1. IPR Strategies for the Environmental
Technology Industry
March 13, 2012
Alexander Koff
akoff@wtplaw.com
+202.262.1197 (U.S. mobile)
U.S. Department of Commerce,
Office of China and Mongolia
Intellectual Property Rights in China Webinar Series
2. Outline
Part I: The U.S. - China Relationship
Part II: The Rise of Environmental and Clean
Technologies
Part III: Chinese Imports and U.S. Options
Part IV: Protecting your IP in China
Part V: Conclusion
Alexander Koff
Page 2 of 81
akoff@wtplaw.com 2
All Rights Reserved
3. Part I: The U.S. - China Relationship
1. History: Many China issues not new
2. Selected Issues: Sinophobia today
3. Economy: Jobs #1 focus
4. Assessment and Recommendations
Presidential Election (November 2012)
Alexander Koff
Page 3 of 81
akoff@wtplaw.com 3
All Rights Reserved
5. China History –
Congress
“On trading and
distribution rights, on
transparency, and
above all on intellectual
property rights – we
should not be hesitant to
enforce our rights.”
/US
“Services industries like
computer programming
or call centers also face
competition from China
and elsewhere, but
services workers are not
eligible for TAA over
80 percent of the U.S.
economy [is] comprised
Note: 19 U.S.C. §2272 now includes services workers thanks to Subtitle I of the American Recovery
and Reinvestment Act of 2009 (P.L. 111-5). (See "Subpart A—Trade Adjustment Assistance for Service
of service sector
Sector Workers. SEC. 1801. EXTENSION OF TRADE ADJUSTMENT ASSISTANCE TO SERVICE industries ”
SECTOR AND PUBLIC AGENCY WORKERS; SHIFTS IN PRODUCTION.”)
Alexander Koff
Page 5 of 81
akoff@wtplaw.com 5
All Rights Reserved
6. China History –
Trade Deficit
Sens. Dorgan, Clinton Introduce Measure to Cap Trade Deficit at 5 Percent of GDP
Bill S.355 – imposes requirements on USTR “to take steps, in cooperation with
Congress, aimed at keeping the deficit in check”
Would require USTR to monitor the trade deficit and total U.S. foreign debt every
quarter and to convene an emergency meeting of the TPSC within 15 days to draw up
/US “plan of action” to reduce the trade deficit if the deficit has reached more than 5
a
percent of GDP or the foreign debt has reached 25 percent of GDP
Require USTR to submit the plan to Congress for its consideration within 45 days
“A companion bill is expected to be introduced in the House by Rep. Benjamin L.
Cardin (D-Md.), ranking Democrat on the House Ways and Means Trade
Subcommittee” [Cardin introduced H.R. 746]
“Clinton said that she does not support repealing permanent normal trade relations
status for China, which currently accounts for more than 25 percent of the current
trade deficit.”
Alexander Koff Source: BNA Daily Report for Executives,
February 11, 2005 Page 6 of 81
akoff@wtplaw.com 6
All Rights Reserved
7. Recall
CNOOC
Alexander Koff
Page 7 of 81
akoff@wtplaw.com 7
All Rights Reserved
8. U.S. – China
Relations
http://www.foreignaffairs.org/
Renewing American Leadership (Jul/Aug 2007) (by Obama)
Changing China (Jan/Feb 2008)
Can the West Handle Chinese Power?
The Misguided Row Over China’s Currency
China and India Go To Africa (Mar/Apr 2008)
Is America in Decline? (May/Jun 2008)
Handling the Economic Challenge From China (Jul /Aug 2008)
Alexander Koff
Page 8 of 81
akoff@wtplaw.com 8
All Rights Reserved
9. Obama & Trade
Policy
NAFTA is not China
Understand history
and past positions
/US
New Commerce
Secretary and USTR
appointments
How Congress
Proposed Dealing
with Past Troubles
Alexander Koff
Page 9 of 81
akoff@wtplaw.com 9
All Rights Reserved
10. Protectionist
Sentiments
Wall Street Journal.
U.S. Steelmakers Seek More Tariffs to Fight Imports “U.S. Steelmakers are
preparing a raft of
complaints against
foreign steel imports, a
move that could result in
tariff increases later this
year and escalate trade
tensions with China ”
“Formal complaints are
weeks away The
moves echo
protectionist efforts
gathering speed in
countries around the
globe as industries
brace for a protracted
economic slump.”
