Court win in China ‘worth it’
When BFM Fittings chief executive Blair McPheat decided to legal action against two businesses in China that were knocking-off his company’s patented industrial pipe couplings, many people told the Auckland businessman he was wasting his time.
But 18 months after deciding to protect the company’s patents, he has no regrets.
A Chinese court ordered two defendants, one in Guangzhou and the other in Suzhou, to sign personal undertakings that mean they could be subject to prison terms if they reoffend.
The counterfeiters were ordered to pay damages, and their tools, moulds, raw materials and finished products were destroyed.
BFM employs 30 staff and the result disproves the common assumption that it is impossible for smaller businesses to defend intellectual property rights in China.
‘‘A lot of people said ‘don’t be stupid McPheat’. A lot of people said we’d be wasting our time, but we know we have very good patents and we thought ‘stuff it’ there is a serious principle at stake here.’’
The company’s couplings are designed to be fitted by hand, without tools, but to still provide a complete seal.
‘‘We have got a fair bit of intellectual property. It looks like a simple product, but it is difficult to make.’’
AJ Park lawyer John Hackett estimated about 70 per cent of the world’s counterfeit goods originated from China, but said it was getting easier for businesses to defend their intellectual property.
‘‘Initially, China just paid lip service to intellectual property rights.
‘‘Certainly their laws have tightened up. We are seeing courts – particularly in the likes of Beijing, Shanghai and Guangzhou – giving good decisions.’’
McPheat’s advice to businesses that find themselves in the same boat is to listen to local partners and find a good, local legal representative.
BFM used law firm Wan Hui Da on a recommendation. ‘‘Your representation has got to be local, and it has got to be good.
‘‘Once we got on to them it was quite quick. We went to the hearing and it was all over in three or four hours.
‘‘We certainly had to do a fair bit of documentation to make sure it was all clear. You have to make sure your I’s are dotted and your T’s are crossed, that’s for sure.’’
The counterfeiters were not costing BFM a lot of business as their knock-offs were of poor quality and were generating complaints from customers, and the legal action was expensive – McPheat doesn’t want to say how expensive – but he said it had been worthwhile.
‘‘Now that we have set a worldwide precedent we are away. It shows we can win anywhere. If it happens again we have got something we can smack them over the head with.’’
Hackett said customs officers in New Zealand were doing a good job intercepting counterfeit goods coming here. ‘‘They are probably only get about 30 per cent.’’
But the same could be said for illegal drugs, he said.