Intellectual property rights protection and their continued enjoyment to the exclusion of others is one of the strongest motivations to innovate and spend considerable amount on research and development. One feels cheated when his hard work and tremendous investment is misappropriated by other at almost not cost.
Japan has alleged that its Shinkansen bullet trains have been pirated by China. Even the value creation concept mooted by few did not find favour with the Japanese company manufacturing the trains in question.
Kawasaki Heavy Industries (KHI), the maker Shinkansen bullet trains, is feeling cheated due to this entire episode. After signing technology transfers with CSR Sifang, the builder of China's impressive, new high-speed rail, KHI says it deeply regrets its now-dissolved partnership. Initially, KHI planned to sue its previously junior partner for patent infringement, but subsequently it changed its mind.
Countries around the world are demanding technology transfer agreements while allowing the foreign companies to establish place of business in their territories. Some even extend benefits, financial and non financial, in lieu of technology transfer.
In the field of telecom equipments, countries generally ask for the source code of hardware and software. As a trade off for earning profit in lucrative markets like china and India, companies generally comply with this demand of respective governments.
KHI is annoyed with CSR Sifang as the latter not only copied its technology after patenting remarkably similar high-speed-rail (HSR) tech but CSR now wants to sell it to the rest of the world as a Chinese product.
Both Japanese and European rail firms are struggling to increase their sales volume and this decision of China and Chinese companies to sell China made rails would create more trouble for them. Chinese companies would now compete with Japanese and European companies both inside and outside Chinese markets.
What made KHI very disturbed is the fact that under the licensing agreements with KHI, China's use of the expertise and blueprints to develop high-speed railway cars was to be limited to domestic application and markets.
Although KHI was not comfortable with the terms and conditions of the technology transfer agreement yet it signed the same in the hope that the terms and conditions of the agreement would be legally binding.
China sees no wrong in this deal and its legal interpretation. The Chinese authorities are now planning to file for HSR patents abroad and that may cover the lucrative market of India. China is also maintaining that Chinese product is much more superior to the products of Japan and Germany. However, some feel that there is no real innovation in the rail products of China. If this is the case, the KHI’s train technology transfer episode may take a very long time to resolve.