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Toyota launches lawsuit against Chinese `copycat'

Toyota Motor Corp, the biggest carmaker by sales, told a Chinese court that a Chinese rival stole its logo, seeking US$1.7 million of compensation in the first legal dispute over vehicle trademarks in the world's fastest-growing car market.

Geely Group (吉利控股), China's sole privately-owned carmaker, also misled its customers by falsely claiming its Merrie cars used Toyota's engines, Shi Yusheng, the Japanese company's lawyer, said at Beijing Intermediate Court. Geely has denied wrongdoing.

Geely, based in eastern China's Zhejiang Province, "has used the commercial value in Toyota's brand name to raise the profile of its own products," Shi said. "These are unfair tactics."

Toyota is among several carmakers concerned that Chinese companies are adapting foreign technology or designs to make cheaper cars in China, where sales are forecast to rise 25 percent this year. General Motors Corp says Chery Automobile Co's QQ model resembles its Spark, produced at a venture with two Chinese partners. Phil Murtaugh, General Motors' China chairman, said in April the world's biggest carmaker is "investigating" how Chery developed the QQ.

"There will be more and more such lawsuits between foreign automakers and local assemblers," said Paul Gao, a principal at McKinsey & Co in Shanghai. "Accusations like these are common in China's car industry. Toyota is aiming to win the case and set an example for the future."

After today's hearing, Toyota's lawyers offered to withdraw the company's demand for compensation if Geely agreed to stop using its disputed logo and to stop mentioning Toyota's name in its sales and marketing brochures. Geely's lawyers rejected the offer and declined the court's offer for mediation.

"We are confident we will win the court case," said Geely's vice president Chen Wenming.

The three-member legal panel will make its decision in two to three months, said Chief Magistrate Shao Mingyan, who declined to comment further.

Geely, a 17-year old company that started out as a maker of refrigerator parts, switched to making cars in 1999.
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