided by Shanghai Feiling Motorcycle Co and Zhejiang Huari Co.

Honda has filed lawsuits against both companies, accusing them of infringing its patent rights.

Court and SIPO officials refuse to comment ahead of the judgement, which is expected in the near future.

Several international companies have filed lawsuits against China's patent bureau, says Ma Laike, deputy chief judge of the court's IPR division.

"In the first half of this year, nearly one-10th of 200 IPR cases involved foreigners," Ma said.

"All parties ... have received equal treatment and protection under Chinese law."

China's patent law, which once applied only to inventions, was expanded in July to include designs.

China produces about 11 million motorcycles annually, 9 million of which are imitations of Japanese products, indicate Japanese Ministry of Economy, Trade and Industry statistics.

"About 2 million of the imitation motorcycles are exported to Asian nations, and some are sold with only the trade marks changed," Japanese officials contend.

"They are totally groundless," a Ministry of Foreign Trade and Economic Co-operation official said, while commenting on Japan's statistics.

Honda's motorcycle sales last year in China dropped 27 per cent, while Yamaha's sales plunged 49 per cent, said an official with Honda's Beijing office.

"Imitation motorcycles are the main reason behind the declines," he said.

Honda's lawsuit is expected to prompt domestic motorcycle makers to change how they develop their products, analysts suggest.

Domestic manufacturers must end their strategies of "cloning" and "duplicating" motorcycles if they are going to beat international firms under the WTO's rules, says He Shibin, president of Chongqing-based Jialing Group.

New product sales account for 39 per cent of his company's total sales, and his firm's investment on technology innovation accounts for 4 per cent of total sales.

Lifan Motorcycle, a leading Chinese motorcycle manufacturer, established in October an IPR department.

The company by the end of last year had applied for 158 patents. Lifan holds 98 patents, and 26 authorized copyrights.

Lifan also established in Southwest China's Chongqing a technology centre, where it independently developed electric fuel-injection technology.

Other Chinese firms have made similar accomplishments.

IPRs under WTO rules are divided into two categories: Copyrights and industrial-design-related rights - including patents, new design rights, outer design rights, trade mark rights and manufacturer name rights.

China's motorcycle makers are usually accused of infringing on firms' outer design rights and trade mark rights.

(China Daily September 7, 2002)

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