France’s Schneider Electric has agreed to pay a Chinese company $23m to settle a patent lawsuit – the largest recorded settlement in an intellectual property case in China.

Chinese IP lawyers said the settlement was a “wake-up call” to foreign companies about the growing risk of lawsuits from China groups asserting IP rights.

Traditionally, damage awards in Chinese IP lawsuits have been small, and the plaintiffs have usually been foreigners suing Chinese companies claiming infringement of IP rights.

But the Schneider case caught the attention of foreign companies in China because it turned that paradigm on its head: the plaintiff was Chinese and the damages substantial.

In 2007, a court in Wenzhou in China’s eastern Zhejiang province awarded damages of Rmb330m ($48m) in a patent lawsuit against Schneider, brought by low-voltage equipment maker Chint Group of Wenzhou.

Schneider appealed to the province’s highest court, but yesterday the company agreed to settle the case for roughly half the original damages.

The Zhejiang Province High Court yesterday said Schneider must pay the damages to Chint within 15 days, or the full award would be enforced against it.

Guy Dufraisse, president of Schneider in China, told the Financial Times yesterday it was “happy to stop fighting”.

This entry was posted on Friday, April 17th, 2009 at 1:28 pm and is filed under China Global News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.