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What is "337 procedure"?
In the United States, the legal protection of intellectual property has some administrative means in addition to judicial procedures. Among them are the administrative investigation procedures stipulated in Article 337 of the Tariff Act of 1930. The program is operated through the International Trade Commission (ITC).
The anti-dumping law and the 337 procedure represent, in a sense, the two stages of the "trade warfare" between U.S. companies and foreign companies. Anti-dumping deals with price competition, and the 337 procedure investigation deals with competition in the fields of technology and intellectual property. . For example, in the 1960s and 1970s, the main targets of anti-dumping in the United States were Japan and South Korea; after the 1980s, the 337 procedure investigation in the United States became an important administrative measure to investigate the infringement of intellectual property rights of foreign companies, and Japan and Korea gradually became investigations. The main object. Since the 1980s, Chinese products have begun to enter the US market. At the same time, anti-dumping investigations against the United States have continued to increase; in recent years, China has become the main country in the US Section 337 investigations.
Legal and economic figures predict that in the next 10 years, the 337 procedure will be the biggest threat to Chinaâ€™s exports to the United States and will be greater than the anti-dumping and general court infringement lawsuits. Because, for US companies, the initiation and litigation costs of anti-dumping procedures far exceed the cost of 337 procedures, generally requiring the support of the entire industry, and it is not easy to initiate; and in infringement litigation, it is the products that the defendants have entered into the United States. However, the plaintiff who won the 337 procedure can effectively prevent competitors from entering the United States. This is not limited to the defendant, and sometimes even includes non-defendant products. In other words, if a U.S. company feels competitive pressures on certain types of Chinese products, it can independently initiate 337 procedures and exclude such products from the United States outside of the United States when saving time and money.
On the other hand, "Section 337" does not require the premise of actual damage, which is much more stringent than the world's usual intellectual property laws. If the US domestic application party can prove that the imported product has infringement facts, and there are indeed related industries or related industries in the United States that are preparing to establish the existence of unfair trade behavior of the respondent, it can limit the product to enter the US market, and there is no Time limit, if it is a permanent exclusion order, the product involved may never enter the US market, resulting in a large number of downstream products in China being implicated due to a technology complaint.
After Chinaâ€™s accession to the WTO, Sino-U.S. trade continued to grow. However, due to protectionist considerations, industries such as the US chemical industry, machinery manufacturing, steel, textiles, furniture manufacturing, and food processing increasingly adopt various quasi-judicial procedures (ie, anti-dumping, Section 337 investigations and safeguards) provided by the US Foreign Trade Tariff Act. Measures, etc.) Attacked Chinese companies to eventually suppress the export of Chinese products to the United States. According to statistics, in the past three years, the U.S. 337 investigation into China has risen linearly: 17 cases were filed in 2002, 5 cases occurred in China, accounting for 29%; 18 were filed in 2003, 8 cases were in China, accounting for 44%; 26 cases were filed in 2004. There are 11 cases for China, accounting for 42%.
In the United States' 337 investigation, Chinese enterprises have been in a passive position. Even if it is the final settlement, it is forced to pay a high patent license fee because there are no chips. Since 1986, Chinese companies have encountered investigations in Section 337 of the United States. Most of the companies have chosen not to file suits, and companies have been sentenced in absentia, leading to the closure of the gates of multiple industries. Until 2004, the mercury-free alkaline battery industry headed by Guangdong Hutou Battery Co., Ltd., as a result of its active response to the case, began to watch out for â€œ337 proceduresâ€ and â€œanti-dumpingâ€.
The Situation Faced by Chinese Enterprises Since 1984, the US International Trade Commission has started hearing 337 procedures involving Chinese companies and has grown year by year. However, before entering this century, Chinese companies took an evasive attitude, resulting in plaintiffs easily obtaining judgments in absentia. As a result, Chinese companies that lost the lawsuits were generally not so assertive as to make it difficult for the outside world to know.
In the 39 â€œ337 investigationsâ€ conducted by the United States against China, the industries involved in the products involved are relatively concentrated, mainly in the electronics industry, chemical industry, light industry, machinery industry, automobile industry and leather industry. Among them, 16 cases involved the electronics industry, accounting for 41% of the total number of investigation cases; 10 cases involved the chemical industry, accounting for about 26%. This also reflects the gradual increase in the share of mainland enterprises in the US market, following mainstream technologies, and increasing the technological content of export products, which objectively constitutes competition with domestic products in the United States. At present, with the continuous increase in the technological content of Chinaâ€™s export products, the means by which foreign companies restrict the entry of Chinese products have also shifted to the high end.
Anti-dumping is aimed at price competition, and the "337 investigation" is aimed at competition in the fields of technology and intellectual property. On the other hand, the â€œ337â€ clause in the United States prohibits all unfair competition or unfairness in imports to the United States. Of the 39 cases in the United States against the Mainland of China, 26 cases initiated 337 investigation procedures on the basis of patent infringement alone. This reflects the weak input and protection of patents by mainland enterprises in China, and it is only because of this that people in the country are restricted. Foreign countries have severely encircled the Chinese enterprises in some important high-tech fields. The use of intellectual property lawsuits can bring great economic benefits to foreign companies.
