Study on the Countermeasures China enterprises deal with the America tariff law "337 clause"

                                      Before  Words

    In 1988, American International Trade Commission (United States International Trade Commission, hereinafter referred to as ITC) induced USA Trade Representative (Department) (United States Trade Representative, referred to as USTR) pointed out in the report, in 431 Usa Inc in the survey, due to insufficient for the protection of intellectual property rights in foreign countries, which in 1986 a year in total the $23800000000 loss. According to this estimate, the USTR Clayton Yeutter, the USA economic loss of about $50000000000[1]. In view of this, American business calls for countries to formulate standards and requirements of the same protection and American USA government can take legal measures to prohibit foreign infringed its intellectual property products into the American market. However, foreign manufacturers in American generally do not have business premises, which makes it impossible to prosecute foreign manufacturers, but only on the America domestic importers to prosecution, which makes it unable to through the legal way to restrict access to USA foreign tort product objective. Moreover through the judicial process, the court also difficult to any non foreign manufacturers to provide the prosecution party required information, investigation of evidence to the fact of infringement becomes difficult. So America tariff law set "337 clause", which in the judicial procedure to solve the lack of protection for intellectual property problem.

    So far, USA tariff law "337 clause" has become a tool of war in the market economy. To investigate the characteristics of time plus the "section 337" short, the respondent costs high, relief means serious, USA enterprises frequently for foreign manufacturers to appeal to the ITC to start the "337 investigation", with the Chinese gradually become a "world factory", as well as high-tech products continued to pour into the USA market, China gradually in recent years replace Japan and Korea, become "the biggest victimized country of clause 337". In addition, because Chinese enterprise at first did not understand the "section 337" severe and IPR protection awareness is not strong, further possibility American enterprises to use the "337 clause" against competitors. Since 1986, China suffered the first America "337 investigation", as of 2006 June, China has suffered 53 "337 investigation".

Since the "337 clause" has greatly affected the Chinese interests of export enterprises, the primary task in front of the China export enterprises will be how to respond to the "section 337"? This is based on the analysis of the purpose of the research.

A history USA tariff law "337 clause"

    The so-called "337 clause", is an import American relief system, which came from the American "1930 year tax law" section 337th[2]. This clause through constant revision[3]From the physical to the program,, the increasingly rich content, also more and more serious, and become an important part of the legal system to adjust the imports of foreign products in the America trade law.

   America "1930 year tax law" 337th clause initial purpose the main controls on the dumping products and monopoly business and other unfair trade practices, after several changes and additions to it in 1988, "Omnibus Trade and Competitiveness Act" (Omnibus Trade and Competition Act) in the formation of the main control system of legal rules of foreign firms enter the violation of America knowledge property products to the United states. At present, the applicable "section 337" refers to the 1994 1988 revision of the "Omnibus Trade and competition law" 337th clause, 1337th day nineteenth in "code" in USA[4].

 "Article 337" also known as "unfair trade practices" clause, it will be unfair trade USA imports fall into two categories: unfair trade general unfair trade and related intellectual property rights. General unfair trade practices[5]: refers to all the people, the importer or the underwriters to USA import or sell products in the unfair competition or unfair practices. This behavior is illegal, must meet the following three conditions: (I) damage USA industrial damage or substantially; (II) prevented the establishment of the industry; or (III) restriction or monopoly America trade and commerce. Unfair trade related intellectual property rights[6]: refers to all the people, the importer or the underwriters to USA import, import and sale or import after the sale violated American belongs to the legal protection of copyright, patent right, trademark right, mask works. And the former is different, as long as there America associated with the industry or is being built on the industry, unfair practices of trade related intellectual property rights is illegal, but not to the enterprise to America damage elements[7]. Because since the "section 337" formulation, mainly related to intellectual property issues, the paper focuses on "unfair trade related intellectual property rights in the 337 clause" to study and put forward countermeasures.