Alexander Koff
Page 10 of 81
akoff@wtplaw.com 10
All Rights Reserved
11. Protectionist
Sentiments
Alexander Koff
Source: Wall Street Journal, Feb 20, 2009 Page 11 of 81
akoff@wtplaw.com 11
All Rights Reserved
12. Protectionism –
Buy America
Current Economic Conditions
Antidumping, Section 421, and other “Unfair
Trade” Measures
Non-tariff Barriers
CFIUS
Buy America
Stimulus Bill
Statute
Impact on China-U.S. Relations
Multilateral Negotiations – WTO Doha Round
Bilateral/Regional Agreements
Alexander Koff
Page 12 of 81
akoff@wtplaw.com 12
All Rights Reserved
13. China Currency
Practice
“The Schumer-Graham bill allows
for a 180-day negotiation period
between the U.S. and China to
revalue its currency ”
“[I]f negotiations are not successful,
/US a temporary across the board tariff
of 27.5% will be applied to all
Chinese products entering the
United States – a penalty that
corresponds to their estimated
currency advantage.”
“[E]conomists estimate that China
undervalues its currency between
15 percent and 40 percent ”
Source: Schumer Press Release,
Alexander Koff February 14, 2005
Page 13 of 81
akoff@wtplaw.com 13
All Rights Reserved
14. Consumer Product
Safety
“Mattel Inc.
apologized as the
company was forced to
Mattel CEO: 'Rigorous standards' after recall millions of toys for
massive toy recall the second time in two
updated 1:44 p.m. EST, Thu November 15, 2007
weeks. ”
“The toys were
/US manufactured in China.”
“It is the largest in
recent months involving
Chinese products, which
have come under
scrutiny worldwide for
containing potentially
dangerous high levels of
chemicals and toxins “
Alexander Koff
Page 14 of 81
akoff@wtplaw.com 14
All Rights Reserved
15. State of the Union:
Jobs & Exports
“we need to export
more of our goods
We will double our
exports over the next
five years, an
increase that will
support two million
jobs in America. To
help meet this goal,
we’re launching a
National Export
Initiative that will help
farmers and small
businesses increase
“jobs must be our number- their export, and
reform export controls
one focus in 2010” consistent with
national security”
Source: http://www.whitehouse.gov/the-press-
Alexander Koff
office/remarks-president-state-union-address Page 15 of 81
akoff@wtplaw.com 15
All Rights Reserved
16. State of the Union:
Jobs & Clean Energy
“we can put Americans
to work today building
the infrastructure of
tomorrow. There's
no reason Europe or
China should have the
fastest trains, or the
new factories that
manufacture clean
energy products.”
“We should put more Americans to work building clean “China is not waiting to revamp its
energy facilities it is time to finally slash the tax breaks economy. They're making
for companies that ship our jobs overseas, and give serious investments in clean
those tax breaks to companies that create jobs right here energy because they want those
in the United States of America.” jobs.”
Alexander Koff Source: http://www.whitehouse.gov/the-press- Page 16 of 81
akoff@wtplaw.com office/remarks-president-state-union-address 16
All Rights Reserved
17. Obama’s Trade Agenda:
Jobs
Proposes 5 Steps:
• Export promotion
• Approve pending trade
agreements
• Focus on key markets,
e.g., Trans-Pacific
Partnership (and expect
calls for “more market
access” in China)
• Enforce trade
agreements
• Basic labor rights and
environmental
“We must do protections (to avoid
“Our most urgent economic goal must be to everything possible to “unfair advantage”)
create jobs. Job creation must be at the open markets and
center of our trade agenda.” promote our exports”
Alexander Koff Source: Page 17 of 81
akoff@wtplaw.com http://finance.senate.gov/imo/media/doc/030310mb.pdf 17
All Rights Reserved
18. U.S. Trade
Balance
Alexander Koff Source: Commerce Department. Census Bureau's Foreign Page 18 of 81
akoff@wtplaw.com Trade Division | The Washington Post - May 14, 2010 18
All Rights Reserved
19. Jobs & Trade: On
Everyone’s Mind
“It's hard to exaggerate how bad the job market is. Here's one
arresting fact: One of every five men 25 to 54 isn't working.”
– David Wessel, “Meet the Unemployable Man,” Wall Street Journal (May 6, 2010)
“Who is going to double their imports? It’s not clear”
– Ravid Menon (Permanent Secretary at Singapore’s Ministry of Trade and Industry) quoted in “Asia Now
Changing Dynamics of Trade,” Washington Post (May 14, 2010)
“Many of the jobs lost during the recession are not coming back.
Period.”
