Intellectual Property in China
Asked to give a presentation for the USPTO Roadshow in Seattle on November 16, 2017, Shane commented on his experiences as an inventor to the audience. We are presenting the speech as a blog. You can also click the link to find the USPTO presentation on their website. Â https://www.uspto.gov/sites/default/files/documents/11162017_Seattle_Roadshow(ShaneChen).pdf
I came to the US from China almost 32 years ago. I created a business named CID, Inc. and started inventing and making scientific instruments for plant physiology scientists. It was a nice, but small niche market.  There were no patent infringements except from one company in the UK. My life was peaceful. Then I started inventing consumer products for my new company, Inventist Inc. That was about 16 years ago.
As soon as I started introducing my new products into the market I started dealing with knockoffs from China that impacted my business. So far, 7 of my inventions have been copied and sold worldwide. The popular ones are: a 3-wheeled scooter that I licensed to Razor scooters called the Powerwing. The Solowheel, an electric one wheeled vehicle you may have seen people riding around in the streets on. And the extremely popular hoverboard. But the ones that have caused fires are not mine. In fact, you probably have never seen mine: the original hoverboard called the Hovertrax which I later licensed to Razor.Â
99% of the hoverboards you have seen are illegal knockoffs. Based on a Chinese government report, there were over 1000 hoverboard makers who exported 4.6 billion dollars of hoverboards in 2015. The number didnât go down in 2016 or 2017. For the 7 infringed inventions, I successfully sued many factories in China in the past 16 years. So, the Chinese patent system is working.
The government has been trying hard to protect intellectual property. Things are improving every year. Now they have added specific intellectual property courts in the major cities. My last case was in an intellectual property court. I heard that the penalties will be increased on infringers. For the products that are not too popular, the problems were solved after I sued a few infringers.
But for the popular products it has not worked. The problem is that there are too many infringers. You know China is the largest product maker. All of the factories are constantly seeking products to make. You can sue a few but there are many more. Often, when you win a lawsuit and shut the factory down, they will reopen again with a different name. Two Chinese judges on two different cases talked to me on the phone to explain the situation in China. They advised me to help create jobs by licensing to the factories instead. I realized itâs impossible to stop all of them by suing.
For a legal system to work we must assume most people obey the law. You can imagine if half the citizens donât follow the law in our community, our police simply cannot protect the rest of us. It becomes a war, which is what I am facing in China for intellectual property.
However, I am not saying that half the Chinese factories donât follow the intellectual property law. Itâs just that they donât understand it. For one thing, many of them are confused about the definition of âinventorshipâ.
Iâve met a factory owner who said, âour engineers didnât copy your product, we only saw your Hovertrax Kickstarter project and then created the same on our own.â Also, someone showed me a Chinese news broadcast talking about a young inventor who invented the electrical one-wheel vehicle. They reported that the he saw my Solowheel on the web and then he created his own. So, he is considered an inventor of Solowheel, too.
Furthermore, much of the Chinese public donât know that stealing intellectual property is a crime. Iâve also found out that most factories donât even know where inventions come from. They make something because they see their neighbor is making it and figure that it must make money, so they copy the copies.
I donât know if you have heard this, but often in one area or town, everybody makes the same thing. I saw a town where everybody makes ties. 80% of the ties made in China come from there. The tie you are wearing today may have come from there.
In another town, everybody either does aluminum extrusion or makes lingerie. And, the 1000 hoverboard makers are mostly in two cities. So, whether itâs a tie, lingerie or the hoverboard, they just want to make whatever their neighbors are making to be sure they can make money.
When Amazon froze all the hoverboard factory accounts, lots of people protested in front of the Amazon building in China with signs that said, âgive us back the money from the blood and sweat of our laborâ.Â
Someone told me that I was destroying the Chinese hoverboard industry if I sued. So, they only see the value of the product they made from their hard work. They are missing the fact that the idea of the product must come from someone.Â
I started to realize that in China, intellectual property is still a relatively new concept. And it will take time for the Chinese people to understand and respect intellectual property. In fact, the US and many other countries went through similar issues when their patent systems started.
Iâve even gone through this process myself. After coming to the US I was hired to design agricultural instruments. The first thing I proudly said to my boss was that I could redesign any of those instruments in the market. Make them cheaper. Sound familiar?
Instead he asked me if I could design something new, something better. After I started my own business, I bought a competitorâs instrument and asked my engineer to reverse engineer it, so we could use the technology for part of our own product. Even though there was no patent on that product, he was reluctant to do it.
I have to say living in America changed the way I think. After my own inventions were on the market, I never again wanted to make anything that other people had made before. The creative culture of America helped me become creative, too. You can imagine that if I had stayed in China, I might have become one of the most successful copiers! I believe Chinese companies want to do the right thing. Itâs a learning process and China will get there some day. I can already see the difference from a few years ago. Many factories now ask me to license to them. Itâs a step in the right direction. We have a great country and we should also try to understand others that are working their way up to our level of understanding.
My conclusion is that enforcement is often necessary and effective, but if you have a popular consumer product, donât drive yourself crazy trying to sue everyone who copies it. Consider using the money to invest in more marketing and branding, and use your patent to support them. If your product is good, it will get copied, but donât let it discourage you. Keep inventing.
