The biggest players in China’s air conditioning industry have established an IP-focused alliance they say will coordinate disputes and licensing in the sector, according to a report in China Daily. This news comes despite the fact that the two largest companies in the space, Midea and Gree, remain locked in a patent litigation battle across China. The new coalition and the publicity surrounding it seem intended to signal that despite internecine disputes, the industry wants to present a united front on the global stage. But its main audience may in fact be smaller domestic companies.
In addition to Gree and Midea, the new group includes Haier, TCL, Hisense, Changhong and Aux. That would seem to comprise most of the leading companies in the sector, most of whom have significant businesses in other verticals as well (TCL and Hisense, for example, are major television vendors, while Midea has a large robotics business). But the alliance is focused on air conditioning products only – it is being called the China Refrigeration and Air Conditioning Industry Association. Its first director general is a Gree executive named Liu Hua, who summed up its mission as follows:
Gree hopes the alliance will guide the industry to respect IP rights, regulate competition order in the air conditioner market, promote patent operation, coordinate patent disputes and licensing among its members, and provide analysis on industrial development trends.
Details are relatively scarce as to whether the new body will simply be a forum for discussing licensing and other patent issues, or might entail some more formal arrangements. But the group certainly seems to have an outward facing element. Liu called on companies in the sector to “join hands to build a firewall”.
If a firewall is the goal, then the right companies are on board. Gree was seventh among domestic Chinese patent applicants last year, and claims to have filed more than 30,000 patents in total. Its president Dong Mingzhu has been outspoken about IP issues, so much so that Chinese media named her one of the country’s top 10 IP personalities last year. Midea, meanwhile, has bolstered its patent portfolio with major overseas acquisitions, netting 5,000 IP assets in its takeover of Toshiba’s appliance unit.
But the two companies are currently engaged in a slew of lawsuits after Gree went on the attack in June – matters are currently pending in the Beijing IP Court, Guangzhou IP Court and Intermediate People’s Court of Suzhou. The announcement of this association gave no indication that the two parties were moving toward settlement. Instead, it highlights that a ‘team of rivals’ are putting the industry first, even as they pursue their own interests.
Midea’s IP chief Sun Mingyan told this blog in July that he sees a lot more litigation coming to the sector – both in the domestic market and overseas as Chinese manufacturers expand to developed countries. He specifically mentioned smaller Chinese upstarts breaking into the industry as posing an IP problem, saying that while they infringe the IP of companies like Midea, the major players so far have not been active in enforcing their rights.
Seen from that perspective, the goal of this new group may well be more domestic than international. The Grees and Mideas will want to show smaller manufacturers that IP protection can be beneficial for the whole industry, rather than just the catalyst for a flood of litigation between Chinese competitors.
What remains to be seen is whether the group becomes an important entity in the licensing space. As air conditioners and other appliances become smarter, more and more patent owners will be knocking on the door. If rivals like Gree and Midea can stay on the same page, an IP-centred industry group could be an effective way for them to cut better deals for everyone.