The legal system of Section 337 in the United States and its impact on me
1. The development process of “Section 337”
“Section 337” is the United States’ “Tariff Act of 1930” "The abbreviation of Section 337 is now compiled in Section 1337 of Title 19 of the United States Code (U.S.C). The predecessor of “Section 337” is “Section 316” of the Tariff Act of 1922, which stipulates: “If unfair competition methods and unfair practices are found in import trade, the Tariff Commission shall report the situation to the President. The president has the power to increase tariffs on relevant products or ban these products from entering the U.S. market." In order to strengthen the protection of U.S. intellectual property rights in import trade, on this basis, the U.S. Congress enacted "Section 337" in 1930. Later, this clause became one of the important trade protection tools of the United States.
The development of "Section 337" can be divided into four stages:
1. 1922~1930, the forming stage. During this period, the Tariff Commission made four affirmative rulings, ruling that foreign countries’ practices of counterfeiting U.S. goods, counterfeiting U.S. trademarks, and infringing U.S. patents were “unfair methods of competition or unfair practices.”
2. From 1930 to 1935, it was a stable and effective stage. This period was 5 years after Section 337 first came into effect, and the Tariff Commission’s rulings mainly focused on patent cases. During this period, the U.S. Court of Customs and Patent Appeals continued to uphold the Tariff Commission's decisions; whenever the Tariff Commission made recommendations, the President routinely issued orders banning certain products from entering the United States.
3. From 1936 to 1968, the inaction stage. This method was hardly used at this stage. Initially, the Tariff Commission did not actually enforce the law in practice, and later the President refused to issue an injunction despite a motion by the Tariff Commission.
4. From 1968 to present, the revival stage. In 1968, a U.S. patent holder filed a complaint with the Tariff Commission claiming that a drug had entered the U.S. market without authorization. Following the Tariff Commission's recommendation, the President issued a temporary restraining order. Subsequently, restraining orders were obtained in three more cases. This was the first time since 1936 that the Tariff Commission had taken action under the Act. During this stage, Section 337 underwent five revisions in 1974, 1976, 1979, 1988 and 1994.
II. Content analysis of “Article 337”
(1) Main content and legislative purpose
The main content of “Article 337” is: “If any If the import behavior contains unfair competition methods or unfair practices (mainly referring to infringement of intellectual property rights such as U.S. copyright, patent rights, trademark rights, and utility model design rights), which may inhibit U.S. industries, the U.S. International Trade Commission can respond to U.S. domestic enterprises The application for investigation. ”
The legislative purpose of “Section 337” of the U.S. Tariff Law is to prevent U.S. industries from being harmed by unfair competition of imported products, especially in terms of intellectual property rights.
(2) Substantive requirements for the application of “Article 337”
1. Statutory protection objects: patents, registered trademarks, copyrights, mask works
After the revision of the Trade Law in 1988, intellectual property issues are currently divided into separate categories B, C, and D in "Article 337" Section (Intellectual Property Rights Section) shall be specified. Under these subsections, if certain goods infringe a U.S. patent, registered trademark, copyright, or mask work, and there is an industry in the United States that is protected by such patent, registered trademark, copyright, or mask work, or those industries are in In the process of establishment, it is illegal to import, sell for import, or sell these goods after importing.
2. The subjects of these unfair competition methods or unfair practices include owners, importers or underwriters, as well as agents of the above entities.
3． Existence of relevant US industries
There are three main criteria for judging whether there are relevant US industries: a considerable amount of investment in factories and equipment; the use of a considerable amount of labor and capital; or the use of intellectual property (including engineering, research and development) or permitted significant investments. From a practical point of view, the threshold for "Section 337" regarding the existence of relevant U.S. industries is very low.
4． There are unfair competition methods or unfair practices
These unfair competition methods or unfair practices are mainly violations of US patent laws, trademark laws and other relevant intellectual property laws and regulations.
5. Causes damage or threats of destruction to relevant industries or trade in the United States
Specifically, these damages or threats mainly include: destroying or actually harming U.S. industries; preventing the establishment of the industry; restricting or Monopolizes trade and commerce in the United States.
3. Compliance analysis of “Article 337”
(1) History of disputes over “Article 337” of the General Agreement on Tariffs and Trade
1.1981 Complaint filed by Canada with the General Agreement on Tariffs and Trade in 1981
In 1981, Canada filed a complaint with the General Agreement on Tariffs and Trade regarding the United States' "Article 337", accusing "Article 337" of violating the principle of national treatment. The GATT expert panel believes that "Article 337" does violate the national treatment principle of the GATT, but because it is a "necessary" measure to ensure that laws or regulations protecting patents are complied with, it is in compliance with the GATT. exception to Article 20(d) of the GATT and therefore does not violate the GATT. The reason why this measure is "necessary" is that civil litigation in the U.S. federal district court cannot provide sufficient and effective protection to the patent owner. The expert panel believes that under the existing U.S. legal system, the most feasible way to effectively protect a patent owner’s right to exclusively use its patent in the United States is to resort to the general exclusion order procedure of “Section 337.”
2. Litigation filed by the European Community in 1988
Since the negotiations between the European Community and the United States did not achieve satisfactory results, the European Community requested the establishment of experts group. Ultimately, the expert panel concluded that under “Section 337”, imported products enjoy lower treatment than domestic products in the United States. Therefore, “Section 337” violates the principle of national treatment and does not apply to the exceptions of Article 20 of the General Agreement on Tariffs and Trade. .
