October 1, 2012

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Road Warriors

Victory for Lifetime Products in a Chinese Court

Tom Haraldsen

October 1, 2012

There’s an old sports axiom that says if a team can win two-thirds of its games at home, and half its games on the road, they’ll be champions. But winning road games in business, particularly when it involves litigation, is often much harder to achieve than a championship.

So it was beyond amazing when Clearfield-based Lifetime Products recently scored a victory in a patent-infringement case against a Chinese company—in a Chinese court.

The Shanghai First Intermediate Court entered a judgment against three co-owned Chinese companies—Zhejiang Bestem Furniture Co. Ltd., Zhejiang Bestem Machinery Co., Ltd. and Hangzhou Bestem Furniture Co, Ltd. Last spring, the court found them guilty of infringement against a Lifetime folding utility table design that the company had invented and patented. As a result of the judgment, the court ordered Bestem to pay about $32,000 in restitution to Lifetime.

Though the Chinese co-op, known collectively as Bestem, is appealing the decision, the verdict looks to be a lock.

“We are thrilled with the Chinese court’s finding,” said Lifetime President Richard Hendrickson in a release. “More important to us than the monetary compensation is the significance of this achievement of successfully enforcing our Chinese patents in a Chinese court for the very first time.”

An Aggressive Approach
Patent protection is at the heart of Lifetime’s business plan. As a company that prides itself for innovative design and production, it’s “always been interested in protecting that innovation,” says Tim Schade, company general counsel.

“Often outside the U.S., particularly in China, we believe that you not only need to get patent protection, but to enforce those protections,” he says. “We’ve taken similar action in Australia, but most of the infringement we’ve seen has come from China.”

In this case, Lifetime officials saw Bestem products at both a trade show in Las Vegas and one in China using the same table edge and corner designs as those Lifetime had invented and patented.

“We did the investigation we felt necessary over there and started a couple of lawsuits,” Schade explains.

There’s both good and bad aspects of litigation in China, he says. The courts don’t require discovery—which means lawyers need to have their ducks firmly in a row before filing a lawsuit. The good part about that, Schade says, is that the discovery aspect of any suit is usually the most expensive and time consuming. “You can get things done much quicker and cheaper in Chinese courts,” he says. “The timeframe on this case was just over two years.”

Another aspect working in Lifetime’s favor was history. Patent infringement cases are a growing problem in China, though intellectual property protection is what Schade calls “a work in progress” for the courts. Most of the patent violations are between Chinese companies themselves. “It’s happening more and more frequently, so their courts are getting more comfortable with it,” he says.

Lifetime Products prevailed because it aggressively protected its patent claim, using local legal counsel in Shanghai that Lifetime found through the U.S. Consulate.

“We didn’t really have to stretch and make any profound arguments,” Schade says. “It was fairly obvious that they were using our intellectual property, and we matched up their product to our patent claim.”

Lifetime has continued its relationship with the Chinese attorneys, planning to use them, if necessary, for future patent protection cases.

Bestem has appealed the decision, and a hearing was slated for late September with a final decision expected in December. Schade doesn’t expect the verdict to be reversed after the appeal.

The Value of Patents
The lesson learned here that all companies can implement, Schade says, is a simple one.

“You need to seriously look at getting rights outside of the U.S. for your products,” he says. “Often companies don’t because of the cost and logistics, but they should expand their coverage. It’s well worth it.”

As important is “being diligent and doing your research, and being willing to enforce your rights. There’s value in having patents, sometimes simply to deter people from even thinking about stealing your ideas. But you need to take action when those rights are infringed upon. It sets the precedent that you are willing to follow through.”

Lifetime Products is a global brand that works with designers and manufactures in foreign countries. Hendrickson says the company remains committed to working with Chinese companies as well as retailers in the country.

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