– Catherine Rampell, “In Job Market Shift, Some Workers Are Left Behind,” New York Times (May 12, 2010)
Alexander Koff
Page 19 of 81
akoff@wtplaw.com 19
All Rights Reserved
20. Jobs & Trade: Still On
Released 6 May 2011 Everyone’s Mind
Year later
9 percent
unemployment
Sourcehttp://www.npr.org/blogs/thetwo-way/2011/05/06/136049915/unemployment-rate-bumps-up-to-9-percent-244-000-jobs-added
Alexander Koff
Page 20 of 81
akoff@wtplaw.com 20
All Rights Reserved
21. Jobs & Trade: You
Released 7 July 2011 Guessed It …
“Unemployment
rate was little
changed at 9.2
percent”
Alexander Koff
Page 21 of 81
akoff@wtplaw.com Source: http://www.bls.gov/news.release/empsit.nr0.htm 21
All Rights Reserved
22. Jobs & Trade: Slight
Released 9 March 2012 Improvement
Unemployment rate
remained
unchanged in
February
But …
It remains
historically high at
8.3 percent, with
more than 12.8
million people out of
work (and only 1.7
percent below the
October 2010 high)
Source:
Alexander Koff
http://www.bls.gov/news.release/empsit.nr0.htm Page 22 of 81
22
akoff@wtplaw.com
All Rights Reserved
23. Different Beds,
Same Dream
Global Economy
Then
Now
Alexander Koff
Page 23 of 81
akoff@wtplaw.com 23
All Rights Reserved Source: http://www.dailymail.co.uk/news/article-409317/Meet-Thumbelina-worlds-smallest-horse.html
24. Outline
Part I: The U.S. - China Relationship
Part II: The Rise of Environmental and Clean
Technologies
Part III: Chinese Imports and U.S. Options
Part IV: Protecting your IP in China
Part V: Conclusion
Alexander Koff
Page 24 of 81
akoff@wtplaw.com 24
All Rights Reserved
25. Part II: The Rise of Environmental and Clean Technologies
Collaboration Example: Climate Change
Clinton Paints China Policy With a Green Hue Obama “hopes to
make climate change
the centerpiece of a
broader, more
vigorous engagement
with China.”
Clinton: “The
opportunities to work
together are
unmatched anywhere
in the world ”
Alexander Koff
Source: NY Times, Feb 21, 2009 Page 25 of 81
akoff@wtplaw.com 25
All Rights Reserved
26. Climate Change
cont’d
“Secretary of State Hillary Rodham Clinton invited
China to join the United States as she toured an
energy-efficient power plant in Beijing on Saturday.”
“The gas-fired power plant, which uses sophisticated
turbines made by General Electric, is nearly twice as
efficient as the coal-fired plants that supply much of
China’s electricity and that helped vault China past
the United States as the world’s leading emitter of
carbon dioxide.”
Alexander Koff
Source: NY Times, Feb 21, 2009 Page 26 of 81
akoff@wtplaw.com 26
All Rights Reserved
27. Smart Grid
Tech
“Clovis, New Mexico, might just be the cornerstone of a clean-energy revolution.
It might also be the epicenter of a political battle over how America embraces
green energy.”
“Clovis is the site chosen for the Tres Amigas electricity-transmission project
The idea is to build a powerful substation in New Mexico using advanced
superconductors [sic] that could physically connect the three otherwise isolated
power grids—the Eastern, the Western, and Texas grids.”
Alexander Koff
Source: WSJ, October 13, 2009 Page 27 of 81
akoff@wtplaw.com 27
All Rights Reserved
28. Smart Grid
Tech (cont’d)
House Majority Leader Steny Hoyer’s
introduced two bills (HR 2347 and HR
2348) that authorize the federal government
to cover half the cost of high-voltage
transmission projects, at least 300 miles in
length, that employ advanced cable
technology.
“[Cold Cables] move large amounts of
energy in a small space and more efficiently
because bundles of special, low-resistance
wire run through pipes chilled with liquid
nitrogen which brings the temperature down
to minus 321 degrees Fahrenheit. In effect, it
provides a more slippery medium for moving
electricity than conventional copper or
aluminum wire whose efficiency degrades as Cold Cables
they heat up. (American Superconductor Inc.)
Alexander Koff
Page 28 of 81
akoff@wtplaw.com Source: WSJ, May 13, 2009 28
All Rights Reserved
29. Smart Grid
Tech (cont’d)
“American Superconductor says it figures its
systems would cost $8 million per mile for a
single superconducting cable capable of
carrying 5,000 megawatts of electricity and
$13 million per mile for two pipes able to
move 10,000 megawatts.”
Update:
“[T]he liquefied gas used as coolant requires
pumps and refrigeration units every mile or
so. That adds to the cost and maintenance
challenge.”
“The most logical use for superconducting
cable would be for short distances in
dense urban settings where space is at a
premium, such as between substations.” Cold Cables
(American Superconductor Inc.)
Alexander Koff
Source: WSJ, May 13, 2009 Page 29 of 81
akoff@wtplaw.com 29
All Rights Reserved
30. Smart Grid
Tech (cont’d)
“American Superconductor Corp. (AMSC), a maker of products
used in electric-power infrastructure to reduce costs and
conserve resources It is also a play on wind energy, licensing
its turbine technology to China for wind-power generation.”
