Jaguar Land Rover Faces Uphill Legal Battle Against Jiangling Motor Over Copycat Car

Jaguar Land Rover has sued carmaker Jiangling Motor in a Chinese court for allegedly copying its Evoque SUV, but observers say the solution to car clones lies outside the courtroom.

At issue is Jiangling Motor’s launch of its Landwind X7 model, which Jaguar Range Rover claims is an illegal copy of its Evoque.

 

 

 

 

 

A Jaguar Land Rover spokesman confirmed that the British carmaker, which is a subsidiary of Tata Motors, has initiated legal proceedings in a Chinese court for copyright infringement and unfair competition, adding he would not “comment any further on these ongoing legal proceedings.”

Jaguar Land Rover will also continue to press its copyright claims in a Chinese court despite a ruling in another court this week that cancelled the UK company’s patent ownership for the Evoque design.

“The proceedings for unfair competition and copyright infringement are separate, and not connected to the registered design patents process,” the Jaguar Land Rover spokesman told Intellectual Property Watch.

Jiangling Motor did not respond to email queries to comment about the case.

Uphill Battle

Jaguar Land Rover’s lawsuit is the latest example of a western automotive company taking legal action against a Chinese carmaker for allegedly making copies of a car model.

Most carmakers have faced long legal battles when seeking their claims in courts in Europe or in China. From 2008-2011, for example, Fiat sued Great Wall for making what the Italian carmaker said was illegal copies of its car models. However, Fiat “had years of trouble in their Chinese court cases,” even after winning a series of legal victories in Italian courts, John Eastwood, a Taiwan-based attorney and partner at Eiger, told Intellectual Property Watch.

Honda begin seeking to enjoin a Chinese carmaker from making and selling a lookalike version of its CR-V SUV over a decade ago. While Reuters reported that it had sued the Chinese firm for 300 million yuan ($46 million), a Honda spokeswoman told Intellectual Property Watch that a Chinese court eventually ruled against Honda and that is was thus unable to recover any damages.

Ford, on the other hand, saw more immediate results when it was able to stop Jianghuai Automobile from introducing its 4R3 at the Beijing Motor Show in 2012, which Ford said was an F-150 copy.

In 2008-2009, BMW sought injunctions to prevent Shuanghuan Automobile from exporting its CEO model, which looks like the BMW X5, with mixed results. BMW won its case in Germany but lost in Italy where Italy-based Martin Motors distributed the car.

German carmaker Daimler successfully sued and won a preliminary injunction in 2007 against Martin Motors prohibiting the import of the minicar called the Bubble or Noble to Italy; Daimler says the model is a look-alike of its Mercedes Smart car.

In consideration of the legal precedents, Jaguar Land Rover will face difficulties in collecting damages, even it wins its case against Jiangling Motor, which could remain in court for years, Eastwood said.

“The past history of these cases has been fraught with a lot of difficulty, and when damages have been awarded, they’ve often been quite low,” Eastwood said.

If Jaguar Land Rover does eventually succeed in proving that Jiangling made an illegal copy of its Evoque in a court of law, it would represent just a fraction of the illegal copies of goods made and sold in China, according to United Nations Office on Drugs and Crime (UNODC) reports. Over two-thirds of counterfeit goods sold worldwide, including copies of everything from brand name handbags to luxury car models, originate in China, the UNODC says.

“Counterfeiting of hi-tech products has been growing in China in particular. This includes sophisticated technologies like mobile phones, computers and storage devices, high-end watches, motorcycles and now automobiles,” Mark Turnage, CEO of US-based OWL Cybersecurity, told Intellectual Property Watch. “It also shouldn’t surprise anyone that the country that makes much of the world’s consumer products can also produce counterfeits.”

The main trend that has emerged reflecting why Chinese firms are copying Western-designed car models is that “if counterfeiting is that profitable for lower-tech products, it will be even more profitable for higher-margin products,” Turnage said.

“The penalties of this type of blatant counterfeiting are still clearly too low as this particular example blatantly demonstrates,” he said. “In spite of the Chinese government’s repeated protestations about cracking down on counterfeiting, it still runs rampant in the country.”

Hope for the Future

In addition to lawsuits, European and US governments will also need to continue to press the Chinese government to take more concrete action to limit illegal copies of cars, Turnage said, adding, “Policy considerations in the US and Europe are to keep anti-counterfeiting and enforcement of IP rights at or near the top of the agenda of every conversation with the Chinese government.”

Specific to the Jaguar Land Rover case, the Chinese government also has incentive to protect the UK-based firm, which opened a $1 billion car plant on Chinese soil in 2014.

“The major policy considerations are that Jaguar Land Rover still has very considerable manufacturing and research activities that are jeopardized by harm to its popular Evoque model,” Eastwood said. “If a foreign major investor in China is left completely without protection then how does China attract future investment? Negatively, of course.”

The Chinese government also has an obvious interest in fostering growth by encouraging foreign firms to invest in China manufacturing in the future and thus has an incentive to protect foreign investors. “With China expected to have some rocky economic problems in the coming time, it’s important to stem the rush of manufacturing investment skipping China and going to Southeast Asia and elsewhere,” Eastwood said.

In the long term as the car industry in China matures, Chinese car manufacturers will likely increasingly look to produce original models instead of copying Western designs and technologies. They will also invariably seek to protect their intellectual property by threatening legal action and stepping up lobby pressure like their Western counterparts have done.

“Chinese brands themselves are starting to suffer from counterfeiters, and so the enforcement lobby is now both internal and external,” Turnage said. “To the extent that I have a hope that in say five or 10 years the Chinese court system will be reasonably transparent and allow vigorous enforcement of IP rights, it will be due to this latter factor of Chinese self-interest and not entirely external pressure.”

Dongfeng Motor, for example, is the third-largest Chinese carmaker in China and owns a 14 percent stake in French carmaker PSA/Peugeot-Citroen. The Chinese carmaker recently formed a development agreement with PSA for the manufacture of electric cars and will obviously seek to protect technologies it develops in-house for cars sold in China and Europe.

The emergence of Chinese carmakers such as Dongfeng in their own right should also have a major impact against illegal copies of cars in the long term as they seek higher profits and sales by offering consumers original designs as opposed to cheaper knockoff copies.

“Chinese brands will produce their own models with original designs and many innovations will come from them,” Jamel Taganza, an analyst for Paris-based automotive consulting firm Inovev, told Intellectual Property Watch. “They will seek to meet consumer demand for original models from brands with a high-level brand image. Buying a copycat is not something of value for the vast majority of Chinese consumers.”