Defending IP: we were infringed.
Around 2012, a Shenzhen company was producing low-temperature plasma surface-treatment units. The defining feature of the product is that the plasma jet emerges from a gun head as a torch (a plasma gun tip) — to the treated object it is just a point, and any relative motion only processes a single line. To convert line into area, the obvious approach is to rotate the torch: within some radius this sweeps out an area. With a 30 mm radius plus the workpiece’s relative motion, the treatment width is a 60 mm plane. If the torch translates linearly while rotating, then with two rotating torches a 500 mm-wide product on a conveyor can be treated.
The plasma gun-head needs compressed gas and high-voltage pulse power piped through it — the centre cannot move — so the original rotation solution used a belt and pulley. But for equipment that sometimes runs 24/7, belts kept snapping and maintenance was painful. The customer asked us to solve the problem magnetically — replace the belt with magnets. They also showed us a photo of a German unit; we judged it used an electromagnetic approach (simpler structure), so we focused on electromagnetic drive.
For rotation, electromagnetic drive means a motor. We trialled several types and settled on brushless permanent-magnet motors — specifically a hollow-shaft motor. This is a specialty design with no off-the-shelf source: we tooled the iron core and housings ourselves and finally produced a prototype around August 2014.
In August 2014 we notified the customer — by now no ordinary company: they had jointly set up an entity with Guangdong XX University on a collaborative-innovation platform, headquartered at the Foshan Nanhai Guang-XXXXXXXX Innovation Research Institute. They came to inspect, were impressed, and asked us to sign a Technology Development (Commission) Contract. For their patent-count target under the collaboration, they asked to be listed as first patent applicant. Honestly we don’t put much weight on patent ordering — we’ve worked with many partners where the patent sits with them and sales rights with them, as long as we keep production. That model had worked before, so we agreed. The contract included responsibilities, obligations, and a 200,000 RMB liquidated-damages clause.
Early 2015 — pilot production. Customer started using the units, ~10 per batch, in run-in mode. We tuned based on user feedback. After about six months some issues remained intractable, so we recommended a site visit. The customer agreed. On-site we found three problems: compressed gas was untreated and contained oil, water, and particulates; the brushless motor’s protections were too aggressive for the customer’s EMI-noisy environment; the customer was pushing motor speed too high for throughput. We adjusted the controller for the environment, asked the customer to bring rpm down to about 1400, and added auxiliary intake to keep contaminants out of the motor. By end-2015 the customer’s reported issues were resolved.
At that point the customer still owed us nearly 120,000 RMB, against over 500,000 RMB of inventory we held. Before Chinese New Year 2015 we called the end users we knew — all reported normal operation (only the controller and rpm were changed; the gas-treatment retrofit was prototyped to the customer but the customer never rolled it out to end users). We gave the customer ample time to test. Then on June 20, 2016, we learned that this Guangdong XX University subsidiary — our partner — was privately copying our product, and still iterating on it. The photos we received showed a clone — “big brother and little brother”. Because little brother carries big brother’s same inherent flaws, they’re still iterating; meanwhile they let the original product fail at user sites to damage our reputation, then swap in little brother — squeezing us out. In fact big brother had long since matured, just not yet been supplied to them.
Our IP defence plan has three steps. Step 1 — directly against Guangdong XX University: suing them for poor partner judgement and theft of our IP, demanding they cease infringement, compensate damages, and publicly apologise — given that they are educators and should set an example. We’re considering 5 million RMB at stake, though for an institution of this profile the operation may not be smooth; they may have anticipated and pre-emptively shielded themselves. Their relationship is nominally spousal but legally a mistress arrangement — no accountability.
Step 2 — directly against the Foshan Nanhai Guang-XXXXXXXX Innovation Research Institute set up by Guangdong XX University. This is a legal entity. It too may have an escape hatch: law sets monogamy but not mistress ownership; one person can have several mistresses, and one mistress can have several people. The world is getting confused.
Step 3 — directly against the XXX Automation subsidiary inside the Guangdong XX University → Foshan Nanhai → Guang-XXXXXXXX Innovation Research Institute → industrial incubator. Long name, but the point is they descend from a famous house. Who would have thought they’d copy our products? (They argued: as first inventor on the patent we can produce, but they forgot how that patent was obtained, and forgot the Technology Development Contract’s clause prohibiting in-house production or third-party purchase of similar products, with 200,000 RMB liquidated damages — though in hindsight that should have been 2 million or 20 million.) Now they want to skip even that penalty.
The state keeps calling for innovation, calling for IP protection. Who’d have thought this respected-house enterprise — under the banner of innovation-research-institute-industrial-incubation — would copy openly and call it innovation? This year Huawei and Samsung are clashing; I have my own clash with this Guangdong XX University. You have the nerve to call yourselves educators? It’s time I made some noise about Chinese IP protection.