Chicago Tribune, “Green companies grow into hot investments,”
Jan. 6, 2008
International Locations:
AMSC Windtec GmbH (Austria)
AMSC Korea
AMSC India
AMSC Beijing
AMSC Suzhou (Jiangsu Province)
American Superconductor Europe GmbH (Germany)
Alexander Koff
Page 30 of 81
akoff@wtplaw.com 30
All Rights Reserved
31. Protectionism Meets
Clean Energy?
21 Feb 2009 Secretary of State Clinton says Obama
“hopes to make climate change the centerpiece of a
broader, more vigorous engagement with China.”
12 May 2009 Hoyer Introduces Clean Energy Bills
13 Oct 2009 Tres Amigas Future of Clean Energy?
27 Jan 2010 President’s State of the Union
3 March 2010 Senate Hearings Regarding the
President’s 2010 Trade Agenda
Alexander Koff
Page 31 of 81
akoff@wtplaw.com 31
All Rights Reserved
32. Protectionism Meets
Clean Energy (cont’d)?
Reportedly 80
percent of $2 billion
in stimulus
renewable energy
grants awarded to
foreign companies
U.S.-China
consortium to build
a 648-megawatt
wind farm in Texas
for half a billion
dollars
Participation of
China’s Shenyang
Would limit ARRA Funds to U.S. companies only for Power Group
specific energy projects. highlighted on
The Bill died in Committee. Capitol Hill
Alexander Koff
Page 32 of 81
akoff@wtplaw.com 32
All Rights Reserved
33. CNOOC (and Sinopec) –
We’re baaack
“Since 2010, Chinese companies have invested more than $17
billion into oil and gas deals in the U.S. and Canada .”
Recent investments have been positioned as a “nonthreatening
way” to get back into America, according to the CEO of
Chesapeake Energy Corp.
How? “Seek minority stakes, play a passive role and, in a nod to
U.S. regulators, keep Chinese personnel at arm's length from
advanced U.S. technology.”
Fu Chengyu has been leading the push, first as chairman of
CNOOC, then as chairman of Sinopec.
Source: China Foothold in U.S. Energy, Ryan Dezember, The Wall Street Journal, March 6, 2012.
Alexander Koff
Page 33 of 81
akoff@wtplaw.com 33
All Rights Reserved
34. BYD –
Electric Cars
Alexander Koff
Page 34 of 81
akoff@wtplaw.com 34
All Rights Reserved
35. State of the Union:
Jobs & Clean Energy
“I will not cede the wind or solar or battery industry to China or
Germany because we refuse to make the same commitment here.”
Alexander Koff
Page 35 of 81
akoff@wtplaw.com 35
All Rights Reserved
36. U.S. Initiative to Fund Innovation
in Energy Projects “ARPA-E”
Founded in 2009, the Advanced Research Projects Agency –
Energy is a DOE agency that funds the development and
deployment of “transformational and disruptive energy
technologies and systems”
Focuses on “high-risk concepts with potentially high rewards.”
It’s statutory mission is to “enhance our nation’s economic and
energy security through reductions in imports of energy from
foreign sources .”
By law, ARPA-E is required to spend at least 5 percent of its
appropriated funds on technology transfer and outreach
activities.
Clean energy has become a national security issue.
Alexander Koff Source: ARPA-E FOA No. DE-FOA-0000475, Page 36 of 81
akoff@wtplaw.com June 30, 2011. 36
All Rights Reserved
37. Federal Interest in Environmental Technologies
The U.S. is Pushing Trade in Environmental Technologies,
but with an eye towards:
Harmonizing global environmental regulations;
Issues related to innovation in the environmental technology
sector (i.e., read ‘IP’); and
trade liberalization negotiations.
DEPARTMENT OF COMMERCE
International Trade Administration
Environmental Technologies Trade Advisory Committee Public Meeting
SUMMARY: This notice sets forth the schedule and proposed agenda of a meeting of
the Environmental Technologies Trade Advisory Committee (ETTAC).
DATE: The meeting is scheduled for Thursday, April 27, 2012, at 9:00 a.m. Eastern
Daylight Time (EDT).
Alexander Koff Source: 77 Fed. Reg. 14734 (March 13, 2012) Page 37 of 81
akoff@wtplaw.com 37
All Rights Reserved
38. Select Examples of Environmental Technologies in
the International Marketplace
U.S. Technologies to the World
Sludge to Oil Technologies (Brazil)
Floating Wetlands (Canada)
World Technologies to the U.S.
Ocean Wave to Air Energy (Ireland & Scotland)
Chinese Technologies to the World
Vacuum Tube Solar Technology (Beijing)
Alexander Koff
Page 38 of 81
akoff@wtplaw.com 38
All Rights Reserved
39. Global Attention Being Paid
to Clean Tech Issues
International Energy Agency:
Countries spent $17 billion on renewable energy and energy
efficiency research in the last 10 years (2009 highest level
for public sector investment primarily through stimulus
funds).
