Shoe Brands Should Have A Strategic Vision In The Face Of Patent Risks.

March 15th is the consumer protection day in China every year. On this day, it happens to be the CeBIT International Electronics Exhibition in Hannover, Germany. Many Chinese brands that aim to compete in overseas markets have set up their booths here.

However, during the exhibition, a number of Chinese exhibitors were searched by the German police. A large number of MP3 exhibits were seized, and some of the publicity posters were also torn off. The cause of the incident stems from a patent agency in Italy reporting to the local police about the alleged infringement of the products.

The vigorous display of the original brand show ended in hasty ending. Chinese enterprises suffered heavy losses: not only the investment but also the brand image was seriously damaged.

In recent years, with the acceleration of overseas expansion of China's own brand products, the trade friction between China and foreign countries has been further intensified. Various overseas trade barriers have gradually emerged: the "shoe burning incident" occurred in Spain, and Japan issued a "strict list system" with strict standards. The United States held high all kinds of "anti-dumping" sticks, all of which showed the sinister danger faced by China's brand internationalization.

The "patent storm" at this Hannover electronics exhibition highlights the greater risk of China's industry: intellectual property rights.

Foreign intellectual property rights protection has a mature profit model. China's intellectual property protection started late and the intellectual property rights of enterprises are relatively weak. On the contrary, foreign intellectual property rights protection has a long history, and patent holders have formed a very mature profit model: in the early stage of industrial development, they tacit approval or encourage consumers and downstream manufacturers to use free technologies; once the consumer market is formed, manufacturers also invest a lot of fixed assets investment in factories, production equipment and so on, and these patent holders will jump out for royalties, and the price will often be expensive.

Take China's DVD industry as an example, in the early stage of industrial development, the cost of each machine's export involves only 1 dollars. With the development of global DVD industry, patent fees increase year by year. By the year 2004, China has to pay a patent fee of up to $26 for every DVD exported to China. At the same time, the whole machine of a DVD is only about 90 dollars.

Thus, under the blow of foreign patent rods, China's DVD brand declined rapidly, almost completely annihilated, a large number of capacity can only be used for overseas brands to do foundry, get a little processing fees, a lot of profits have been taken away by patent holders and brand manufacturers. The current situation is: China has no voice in the DVD industry, basically quit the stage of competition.

At present, China's digital cameras, HDTV, MP3 and MP4 industries are faced with similar huge risks.

When it comes to overseas patent protection, there is another force that can not be ignored, that is, the so-called "patent pool" company.

The patent pool company represents a patent holder of a certain technology standard. It combines patent holders and systematically adopts professional means to deal with patent users.

For example, the 6C alliance, 3C alliance and MPEG LA of DVD industry belong to such organizations.

In order to achieve patent protection, the patent pool company has established special forces to collect market information, negotiate with the receiving party, charge patent fees and patent lawsuits.

Originally, patent fees were undeniable. But by the end of 2006, "a DVD patent invalidation case by Chinese professors and PHILPS" seemed to reveal the reality that some of the patent pools were garbage patents, invalid patents and unnecessary patents, but they were also packaged by patent pool companies as a whole to receive patent licensing fees.

This is because patent pool companies often collect hundreds of patents in order to achieve the scale effect. Even if they want to sue, they will hardly have the energy to study one after another, even if they want to sue. They will often be forced to accept the package price of the patent pool company.

Therefore, in the face of increasingly complex international trade environment, Chinese enterprises should not only focus on production, but also pay attention to studying international rules and attach importance to the strength of industrial alliances, so that they can be in a favorable position in international competition.

The essence of intellectual property protection is the way of market protection comparing with the way of earning profits by collecting patent fees. The greater interest of patent holders lies in market protection, that is, borrowing legal constraints to strike the market of competitors.

We often see that patent protection is used as an example of market competition. For example, the "SigmaTel prosecution of the Zhuhai force" case in the MP3 industry has been a hot topic, rather than a patent dispute.

