29 March 2019

Does recent JLR court decision mean China is taking IPR seriously?

Last week Jaguar Land Rover (JLR) won a crucial court battle in the Chinese Courts against local manufacturer Jiangling Motors for breach of their intellectual property rights (IPR) by producing the Landwind X7 SUV which was a close replica of JLR’s Range Rover Evoque design.

The Beijing Chaoyang District Court upheld JLR’s claim that the Landwind had utilised or copied at least five unique design characteristics causing confusion to the average customer as to which product they were buying.

The decision refers to the original X7 dating back from 2014 which to many was a blatant copycat of the Evoque. A subsequent facelifted version of the X7 dialled down the Evoque design cues.

JLR had previously tried to stop Jiangling manufacturing the X7 but in a gravity defying decision the court supported the X7 saying it had not breached JLR’s IPR. JLR had its patent on the Evoque’s shape cancelled in China in 2016 after a court ruled it was void because the company had patented it outside China first. The decision sent a chill through the auto industry giving a message that Chinese manufacturers has almost carte blanche to copy designs. The business environment needs trust and confidence which will erode if you are ripped off.

Hence the most recent Chinese Court decsion is regarded as a landmark ruling. It indicates the Chinese judicial system will enforce lawful IPR to protect design and brand integrity. In fairness the Chinse system has a well designed and cost effective court process for protecting IPR. It is how the court operates to ensure protecting design law.

As said in a statement by Keith Benjamin, Jaguar Land Rover's legal affairs chief. 'This ruling is a clear sign of the law being implemented appropriately to protect consumers and uphold their rights so that they are not confused or misled, while protecting business investment in design and innovation'.

Jiangling must pay JLR compensation. The facelifted version of the X7 can be sold but Landwind cannot produce the original design having a similar shape to the Evoque including the roof and windown tapering; near identical tail lights and the character lines on the side panellings. The X7 costs the equivalent of 17,100 euros in China, compared to almost 50,000 euros for the Evoque.

JLR's China deliveries fell 22 percent to 115,000 last year after they faced quality problems that caused Jaguar and Land Rover owners to protest outside its China headquarters in Shanghai. Disputes with the local dealers and recall issues have added to JLR’s Chinese woes. A number of European manufacturers have been subject to recalls which some say were groundless.

However, one swallow does not make a summer.There must be consistency in Chinese court decisions about protecting a company’s IPR. The Chinese track record has been to back the local manufacturer against the overseas competitor. Fiat lost a case against Great Wall in 2008 after a court ruled that the GW Peri was not a direct copy of Fiat's Panda, despite strong similarities. Fiat was ordered to pay court costs. In 2016 Porsche contemplated a court action against Zotye whose T700 model had alledgedly copied the Macan design, however, the German manufacturer did not pursue the claim.

The JLR decisions is not unique but certainly rare; German coach-maker Neoplan in 2006, after a court ruled that the A9 bus made by the Zonda Industrial Group was a direct copy of the Neoplan Starliner. Zonda was ordered to stop making and selling the bus and ordered to pay 20-million-yuan compensation to Neoplan.

If the latest JLR decision is a not a one off then it is good for business, trust and confidence in China and their legal process for IPR. Creativity and protecting intellectual property rights is vital for business well being whether auto, tech; music or fashion. Hopefully, China is maturing as an international trader and realising that protecting the lawful owner’s IPR is the lifeblood to good busisness. Arguably, even more so as the auto industry is increasingly tech driven and seeking international standards for self driving vehicles.As the late US President Ronald Reagan said during negotiations with Russia’s President Gorbachev about nuclear disarmament “trust but verify”.

Publisher: Shaun Hunter

Global News Editor: Trisha Chowdhury

Legal Affairs Editor: Julian Wilkins

Chief Executive: Peter Wooding

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