$56 billion on nuclear energy research and $22 billion on
fossil fuel research during same period.
Source: IEA Clean Energy Progress Report 2011 (released ahead of Abu Dhabi meeting in April 2011)
Selected Global Conferences
Singapore International Energy Week
Singapore International Water Week
Copenhagen International Clean Energy Fair
Alexander Koff
Page 39 of 81
akoff@wtplaw.com 39
All Rights Reserved
40. Outline
Part I: The U.S. - China Relationship
Part II: The Rise of Environmental and Clean
Technologies
Part III: Chinese Imports and U.S. Options
Part IV: Protecting your IP in China
Part V: Conclusion
Alexander Koff
Page 40 of 81
akoff@wtplaw.com 40
All Rights Reserved
41. Part III: Chinese Imports and U.S. Options
1. Trade Remedies
a. AD/CVD
b. Safeguards (Section 421)
2. IP Specific Remedies
a. U.S. District Courts & State Courts
b. Section 337 (U.S. International Trade Commission)
Alexander Koff
Page 41 of 81
akoff@wtplaw.com 41
All Rights Reserved
42. AD/CVD
Timeline
Event Allotted Time Total Case
Filing of Petition n/a n/a
Commerce Determination to Initiate an 20 days 20
Investigation Based on the Petition
ITC Affirmative Preliminary 25 days 45
Determination
Commerce Affirmative Preliminary 115 days 160
Determination
Commerce Affirmative Final 75 days 2353
Determination 3 May be extended by 60 additional
days
ITC Affirmative Final Determination Approximately 45 days 280
Commerce Issues Antidumping Duty 7 days 287
Order
Total Time 10-14 months
Alexander Koff
Page 42 of 81
akoff@wtplaw.com 42
All Rights Reserved
43. Photovoltaic Cell AD/CVD Cases
Inv. Nos. 701-TA-481 & 731-TA-1190
Antidumping Duty and Countervailing Duty
Investigations of cyrstalline silicon photovoltaic cell
imports from the PRC was filed on October 19, 2011.
“In 2010, imports of solar cells from China were
valued at $1.5 billion.”
The U.S. International Trade Commission released
its affirmative preliminary finding on December 16,
2011 (reasonable indication an industry in the United
States is materially injured by Chinese imports), and
the case is being considered now by the U.S.
Department of Commerce.
Source:http://ia.ita.doc.gov/download/factsheets/fa
Alexander Koff ctsheet_prc-solar-cells-ad-cvd-init.pdf Page 43 of 81
akoff@wtplaw.com 43
All Rights Reserved
44. Section 421 –
Timeline
Event Allotted Time Total Case
Filing of Petition n/a n/a
ITC Determination 60 Days From Filing of Petition 60
ITC Report to USTR 20 Days From ITC Determination 80
USTR Recommendation to the President 55 Days From ITC Report to USTR 135
Presidential Decision 15 Days From USTR 150
Recommendation
Effective Date of Relief 1 15 Days From Presidential Decision 165
1 In the case of critical
circumstances, provisional relief is
provided within 45 days, although
the date for any final determination
is delayed up to 30 days.
Total Time Approx. 5 ½ Months
Alexander Koff
Page 44 of 81
akoff@wtplaw.com 44
All Rights Reserved
45. Section 421 – The China
Specific Safeguard
Unique
Global Safeguard Action (201)
Non-Market Economy Safeguard Action (406)
Country-Specific Safeguard Action for China (421)
Transitional Measure: Part of China’s WTO
Accession Package
China’s ‘non-market economy status’ established
under the WTO Accession Protocol is set to expire
in December 2016.
Alexander Koff
Page 45 of 81
akoff@wtplaw.com 45
All Rights Reserved
46. Section 421 –
= cases I served as counsel for Chinese respondents
7 Cases
Pedestal Actuators
ITC: affirmative President Bush
President: no relief
Garment Hangers
ITC: affirmative President Obama
President: no relief
Brake Drums and Rotors
ITC: no market disruption Tires
ITC: affirmative
DIWFs President: relief
ITC: affirmative (September 2009)
President: no relief
Note: petition filed on
Innersprings April 20, 2009 (exactly
ITC: no market disruption 3 months after Obama’s
inauguration)
Steel Pipe
ITC: affirmative
Alexander Koff President: no relief Page 46 of 81
akoff@wtplaw.com 46
All Rights Reserved
47. Section 421 –
Tires Case
USITC defined “certain Imposes import relief for 3 years
passenger vehicle and light
truck tires from China” as “new
pneumatic tires, of rubber, from X% ad valorem above column 1
China, of a kind used on motor duty rate, as follows:
cars (except racing cars) and
on-the-highway light trucks, Year 1: 35 percent
vans, and sport utility vehicles, Year 2: 30 percent
provided for in subheadings
4011.10.10, 4011.10.50, Year 3: 25 percent
4011.20.10, and 4011.20.50 of
the Harmonized Tariff Schedule
of the United States (HTS)” Effective September 2009,
ends September 2012.