When SigmaTel first announced the prosecution of Zhuhai force in January 4, 2005, it was only 2 days from the opening of the CES. In March 14th, SigmaTel also made a high-profile complaint to the US International Trade Commission (ITC) against the Zhuhai force, which is at the time of the Hannover International Exhibition.

According to industry analysis, SigmaTel obviously chose the right time: CES and CeBIT are the largest international ordering companies in the MP3 industry. Every year, the MP3 chip manufacturers can receive a large number of orders.

The prosecution of Zhuhai force before the exhibition has really played a role in interfering with its business judgement for the MP3 manufacturers who want to enter the US market, so that the market of Zhuhai force has been greatly affected.

Therefore, sometimes the meaning of property protection is not the result, but the process. If a patent holder wins the lawsuit, he will naturally get a large amount of compensation; if he fails to win the lawsuit, he will block the competitive brand outside the local market for at least a long time.

When Chinese brands respond to patent risks, they need to strategically face the technological encirclement and suppression of overseas markets. How can Chinese enterprises break through the competition of patent disputes?

This requires that the management of Chinese enterprises must have a strategic vision and layout when formulating an enterprise development plan.

Concretely speaking, we must do well in three points: first, we must attach importance to vertical cooperation.

Patent holders and technology users are rivals in the collection of royalties, but they share common interests in promoting industrial development.

Chinese enterprises can actively develop technological cooperation with patent holders and enhance their technological development capability.

In 1996, when China's air conditioner market was still fixed under the fixed speed air-conditioning system, Hisense resolutely decided to launch the inverter air conditioner. This decision was supported by Japan's SANYO, which has many patent technologies of inverter air conditioner.

SANYO not only provided Hisense with production lines, testing equipment and core components, but also committed to actively helping Hisense cultivate talents in frequency conversion technology and develop Hisense's own frequency conversion technology.

Obviously, SANYO can feel that if the inverter air conditioner can open the market in China, it will also be good for its own development.

After years of efforts, inverter air conditioner has gained popularity in the market.

Hisense has developed from the initial dependence on Japanese technology to the joint development of frequency conversion technology with Japanese SANYO.

Now, Hisense has not only firmly established the image of "the first brand of inverter air conditioner" in Chinese market, but also greatly improved the level of technology research and development, and even sold products to Japan.

We are pleased to see that the patent technology of foreign countries has not only become an obstacle, but also has greatly contributed to the upgrading of Hisense's own technological capability.

Second, we should pay attention to horizontal alliances, and manufacturers within the industry should join forces to increase their bargaining power. Industrial alliances can have a significant impact on the selection of technical standards, thereby enhancing the bargaining power of downstream firms.

Such as: the digital high definition television industry's current bubbling "liquid crystal", "plasma" competition, from manufacturers support is very important; who can get more manufacturers support, means that can gain greater market, and the chance of winning finally will increase.

Manufacturers can form alliances at the right time, while promising production support, and require technology holders to give rewards in the future.

Even if technical standards have been formed, industrial alliances can enhance their bargaining power by actively supporting new alternative technologies.

The fundamental solution is that Chinese enterprises should actively develop their own technological strength. With their own industrial technology, the initiative of enterprises in patent negotiations will be greatly improved.

In this regard, some Chinese enterprises have set an example.

For example, in the face of the 3G technology that will have great application, ZTE does not locate itself in the simple hardware equipment manufacturer, but actively develops its own technology and improves the market response capability.

Although 3G originated from the patent technology of Qualcomm Corp in the US, ZTE has obtained a large number of two development patents through chip R & D and TD mobile protocol station software and commercially available chips.

In turn, the two development patents can be exchanged with the first patent, which greatly reduces the risk of patent.

In the long run, Chinese enterprises should be positioned as "rules makers and participants" rather than followers.

In this respect, the Patriot chess of President Feng Jun of Huaqi is deeply enlightened. This kind of chess adopts the chess rules familiar to Westerners, but it adds to the essence of Chinese chess: the "cannon" of each other.

Under the background of globalization, Chinese enterprises must grasp the initiative and the right to speak while adapting to international rules and accepting international rules.

Otherwise, a great country can only become a factory of others.