Chinese Company Sues American Retailers For Selling 'Knockoffs'

from the yes,-read-that-again dept

Jake points us to a story that (as Jake notes) makes you read the headline twice to make sure you got it right: Chinese Company Sues in U.S. to Block "Knockoff". It's not really "knockoffs" that they're suing over. It's a patent infringement claim from Changzhou Asian Endergonic Electronic Technology Co., which is upset that Best Buy, Wal-Mart and some other retailers are selling a competitors' dashboard mount that it claims is covered by its own patent.

Now, there are a bunch of points worth discussing here. First, apparently this is the first such case of a Chinese company (based in China) suing in the US over a patent infringement claim (a claim that really surprises me). Considering the long history of China copying (blatantly) American products and then reselling them, it's really quite fascinating to see a Chinese company now complain about the "reverse." Of course, as we've been highlighting recently, there's been a big push in China to build up a belief in patents. It seems this firm has already learned the basics of the American patent system: it's suing in Texas, of course!

The other odd thing about this case is filing the lawsuit against the retailers. The company is also suing the manufacturer (another Chinese company) which makes sense, but I've never understood why going after the retailer makes sense. Best Buy, Wal-Mart and others shouldn't need to investigate every product they sell to determine whether it violates someone else's patents. Let that be handled between vendors. Dragging the retailers into the lawsuit is just a waste of resources.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    identicon
    Anonymous Coward, Jul 17th, 2009 @ 11:07am

    Mike:

    As you well know, patents cover the rights to make, use or sell. Ergo, retailers can be sued for patent infringement by selling an infringing product.

    Now, a court will typically only be swayed if letters were sent to Wal-Mart prior to the suit being filed; i.e., Wal-Mart is not responsible for determining whether all the products it sells are non-infringing, but typically they will have an indemnification clause in supplier contracts that covers infringement.

    By belief is that Wal-Mart will likely be dropped as a defendant in this case (assuming they did not ignore warning letters). Unless, of course, Wal-Mart got letters, had a reasonable belief the products in question did not infringe, and ignored the letters.

     

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      Casey, Jul 17th, 2009 @ 12:52pm

      Re:

      Why would Wal-Mart simply stop selling a product when all it received was a threatening letter? IANAL, but I believe one of the few things that would compel Wal-Mart to stop selling the product in question would be an injunction issued by a court. Wal-Mart simply stopping the sale of any given product upon receipt of any given threatening letter would set a bad precedent and would set off a tidal wave of these things (IMO).

       

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      Anonymous Coward, Jul 17th, 2009 @ 2:35pm

      Re:

      I think in this case "sell" refers to the manufacturer selling goods to the retailer not the retailer selling to the customer.

       

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        Anonymous Coward, Jul 20th, 2009 @ 12:41pm

        Re: Re:

        Sell refers to anyone selling an infringing product. It does not need to be a manufacturer selling the infringing product. In fact, one strategy is to go after distributors and retailers and not after the manufacturer.

         

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    Anonymous Coward, Jul 17th, 2009 @ 11:12am

    Mike, you need to get a slightly broader brush here. You effectively claim ALL chinese as patent offenders, which is sort of like calling all black people dope addicts. Please!

     

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    Dark Helmet (profile), Jul 17th, 2009 @ 11:24am

    ...

    "it's suing in Texas, of course!"

    I can just see it now.

    Texan Judge: "Awww, yew liddle squinty fellers 'r CUTE. Tell yew what, we'll only charge yew half of what we normally charge fer a verdict in yer favor."

    "Dragging the retailers into the lawsuit is just a waste of resources."

    Not to mention that, ostensibly, these manufacturers either already do or would at some point like the opportunity to sell their product in these same retailers. Doesn't this sort of action build up animosity to potential customers?

     

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    :Lobo Santo (profile), Jul 17th, 2009 @ 11:43am

    Eulogy

    Free Market:
    You will be missed--you were always so lively, so imaginative; quirky and unpredictable but oh-so-much fun. Seriously, we wish your bitchy sister "Intellectual Property Suppressed Market" had died instead of you.
    Good night, sweet lady, good night.

     

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    Anonymous Coward, Jul 17th, 2009 @ 11:44am

    In Soviet Russia, China sues you for patent infringement.

     

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    Anonymous Coward, Jul 17th, 2009 @ 11:51am

    Heh... almost a "Man Bites Dog" headline...

     

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    duceolsen, Jul 17th, 2009 @ 11:51am

    lol

    I read the headline and could have swore this would be something from the onion.