  Modification and evolution of "section 337", have to mention "1994 Uruguay round agreement law". Chemical fiber in April 18, 1984 ""[8]Led directly to the "birth" of the 1994 Uruguay Round Agreement method. The general agreement on Tariffs and trade (GATT) expert group award for reference, was modified in the face of "section 337" from the following three parts: (1) the provisions of the original limited the ITC trial for a period of 1 years, no such provisions, tort cases involving domestic goods, therefore, the cancellation of 1 years the time limit is specified, replace sb. investigation and the arbitration shall be completed in "the earliest practicable", and in 45 days after ITC launched an investigation to determine the made the decision period; (2) the original provision allowing the aggrieved party may apply to the court for the ITC and the Federal area also appeal and prosecution, aggravated by the burden of the prosecution ", a clear violation of the principle of national treatment", it still allows the victim to take double relief measures, but require the complainant to ITC requests to initiate an investigation within 30 days, the respondent request, the district court shall suspend the trial, ITC to make the final decision after the trial, court records and allows using ITC; (3) the provisions of the original ITC does not allow the respondent a counterclaim, the new law changed this practice, the respondent if presented to the ITC counter, the counter will be quickly transferred to a tube of CO The district court jurisdiction of the court, and the district court only to the source in the same event the appeal of the counterclaim has jurisdiction.

However, the modification does not produce on the production of the imported goods and domestic goods in the protection of intellectual property rights law program of the same, and not break "the effectiveness of the overall 337 terms" legal relief on, do not eliminate "337 clause" is caused to import goods on the domestic law of discrimination. Therefore, USA tariff law "337 clause" still and WTO multilateral trade system in conflict, and has been constantly caused his country on the terms of discontent and challenges.

Two. Function America International Trade Commission to "337 investigation"

   "337 investigation" is mainly composed of American International Trade Commission is responsible for the entire survey process, consists of three relatively independent and functions of different institutions:

(a) American International Trade Commission (International Trade Commission, or "ITC")

American International Trade Commission is an independent quasi judicial federal, it was founded in 1916, its predecessor for the USA Tariff Commission (U.S. Tariff Commission), renamed the International Trade Commission in the "1974" after the promulgation of law of trade, a quasi judicial bodies have right to investigate related widely and trade. ITC's main responsibility is in accordance with the legal procedures to protect American enterprises from unfair competition related to imported products, including unfair anti-dumping and intellectual property related.

ITC is composed of six members, including the chairman and deputy chairman of the a. USA International Trade Commission members nominated by the president, the Senate appointment, term of up to 9 years. The chairman and deputy chairman appointed by the president in the six member. And the rule is: come from the same party committee shall not be more than three, the chairman and vice chairman shall not belong to the same political party.

(two) the administrative judge (Administrative Law Judge, or "ALJ")

The administrative judge is ITC case of American government full-time employees, which according to the provisions of the procedure ITC to start the "337 investigation" case, evidence submitted by the parties and the relevant documents and made a preliminary ruling on the case based on the. Once the ITC decided to start the "337 investigation", it will put the case assigned to the basic rules, the administrative judge is determined by its investigation and verification arrangements and the final decision date. ITC's final decision is based on the preliminary ruling foundation of administrative law judges. The administrative judge launched a series of activities to verify the situation, investigation and hearing. Administrative law judges in the collection of evidence and the legal documents written and spoken of, not by ITC interference, and the right to make independent judgment in any case. The investigation process in specific cases, usually the administrative judge and not ITC have private contact.[9]

(three) the unfair import Office (Office of Unfair Import Investigations, or "OUII")

ITC is usually based on case related enterprises appeal decided "337 investigation", the general may on its decision to file. ITC received the relevant enterprises complaint file, specify the unfair importOffice (Office of Unfair Import Investigations, OUII) of in-house lawyers in investigation of complaints background and decided that the appeal for compliance with statutory procedural requirements of ITC. The office of the law as an independent body to participate in the "337 investigation", their participation in the case as the public representative, is the representative of the public interest. ITC start the "337 investigation", as the public representative lawyer shall not privately negotiated with ITC and the administrative law judge. In addition, in before the survey, unfair import office lawyers will be able to ITC the plaintiff submitted material whether accord with the survey standard put forward, at the same time, also can be the plaintiff to prepare materials for help[10].

