Friday, December 09, 2011

TGIF: Vacuum Cleaner Inventor Says The Darndest Things

Thank goodness it is Friday

Sir James Dyson was quoted by Dan Milmo in the Guardian, here, saying:

"They are running the risk of being expelled from the WTO. They are creating an unlevel playing field by taking our technology and selling it all over the world.

With "they" Mr Dyson means China. I understand Mr Dyson's frustration, but the quote is grotesque. China cannot be simply pulled out of the World Trade Organization (WTO) equation. China is one of its key players. The idea about the WTO is to resolve the issues via a binding dispute resolution system. When Mr Dyson would have said that a dispute resolution procedure could be started against China's lack of IP enforcement or non-compliance of the national treatment principle (treating foreign companies at least as good as domestic ones), it would have made more sense.  

Police in Shenzhen. Aren't we ... visible?
Photo: Danny Friedmann
In the piece Mr Dyson, who invented the bagless vacuum cleaner and the bladeless electronic fan, makes the following clueless allegations to China:

- "China benefits from strictly monitored IP regimes outside its own border, but has failed to crack down on domestic offenders as it pursues rapid economic growth." Does China benefit much from strictly monitored IP regimes, if their alleged infringed products cannot enter into other countries? Did China fail to crack down on domestic offenders? One can argue that China failed to crack down on domestic offenders inadequately or insufficiently. But to assert that China failed to crack down on domestic offenders is simply not true (think about all the campaigns with the fancy names, see here 2010 and here 2011).
Mr Dyson backs up his claim with anecdotal, evidence: a patent infringement case he won, but where the infringers did not pay the fine nor stop their infringing activities.
- "China's reputation among foreign investors is being diminished by the flouting of product copyrights and a two-speed patent system that appears to discriminate against non-Chinese applications."
With "product copyrights" probably intellectual property protection is meant, which includes invention-patents, utility-patents, design-patents, trademarks, copyrights and trade secrets. To make such sweeping statements is not useful unless they are backed up by research that gives the status on how the intellectual property rights of British industries or European industries are protected. Until now Chinese foreign direct investments did not correlate much with China's level of intellectual property enforcement level. It seems more to correspond to China's economic growth. And I have not come across evidence that foreign patents on average are examined slower. Very broadly speaking a utility and design patent takes about half a year and an invention patent can take up to two years time. 

Dyson, the company, is spending 10 million UK pounds per year on legal costs (according to an article by James Hurley in the Telegraph, see here) and is also inventive to bring the intellectual property in China challenges under the attention of people in British government, such as David Cameron (prime minister) and Baroness Wilcox (IP minister). 

Inconvenient truth about intellectual property infringement
A Dyson bagless vacuum cleaner costs about 4,000 Yuan in China. Factory workers in Shenzhen make about 1,200 Renminbi per month and middle class earnings are about 4,000 Renminbi per month. The inconvenient truth is that the more a company has spent on research and development (as is the case with Dyson) or marketing and advertising (as is the case with luxury brands) the bigger the incentive for infringers to ride on the coat tails of some other companies' economic activities.

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