Chinese firms urged to improve their IPR knowledge

Chinese companies need to develop their understanding of intellectual property rights (IPR) before expanding overseas, experts said Sunday, following a series of Section 337 investigations in the US involving Chinese companies.

The US International Trade Commission (USITC) instituted Friday an investigation of electronic devices that have a retractable USB connector, such as cameras, digital audio recorders and MP3 players. Chinese firm Huawei Technology Co was among the targets, but it was not available for comment Sunday.

The Ministry of Commerce (MOFCOM) could not be reached Sunday. In February, the ministry urged businesses to get prepared to defend themselves, following similar probes involving 11 companies from the Chinese mainland.

Section 337 of the US Tariff Act of 1930 helps protect trademark owners against patent or registered trademark infringement.

The number of Section 337 investigations against Chinese companies has been rising in recent years, partly because they are exporting more high-technology products these days, He Weiwen, co-director of the China-US-EU Study Center under the China Association of International Trade, told the Global Times Sunday.

The US launched 12 investigations under Section 337 in the first quarter of 2012, with eight or 66.7 percent involving companies from the Chinese mainland, nearly 17 percentage points higher than a year before, according to data released on May 9 by the China Trade Remedy Information, a website run by the MOFCOM.

Some Chinese companies fail to observe IPR norms, resulting in the increasing number of Section 337 investigations, He said.

Ran Ruixue, a licensed lawyer in China and New York and a partner with Beijing-based Jun He Law Offices specializing in Section 337 investigations, told the Global Times Sunday that many Chinese companies lose out in overseas trade wars because they do not defend their cases before the USITC.

The proportion of companies who do respond has been rising, with quite a few winning their cases, but there are still many firms who choose not to defend themselves, partly due to a lack of international experience and high legal costs, Ran noted.

"The IPR disputes in the USITC offer a lesson that Chinese companies should learn from. They need to conduct due diligence investigations on whether their exports might infringe on rights in the US and establish an IPR strategy for foreign trade," Ran noted.

She also suggested that sufficiently internationalized Chinese enterprises that have patent registration and investment in the US should use Section 337 to protect against infringement of their own rights, something that Japanese and South Korean companies have already done.