May 28.2008

“337 Investigation” directed at LED industry

Retired professor Gertude Neumark Rothschild in American Colombian University considered his American Patent NO.5, 252, 499 was infringed, and applied for 337 investigation regarding shortwave LBD, laser LED, etc.. to International Trade Commercial (ITC) and request the general exclusion order and prohibition order in America on February 20th, 2008. ITC in America received complainant’s litigation request to pull on record in due form and made a investigation on March 20th, 2008.More than 30 enterprises which produce similar products in the global market were litigated.Include 4 LED enterprises in Shenzhen of China.The products’ Customs Tax Number are 85414020 (LBD) and 85414060(other LED semiconductor devices).That 4 LED enterprises are follow:

Guangzhou Hongli Opto-Electronic Co.,Ltd.,China;

Shenzhen Unilight Electronic Co., Ltd., China

Exceed Perseverance Electronic Ind., China

Lucky Light Electronics Co., Ltd., China;


        It is reported, this year’s “American 337 investigation” is the fitth time to aim at China’s enterprises. The target of this year’s case is China’s LED industry, the following sectors are affected directly: manufacturers of LED chips, encapsulation and applications (including LED displays, lightings and backlights), and manufacturers of monitor backlight sources, car lights, home appliance DVD & VCD, all those manufacturers who have employed the short-wave blue LEDs. These manufacturers are largely located in Shenzhen, Guangdong.


What is the 337 investigation.

        The 337 investigation, also called Unfair Behaviour in Import Trade, filed by the U.S. International Trade Commission (ITC) according to the section 337 of the Tariff Act of 1930, is the investigation and related sanction actions against the unfair importation, mainly the violation of American intellectual property rights. However, though there is the alleged violation of the patent No. 5252499 patent in this case, the patent itself does not have substantial technology content, and it is not well grounded in the science, after careful studies done by patent officials, technical experts of the industry and the patent lawyers.


         According to US laws, an enterprise should respond to the prosecution of the section 337 within 20 days. Otherwise, the enterprise will be deemed as loser with renunciation. So, respondents should lodge their reasons with the ITC in about April 20. In early May, the ITC will hold their first round of hearing of witnesses, and determine the timetable of finishing the whole case. In January of next year, the first verdict will be declared at court, while a final verdict will be declared in March.


         In April 16, 2 alleged enterprises in China, Guangzhou Hongli Opto-electronical Co. Ltd. And Shenzhen Unilight Electronic Co Ltd. responded to the case, while 2 other alledged enterprises, Exceed Perseverance Electronic Ind. And Lucky Light Electronics Co. Ltd. give up the lawsuit due to the very high legal cost. From the past cases of the US 337 investigation, the legal cost is about USD 6,000,000. Each company will have to have at least USD 3,000,000 for this case. 


The aftereffect is unimaginable if lose a lawsuit

         In fact, this case is indicting the technology of led, and the IC manufacturer having this patent. Moreovers, the America didn' indict those Upstream firms, they indicted the downstream firms which buy the IC chip and process for the export.According to the "337 investigation",If the America trade committee found the import production which have been infringed the America Intellectual Property Right(A.I.P.R). The plaintiff will have right to request  the limited or the general exclusion order, prohibition order and relief order etc..According to the general exclusion order statute. The A.I.P.R is usually to indict the manufactory which is competitive in America,the small corporation will used to being the apellee. If they are losing a lowsuit,then the A.I.P.R will debar all those product which will export to America.

It's reported(The Government semiconductor Research & industry League) the LED product was exported from China(It was gained ¥16,800,000,000, and the related applications products are attained ¥30,000,000,000.). If we was losing a lawsuit in "337 investigation ". we will loss the share in the American LED market. And the aftereffect will be spread in the European market,the South-American market,and so on. Finally we may lose the international semiconductor market.

Moreover, the plaintiff (A.I.P.R)send a settlement agreement and the indictments at the same time. It is said that all  enterprises do not need to pay but the indictee

must admit the Tort,and can't buy those products,except the apointed organization which sale those product in the international. According to the disadvantagement, it will destroy the LED chip industry & LED encamsulation industry in China