Many of the companies in China lacked independent intellectual property rights and invested less in R&D costs. Many products relied on imported core components to export. The entire process of introducing imported technology components lacks awareness of intellectual property rights. On the one hand, the introduction of technology has become a simple imitation. On the other hand, although digestion and absorption have not been protected by using intellectual property rights, let alone applying for patents abroad, plus the export process. Chinaâ€™s lack of understanding of the legal environment of the target country has led to frequent foreign intellectual property litigation.
It was not a win-win war. In 2004, Guangdong's Hutou brand battery counterattacked after encountering 337 procedures. This time it was China's battery companies and industry associations that attacked each other. Once losing the case, it means that there are more than 10 billion Chinese batteries exported every year. It is difficult to enter the U.S. market. When the U.S. International Trade Commission announced that the plaintiff, American Energizer, had lost, it meant that Chinese companies had won for the first time in responding to foreign intellectual property rights and trade disputes. The tiger's head victory was described by the Chinese industry as the historic "Nanchang Uprising" for Chinese exporters. From this year onwards, Chinese companies finally put the 337 process on the agenda, and some large companies have stated that they should respond actively. The experience of Guangzhou Hutou Battery Group Co., Ltd. is: â€œBoldly responded, the accused company must work together, the state supports, and there is independent intellectual property rights!â€
Exporting companies must master relevant laws and regulations and give full play to the lead role of industry associations. In the United States, they hire lawyers who have no prejudice against China and have relevant lawsuits. Wu Kaili, chairman of the Guangdong Provincial Business Confederation, believes that these three items are basic for dealing with such issues. Elements.
â€œActually, this is not a war that cannot be won. Chinese companies have a lot of economic accounts, but they often do not take these risks into account.â€ Beijing Deheng lawyers who have worked as an attorney for the US for many years and represented many cases of intellectual property infringement. According to Lin Xiaoyun, a global partner of the firm, the key lies in the fact that domestic defendants should fully understand their own rights and know how to use these rights to maximize their legitimate interests. In fact, "337 procedures" also provided the accused party with appropriate legal procedures to protect their interests. The most important thing is that as long as the respondent responds to the case, the complaining party must prove that it has legal intellectual property rights. It is very difficult for the unregistered intellectual property rights, such as the general commercial appearance, to collect evidence. Even if the other party has a valid patent, the responded party may also file a counterclaim for invalidation of the patent.
The famous Japanese companies Sony, Toshiba, and Hitachi had all been the main targets of the 337 investigation. These companies developed passive responding to active responding, and eventually began to apply for a large number of patents in the United States to prevent the 337 investigation. It is a matter of grave concern that in the past 337 procedure cases, most of the defendant companies in China have taken the initiative to abstain from responding without understanding these circumstances, so that Chinese companies are known to have â€œnot beatenâ€ in the United States. Go back and walk around."
According to legal experts, in the United States, the combination of colors, colors, sounds, and even odors can be the main body of trademark protection. Enterprises should pay more attention to avoid infringement. On the other hand, establish its own intellectual property protection system. In particular, we must pay attention to the technical transfer contract must have the right to guarantee the terms and try to avoid the risk of the contract.
As far as specific operations are concerned, infringement should be avoided before the products are exported, and the intellectual property rights of the exporting country should be investigated. For products commissioned by others, set aside relevant information. What is particularly important is that when Chinese companies are sued by US companies, they should promptly take the initiative to respond. If the U.S. patent or other intellectual property rights owner believes that the Chinese company is infringing, the parties concerned should respond positively after receiving this letter, otherwise they may be subject to 337 investigation. Since "337 investigations" are all over a million US dollars, up to a maximum of 3 million US dollars, and individual companies are often unbearable, if there is no Chinese company defending in the "337 investigation", the USTC Administrative Judge shall be absent from trial without exception. The Chinese company was found to have lost the case. Enterprises, association organizations, and government agencies need to show greater determination and perseverance than anti-dumping responding to deal with cases of Section 337.
Related Links The US International Trade Commission (referred to as USITC) is an independent non-partisan, quasi-judicial Federal agency formerly known as the US Tariff Commission established in 1916. Determine whether domestic U.S. industry is harmed by dumping or subsidy of foreign products; determine the impact of imports on U.S. domestic industry sectors; and take measures to respond to certain unfair trade measures, such as patent, trademark or copyright infringement; Research on trade and tariff issues, providing technical information and advice to the President and Congress and other government agencies on trade and tariff issues.
The US International Trade Commission and the Ministry of Commerce are jointly responsible for US anti-dumping and anti-subsidy investigations. The International Trade Commission is responsible for determining whether the domestic industry sector in the United States has been damaged by dumping or subsidies.
Deanna Tina Okun served on the US Trade Commission until June 16, 2008. The term of office of the Vice Chairman of the United States International Trade Commission is from June 17, 2004 to June 16, 2006.
(Author: Deng Wei)
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