    I laughed

     

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    Anonymous Coward, Jul 17th, 2009 @ 2:27pm

    there would first hqave to be established proof(either court order or the company aditting to it) before they could be liable as retialers for copright infrigment, it's not like the dmca where it's guilty unless protested to

     

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    Shake, Jul 17th, 2009 @ 3:39pm

    HAR HAR HAR HAR HAR :))

    I hope they boot the claim and ask them to fight it out in China. Teach the stealing Chinese a lesson. And oh! I am not saying that every Chinese out there is a thief but most of them are! I saw Schiphone on ebay which is a rip-off of the Iphone.

     

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    This.is awesome, Jul 17th, 2009 @ 3:45pm

    This is great news

    Let's hope china and Russia sue the hell out of every American that they can . Nothing will wake up congress like a massive international idea patent thicket :) I can see the day when someone on Capitol hill realizes what a mess we've made by allowing ownership of ideas.

     

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    Anil, Jul 17th, 2009 @ 5:51pm

    Re.

    Mike,

    Your insinuations are absurd.

    1. If Chinese have been accused of copyright violations - why should it preclude them to sue a US company? This is like saying if a person is a thief, it is OK for others to steal from him!

    2. Re. suing the retailers, I think it is perfectly OK. Do you know that it is a crime to sell stolen goods! You cannot wash off your hands saying that someone gave you stolen goods and you were merely reselling!

    I think you need to read something more than "gossip" magazines before writing something stupid like this.

    Best regards;

     

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      Anonymous Coward, Jul 17th, 2009 @ 6:00pm

      Re: Re.

      "You cannot wash off your hands saying that someone gave you stolen goods and you were merely reselling!"

      Not if you didn't know they were stolen.

       

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      Anonymous Coward, Jul 17th, 2009 @ 6:02pm

      Re: Re.

      "Do you know that it is a crime to sell stolen goods!"

      Not if you didn't know it was stolen.

      "I think you need to read something more than "gossip" magazines before writing something stupid like this."

      I think you need to think and apply common sense before you type something stupid, or at least take a law class. If you didn't know (or should have known) that something was stolen you're in the clear.

       

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    staff1, Jul 18th, 2009 @ 7:07am

    blatantly

    "Considering the long history of China copying (blatantly) American products and then reselling them..."

    so it's ok for US firms to do that to other US firms, but not the Chinese?

    "I've never understood why going after the retailer makes sense..."

    In US patent law the patent holder has the exclusive right to make, use and SELL the invention. If you don't understand patent law (which you obviously don't) do us all a favor and avoid commenting on it.

     

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      Anonymous Coward, Jul 18th, 2009 @ 9:37pm

      Re: blatantly

      "In US patent law the patent holder has the exclusive right to make, use and SELL the invention. If you don't understand patent law (which you obviously don't) do us all a favor and avoid commenting on it."

      You must have a reading comprehension problem. He isn't arguing about what the law is, he's arguing about what makes sense. If the law is so stupid such that a retailer selling thousands of products can be fined, without warning, for unknowingly selling one product with many components where only one patented component exists in the product then the law desperately needs to change. Such a law makes no sense. Please don't disrespect people just because you think you have a point when in fact you do not. It only makes you look foolish. And even if you do have a point (which you don't) you can be respectful about it (and I'm disrespecting you because you started to disrespect Mike first for no reason so I'm just returning the favor by pointing out your apparently poor reading comprehension abilities).

       

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    siliconbandit (profile), Jul 18th, 2009 @ 10:50am

    Of course, as we've been highlighting recently, there's been a big push in China to build up a belief in patents. It seems this firm has already learned the basics of the American patent system: it's suing in Texas, of course!

    The Chinese companies are likely aware of the west's viewpoint on knock offs and deciding to take a shot.
    Including Wal-Mart et al is a nice method of making sure word gets around faster. I'm guessing the retail chains will be dropped at some point.

     

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    Bloodyscot, Jul 19th, 2009 @ 7:30am

    The real problem is the patent laws or maybe the lawyers

    Patent laws are really hard to fully understand with functional and non-functional designs. Then there is the problem of similar or overlapping patents being issued that should not have been. The Eastern District of Texas is the most popular jurisdiction for patent litigation, I'm guessing thats because its easier to win there and their lawyers know this. With patents getting longer and rules being lower for issuing patents this will become big money for lawyers in years to come. Since Chinese companies are on both side of this, there maybe a bigger reason to include the US retail companies in this.

     

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    Anonymous Coward, Jul 20th, 2009 @ 6:23am

    My comment is so far down that it probably won't get read, but it makes sense to file against the retailer in one situation.

    You solely request an injunction against the retailer preventing them from selling the infringing products.

    This strategy worked when Sharper Image received an injunction barring them from selling products built with counterfeit Super Bright LED's. Sharper Image paid no fines, they just couldn't sell the infringing product. For the patent owner, this technically was a win since they couldn't go after the chinese company making the counterfeit LED's.

     

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