Biting the hand that sues you

A Chinese company boldly goes where none has gone before. To file suit in the U.S.

Published February 17, 2006 7:21PM (EST)

On Feb. 10, Netac, a Chinese maker of flash memory drives, sued an American company, PNY Technologies, for patent infringement in a Texas court.

Mark down the date. Because if you're looking for signs that the Chinese economy is becoming truly competitive with the U.S. then this could be the best proof yet. Netac's CEO, Frank Deng, claims that Netac invented the mobile USB flash drive. The company has won patent approval in both China and the U.S., has successfully defended its patent against a rival Chinese company, and has even taken the bold step of filing suit against no less an industrial titan than Sony, becoming, in the course of doing so, the first Chinese company to sue a foreign corporation for patent infringement in China. Now it's taking a step that few Chinese companies are willing to even consider, bearding a U.S. lion in its own den.

We make no claim here at How the World Works to judge the merits of Netac's litigation, although we are intrigued to learn that there's even a possibility that USB flash drives, the kind of gadgets that now adorn key rings everywhere and are making floppy drives a neolithic affectation, are a Chinese invention. So much for the cheap labor, just-assembling-the-world's-goods theory of Chinese economic power.

Netac, in other words, is the very model of a modern high-tech company: determined to amass a portfolio of intellectual property and defend it against all comers. You can be guaranteed that there are a host of imitators watching to see how Netac fares.

It is a centerpiece of U.S. economic policy that one way to address the trade deficit with China is to pressure China for greater I.P. enforcement; U.S. companies, the theory goes, are losing hundreds of billions of dollars to piracy, which exacerbates the trade gap. But just last week, How the World Works opined that one result of U.S. pressure on China to increase enforcement of intellectual property laws would be to, in effect, educate China on how to exploit its own I.P. Well, the future is now.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Globalization How The World Works Intellectual Property