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November 22, 2005

GM Piracy Case Ends Shrouded In Mystery

Piracy of products by companies based in China has long been a problem that has vexed U.S. intellectual property owners. Several years ago, General Motors attempted to tackle the problem head on when it (in partnership with Korean automaker Daewoo Motor Corporation) filed suit in China against Chery Automobile Company, a car manufacturer based in China, accusing Chery of counterfeiting the design of a GM vehicle.

GM claimed that the design of Chery’s mini-car contained “extreme similarities” with a car developed and sold by Daewoo. According to the suit, the claimed similarities extended to both exterior and interior design features, as well as interchangeable parts. GM further contended that these similarities did not result serendipitously, but occurred because one of its engineers went to Chery with design plans in hand.

With little fanfare, it was announced recently that the parties have reached “an undisclosed settlement” of GM’s suit. The Chinese government had apparently encouraged GM to resolve the matter. Because the settlement terms have not been revealed, it is not presently known whether Chery had to pay for its alleged infringement or whether it is barred from using the purportedly infringing design. Therefore, it is also not known if the initiation of legal action by GM against an alleged counterfeiter and the settlement of that action will have any deterrent effect on other potential pirates. Is this a good way to address piracy in China? Is there a more effective way?

Today's Blogger:  Bob Sloss

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