No more police raids: China and Europe agree to talk

Negotiation over technology licensing continued at this year's Cebit trade show.

There was no dawn raid by police to seize patent-infringing MP3 players at this year's Cebit trade show -- but behind the scenes, haggling over technology licensing continued.

Raids by German police or customs officers had become a regular feature of shows such as Cebit, in Hanover, and IFA, in Berlin, in recent years, often at the instigation of an Italian company, Sisvel, which licenses patented technology essential to the manufacture of MP3 players.

At this year's Cebit, though, things were a little quieter, thanks in part to the intervention of a team of mediators from a new organization, the China IPR Desk, supported by China's Ministry of Commerce and the European Commission.

To avoid costly legal action, "we thought we would try mediation, bringing companies together that are not yet partners," said team leader Carlo Pandolfi. The process also allows them to advise companies that don't know about laws governing patent licenses, or don't have the language skills to negotiate a license, he said.

In principle, the mediators wait for companies to approach them, but in practice, said team member Wu Zhuomin, work began long before the show. "We contacted Chinese companies to let them know what the legal situation is in Germany, asking them to be sure their products don't infringe patents and other rights," he said.

Sisvel takes a similar approach, studying exhibitor lists ahead of shows to identify companies that are not yet licensees of its patents that are likely to display infringing products, said Thomas Hartmann, managing director of Sisvel Germany. Exhibitors that declined an invitation to sign a patent licensing agreement in previous years might well have had potentially infringing products seized by police on the opening day of the show, for use as evidence in legal proceedings, he said.

Pushing for criminal legal proceedings during the show is the only way patent owners can protect their rights, said Hartmann. Civil proceedings would be too slow, leaving companies free to exhibit and sell infringing products, he said.

Perhaps encouraged by the efforts of the Sino-European mediation team, "quite a lot of companies came at the beginning of the fair, saying 'we might have a problem, how can we solve it?'" he said.

But for others, mediation is just another way to stall for time, he said.

Until now, the focus for both sides has been on persuading Chinese companies to pay to license technology developed in the U.S. or Europe, but as the Chinese develop an increasing body of intellectual property of their own, they are starting to take an interest in licensing that to Western companies.

"Chinese people are also creative and developing things. Patents are being registered there," said Hartmann. "We are talking with quite big Chinese companies to evaluate their patents and license them," he said.

Over at the China IPR Desk, team member Wang Xuming also sees signs that the tables might one day be turned. "Chinese companies are very interested in whether we offer the service for Chinese rights holders," he said.

But perhaps the switch has already occurred: In 2008 a Chinese company, Huawei Technologies, was the top applicant for international patents under the World Intellectual Property Organization's Patent Cooperation Treaty, which allows applicants to protect an invention in a large number of countries with a single filing.

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Peter Sayer

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