Mainland companies must build intellectual property to guard against lawsuits
Mainland firms such as Actions Semiconductor, the Zhuhai-based firm on the receiving end of a legal offensive by SigmaTel, are learning the hard way that a wide portfolio of patented intellectual property is as much a tool for squeezing out competition as a source of lucrative royalties, according to a Hong Kong law firm.
The surge of mainland exports to the United States and the rest of the world has intensified competition for global market share, with the minefield of intellectual property law emerging as a key battleground.
'US companies are not going to let Chinese manufacturers swamp their market, so Chinese firms should be prepared for this [kind of lawsuit],' said Jacqueline Lui, executive director at Ella Cheong (HK).
'Unless they start to demonstrate they have the weapons and the ammunition to fight this they are sitting ducks.'
Shipments of MP3 players are expected to reach 132 million units in 2009 from 36.8 million last year, according to market researcher iSuppli. Last year, the mainland produced 40 per cent of flash-based MP3 players sold globally.