Three. "Proceedings of the 337 investigation"

   One of the biggest characteristics of 337 terms "is that it provides a rapid and effective relief measures. "1994 Uruguay round agreement law", the ITC survey should be at the end of "the earliest time possible in reality", thus eliminating a specific time limit. But over the years the rapid processing of ITC and its administrative judge for "337 clause" case has been formed practice, although the statute law abolished the limit, but they generally do not delay to tackle. "Fast performance for 337 terms", completed the survey program within 12 months, only substantive procedures for 9 months, the prosecution prepared, but the defendant can be caught off guard. The respondent shall be prepared in a finite time is almost all material production and management[11]. If the "337 investigation" the case is complex, can be extended to 18 months, average time limit and the federal court of patent infringement cases is 31 months, this clause can greatly improve the efficiency of relief. Start the "337 investigation of specific legal procedures" for:

(a) (Institution) of initiation of the investigation

To submit "337 clause" under the complaint, the complainant must be American intellectual property rights, such as patent, copyright registration, registered trademark owner or exclusive licensee. The patent must be valid and enforceable. Infringing its intellectual property infringement complaint alleged at least one must be imported. In addition, America home must have a "domestic industry to use the intellectual property rights".[12]

ITC is "accepted" decision, after receiving claims within 30 days thereafter, the administrative judge will issue "protection order" and "time to". For the cases involving commercial secrets protection provisions, the latter for the "337 investigation" to develop survey process.

(two) the evidence reveal (Discovery)

Once the ITC decided to file, ITC will publish a notice in the federal investigation "bulletin", announcement will specify the complainant accused of violating the "section 337" behavior, be investigated lawyers accused of violating the "section 337" a defense and ITC of unfair import office. They can be used as the parties involved in the Commission of inquiry. Otherwise, notify the complainant to withdraw. In the meantime, ITC has the right to decide whether to issue a temporary injunction.[13]ITC if the investigation, the applicant must pay a certain amount of margin, much as determined by the ITC, to rule the defendant does not violate the "337 clause", compensation for the loss of the defendant. Investigation group is set up, to the respondent to the indictment and notice of investigation, set a target date for the end of the.[14]

ITC chief judge will decide the case end deadline in 45 days. The first program after the filing of the case as evidence revealed. Evidence that process is also the parties access to information, to collect evidence. Evidence that includes written testimony, written interrogatories, presentation of documentary evidence, seek recognition etc.. Because this kind of survey time is tight, if the investigation process for 1 years, the evidence reveals procedures must be completed within 5 months. The evidence also revealed in the process, the administrative judge may convene a meeting, processing a variety of items or asking for more information[15]. "337 clause" of the respondent to set a short time submitted pleadings, if the respondent is American enterprise, allegations of should be written in 20 days to reply, if the respondent is a foreign enterprise, the time limit for the answer to the 30. If the defendant is not responding to ITC, according to the rules of procedure, then the ITC will identify the complainant's appeal was established, which led to the implementation of various beneficial to the complainant's relief measures.

Hearing (three) (Trial)

Administrative law judges in the preliminary before after fact finding, pre hearing and hearing procedures. Generally speaking, after investigation, the parties and the administrative judge will hold a pre hearing (Pre-Trail), the main purpose is to develop the basic rules for verification and hearing, to facilitate the parties to simplify, clarify the problem, determine the scope of hearing, determine whether the appeal request to modify, and to review the facts and documents. During the pre hearing, the parties also need to determine the number of experts and skilled witness. The witness's name also announced in the pre hearing. Then the administrative judge issued a preliminary hearing to. Administrative law judges according to the provisions of administrative procedure law "substantive issues 337 investigation" for a formal hearing (Post-Trail), mainly in order to make the administrative law judge adopt the evidence, to argue and decide whether or not to violate the "section 337" decision.

Hearings are often in the investigation about 6-7 months after. According to the relevant provisions America administrative procedure law, the parties have the right to a hearing, including access to sufficient notice, retort, submission of evidence, cross examination, defense right. In fact, very close to the hearing before the judge and court proceedings administrative burden, including a large number of facts and expert testimony. "337 investigation" hearing usually lasts several days to weeks time[16].

