Importing from China and intellectual property

Thread Starter

andybrandi

Joined Jun 14, 2018
2
Hope this not too off-topic. Here we go:

I plan on selling some of the common ICs (LM358s, LM317s, 7805s and the like) on my small online shop (targeted at hobbyists like myself). Now I could get the "good" ones from TI/ST/ON, or just source them from China for 1/10 the price. Since component quality and reliability are not a top priority in my case, I favor the cheaper way (obviously), but then the question is: How do I not accidentally violate anyone's intellectual property in the process?

It would be easy to tell if I was going to sell fake MacBooks with a Banana logo on them, but it doesn't seem to be that easy with most ICs: These are often sold by multiple manufacturers even under exactly the same name, so sourcing those parts from some anonymous fab in China would probably not be a problem - but where do I draw the line? Obviously, the parts should not be branded as "TI" when they are actually not (that's just common sense, glad I got that far), but when is putting "L7805CV" (or whatever it is going to be) on a clone fine, and when is it not?

Granted, I could spend a lot of time doing patent and trademark research, but that's just one big false negative waiting to sue silly me. Any insights you could share with me?

Thanks! :)
 

dl324

Joined Mar 30, 2015
17,145
Welcome to AAC!
I plan on selling some of the common ICs (LM358s, LM317s, 7805s and the like) on my small online shop (targeted at hobbyists like myself). Now I could get the "good" ones from TI/ST/ON, or just source them from China for 1/10 the price. Since component quality and reliability are not a top priority in my case, I favor the cheaper way (obviously), but then the question is: How do I not accidentally violate anyone's intellectual property in the process?
I think you've got it wrong.

If you're going to become a distributor of electronic components, you owe it to yourself and your customers to make sure you're selling legitimate parts.

Those "cheap" parts you're getting from China are cheap for a reason. If the price is too good to be true, it's likely that they're counterfeit (rejects, remarked, salvaged, etc) parts and you have no business keeping those entities in business or selling them to your unsuspecting customers.
It would be easy to tell if I was going to sell fake MacBooks with a Banana logo on them, but it doesn't seem to be that easy with most ICs: These are often sold by multiple manufacturers even under exactly the same name, so sourcing those parts from some anonymous fab in China would probably not be a problem - but where do I draw the line? Obviously, the parts should not be branded as "TI" when they are actually not (that's just common sense, glad I got that far), but when is putting "L7805CV" (or whatever it is going to be) on a clone fine, and when is it not?
If the parts are genuine, they work out marketing details with the copyright/patent/etc owner. In that case, they'll be authorized to use the "generic" part number without infringing on any IP.

If the designs are now in the public domain, there's no IP violation.

Becoming a reseller of components comes with responsibilities. You shouldn't try to increase your profits by knowingly or unknowingly purchasing parts of unknown authenticity and quality. When I buy parts from Jameco and Newark, they come with a letter from their CEO/President attesting to the authenticity of what they sell. If you enter this business and intend to be reputable, you should know where your parts came from. If you're going to sell TI parts, you should be able to certify that the parts came through authorized channels. If you can't, you're going to become part of the problem.
 

Thread Starter

andybrandi

Joined Jun 14, 2018
2
Thanks for your reply Dennis. Now that I think about it, the way I stated my question was probably a little misleading. I certainly don't want to make customers believe they are getting "genuine" parts when in fact they are getting my cheap clones, nor do I want to be part of the problem :)

I probably should have asked:
I want to sell cheap clone ICs to people who want to buy cheap clone ICs. How can I find out if the part itself or the part number I intend to sell are public domain so I don't risk any legal issues?
From what you've said, this might be a lot harder than I expected. I'll probably be better off sticking to authentic parts. Thank you.
 

dl324

Joined Mar 30, 2015
17,145
I certainly don't want to make customers believe they are getting "genuine" parts when in fact they are getting my cheap clones, nor do I want to be part of the problem
If a part is a legitimate second or third or fourth source, it doesn't have to be designated a clone. The parts should be functionally equivalent. It's the same way with anything else. Anything from legitimate alternate sources aren't called clones; though they could be called generics.

EDIT: Corrected a typo.

With the rampant increase of counterfeiting from state sponsored Chinese sources, it's not safe to buy anything originating from China unless there is an OEM manufacturer there. Even if the parts are from an OEM who has a Chinese manufacturer, Chinese companies frequently compete with their customers (illegally); so you need to make sure it's coming from the OEM's distribution channel.

Another dirty secret about Chinese manufacturers is that they're likely to start cutting corners to increase their profit margin. So anyone contracting with a Chinese manufacturer could start out with a good product whose quality degrades over time. The Chinese are smart and do this in ways that are difficult to detect. So when the customer goes through a rigorous initial qualification process; little do they know that they'll have to continue qualifying going forward.

If you want to be a reseller, buy from places where part authenticity is guaranteed. They'll stand behind anything they sell and that protects you and your customers. If you want a good price, you need to buy in high volume to get a good price break, and you need to pay the price of having inventory.
 
Last edited:

Hymie

Joined Mar 30, 2018
1,297
I buy most of my electronic components form sellers in the Far East (via ebay), some for quite unbelievable prices (see an example below).

Of course I might have to wait a couple of months for delivery, but I have a stock of common parts and if I’m really desperate I can buy the part from a UK seller for more money.

https://www.ebay.co.uk/itm/New-50PC...-TOP-Quality/181882519906?hash=item2a590b0162

50 pcs of 555 timer for £1.22 (less than 2.5 pence each).

So without selling dodgy copy knock-offs, you could sell quite a few generic common parts and might make a profitable sideline out of it. But be aware, there are quite a few others already doing what you propose.
Besides competing with the Chinese (who pay no postage fees), you will have competition from locals.

Before you invest your hard earned cash in such an enterprise, take a look at what you can buy the components in bulk for, and the price others are charging based in your location.

One other tip, if based in the UK, no tax is payable on imported consignments of less than £18 (including P&P) – no doubt other countries operate a similar system – but may have a different threshold at which tax becomes payable.
 
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