Alexander Koff
Page 47 of 81
akoff@wtplaw.com 47
All Rights Reserved
48. Section 421 –
Tires Case
"When China came in to the WTO, the U.S. negotiated the ability to impose
remedies in situations just like this one," said Kirk. "This Administration is
doing what is necessary to enforce trade agreements on behalf of
American workers and manufacturers. Enforcing trade laws is key to
maintaining an open and free trading system."
– Ron Kirk, USTR (Press Release 11 Sept 2009)
“For far too long, workers across this country have been victimized by bad
trade policies and government inaction. Today, President Obama made
clear that he will enforce America’s trade laws and stand with American
workers”
– USW International President Leo W. Gerard (Press Release 11 Sept 2009)
Alexander Koff
Page 48 of 81
akoff@wtplaw.com 48
All Rights Reserved
49. Section 421 –
Tires Case
“business is improving,
production has
increased and utilization
rates are moving higher
and anticipated to reach
April 8, 2010
full capacity during early
VIA FAX 2010. Most important is
The Honorable Barack Obama that employment has not
President of the United States only been maintained,
The White House but that workers have
1600 Pennsylvania Ave., N.W. been recalled to work.
Washington, D.C. 20500
These positive results
Dear Mr. President: simply would not be
possible without the 421
I am writing in follow-up to my letter of December 1, 2009, which relief.”
reported the initial success of your decision to provide relief to the domestic
consumer tire industry under Section 421 of the nation’s trade laws. While
– USW International President Leo W. Gerard (8 April 2010)
Alexander Koff
Page 49 of 81
akoff@wtplaw.com 49
Source: http://assets.usw.org/china-trade-tires/s-421-gerard-ltr-to-obama-tire-relief-update-04-08-10.pdf
All Rights Reserved
50. State of the Union/
~May 1 New 421 Case?
“I will not stand by when our competitors don’t play by the rules. We’ve brought
trade cases against China at nearly twice the rate as the last administration –- and
it’s made a difference. Over a thousand Americans are working today because
we stopped a surge in Chinese tires. But we need to do more. It’s not right when
another country lets our movies, music, and software be pirated. It’s not fair when
foreign manufacturers have a leg up on ours only because they’re heavily
subsidized.”
Environ case coming ~May 1 (for mid-Oct decision, just before election)?
Source: http://www.whitehouse.gov/the-press-
Alexander Koff office/2012/01/24/remarks-president-state-union-
Page 50 of 81
akoff@wtplaw.com address 50
All Rights Reserved
51. Commercialization
of IP
Alexander Koff
Page 51 of 81
akoff@wtplaw.com 51
All Rights Reserved
52. Section 337 –
Timeline
Event Allotted Time Total Case
Filing of Complaint n/a n/a
Determination by the ITC to Institute an Typically Within 30 days1 0 days
Investigation Based on the Complaint
Responses Date 20 days 20 days
ALJ sets Target Date for Completion of 45 days 45 days
Investigation (perhaps 15 months)
Initial Determination by ALJ of Violation 9-12 months5 275-365 days
of Section 337 5 Assumes 12-15 month Target Date.
ALJ Remedy Recommendation 14 days 289-379 days
Initial Determination of Violation 45 days7 320-410 days
Becomes Final Automatically if ITC 7 Runs from Date of Initial
Does Not Review Determination.
ITC Review and Determination Est. 45 days 365-455 days
Regarding Remedy
Total Time 12-15 months
Alexander Koff
Page 52 of 81
akoff@wtplaw.com 52
All Rights Reserved
53. 337 Cases –
The ITC
Independent, quasi-judicial federal agency with broad investigative
responsibilities on matters of trade
ITC remedy: excludes infringing products from U.S. market
Often better than money judgment from federal court
U.S. government enforces remedy for complainant
Cases argued before knowledgeable adminstrative law judges – dockets
exclusively intellectual property
Rocket docket – cases are fast & forum of choice for big and small
Apple: mobile communications and computer devices
(337-TA-704)
HP: inkjet ink supplies from China (337-TA-691)
GlaxoSmithKline: Augmentin (antibiotic) (337-TA-479)
Zippo: trademark protection for lighters (337-TA-575)
Geoffrey Lee McCabe: fulcrum tremolos on stringed
musical instruments (337-TA-708)
Alexander Koff
Page 53 of 81
akoff@wtplaw.com 53
All Rights Reserved
54. 337 Cases –
Legal Issues
Ebay, Inc. v. MercExchange, 547 U.S. 388 (2006)
More difficult to obtain injunction in district court post-Ebay?