(four) the preliminary ruling (ALJ Deliberations)

After the hearing, the parties have about 1 months time to consider for the administrative judge of the evidence and materials. Since then, the administrative judge in within 60 days of the evidentiary hearing submitted to consider and be prepared to make a preliminary. Administrative law judges shall be before closing for at least 3 months (if the maximum length of time for more than 15 months, in the previous 4 months) made the preliminary ruling according to the hearing record and relevant evidence, to confirm the existence of violating the "section 337" facts. "The basic premise in violation of Section 337" is the proof of USA related intellectual property rights infringement, and the current intellectual property effectively. Should be specified, and other non intellectual property "337 investigation" case is different, all cases of infringement of intellectual property does not need to prove that imports have caused substantial damage or threat of material injury caused by. Administrative law judges ruled that includes the respondent is a violation of the "337 clause", and decided the respondent if hope during the presidential review the amount payable to import deposit. In addition, the administrative law judge also suggests remedies, such as the prohibition, exclusion order etc..

If the "337 investigation" administrative law judge made the preliminary ruling, the preliminary ruling will automatically become the final ITC, unless at least one of a USA International Trade Commission within 45 days to review the preliminary ruling recommendations, or any one of the parties request ITC to review the preliminary ruling, not a request for review it means giving up the future of any right of appeal.

(five) review (Commission Review) and final (Final Decision Orders)

America International Trade Commission is responsible for the review of the initial decision (Commission Review). Review the results may be sent back to re arbitration, administrative law judges to maintain the preliminary ruling or change of part or all of the preliminary ruling. ITC usually according to the results of the survey on the facts of the administrative law judge and hearing record, will focus on the review focused on legal issues.

Since then, ITC should be recommended to the preliminary ruling and ITC relief measures in the preliminary ruling on the basis of the decision will be published in the Federal Register. ""[17]. If the ITC review ruled that the respondent did not violate the "section 337", then, the ruling was issued will immediately become final ITC (Final Decision Orders). However, if the ITC review ruled that the defendant violated the "section 337", ITC will its decision and with the relevant administrative relief measures to USA president, that is to say, ITC eventually ruled in the president's approval to determine the expiration effect or not.

(six) the president's action (The Action of the President)

"337 clause" to allow America president for policy reasons in the Commission issued an order within 60 days after the[18]Veto the decision of the Commission, but the president rarely exercised this power[19]. In addition, if American president eventually rejected the ITC ruling, the parties may appeal, the investigation ended; if the president agrees with the ultimate decision ITC or within 60 days did not reply, then ITC's decision will be final. In America presidential approval during the period of 60 days, the "337 investigation" the infringing products can still enter the America, but the Respondent must pay certain amount to America customs deposit, the amount is determined by ITC; the ruling after the entry into force, the respondent would no longer be the output of the "337 investigation" the infringing products enter the American, and have to pay the margin may be confiscated.

If not ITC "337 investigation" ruling, whatever might be adversely affected can rule on the ITC effect in the ITC ruling within 60 days after the America Federal Circuit Court of appeals filed a lawsuit. Review the Federal Circuit Court of appeals by two standard. For the legal issues, the court should make sure that all of the legal issues, interpretation of the Constitution and the law. Therefore, the court has the power to declare the decision of the committee is random, the abuse of power, not legal. In fact, the committee's decision could be overturned only in "no substantial evidence" case. If a party refuses to accept the decision of the Federal Circuit Court of appeals, may be appealed to the Supreme court. The Federal Supreme Court's ruling in finality, no party may appeal again[20].

 

 

 

 

 

 

 

Figure 1: "337 investigation" legal time limit

Four. "The relief of administrative means 337 investigation"

   "Another feature of the 337 clause" is the administrative remedy measures of severe and widespread. If the ITC eventually ruled Foreign Company tort, can be issued a general exclusion order, limited exclusion order or injunction. Even in the act of tort has not been recognized during the survey, ITC can also take relief measures, promulgated temporary exclusion order or injunction. The ITC decisions to exclude any infringement imports into the America market, even can be expanded to include the infringing products "downstream" products or "upstream" parts of products from different sources, stop infringing products into the USA, and judicial proceedings cannot achieve this point, which makes the "section 337" relief has powerful force. For those Chinese enterprises is closely related with the America market, if the final ruling in violation of the "337 clause", then they may have lost their America market in the long term, and thus the development China related industry a heavy blow. The foreign enterprises of the products, it can be called "the crowning calamity". "The administrative remedy embodied 337 investigation" as follows:

(a) exclusion order (Exclusion Order)[21]

