The USITC launched Section 337 Investigation of "certain optical disc drives, components thereof, and products containing the same" from seven companies in Asia to confirm whether these products violate patent rights of the U.S. companies.

In recent years, ITC has launched 337 investigation aganist several Chinese companies like Huawei, ZTE and SANY. How should Chinese company respond to the investigation?

Competition triggers 337 investigation

Products involved are mainly desktop computers, laptops, DVD, blue light players, CD players and game machines.

And the seven companies involved are China Lenovo, Mediatek, LG, Samsung, Nintendo, Panasonic and Toshiba. The investigation is based on a complaint filed by Optical Devices, LLC, of Peterborough, on NH, on September 3, 2013, and on products containing the same that infringe patents asserted by the complainant. The complainant requests that the USITC issue a limited exclusion order and desist orders.

At the end of 2012, Lenovo overtook HP in PC sales for the first time and became the largest PC manufacturer in the world. Then Lenovo was launched 337 investigation less than a year, which had very clear implications for the company's export arrangements. "Although the storage device are upgrading in recent years, the heat of disc drives seems lower than the previous years. As a big company, Lenovo, however, still enjoys high competitiveness  and broad market prospect. Thanks to the advantages of low cost, Chinese companies including Lenovo keep breaking sales records, which will definitely impact overseas IT companies including the U.S. IT companies. That's the reason why the USITC launched 337 investigation aganist Chinese IT companies,"said a relevant expert.

How to respond

According to the statistics, the number of 337 investigations that China is invloved in has been the largest in the world. Among the relevant ruled cases, 60% Chinese companies lose out in the cases, 26% higher than the world's avearge.Some Chinese companies even turn pale at the mere mention of 337 investigation.

Yu Guofu, Director of Beijing Shengfeng law firm, however, does not agree to attribute 337 investigation to a unhealthy competition. "From the design purpose of 337 investigation, it is not directly aimed at China. It just becasue China is the most important trade partner of the U.S., and the U.S. imported a large numbers of product from China. As a result, the conflict and friction over the trade is rising,"according to Yu.

"All Chinese company have to do now is not to response or moan about the injustice of system design, but to actively use the system to safeguard their lawful right,"said Yu.

With the development of Chinese company and S&T product trade, ITC begin to frequently  raise difficult questions to Chinese companies by 337 investigation. Ma Zhiguo, Director of IP Research Center of Xi'an Jiaotong University, thought that it is a typical reflection of the U.S.'s trade protectionism in the law.

"It is a kind of trade battle between Lenovo and Optical Devices when Lenovo was subjected to 337 investigation," said Ma Zhiguo. On the back of IPR, the multinational firms which have IPRs in the U.S. use 337 investigation as a tool to limit competition, and curb our industry upgrade and product export. It created patent barriers and made the competitors hard to break through.

"China should take active law and policy measures to support and protect Chinese companies' participation in the international competition. Firstly, China should provide policy guidance for international trade, strenthen the system building of IP application and protection, establish a infringement warning mechanism. Secondly, China should make full use of WTO dispute-settlement system and find a solution to trade discrimination with the U.S. government ." said Ma. He also stressed that China should make law to reduce the negative effects within the WTO rules.

(China IP News)