Introduction | Lead

The intellectual property lawsuit between Geely and WM Motor has finally come to an end. However, WM Motor has long lost its past glory. Its founder, Shen Hui, has fled to another country and may become the next Jia Yueting, making it difficult for him to return home in the short term. Therefore, although Geely won the lawsuit, it may not be able to recover the compensation amount.

Produced by | Heyan Yueche Studio

Written by | Zhang Dachuan

Edited by | Heyanzi

Total words: 2289

Reading time: 4 minutes

On June 14, an appeal case involving intellectual property infringement of new energy vehicle chassis technology secrets triggered by employee job hopping between two well-known automakers in China has been concluded. This is the previous case where Geely sued WM Motor. While Geely sought compensation of up to 2.1 billion yuan, the Supreme People's Court finally ruled in the second instance that the infringer should compensate for economic losses and reasonable expenses for rights protection totaling approximately 640 million yuan. This sets a new record for the compensation amount in domestic intellectual property infringement lawsuits.

△WM Motor needs to compensate Geely over 600 million yuan

The Enmity between Geely and WM Motor

Geely's lawsuit against WM Motor originated from the job hopping of Geely Chengdu employees. WM Motor's founder, Shen Hui, was once invited by Li Shufu to oversee the acquisition of Volvo. After the acquisition, Shen Hui served as the chairman of Volvo China for a time. Later, Shen Hui left Volvo and returned to Geely Group, serving as the group's vice president. Eventually, encouraged by the wave of new forces in entrepreneurship in China at that time, Shen Hui left Geely and founded WM Motor.

△Shen Hui, the founder of WM Motor, was a key figure in Geely's acquisition of Volvo

Starting in 2016, 40 senior management and technical personnel from Geely Chengdu successively left and subsequently joined WM Motor-related enterprises, including Geely Chengdu's general manager, Hou Haijing. In 2018, Geely discovered that WM Motor-related enterprises had applied for 12 utility model patents related to chassis using these former employees as inventors or co-inventors.

△The old Geely Vision X6 and WM EX5 share a high degree of similarity in chassis design

Automobile development is a long-term project. For a startup automaker, it is very difficult to build a brand-new vehicle platform in a short period of time without any prior accumulation. WM Motor quickly launched the WM EX series of electric vehicles in a short time, coupled with the addition of many former Geely employees and the collection of other data, which led Geely to make the decision to sue WM Motor and demand compensation of up to 2.1 billion yuan. However, the first-instance judgment, where WM Motor was ordered to pay Geely 7 million yuan, was unsatisfactory to both parties, and both appealed to the Supreme People's Court. In this final judgment by the Supreme People's Court, it was determined that this was a case of infringement of technical secrets caused by organized and planned large-scale poaching of new energy vehicle technical talents and technical resources through improper means.

The Significance of Geely Winning the Lawsuit

Globally, intellectual property lawsuits have always been difficult to win. It is challenging to prove that the other party has infringed on intellectual property rights, especially systems like automobile platforms/chassis architectures. This poses a significant challenge for judges and lawyers. However, Geely's victory in this intellectual property case, even considering the fact that the struggling WM Motor may find it difficult to pay the compensation of up to 640 million yuan, still holds significant value for Geely:

This helps avoid similar incidents from happening again. In the domestic automotive market, Geely is one of the few automakers that possess vehicle platform-level development capabilities and has invested heavily in other core technology areas as well. This means that Geely has a large engineering team, which is bound to be a sought-after asset for other automakers, especially many startups. After winning the lawsuit against WM Motor, it means that other automakers need to avoid poaching Geely's patented technologies when recruiting Geely's engineers, as WM Motor serves as a cautionary tale.

△Geely has invested heavily in core technology research and development

WM Motor, which lost the lawsuit, was founded in 2015 and delivered its first mass-produced model, the WM EX5, in 2018, making it one of the earliest companies to deliver vehicles among the new forces in China at that time. In 2019, WM Motor became the second-largest new force after NIO, firmly occupying the first tier of domestic new-energy vehicle startups, with a sales volume of 16,900 units last year. Not to mention that WM Motor, through acquisitions, not only had its own factory but also had its own car manufacturing qualifications. Compared to other new forces, WM Motor had control over the entire manufacturing process. WM Motor was also confident at that time, hoping to achieve an IPO through multiple rounds of financing.

When Geely initiated that lawsuit in 2018, it was when WM Motor was at its peak. It is difficult to say that Geely's intellectual property lawsuit was the direct reason for preventing WM Motor's IPO, but investors seeing such lawsuits would also have significant doubts about WM Motor. As the automotive industry is capital-intensive, requiring investments of tens of billions of yuan, completing an IPO is crucial for automakers like WM Motor. WM Motor, which has been unable to complete its IPO for a long time, will eventually struggle to survive.

△WM Motor is already struggling to survive

Emphasizing the Foundation of "Positive Development"

In the past, the design departments of some automakers in the domestic market were referred to as "tape measure departments" by the media. They achieved rapid model design and launch by directly imitating the styling of foreign models or even copying chassis designs. Although this approach may win a certain amount of sales in the short term, various problems will emerge over time. In today's highly transparent information age, relevant plagiarism information will be widely spread on the internet, making consumers who purchase such models feel embarrassed. Not to mention that this approach, which knows the results but not the reasons, can lead to various quality issues.

△Chinese automakers can no longer follow the old path of imitation and plagiarism

Currently, Chinese automakers are seeking to go global. With severe overcapacity in the domestic automotive market, only by selling cars to more countries can they effectively resolve domestic excess automotive capacity and avoid disorderly price wars between enterprises. Chinese electric vehicles are gradually emerging in the international market, not to mention in European markets, but even in developing countries like Thailand, they can command higher premiums.

△Chinese automakers must pay close attention to intellectual property rights when going global

In European and American markets with stronger purchasing power, their requirements for legislation and protection of intellectual property rights are stricter than those in China. At this time, if our automakers continue to use the past reverse design method, they will surely struggle in European and American markets. However, comprehensive positive development means investing a lot of money upfront, from product research to styling design, from vehicle platform development to the design of specific components, all of which require significant human and material resources. Therefore, through the lawsuit between Geely and WM Motor, we can see the importance of the positive development research and development model. We can disassemble cars and refer to better designs, but the prerequisite must be to fully respect each other's intellectual property rights.

Commentary

Whether or not Geely collects the money, its victory over WM Motor has inspired domestic automakers in protecting intellectual property rights. For independent brands, it is necessary to quickly sort out and formulate their own intellectual property strategies. If Chinese automakers want to achieve higher premiums, intellectual property protection is also an area where we need to integrate into global standards. It is not only about protecting our own core technologies from being leaked but also a required course for us to enter the global market.

(This article is originally created by Heyan Yueche Studio and may not be reproduced without authorization.)