    Exclusion has on property, products listed among them, regardless of the source, origin and imported one, all people, dealers, distributors for who, are not allowed to enter the American, it applies to unfair practices and there exist except those involved other people still have illegal possible. Exclusion order includes two -- "general exclusion order (General Exclusion, Order, GEO)" and "limited exclusion order (Limited, Exclusion Order, LEO)". The former banned all infringing products into the market of a kind of American, not to the person, without distinction of origin or producers, but also in the future and has not yet grasp the producers and importers. General exclusion order are carried out automatically by the America Customs on its side of the border. To obtain a general exclusion order (GEO), the plaintiff must prove the following facts: (1) the complainant of the patent right infringement behavior is very common; (2) there is evidence, other foreign producers in addition to respondent outside is to America output infringe their patents products. Limited exclusion order is not, only prohibits the respondent enterprises infringement products to enter the USA market, but it can also be applied to the respondent enterprises at present and in the future production of infringement of all types of products, not just the lawsuit that product. In addition, limited exclusion order (LEO) effect can even extend to the infringing products or inferior products upstream and downstream components.

    In addition, because the "exclusion" is issued against "337 clause" products, rather than by targeting specific people, so it is a relief to the matter. The nature of the relief, mainly for offenders in American does not have a place of business. ITC Certain Coin-Operated Audio-Visual Games[22]That in the case of Foreign Relations: even if people did not participate in the ITC program, ITC can still be based on matter jurisdiction against intellectual property rights prohibited goods import. Lift the exclusion order in three ways: one is the complainant or other America importers to respondent behavior not in violation of the "337 terms" grounds, suggests ITC stop exclusion order implementation, the common way; two is at the appropriate time, the implementation of ITC that leads to the exclusion of the article does not exist, the can take the initiative to stop the implementation; three is the respondent modification of infringing products which do not constitute infringement, then draw ITC revocation exclusion order, however the way for the respondent burden of difficult.[23]

(two) (Cease and Desist Order ban)

When the infringing products has been imported to USA and sales, and issuance of import exclusion order has been impossible, in this case, USA International Trade Commission can issue an injunction (Cease and Desist Order), ask the respondent to stop selling the infringing products. The ban is mainly aimed at USA engaged in acts of unfair competition, the imported products importer distributor apply; prohibited include sales in the domestic market America; development, distribution, advertising and recruitment agents and distributors behavior. From this point of view, the ban is similar to the America federal district court to ban, which requires the respondent to immediately stop the alleged infringement. If the respondent regardless of the order will be determined USA imports input and sales, there may be a huge fine[24]. And the general exclusion order or limited exclusion order is different: ITC issued the injunction is the premise, must determine the jurisdiction of the ITC has the violation of "section 337", so the ban object is generally America defendants in the.

(three) the confiscation and seizure (Seizure and Forfeiture)

   This command is issued by the premise of ITC after the importer that exclusion order, still imports and import banned for violating the "section 337" products. The purpose of this provision is to punish those who disregard the law was promulgated in USA, eliminate import bans imports of infringing products are still.

    "America code" nineteenth section 1337th (I) (1) the provisions[25]In addition to this section: (d) exclusion order measures, the committee may issue a command, in violation of this section import products from America seizure and confiscation, if:

The product of all the people, the importer or the Underwriters previously tried to import the product to the American;

The product is used as the festival (d) causes release of command, was refused entry to the USA; and

Refused to enter, Minister of Finance issued a written notice to all the people, products, importers or underwriters:

The command; and

Then try to import the products resulting consequences USA confiscated.

(four) temporary measures (Temporary measures)

Another advantage of ITC is that ITC can provide temporary relief measures immediately, the plaintiff can take temporary measures to "337 investigation" to apply at the same time requirements of ITC, including the temporary injunction and exclusion order. America International Trade Commission will be made whether to accept the proposed temporary measures decision in 35 days. If ITC accepts the application, the application will be submitted to the administrative law judge. The provisions USA International Trade Commission request ITC to investigation within 90 days after the start of (for complex cases, can be extended to 150 days) according to the complainant's request, pay a deposit to the complainant conditions issued a temporary injunction. In determining the temporary remedy the problem of legitimacy, ITC reference factors, consider whether America Federal Circuit Court of appeals should be given to the possibility that the initial ban: plaintiff won in the "337 investigation"; if we do not take temporary measures to America domestic industry damage caused by damage to take temporary relief measures; respondent creates and the public interest.