Honeywell, maker of Garrett brand turbochargers, has announced that the supreme People’s Court of China has ruled in their favor over a trademark dispute with a rival Chinese Turbocharger manufacturer.
The SPC ruling brings to an end the nine-year legal battle for Honeywell in an attempt to protect its brand identity from the Chinese firm attemping to trademark its turbocharger brand under the name “Galitt.”
In 2006, Honeywell opposed an application for the "Galitt" trademark sought by a local manufacturer in Fengcheng, Liaoning Province, which was manufacturing and selling lookalike turbochargers through companies in Fengcheng and Shanghai.
Working with Honeywell, local enforcement authorities in China seized the "Galitt" turbochargers.
Honeywell successfully argued before China's highest court that the Garrett brand had acquired a high level of recognition through its 60-year history in global markets. As a result, the local manufacturer was willfully acting in bad faith, trying to capitalize on the established Garrett brand with a similar sounding name and packaging closely copying Garrett design standards.
This is not only a case of a high court in China acting to enforce a Western company’s trademark, but also an example of cooperation by local law enforcement in seizing what are essentially counterfeit goods.
While legal precedent doesn’t have the same impact in China as it does in the West, it’s clear that Beijing now understands that the economic benefits of trade with the West, backstopped by protection of intellectual property, far outweighs the short-term economic benefits of locally manufactured knockoff goods.
To what extent foreign investment in China has been hampered by the lack of clear, unambiguous property rights is unknown, but look at it from the Chinese perspective: indigenous production of Western technology will result in technology transfer. In Garrett’s case, possibly resulting in domestically made competitive turbocharger products which go to market under their own brands.
The long game for China is clear: develop a unique brand identity and reputation for quality much in the way Japanese goods transitioned from low-cost, low quality copies of Western goods to high-value brands synonymous with innovation.
It’s just a smart strategy for Beijing and one that’s been a long time coming. This also puts additional pressure on domestic manufacturers to up their game if they want to avoid further outsourcing to captive plants in China.
Chinese workers are literate, numerate and capable, but in the industry of mass production consumer goods, their technology still lags. It’s no surprise that they’re willing to support a foreign company’s intellectual property rights to encourage the kind of foreign investment that brings technology transfer along with it.