Kennedy’s concurrence directed at “firm’s [who] use patents not as basis
for producing and selling goods but, instead, primarily for obtaining
licensing fees” – a nice way of saying a “patent troll”
Kyocera Wireless Corp. v. Int’l Trade Comm’n, 545 F.3d 1340 (Fed.
Cir. 2008)
Overturned longstanding ITC practice of downstream relief
More attention to limited and general exclusion orders
Tianrui Group et al. v. Int’l Trade Comm’n, Slip Op. 661 F.3d 1322
(Fed. Cir. 2011)
ITC may impose relief when trade secret violation occurs wholly outside
the United States but goods imported into the United States
Uniform federal common law applies
Alexander Koff
Page 54 of 81
akoff@wtplaw.com 54
All Rights Reserved
55. 337 Investigations –
Trends
50
45
40
35
30
Number of Cases
25
20
15
10
5
0
72
74
76
78
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
Year
Alexander Koff
Page 55 of 81
akoff@wtplaw.com As of December 1, 2008 55
All Rights Reserved
56. 337 Investigations –
Top Six Countries
18
16
14
Number of Investigations
12 Canada
China
10 Germany
Hong Kong
8 Japan
Korea
6 Taiwan
4
2
0
1 2 3 4 5 6 7 8 9 10111213 1415161718 192021222324 2526272829 3031323334 353637
Year
Alexander Koff
Page 56 of 81
akoff@wtplaw.com As of December 1, 2008 56
All Rights Reserved
57. 337 Investigations –
China
18
16
14
12
Numbre of Investigations
10
8
6
4
2
0
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
Alexander Koff
Page 57 of 81
akoff@wtplaw.com As of December 1, 2008 57
All Rights Reserved
58. Increased IP Protection:
China
(Soft) Data: A Lawyer’s View
Korea Cases at ITC – 1977 to 2007
Trends Show Increasing Importance of IP in Korea
Suggests Increase in Industrialization Results in
Increase Value Accorded to IP
Increase in IP Value Encourages Additional R&D and
Resources Devoted to Innovation
60 cases related to Korea
Sharp rise in last five years
Sharp rise in Foreign Complaints
Alexander Koff
Page 58 of 81
akoff@wtplaw.com 58
All Rights Reserved
59. ITC & Korea: Case
Filings
Case Filings Involving Korea
14
12
10
Number of Cases
8
Cases Completed
Cases Pending
6
4
2
0
77-81 82-86 87-91 92-96 97-01 02-07
Cases Completed 8 12 9 6 5 10
Cases Pending 0 0 0 0 0 10
Year
Alexander Koff
Page 59 of 81
akoff@wtplaw.com 59
All Rights Reserved
60. ITC & Korea: Increase in
Foreign Complainants
Complainant Trends
14
12
10
Number of Cases
8
U.S. Complainants
Foreign Complainants
U.S. and Foreign Complainant
6
4
2
0
77-81 82-86 87-91 92-96 97-01 02-07
Years
Alexander Koff
Page 60 of 81
akoff@wtplaw.com 60
All Rights Reserved
61. China Prediction:
Move to Hi-Tech
337 Cases – Many Low Tech, such as:
Ground Fault Circuit Interrupters
Nitrile Rubber Gloves
Sucralose Sweeteners
DVD Players & Recorders
Exceptions: TSMC v. SMIC but Zippo Lighter TM
Move to Higher Tech Products and IP Protection
Alexander Koff
Page 61 of 81
akoff@wtplaw.com 61
All Rights Reserved
62. Will China Follow
Korea to the ITC?
Innovation
Long-term strategy
Litigation Lessons
Value IP
Direct Reports
New Technology
Alexander Koff
Page 62 of 81
akoff@wtplaw.com 62
All Rights Reserved
63. A full court press .…
• Case marks the first time U.S.
officials have filed criminal
espionage charges against a
state-owned foreign company.
• Alleges that Chinese government
and company officials asked U.S.
citizens to compile DuPont
proprietary information used for
the manufacturing of titanium
dioxide.
• Involved long-term and
widespread efforts to collect this
older information- “hardly cutting
edge.”
Alexander Koff
Page 63 of 81
akoff@wtplaw.com Source: The Wall Street Journal, March 10, 2012 63
All Rights Reserved
64. Outline
Part I: The U.S. - China Relationship
Part II: The Rise of Environmental and Clean
Technologies
Part III: Chinese Imports and U.S. Options
Part IV: Protecting your IP in China
Part V: Conclusion
Alexander Koff
Page 64 of 81
akoff@wtplaw.com 64
All Rights Reserved
65. “The American
Experience?”
