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Print Edition> Business
UPDATED: December 14, 2009 NO. 50 DECEMBER 17, 2009
Head-on Collision
Chinese automaker takes historic legal action against foreign competitor to protect its product patent


Great Wall's Peri model 

Since hitting the roads in early 2008, the Peri, a sleek, stylish car from Chinese automaker Great Wall Motor Co. Ltd., has been a market hit across the country, selling more than 1,000 units per month on average since its release.

Despite the success, the popular Peri is cruising into the spotlight for a different reason—an intractable patent dispute over its exterior design has led to a ban on Peri sales across Europe.

In 2007, Italian auto giant Fiat S.P.A. filed suit against Great Wall Motor, accusing the Chinese automaker of copying the designs of its Panda model, a fancier Fiat car class that has been popular among young Italians since its market release in 2003. Great Wall Motor disputed the claim, taking legal action in June 2009 against Fiat for "stealing its commercial secrets."

Although the controversy has yet to produce any solid results, it has aroused heated debate in the auto industry. Many in the automobile industry showed support for Great Wall Motor's willingness to fight back, while others have called the case a farce. The outcome aside, the case will prove to be monumental—it is the first time a Chinese automaker has brought legal action against a foreign rival for infringement of commercial secrets.

Driving in circles

Great Wall Motor is one of the country's largest collectively owned auto companies with a large overseas presence. While its major markets include Russia, South Africa and Iraq, in recent years the company has turned its eyes to Europe. The Peri, Great Wall Motor's first compact car, was manufactured according to European technological standards, presenting a potential threat to the Panda as both car models targeted young European customers.

Tensions began to mount in June 2007. As the Chinese automaker initiated a promotional campaign for the Peri in European markets, Fiat filed lawsuits through the court in Turin, Italy, and the Shijiazhuang Intermediate People's Court in Hebei Province. Accusing Great Wall Motor of infringing its patent for Panda's exterior design, Fiat's ultimate goal was to prohibit Peri's sale in Europe.

The Turin court ruled in July 2008 that Great Wall Motor had illegally copied Panda's design, ordering a ban on Peri sales across Europe. Two weeks later, the Shijiazhuang Intermediate People's Court took an oppositional stance, rejecting the Fiat lawsuit by citing apparent differences between the two models, particularly on their front and tail sections.

Dissatisfied with the results, Great Wall Motor and Fiat appealed to the Turin and Shijiazhuang courts, respectively. In December 2008, the Shijiazhuang Intermediate People's Court upheld its original verdict. The final judgment of the Turin court will be made in March 2010.

Taking action

Although easily lost in the sea of patent lawsuits involving Chinese companies, what made the current auto situation unique was the counter-action from Great Wall Motor, specifically the June 2009 lawsuit against Fiat on claims of stealing its commercial secrets.

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