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Research on the Strategy of Tackling Section337Investigation in USA

Author: WangShuai
Tutor: GongHuanGang
School: Dongbei University of Finance
Course: International Trade
Keywords: 337investigation intellectual property strategy of tackling337investigations
CLC: F752.7
Type: Master's thesis
Year: 2013
Downloads: 4
Quote: 0
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With the development of China import and export trade and improvement of export product competition capability, trade friction turns to be fiercer and fiercer.337investigations, the main weapon utilized by US government on intellectual property has become the biggest obstacle for China enterprises to export goods to the USA. According to document from the Information Net of Trade Remedy, from2002to2012, number of337instigations focusing on China enterprises from China Continental is increasing greatly. And among all the cases, China enterprises could take40%of all the cases. On the other hand, according to data from China and American Customs, in2012, trade deficit between China and the USA expanded greatly, reaching to200.3billion dollars. Compared with the deficit in2011, America’s bilateral deficit with China increased8.3%. What’s more, technological contents of products exported to the US are improving, Value of high-tech products exported to the USA in2010is492.4billion dollars, while this data in2009is376.9billion. Recently, the implementation of "Going Ouf"utilized by Huawei, ZTE and Haier and some other high-tech China enterprises improved the proportion of high-tech products exported to the USA.On the other hand, Section337is famous for its severity, once a company is against Section337, the corporation or even the whose industry which investigated by the ITC may be forbidden to sell goods to American market which means that the whose industry has lost one of its biggest market. However, since most of export corporations have no information about Section337, which lead to many failures on facing337investigations. No matter from theory or from practice, Section337is an important issue for China government, enterprise and academic to lean and to deal with. Therefore, the author chooses Research on the strategy of Tackling Section337Investigation in USA as the title of this paper to find strategies to deal with Section 337through theoretical analysis, case anatomy and empirical research.In the first part, the paper introduces historical track and contents of337clauses.337clauses could trace back to Tariff Act of1920and Smoot-Hawley Tariff Act of1930, the issue of those two laws means that337clause is born.by offering a compromise path of liberalizing trade while expanding protection against unfair competition, Trade Act of1974and Omnibus Trade and Competition Act of1980have make main amendments on Section337. In the late1980s, a panel from GATT realized that the requirements in Section337were against the national treatment provision of the General Agreement on Tariffs and Trade, Uruguay Round agreement has been reached to prevent Section337. All in all, scope of application of Section337is enlarged and authority of the ITC is expanded. Then, the paper introduces the contents of Section337, in the process of337investigations, time limit for every process is short, which could bring a great challenge for the defendants, the process could be listed as below:Prosecution→Initiation of investigations→Reply→Initial determination→Determination by the ITC→President permission→Final determinations→Appeal. Except the process, the paper also introduces the remedies of Section337in this chapter, The Commission has authority to issue four types of remedial orders for violations of Section337:(1) temporary relief orders;(2) exclusion orders;(3) cease and desist orders; and (4) consent orders.In the second part, the author mainly especially makes a further analysis on the characteristics of337Clause by comparing with lawsuit of federal court anti-dumping instigations and the Special Section301, and analyzes why American enterprises favor making use of337investigation to copy with the problems of intellectual property right infringed. Through the comparison, the paper lists the characteristics of Section337:(1) It is easier to initiate337investigation for accusers.(2) It is easier to confirm the infringement of intellectual property.(3) Cost for accusers and responder is asymmetric.(4) Results are more terrible.In the third part, the paper introduces the present situation and problems of China enterprises facing337investigations. Right now, replacing Japan, China has become the biggest victim of337investigations. Among all the enterprises investigated by the ITC, high-tech companies have become the focus. Reasons are listed as below: first, China economic structure is changing, product mix is updating; second, the US government need to protect its domestic industry due to the high deficit; third, China enterprises lack of awareness of intellectual property; last, due to the high cost, China enterprises do not choose to respond actively.In the fourth part, also the most important chapter, the paper introduces the strategies to deal with337investigations through the aspect of China government, enterprises and industry associations.For China government, on one hand, it should provide policy orientation on intellectual strategy for China enterprises; on the other hand, China government, combining its resources, show its function with below ways:first,folly utilizing government resources, building an institute which aims at dealing with337investigation; second, improving the social foundation to prevent and defend337investigations; third, building and perfecting work mechanism to prevent and defend337investigations such as intellectual property pre-warning system and Right-safeguard mechanism.For China enterprises, the paper introduces their strategies from three aspects. Before the enterprises receive the notice of337investigations, the enterprises could act following below defenses plans:(1) China enterprises need to do a deep research on Section337.(2) learning from Japanese companies, China enterprise should accumulate resources about intellectual property.(3) China enterprises should run a comprehensive research about market which the enterprises would like to step into.(4) For those OEM manufactures, they should pay attention to the responsibility clearance when signing a contract. Once the notice has been delivered to China enterprises, enterprises could defend for themselves through tactics of response plan:(1) Enterprises should respond actively and in time;(2) Enterprises could hire experienced lawyers and choose proper responding strategies, like announcing the patents are invalid; or announcing that our products do not infringe the intellectual property of parties involved, although the patents are valid or announcing that patents are unenforceable.(3) China enterprises should share information with each other and build alliance to deal with Section337. If wining a lawsuit about337investigations is impossible, enterprises, fully utilizing the process of suspension of litigation of337investigations, run for make reconciliation. At last, China enterprise should also utilize Section337to protect their own rights, this is the offense plan:(1) China enterprises should understand that improving independent innovation ability is the key;(2) Owning intellectual property create the possibility of cross orders;(3) Applying the protection of intellectual property in the United States.For industry associations, they should act as a bridge between enterprises and government, and show their abilities to unite companies to deal with337investigations together. Finally, Government, enterprises and industry associations should work together to copy with337investigations.

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CLC: > Economic > Trade and Economic > States foreign trade > China's foreign trade > Trade relations with other countries
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