Multinational companies are accustomed to fighting epic legal battles against each other in US or EU courts, often with global consequences. They should brace themselves for the opening of a third front — in China. Two weeks ago a little-known Canadian company, Wilan Inc, sued Sony in the eastern Chinese city of Nanjing for alleged patent infringement involving technologies used in the Japanese group’s LTE-standard smartphones.
Wilan is what critics call a “patent troll”, a company that collects payments from other companies on its intellectual property but produces little if anything itself. If Wilan wins, Sony could be barred from selling and exporting its LTE handsets as early as next summer. The potential ban on exports is the real threat, given China’s pivotal role in almost all global manufacturing chains.
Imagine a similar suit with the same potential consequences, only with an Apple or a Samsung cast as the defendant. The impact on consumers would be enormous. A new corporate era beckons in which a Chinese judge could conceivably cut off the lifeblood of some of the world’s most valuable companies.