Patent Law Case Study: How a Canadian Multinational’s Victory Set a Precedent For Foreign Businesses in China

Patent law aims to strike a balance between the interests of inventors and the interests of the public. It protects inventions developed by people or businesses, which gives them an incentive to create new products that benefit the public. 

For foreign entities planning to enter the Chinese market, patent law is extremely important, as it can be the difference between failure and success. Without proper protection, products and inventions may be at risk of being copied or imitated, which could erode market share, lessen their reputation, or worse. Some critics have concerns about China’s approach to patent enforcement, and while major improvements have been made, it’s important to stay vigilant. 

The recent dispute between Spin Master and Guangzhou Lingdong Creative Culture Technology highlights the role of patent law in China and the importance of having an experienced IP protection lawyer on your side when entering a foreign market.

Spin Master vs Guangzhou Lingdong Creative Culture Technology Case Background

Spin Master and Guangzhou Lingdong Creative Culture Technology are two toy-making companies whose products are sold all over the world. The patent dispute between them was filed by Spin Master in March 2018 and officially settled on April 20th, 2020.

Spin Master Ltd.

Spin Master is a toy company based in Canada that owns patents around the world, including China. The dispute in question involves their line of Bakugan toys that are known for their unique rollable shape, structure, and use of magnets.

Guangzhou Lingdong Creative Culture Technology Co., Ltd

Guangzhou Lingdong Creative Culture Technology is a prominent toymaker and animation enterprise based in China. The dispute-relevant product that they produce is a line of transforming sphere toys called Eonster Hunter, which have some of the same features as the Bakugan toys.

The Claim

Spin Master claimed that Guangzhou Lingdong Creative Culture Technology had infringed upon their Bakugan patent in China with their Eonster Hunter toy products. Representatives from Spin Master noted that all twenty types of the Eonster Toys had very similar mechanics and features to Bakugan toys.

The Judgement

The Chinese court found in favor of Spin Master and  that not only the defendant but also two other production factories in Guangdong Province liable in the case. The companies were ordered to cease all production of Eonster Toys and to award compensation of CNY 15,000,000 (approximately $2.2 million USD) to Spin Master.

The Importance of the Spin Master Case

This case is an example China is changing the way it handles patent disputes brought by foreign parties against Chinese companies. CNY 15,000,000 is the largest amount of damages ever awarded to a foreign patent owner in a Chinese court

More importantly, the amount of awarded damage to the Canadian company was based on the profit the defendants gained from infringement and it also covered the legal expenses incurred by Spin Master.  In calculating the damage, when the defendant “failed” to present their records of its sales, the Chinese court accepted the evidence submitted by Spin Master which included the online and offline sales data of the defendant. 

Protect Your IP Rights with Robust Representation

While the IP landscape in China is improving and becoming more favorable for foreign business owners, the outcome of this case is largely due to the expertise of Spin Master’s legal representation. It is essential for any company, especially those operating internationally, to protect their intellectual property rights when doing business abroad. 

Trustiics connects business owners with top-rated international IP protection lawyers for a fraction of the cost of traditional lawyers. From creating tailor-made IP protection strategies to resolving specific IPR-related legal issues in China, Trustiics can help. Sign up for a free account to submit a request or book a 1-on-1 call with one of the many experienced intellectual property lawyers on our platform.