The Fight Between the Ant and the Elephants in the Chinese LED Industry

A small Chinese LED manufacturer Zhongshan Sover Lighting Company (Sover) patent infringement plaintiff filed against four leading industry players in China has been compared to as the battle between an ant and the elephant, according to Chinese-language media

Many company owners in China’s lighting city Guzhen Town have been discussing Sover’s lawsuit filed against top companies in the industry. It will be difficult for the industry’s “black horse” and “new rising star” Sover to challenge well- established industry players. Despite the negative descriptions applied to Sover’s struggle against large lighting enterprise, the company has not abandoned taking legal action against lighting enterprises.

Sover’s had enough with larger players patent infringement behavior

“I know a lot of people are pessimistic about Sover’s patent lawsuit, but we will continue to pursue this lawsuit,” said Wei Xie, General Manager of Sover. The aim of the company is not compensations, but for the company to protect its patents, and fight for justice.

According to understanding, a large number of small manufacturers in Guzhen have patent protected products, but many of their products patents are infringed by large manufacturers. This is very common in the industry, patent infringed products include crystal chandeliers, and other special handmade lights. Yet, most small manufacturers have endured these patent infringements in silence. “I believe Sover can win the lawsuit because of its just cause, even ants will be able trip an elephant over if it acts as a swarm and collects its strength,” said Xie.

“Sover is not trying to provoke lighting conglomerates, but has found the patent infringement cases no longer bearable,” he added. Losses Sover has incurred from other manufacturers patent infringement actions are incalculable. The company owns 1,500 patents. Hence, after conducting a nationwide market survey since second half of 2014, Sover decided to take the difficult path of taking legal action to protect its rights.

As of July 2014, more than 117 companies in China had infringed Sover’s patent rights, out of these 89 companies were based in Zhongshan, Guangdong. Sover has resolved 24 of these patent infringement issues through Zhongshan Intellectual Property Rights Center.

“Four of these companies have shown no remorse, and believe they cannot be challenged because of their leading industry status,” said Xie. “We insist on suing these companies. Since these are top four residential lighting manufacturers in China, it will be difficult to win this case, which is why we view it as the first decorative lighting patent infringement lawsuit in China.”  Sover will not just be suing the patent infringing companies, but also distributors that have been selling patent infringed products. The Guangdong People’s High Court’s Intellectual Property Court is processing the case.

Decorative lighting manufacturers divided on lawsuit case

Sover has won numerous innovation and lighting design awards, and the company Chairman Wei Xie is confident it can win the legal battle against “elephants” in the industry. However, many smaller lighting manufacturers are less optimistic.

“For a manufacturer, whose annual revenue is less than RMB 10 million, it is impractical to sue a manufacturer 10 times larger than it,” said a small decorative lighting company owner, who declined to be named. “For these smaller manufacturers they cannot afford the financial resources, and time invested in these lawsuits.” The manufacturer admitted it had used other decorative lighting manufacturers design for “reference” and it is difficult to determine whether it infringed the other company’s patents, economic losses are also incalculable. The shared view among many manufacturers is it is better for smaller manufacturers to abandon the struggle against larger manufacturers. Most people are in the lighting industry to get a living, patent infringement lawsuits can ruin relationships with larger manufacturers, and there is no guarantee that plaintiffs can win the lawsuit.

A small number of manufacturers believe, smaller manufacturers will definitely lose such lawsuits. Copying is very common in the decorative lighting industry, and it will be difficult for most Chinese lighting companies to continue business if patents are taken seriously. Survival is the way under the current economic environment, and any company that can stimulate economic growth is a good company.

Although, a small number of manufacturers justify patent lawsuits as protecting innovation and their own rights and pride. Even if manufacturers win the lawsuit, it might have little impact, since patent infringement issues are a long term problem in the industry.

Most manufacturers empathize with smaller manufacturers lack of patent rights

The majority of small manufacturers have decided not to voice their concerns, or protect their own rights. Xie believes this has been the cause of blatant patent infringement cases in Guzhen.

Decorative lighting has a very low entry level in Guzhen’s lighting industry. It is possible for three to five people to set up their own decorative lighting factory. Many manufacturers have achieved rapid growth by copying competitors products, and quickly withdrawing from the market. The costs of illegal copying is low, and it is difficult for manufacturers to protect their patents. Even when these manufacturers are caught, they usually will reappear on the market as a different company very soon.

“This is why we find large manufacturers infringement of smaller manufacturers patents unacceptable, and why we are so angry,” said Xie. 

Small innovative companies have insisted on innovation, but their fruits of labor are not protected, said Xie. Most people will emphasize with smaller manufacturers. “In an age where the trend is innovation, protecting our patents has become increasingly urgent,” he added.

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