The Middle Kingdom Strikes Back: Great Wall Sues Fiat For Espionage

The Chinese car maker Great Wall Motor, a Hong Kong-listed Chinese car company, is suing Fiat in China for industrial espionage. According to the Financial Times, this in “an apparent response to an Italian court ruling that Great Wall copied a Fiat car model.”

Last year, Fiat sued Great Wall both in Italy and in China for copying the Fiat Panda, which Great Wall sells as the Peri.

On Fiat’s home turf, Great Wall didn’t stand a chance: The court in Fiat’s hometown Turin ruled on July 16, 2008 that the Great Wall Peri “doesn’t look like a different car but is a Panda with a different front end.”

Yellow Peri (top,) the Italian Panda (bottom) – You decide.

The court in Torino said that the first GW Peri imported into Europe would cost a €15,000 fine, for each subsequent import, the fine would go up to €50,000 each. Europe was not invaded by the yellow Peri.

The Nissan Note – you decide again (Picture courtesy l.yimg.com)

The professionals at Car Design News opined that both the Panda and the Peri are a rip-off of the Nissan Note, but nobody wanted to point that little item out to the courts.

Not surprisingly, Fiat was not so lucky in China. Fiat sued at the Intermediate People’s Court in the capital of Great Wall’s home province, in Shijiazhuang. The court saw noticeable differences between the Panda and the Peri. The fine was more in line with other costs in China: Fiat was ordered to pay 8,800 yuan ($1,291) in legal expenses.

The evidence Fiat presented to the Chinese court may now be their undoing. Great Wall not only alleges that Fiat secretly photographed Great Wall’s top secret production facilities in Baoding. They say Fiat had already admitted to the spying to the Shijiazhuang court.

“We don’t have the exact photos, but in Fiat’s evidence, they said they had sent people to photograph Great Wall so in their material they acknowledged that they carried out this secret photography,” said Liu Hongkai, the lawyer representing Great Wall. (An American lawyer would have alleged that Fiat stole the Panda from a Chinese wildlife reserve, but China isn’t that far advanced yet.)

Great Wall is seeking an apology from Fiat and unspecified compensation for infringement of Great Wall’s commercial secrets.

Fiat of course claims their innocence, and that the allegations are utterly baseless. Fiat expressed to the FT their “wish to state that Fiat in its 110 years of history has never copied or imitated the design or the styling of any other car manufacturer in the world.” Some, including the good folks at Car Design Times, are of a different opinion. As in every kind of visual arts, car designers take their cues from each other, and there is a fine line between blatant copying and righteous inspiration.

Fiat has a lot more to lose in China than Great Wall in Europe. Great Wall never had any significant EU sales. Fiat Group operates a successful commercial vehicle joint venture with SAIC under their IVECO brand. Fiat exports (in moderate numbers) the Punto, the Linea, and the Bravo to China. This summer, Fiat announced a joint venture with China’s Guangzhou Automobile Group, which is scheduled to introduce a China-built Linea in 2011. The plant will have a capacity of 140,000 cars and 220,000 engines per year.

Then, there is Chrysler. Currently, Chrysler only provides imported vehicles under its Jeep, Chrysler and Dodge brands in China, which accounts for a very small share in the world’s biggest automobile market, without any local production. Chrysler’s new overlords may want to change this also.

Having been on the receiving end of lawsuits, Chinese companies now even copy courtroom tactics. They become aggressive in protecting their own patents and file counter-suits when they are accused of infringement.

The espionage counter-attack has become a favorite strategy. “Chinese companies that infringe intellectual property rights are increasingly adopting a strategy of claiming that investigations to gather evidence of their infringement actually constitute acts of industrial espionage,” said Elliot Papageorgiou, a partner at Rouse Legal, a law firm specializing in intellectual property cases.