GDC terms IMAX suit 'baseless'

GDC Technology Ltd said in an e-mail response to China Daily on Monday that a lawsuit filed against the company by IMAX Corp is "baseless". GDC disagrees with and disputes the allegations in the complaint.

IMAX Corp, the leading giant-screen movie theater operator, is suing GDC, a Hong Kong-headquartered digital cinema equipment maker backed by Carlyle Group, for using what it claims are stolen trade secrets tied to its large-screen digital movie projection and conversion systems.

IMAX also claims that its former employee, Gary Tsui, stole the proprietary technology from IMAX and provided it to film companies in China.

The legal move demonstrates the fierce competition in the giant-screen movie theater segment of the world's second-largest film market.

The burgeoning film market in China in recent years and the fast-growing demand for watching movies on the giant screen have attracted more companies into the sector, in addition to the Canadian industry pioneer.

As of July 25, IMAX had 108 theaters open in China. Moreover, it has a backlog that's expected to take years to complete.

Co-developed by State-owned China Film Group Corp and GDC, China Giant Screen has become a major rival of IMAX in China, with a comparatively low ticket price and a rapid pace of expansion.

The number of China Giant Screen theaters is expected to reach about 50 by the end of the year, although it only officially entered the business in April 2012.

Separately, Poly Film Investment Co Ltd, a wholly owned subsidiary of the State-owned China Poly Group Corp, formally introduced its internally developed giant-screen projection system known as PolyMax in June.

Both China Giant Screen and PolyMax systems cost only about half as much as IMAX.

The revenue picture is also different for these systems.

The average annual box office revenue for a single IMAX screen is close to 8 million yuan ($1.3 million), while even China Giant Screen's highest-grossing screens only generate about half as much.

China continues to be a very important market for IMAX. In the first quarter, China contributed $11 million of the $50 million in the company's revenue worldwide, up 58 percent. That was the fastest growth rate in the world, according to the company's financial reports.

In the complaint filed by IMAX, it claims the theft of its trade secrets and their sale to competing companies has reduced its value and has hurt the company's profits and its relationship with its customers.