Tuesday, June 07, 2005

CHINA STARTS GETTING WISE ON 337 ACTIONS - In a bit of poetic license, an undeclared "patent war" has been brewing between the US and China. Specifically, the US International Trade Commission (ITC) is becoming increasingly deluged by complaints from US companies about alleged infringement of their intellectual property, mostly patents, by Chinese imports.

Under US trade law, Section 337 of the Tariff Act of 1930 allows parties to petition the ITC for an order to stop importation of infringing goods at customs. As you can guess, Section 337 proceedings can be a huge headache for Chinese exporters, more so than anti-dumping measures, which, at worst, result in fines.

Potentially, the impact of a Section 337 order can be felt throughout an entire industry. When the ITC issues one against one product, it automatically applies to similar products as well. According to one comment, section 337 cases filed in the United States against Chinese companies since 1999 account for almost 40 percent of all Section 337 cases filed. Last year firms or goods from China again received the largest number of investigation notices, 11.
So serious has the trade threat become that the Chinese government has begun briefing companies on how to fight Section 337 claims.

[Blogger note - do you suppose advising companies not to blatantly infringe patents is a good idea, and such action could feasibly eliminate these pesky 337 actions?]

One interesting countermeasure for Chinese companies involves filing more patents in the US.


Well, for one, companies may give pause shooting off an infringement action knowing that you have some arrows in your own patent quiver. Second, and more importantly, once you start obtaining US patents, you can start filing your own 337 actions against competing products being imported into the US.

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