Aigo wins damages in Toshiba patent case

By: Kathrin Hille

A Chinese court has ordered Toshiba to stop selling some of its notebook computers in China and pay Rmb200,000 ($31,000) in damages to Aigo for infringement of the Chinese electronics company’s patents on storage port technology.

Although Toshiba can appeal the ruling of the Xi’an People’s Court, the decision is a reminder of the growing intellectual property litigation challenges that multinationals face in China.

Historically, foreign companies used to go after Chinese rivals for alleged infringement of their intellectual property rights. But over the past few years, the number of patents filed by Chinese companies has soared and the number of intellectual property rights cases brought by Chinese firms against foreign plaintiffs are on the rise.

A 2009 settlement under which France’s Schneider Electric agreed to pay a Chinese rival $23m is being remembered as a milestone in this process. Many Chinese companies have started to recognise the value of IPR.

Beijing Huaqi Information Digital Technology, better known by its brand name Aigo, has long been selling a broad range of consumer electronics products including digital music and video players, cameras, tablet computers and storage devices. But the company only kick-started its IP strategy in 2005 and collected its first royalty payment in 2009.

“Apart from creating intellectual property rights, we need to learn how to use it,” said Huang Jin, Aigo’s head of IP. Ren Jianqing, Aigo’s head of standards, said: “Chinese standards are only very rarely recognised. With our economic model focused on labour-intensive manufacturing, we have not earned the respect we should get.”

The company started IPR litigation against multinationals in April 2010. Apart from suing Toshiba in Xi’an, it also sued Hewlett-Packard, the world’s largest PC vendor by sales, in a Beijing court.

Aigo accused the two foreign companies of violating patents it owns for USB Plus, a storage port technology used in many laptop computers.

In its complaint against HP, Aigo asked for damages of Rmb1m. HP has refuted Aigo’s claims of patent infringement.

But that case faces procedural delays as a co-defendant, a retailer from which Aigo purchased HP laptops, has not responded to summons to appear in court.

Aigo said laptops sold by other global brands also use its technology. It added that it had approached some of these companies about potential royalty payments but did not intend to sue every one of them.

“We expect the lawsuits against Toshiba and HP to have a much broader impact beyond the models referred to in the court cases,” said Mr Huang. “They cover patents for very basic technology widely used in almost every laptop. Therefore other PC makers are going to look to the rulings in these cases.”

Toshiba China declined to comment on the ruling.

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