Guarding patents crucial for long-term success

Faced with Section 337 investigations from the United States, Chinese companies should integrate patent protection with their business expansion plans.

Meanwhile, they can have more confidence in winning cases.

"When Chinese companies are faced with a 337 case at the US International Trade Commission, it is always a new experience for them," said Shara Aranoff, a former commissioner and chairman of the ITC.

Before that happens - that is, when Chinese companies enter the US market or start to grow in the marketplace - they should pay more attention to intellectual property rights protection, she said.

And then, if they do become involved in a Section 337 case, it is really important for them to understand that they have many opportunities to mount an effective defense at the ITC, said Aranoff.

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"The ITC is immune to politics. It makes decisions based on facts and law," she said.

"A respondent only needs to disprove any one of the things on the long list to win the case. There are a number of points that companies can raise and defend if they participate in the proceedings," she said.

According to the ITC, Section 337 cases "involve claims regarding intellectual property rights, including allegations of patent infringement and trademark infringement by imported goods".

Further, under the ITC definition: "Other forms of unfair competition involving imported products, such as infringement of registered copyrights ... misappropriation of trade secrets ... and false advertising, may also be asserted."

Broadly speaking, talking about Section 337 disputes between the US and Chinese companies, people tend to count the number of Chinese companies that are on the responding side and say these are cases by US companies against Chinese companies or by the US against China.

"I think it is a mistake to judge it just on the nationality of the headquarters of the companies that are involved," she said. Many of the US-based companies that bring these cases also make products in China.

"And so what you see is a fight for US market share," said Aranoff.

The government agencies that hear the cases do not get to select how many cases or which industries, according to Aranoff.

In 2013, the ITC launched 42 investigations under Section 337 concerning patent infringements, 13 of which involved Chinese companies, according to the State Intellectual Property Office.

Aranoff said the investigations are not becoming more intense.

"The percentage of the 337 cases that involved Chinese companies was about the same as that recorded over the past several years," she said.

Aranoff said the number of cases was very high in 2011 but has since declined.

The number of Section 337 probes targeting Chinese companies peaked at 26 out of 69 in 2011, and China has been the most investigated country in terms of the number of annual cases since 2003, according to China Trade Remedy Information.