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Sogou’s assertion of patents against Baidu could be a landmark in the evolution of China’s IP market

Source: Jack Ellis

Chinese internet and software company Sogou has sued domestic competitor Baidu for patent infringement in a development that underlines just how rapidly the Chinese IP marketplace is growing in sophistication.

Sogou – a subsidiary of online services giant Sohu – is China’s second most popular web search engine after Baidu. It also develops related software, including a browser, web apps and an input method editor (IME) for Chinese characters which allows users to perform web searches with pinyin, a writing system that transcribes Mandarin Chinese into the Latin alphabet.

It is the latter that has brought the company into conflict with Baidu, which is China’s leading web search provider by a large margin. In Q4 2014, Baidu commanded 85.9% market share in terms of revenues generated in the country, with Sogou in second place at 6.3%, according to China Internet Watch.

A statement released by Sogou this week says that it has filed eight lawsuits against Baidu in the Beijing IP Rights Court, alleging infringement of “multiple key patents” relating to its pinyin input method. The claimant is asking for Rmb80 million (around US$12.6 million) in damages.

The press release itself is striking. As far as I can tell, it is rare – if not unheard of – to see a Chinese company making and circulating a public statement, in English, announcing that it is initiating patent litigation against another Chinese company.

That the press release has been made in English suggests that its intended audience is not restricted to China. As such, it may be considered as a statement of intent towards foreign companies operating in the same industries as Sogou that may be looking to make inroads into the Chinese market and could potentially be infringing on its IP rights. Indeed, do a little digging online and you will find that back in 2007 Sogou emerged victorious against none other than Google, after the US company admitted that its Chinese character IME lifted elements from Sogou’s. The Chinese company has also been embroiled in unfair competition litigation with compatriot Tencent in the past over allegations that each party was preventing users from accessing the other’s pinyin input service. Later, in September 2013, Tencent paid US$448 million to take a minority share in Sogou and has worked closely with the company ever since.

The statement highlighting the Baidu litigation uses a firm and assertive tone in alluding to these past clashes and cautioning present and future would-be infringers:

It’s not the first time that intellectual property rights of Sogou Input Method have been violated by other companies. Sogou is attaching unprecedented importance to its independent intellectual property rights and will defend its legal rights and interests against suspected violations according to laws.

This kind of proactive and globally focused approach – utilising a variety of tools including patents, copyright, public relations and competition law – is indicative of a company that is thinking progressively about its IP assets and the value creation possibilities that they present, and how to leverage them effectively in alignment with its broader business strategy.

Chinese IP owners are still typically thought of as lacking in such sophistication, but Sogou’s commitment to protecting its rights through multiple channels might suggest otherwise. Despite coming a distant second in China’s web search sector, a success in its dispute with Baidu would not only vindicate Sogou in its claims of infringement, but could also give it the chance to derive value from its competitor’s superior market share – perhaps in the form of licensing revenues, or some other arrangement such a collaborative deal which would increase exposure for its products.

With Chinese businesses across several industries – perhaps most notably smartphones – engaged in fierce competition at home and looking to expand overseas, we may soon be seeing many more such press releases emanating from the country.

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Author: grill-ip

Grill IP is a non-profit project for educational and entertaining purposes only. Our aim is to provide quick and easy access to aggregated and original patent news, IP analysis, interesting business cases in IP, basic legal updates and a list of patent transactions.

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