The Chint V. Schneider Settlement: 157 Million Reasons to Believe Chinese Patent Holder's Rights Have Muscle

15 April 2009 Publication

Legal News Alert: China

Today there was drama in the Zhejiang High People's Court at the beginning of the oral hearing of an ongoing dispute between Chint Group Corp (Chint) and Schneider Electric Low-Voltage (Tianjin) Co., Ltd. (Schneider) (Chint v. Schneider). Schneider, the French-based leading Western manufacturer of low-voltage electronics such as switches and circuit breakers, has settled its patent lawsuit with Wenzhou-based Chint, its top Chinese competitor, for RMB 157 million (approximately U.S. $23 million). Schneider has battled with Chint on multiple continents to restrain Chint’s presence in the global marketplace. The sum is approximately half of the damages (RMB 334 million) previously awarded to Chint by the Wenzhou Intermediate People's Court in late 2007.

Chint initiated a lawsuit on its home turf in 2006 with the Wenzhou Intermediate People's Court against Schneider for patent infringement of one of its PRC utility model patents. During approximately two years of legal proceedings, Chint successfully defended the validity of the concerned utility model patent before the PRC Patent Reexamination Board and succeeded in the patent infringement lawsuit at the Wenzhou Intermediate People's Court. The original RMB 334 million in damages was (and still is) the largest amount ever rewarded in China for patent infringement, and has aroused great attention in the industry, especially in view of the fact that the concerned patent was a utility model patent (which, under Chinese law, is not examined on its substance during prosecution but is registered with a substantive examination deferred until enforcement and which, accordingly, may be viewed as providing "weaker" or less certain protection of intellectual property rights than an invention patent). Schneider subsequently appealed the lower court’s ruling to the Zhejiang High People's Court.

By Chinese standards, a RMB 157 million-settlement amount is unprecedently high and will certainly encourage more patent holders to aggressively enforce their rights in China.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues.

If you have any questions about this alert or would like to discuss the topic further, please contact your Foley attorney or the following individuals:

Sharon R. Barner
Chair, Intellectual Property Department
Chicago, Illinois

Catherine Sun
Chair, Asia Practice
Shanghai, China
86 21 6100 8900

Yan Zhao
Senior Counsel, Intellectual Property Department
Shanghai, China
86 21 6100 8900

Foley & Lardner LLP is licensed to operate in China as a foreign law firm. Under Ministry of Justice regulations, foreign law firms in China are permitted to advise clients on certain aspects of international transactions and to provide consultation concerning the impact of the Chinese legal and regulatory environment; foreign law firms in China are not permitted to practice Chinese law. The content of this communication does not constitute an opinion on Chinese law nor does it constitute legal advice, but is based on our research and our experience advising clients on international business transactions in China.

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