After the release of the GATT expert panel report, there was a heated debate in the United States about what measures the United States should take in response to the report. Finally, after the game among various interest groups, the United States made the following modifications to "Section 337" in accordance with the Uruguay Round Agreement Act: the investigation should be completed in the shortest possible time; if the defendant responding to the federal district court is also a " 337 Investigation", the federal district court should issue an order to suspend the trial of the same dispute case upon the motion of the defendant; the International Trade Commission can issue a general exclusion order only under certain circumstances; the respondent is allowed to file a counterclaim, and once the counterclaim is is filed, it should be immediately transferred to the district court, etc.
(2) "Article 337" does not comply with the provisions of the General Agreement on Tariffs and Trade and the World Trade Organization
Although "Article 337" has been modified, it has not calmed down U.S. trade Opposition from partners. Among them, the focus of the dispute is whether "Article 337" complies with Article 3, paragraph 4 (national treatment) of the General Agreement on Tariffs and Trade, and the introduction to Article 20 of the General Agreement on Tariffs and Trade (prohibition of "arbitrary or unreasonable discrimination") and Article 20(d) of the GATT (whether these investigations are “necessary”). Theoretically, the provisions of Section 337 of the U.S. Tariff Act of 1930 are not in compliance with the relevant principles of the WTO because:
(1) The "Section 337 Investigation" discriminates against imported products in practice. It is highlighted in two aspects: First, once a certain product is ruled to be subject to a general ban, all imported goods that meet the characteristics will be universally applied, without distinguishing the origin or manufacturer, even including currently unknown manufacturers and importers. This is different from the practice in domestic civil litigation where the penalties for infringing products are linked to specific infringers; secondly, some "337 investigations" do not specify the companies under investigation, but only the country of origin of the products under investigation, which in fact deprives them of The foreign companies involved in the case have no chance to respond to the lawsuit, which harms the interests of the companies involved.
(2) In 1989, the GATT expert panel ruled that the provisions of “Section 337” of the U.S. Tariff Act of 1930 and the practice of “Section 337” investigations were inconsistent with Article 337 of the GATT. Article 3, paragraph 4, stipulates that imported goods shall enjoy national treatment with respect to the application of domestic law, as well as the general exceptions in Article 20(d). Later, although "Article 337" was modified, it was still inconsistent with the relevant provisions of the General Agreement on Tariffs and Trade to a considerable extent.
IV. The impact of “Section 337” on my country
(1) Current status of the “Section 337 investigation” against China
Since December 29, 1986, the United States The first "337 investigation" against China was launched. It was not until 1993 that the second investigation was launched, and the number increased year by year thereafter. After 2002, China became the country that suffered the most "337 investigations". As of August 2006, it had been involved in 55 cases. These include cases in which Chinese export companies are directly sued, as well as cases in which China is the country of origin under investigation.
Among the 55 investigations in China, there were 47 cases on the grounds of patent infringement, 5 cases on the grounds of trademark infringement, and 5 cases on the grounds of simultaneous infringement of trademark and patent rights. 1 case on the grounds of trademark and copyright infringement, and 1 case on the grounds of trade dress.
(2) The impact of the “337 Investigation” on our company
1. The "337 investigation" has posed a threat to the export of our products. As my country's export structure continues to adjust and upgrade, this threat will become more and more serious. The industries involved in the "337 Investigation" are relatively concentrated, mainly high-end industries with high technology content, high added value and gradually expanding market share in the United States. These industries include electronics, chemicals, light industry, machinery, automobiles and leather. So far, the US "337 Investigation" has involved 30 cases in China's electronics industry, accounting for approximately 54% of the total number of investigated cases; 11 cases involving the chemical industry, accounting for 20%; and 8 cases involving the light industry, accounting for 15%. %; 3 cases involving the machinery industry, accounting for 5%; 2 cases involving the automobile industry, accounting for 4%; 1 case involving the leather industry, accounting for 2%.
2. It affects peers and upstream and downstream products, affecting the entire industry and causing huge losses to the companies directly involved. The rem jurisdiction of the “337 investigation” enables U.S. intellectual property rights holders to target all parties related to production, sales, and services. Once the International Trade Commission decides to adopt a general exclusion order, even if the products are not included in the lawsuit list, as long as they are directly or indirectly exported to the United States, even the downstream products and upstream parts and components of this product may be prohibited from import. scope, thereby losing the US market.
3. The grounds for prosecution continue to expand, making it difficult for companies to take precautions. Among the reasons filed against China’s “337 investigation”, the vast majority are based on patent rights. However, cases have shown that trademarks, copyrights, trade secrets, and even trade dress have become grounds for prosecution under the "337 investigation", and Chinese companies are facing more severe challenges.
4． The threshold for responding to a lawsuit is high, so many companies give up responding to the lawsuit. The issues involved in the "337 Investigation" are highly specialized, and Chinese enterprises have low awareness of intellectual property protection and lack relevant experience. Therefore, in many cases, it is difficult for Chinese enterprises to respond in a timely and effective manner. In addition, the expensive lawyer fees and expert fees required to respond to investigations are also unaffordable for Chinese companies. Therefore, many Chinese companies often respond passively when encountering the "337 investigation", resulting in losing the lawsuit and losing the US market.