Will Chinese Investment in A123 Systems Mean Intellectual Property Theft?

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Fears over Chi­nese sources steal­ing out­sider intel­lec­tion prop­er­ty for advanced vehi­cle tech­nolo­gies and exploit­ing it for their own goals has always been in the back­ground in Chi­nese mar­ket invest­ments. Observers will be watch­ing to see what hap­pens with the new merg­er between EV lithi­um ion bat­tery mak­er and Chi­nese auto sup­pli­er Wanx­i­ang Group Corp. Part of the invest­ment and own­er­ship stake for Wanx­i­ang is bring­ing the A123 tech­nol­o­gy to the Chi­nese mar­ket.

Here are a few issues to think about:

• The top­ic has been a hot one in Wash­ing­ton dur­ing an elec­tion year. A123 receives U.S. Dept of Ener­gy grants tied into keep­ing pro­duc­tion and jobs in the U.S.

• Some indus­try exec­u­tives includ­ing engi­neer­ing chiefs from two glob­al auto mak­ers expressed con­cern at the prospect that A123 could lose con­trol of its fierce­ly guard­ed bat­tery design and man­u­fac­tur­ing know-how. They are par­tic­u­lar­ly wor­ried that Wanx­i­ang might shift part of A123’s research and devel­op­ment activ­i­ties to Chi­na.

• The enabling tech­nol­o­gy was in part devel­oped by a Mass­a­chu­setts Insti­tute of Tech­nol­o­gy (MIT) pro­fes­sor who is one of A123’s founders, and is patent­ed.

• Peo­ple close to Wanx­i­ang and famil­iar with its A123 invest­ment, said the compa­ny would behave respon­si­bly with A123’s intel­lec­tu­al prop­er­ty, and not­ed the U.S. firm already pro­duces advanced bat­ter­ies in Chi­na. Fears of A123 los­ing con­trol of its intel­lec­tu­al prop­er­ty are overblown, they said.

• Wanx­i­ang is a major auto parts sup­pli­er and has a rel­a­tive­ly large pres­ence in the Unit­ed States hav­ing bought up dis­tressed parts mak­ers over the past decade.

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