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Dow, Johnson Matthey win trade-secret case in China

Victory in court demonstrates nation’s growing enforcement of intellectual property rights

by Hepeng Jia, special to C&EN
October 21, 2020 | APPEARED IN VOLUME 98, ISSUE 41

 

09841-buscon3-hose.jpg
Credit: Shutterstock
The oxo alcohol 2-ethylhexanol is a raw material for phthalate plasticizers, used in polyvinyl chloride for garden hoses and other consumer goods.

Amid a trade war and other disputes between China and the US, the Western chemical makers Dow and Johnson Matthey have won a trade-secret lawsuit in a Chinese court against Shanjun Clean Energy Technology over their jointly owned oxo alcohol technology. The two companies expect to be compensated with an undisclosed but “significant” amount of money.

The technology is a catalyzed low-pressure process for producing oxo alcohols, often used to make plasticizers. The firms have licensed the technology for more than 20 projects in China.

Liu Wei, an associate professor of intellectual property rights (IPR) law at Shanghai Jiaotong University, says the ruling indicates a growing professionalism in Chinese courts. “It is clear evidence that China’s IPR protection has achieved great progress,” he says.

Outsiders say that China needs to do even more, however. The US Chamber of Commerce urged China to take action to overcome its laggard status in the chamber’s 2020 International IP Index, released in February. China ranked 28th globally, below nearly every other industrial nation.

Since 2019, the country has taken a series of legislative steps to improve IPR. Last month, China released administrative rules on secrecy protection, and its Supreme People’s Court issued guidelines for standardizing the implementation of court rulings on trade secrecy.

On Sept. 14, the State Intellectual Property Office, the Chinese equivalent of the US Patent and Trademark Office, released a report concluding that the country’s IPR protection is ranked 8th worldwide.

China has reasons other than its international status to improve IPR oversight, Liu says. The consensus among its legislators, judges, government officials, and legal scholars is that increasing such protection is a way to force Chinese companies to upgrade their technologies.

And greater intellectual property protection benefits firms that make the effort to develop their own intellectual property, Liu says. “More and more Chinese companies with high-end technologies need to be protected, too.”

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