The intellectual property rights dispute between Nanjing Automobile Corp (NAC) and China's leading carmaker Shanghai Automotive Industrial Corp (SAIC) has again bubbled to the surface following the launch of NAC's MG 7 series this week.
NAC's MG 7 is considered to a rival to the Roewe 750, a Rover 75-based sedan unveiled in October last year by SAIC as its first own-brand high-end model.
The problem lies in the fact that the intellectual property rights of both the Roewe 750 and the MG 7 are derived from the original Rover 75 model.
NAC outbid Shanghai Automotive Industrial Corp. (SAIC) in 2005 to acquire the failed British carmaker MG Rover Group and its engine producer for 53 million pounds.
But SAIC bought the technology for two Rover models - the 25 and 75 - and their engines for 67 million pounds in 2004.
"According to the technology transfer agreement between MG Rover Group and SAIC, SAIC owns the IPR to the 25 and 75 models and any company must get approval from and pay SAIC for the use of the technology," Friday's Shanghai Securities News quoted an insider close to the deal between SAIC and MG Rover as saying.
But NAC said that with the technology transfer agreement, SAIC does not have the IPR and it is the NAC, the actual purchaser of the British company, that has the patent license.
Zhang Xin, the head of the MG project, said "the difference between the two cars is that the NAC's MG 7 is a pure English breed".
The SAIC declined to provide a detailed comment on the issue but a spokesman said, "Looking at the legal documents, it is clear who the IPR owner is.
"What SAIC is focusing on is the development of its own-brand models and we hope NAC will also do a good job in developing its own-brand models," he added.
"An asset sales agreement signed before a company's bankruptcy is protected by the law", said Bill Fishers, executive vice president of AmAsia International Inc, the leading importer and distributor of Chinese automobiles to North America.
Fisher issued a warning to future overseas distributors of the MG 7 to be aware of the risks of IPR disputes.