China's High-Speed Rail Faces Questions Over Intellectual Property, Reliability

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SHENZHEN, China—China's hopes to begin exporting high-speed rail, or HSR, technology could run into hurdles over questions about whether the technology that its companies are exporting infringes the intellectual property rights of companies that first transferred technology to them, as well as over safety and reliability issues related to trains that have recently started operating in China, a BNA analysis shows.

After rapidly expanding the infrastructure domestically, China's Ministry of Railways, or MOR, and Chinese companies are looking to cash in by selling technology and know-how abroad, including in the United States for possible HSR lines in Florida and California.

Recently however, Kawasaki Heavy Industries Ltd., the company that first transferred technology to state-owned China CSR Qingdao Sifang Corporation Ltd. in 2004 to jointly develop a high-speed train called the CRH2 based on technology Kawasaki had used in Japan, has said it will closely monitor patent filings for China CSR's CRH380A in other countries to determine whether they violate intellectual property agreements previously made in contracts between the two companies.

China CSR and the MOR have rejected Kawasaki's claims that the CRH380A patent filings are violations of those contracts. Wang Yongping, spokesman for the MOR said at a press conference on July 7 that the technology developed for the CRH380A is “far better” than what Kawasaki had developed and that “we will never give up our rights to file patent applications for innovations developed through our own efforts and wisdom” according to a report from state-run Xinhua news agency.

The MOR claims that China improved on the technology of the original CRH2 and should hold the intellectual property rights for those innovations. The CRH380A, which started running a 1,300 kilometer HSR route between Beijing and Shanghai on June 30, can operate at a top speed of between 300 and 350 kilometers-per-hour, while the CRH2 runs at a top speed of 200 kilometers per hour.

Yet the newly opened Beijing to Shanghai HSR line has also had its share of problems in the first few weeks as power outages halted the train three times in five days during that period.

Zhao Jian, a rail expert at the School of Economics and Management at Beijing Jiaotong University told BNA on July 19 that he had been invited to be part of the last inspection team before the Beijing to Shanghai route started operating and said it operated as well or better than such trains in Japan or Germany.

“I think the quality is high [with the train], there is no problem,” Zhao said. “Issues at the beginning of operation are normal. If a train operating at over 300 kilometers per hour can stop safely like they have after a power outage, that is a sign that they are reliable.”

Yet because of public concerns over safety and reliability on this route, the Work Safety Commission of the State Council, China's top decision-making body, issued a notice on July 17 that two groups of inspectors would be involved in a 10-day safety inspection of the Beijing to Shanghai line over the final two weeks of July.

Li Jun, director of General Affairs of the MOR Transport Bureau, told the state-run newspaper China Daily on June 27 that China is filing patent applications to the World Intellectual Property Organization to cover its HSR assembly, hull, and bogie ttechnologies in the United States, the European Union, Russia, Japan, and Brazil.

In the report Li said that eight of 21 patents filed with the WIPO have gone through preliminary examination, but patents have not yet been approved or issued. Li said that no patents would be filed for technologies transferred from other countries, only for what China researched and developed on its own.

“We had to import advanced technologies first and then make our own new brand,” Sun Zhang, an expert at the Urban Mass Transit Railway Research Institute at Tongji University in Shanghai told BNA on July 19. “This was clearly defined in the contracts. We learned from [Kawasaki] but later recreated our own new models of high speed rail technology.”

In December, GE Transportation signed a Letter of Intent agreement valued at $1.4 billion with China CSR and the MOR on exporting around $350 million worth of HSR systems to the United States. GE Transportation and China CSR are exploring the formation of a joint-venture to build HSR lines in the United States., possibly in California or Florida, a GE statement from January said.

Zhou Li, an official with the MOR Transport Bureau said at a press conference on June 27 that China CSR and GE had studied over 200 patents involved with the technology that the company might import into the United States and “concluded none will generate disputes for the deal,” China Daily reported.

China CSR's Deputy Manager Ma Yunshuang said at the same press conference, “Our technologies may originate from foreign countries, but that doesn't mean that what we have now all belongs to them. We have added our knowledge gained from experiments to the train and made designs to satisfy our needs, so the new train is not theirs anymore.”

By Michael Standaert