Fortwo Introduced in China, With Caveat

No, Daimler AG is not selling its previous-generation Smart Fortwo in China next year.

The question arises because the launch announcement from Auto China Beijing 2008 repeatedly refers to “the original” Fortwo, now in its second iteration.

“Fashion-conscious young people, in particular, seek an agile, trendy vehicle for their flexible urban lifestyle in order to set themselves apart from others,” Daimler’s statement says. “Against the background of these developments, (Daimler’s) Mercedes-Benz Cars decided to launch the ‘original’ 2-seater Smart Fortwo on the Chinese market in mid-2009.”

Says Daimler spokeswoman Julia Englehardt: “The term ‘original’ was used in the press release because we already saw ‘copies’ of the Smart Fortwo in some countries.”

In 2006, Daimler became embroiled in a heated defense of its product after China-based CMEC launched production of the Electric City Smart – a battery-powered, 2-seater that mimicked the Fortwo’s size and styling almost exactly.

The knockoff was sold in China and Eastern Europe, according to media reports.

Intellectual property protection has been a hot-button issue for overseas-based auto makers seeking access to the burgeoning Chinese market. Lax standards and ineffectual enforcement allowed infringement to flourish, critics say.

Lax regulations in China allowed competition to copy Smart Fortwo.

But protecting a product’s appearance from copycats can be a complex proposition, warns Jim Singer, partner in Pepper Hamilton’s Pittsburgh law office. Appearance, or “product dress,” is subject to a subset of trademark law, he says.

While the situation in China is improving, it remains “an area to tread cautiously,” Singer says.

“Some companies are having some success in recent years enforcing intellectual property rights in China,” he adds. “But it’s a slow process.”

The first U.S. patent legislation was enacted in the late 1700s, Singer notes. So a culture of fairness, as defined by American standards, is a product of evolution that spans four centuries.

“The first intellectual property laws in China were enacted in the 1980s,” Singer says.

A recent U.S. report on counterfeiting reveals 81% of phony goods seized at American ports in 2006 were from China.

Against this backdrop, the Bush Admin. is pressuring Beijing to alter a statute that declares counterfeiting has not occurred unless a minimum amount of fake goods are seized from the perpetrator.

Meanwhile, Smart touts the Fortwo as “a real trendsetter” for safety.

The Fortwo’s egg-shaped construction “protects its occupants like the hard shell,” says the auto maker’s statement.

The Fortwo, arriving now in U.S. showrooms, earned three to five stars in National Highway Traffic Safety Admin. crashworthiness testing. It was the smallest car ever tested by the U.S. federal agency.

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