During a business trip to Shenzhen, we had a chance to talk with a Chinese company Andun which provides an intellectual property protection platform against counterfeit products.
Andun has been building a network of lawyers to investigate infringing products and stop infringement activities for its customers. An interesting point of the business model is that Andun does not charge for such activities to the customers. Settlement money and compensation for damage are its revenue source for Andun and its allied lawyers. The customers can not only remove infringing products from the marketplace at no cost, but also receive a part of the damages. Therefore, this business model is realized at the risk of Andun and the allied lawyers. However, they have been doing well so far by carefully choosing cases. Andun is now expanding its business out of China.
In my view, this business model requires the following conditions to become successful.
- There are numerous infringement cases that happen;
- It is possible to receive enough settlement money or compensation for damage; and
- It is possible to resolve a dispute relatively in a short period of time.
The IP situation surrounding China seems to be good fit. But in Japan, this business model does not seem to work, considering the above conditions, though there may be some specific cases in which it works.