Knowles, defending patents, says fair trial in China "impossible"

BEIJING, April 2 Wed Apr 2, 2014 9:41am EDT

BEIJING, April 2 (Reuters) - Knowles Corp, a New York-listed maker of advanced micro-acoustic products, said a patent infringement case involving Chinese group GoerTek could not be decided fairly after a provincial court barred lawyers for Knowles from entering its own trial.

Lawyers representing Knowles had been blocked from entering Weifang Intermediate People's Court in Shandong province this week, the Itasca, Illinois-based company said in a statement.

"The Weifang Court's decision to bar Knowles from the legal proceedings makes a fair trial impossible," Jeffrey Niew, Knowles's chief executive, said in the statement.

No-one at the Weifang court could be reached for comment. Spokespeople for GoerTek, which is based in Weifang, could not be reached for comment.

A call to the office of GoerTek's chief executive was referred to the company's Intellectual Property Rights department, where an official declined to discuss the matter in any detail.

"I think this is a problem between Knowles and the court," the official who identified himself as Mr. Song told Reuters. Song did not give his position within the department.

China has long been a centre for disputes over intellectual property rights. Last year a U.S. research group called the Commission on the Theft of American Intellectual Property said 80 percent of global intellectual property rights abuse occurred in China.

The Weifang trial stems from patent disputes involving micro-electro-mechanical systems, or MEMs. Knowles says it began filing patents for the technology starting in the early 2000s.

MEMs technology is used in the manufacture of microphones and speakers and is present in nearly all high-end smartphones, including those produced by Apple Inc, Samsung Electronics Co and Blackberry Ltd.

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Knowles, which began producing MEMs products at its factory in the eastern Chinese city Suzhou in 2001, claims GoerTek used that technology to produce MEMs microphones in 2008.

In June, Knowles filed a suit against GoerTek in the United States for patent infringement. It also asked the U.S. International Trade Commission to investigate. Two weeks later, GoerTek counter-sued against Knowles in Weifang.

"Knowles continues to go through official Chinese legal channels and is asking for the most basic of legal rights: to be present and defend itself at trial so the court can make fair legal decisions based on the merits of the case," the company said.

In July, the Weifang court ordered a group of nearly a dozen people, some carrying clubs and handcuffs, to raid Knowles' Suzhou factory. They seized more than 85,000 microphones to obtain finished products for inspection.

The court later issued a punitive order against Knowles for "severly obstructing" its performance.

Knowles also charged that the Weifang court allowed GoerTek representatives, using GoerTek technical equipment, to conduct inspections of Knowles' finished products for alleged IPR infringement, rather than independent third parties.

Goertek, which was founded by billionaire Jiang Bin in 2001, reported revenue of 10 billion yuan ($1.6 billion) last year, a 38.2 percent increase over a year earlier. Its share price has gained 11.6 percent over the last 12 months.

Knowles was previously a subsidiary of Dover Corp. It was listed on the New York Stock Exchange last month. ($1 = 6.2069 Chinese Yuan) (Editing by David Holmes)

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