“Hot Property: The Stealing of Ideas In An
Age of Globalization” by Pat Choate
Nation Building – U.S. as “the world’s premier
legal sanctuary for industrial pirates” (page
30)
Alexander Koff
Page 65 of 81
akoff@wtplaw.com 65
All Rights Reserved
66. Do You Know What
You Have?
Alexander Koff
Page 66 of 81
akoff@wtplaw.com 66
All Rights Reserved
67. Do You Know What
You Have?
Alexander Koff
Page 67 of 81
akoff@wtplaw.com 67
All Rights Reserved
68. Stealing of Ideas – the new premier
legal sanctuary for industrial pirates?
Kenneth G. Lieberthal’s routine seems straight from a spy film. ‘He leaves his
cellphone and laptop at home and instead brings “loaner” devices, which he
erases before he leaves the United States and wipes clean the minute he
returns. In China, he disables Bluetooth and Wi-Fi, never lets his phone out of
his sight and, in meetings, not only turns off his phone but also removes the
battery, for fear his microphone could be turned on remotely. He connects to the
Internet only through an encrypted, password-protected channel, and copies
and pastes his password from a USB thumb drive. He never types in a
password directly, because, he said, “the Chinese are very good at installing
key-logging software on your laptop.”’
He’s not alone: “If a company has significant intellectual property that the
Chinese and Russians are interested in, and you go over there with mobile
devices, your devices will get penetrated,” Joel F. Brenner, formerly the top
counterintelligence official in the office of the director of national intelligence.
Source: Traveling Light in a Time of Digital Thievery, Nicole Perlroth, The New York Times,
February 10, 2012.
Alexander Koff
Page 68 of 81
akoff@wtplaw.com 68
All Rights Reserved
69. China & IP –
Is It Time to Believe?
Tian Lipu, Commissioner of China’s IP office declared in a
December 2010 Wall Street Journal opinion article that China
was serious about protecting IP rights.
However, Commerce Secretary Gary Locke the next month
publicly lamented China’s “lax intellectual property protection
and enforcement.”
Commissioner Lipu’s declaration was nothing new- in 2006 he
told China’s state-run website that more IP protection helps
Chinese companies and promotes innovation.
But within a few short years lax enforcement escalated to a
trade dispute with both sides claiming victory in January 2009.
Source: http://wlflegalpulse.com/2011/01/18/intellectual-property-rights-protection-in-china-is-it-time-to-believe/
Alexander Koff
Page 69 of 81
akoff@wtplaw.com 69
All Rights Reserved
70. Intellectual Property
Rights
Alexander Koff
Page 70 of 81
akoff@wtplaw.com 70
All Rights Reserved
71. Issues heat up with the coming Presidential
election .
• March 12, 2012: U.S.
Government, with Japan
and E.U., file “request for
consultations” with China
at WTO.
• Concerns restrictions on
rare earth metals; other
issues likely to receive
attention in coming months
are auto parts, cars.
• March 13, 2012: President
signs law retroactively
revising trade laws to allow
filing of anti-subsidy cases
Alexander Koff Source: The New York Times, March 12, 2012 Page 71 of 81
akoff@wtplaw.com 71
All Rights Reserved
72. Example of IP win,
but
In March 2011, The Wall Street Journal reported that software
makers Microsoft, Adobe, and Autodesk settled copyright
infringement suits against a midsize Chinese steel structure
engineering company.
Good on its face- but the settlement was reportedly just shy of
$US200,000 and split three ways.
Although supposedly this does not include “undisclosed financial
damages,” the use of pirated software is widely reported to be
rampant.
Alexander Koff
Page 72 of 81
akoff@wtplaw.com 72
All Rights Reserved
73. Should We Establish
Operations In China?
Many companies decide establish commercial presence in
China despite IPR-theft for various company-specific reasons:
the of the size of the relevant market or
the cost advantages associated with opening a factory in that
location, e.g., cheaper employment, less environmental restrictions,
cost of raw materials, etc.
For them, the issue is not whether to manufacture but rather
how to do so in a manner that adequately protects their IPR.
For others, the balancing weighs against China (Patton Electronics)
For discrete industries, (e.g., mining) econometric modeling show
no positive association between IPR protection and enforcement.
This makes sense – whether to open a copper mine should not be
based on whether a country has strong IPR rules or enforcement
but on global copper demand and location of copper deposits.
Alexander Koff
Page 73 of 81
akoff@wtplaw.com 73
All Rights Reserved
74. Stimulating Innovation
(the Singapore Model)
Tax Incentives
Grants
Research Centers
Clustering
Strong IPOS
Ready Financing
Rule of Law
Alexander Koff
Page 74 of 81
akoff@wtplaw.com 74
All Rights Reserved
75. Be Sure To Register And
Protect Your IP
Even if you do not go to China or plan to in
the near future, register and protect your
rights now
Squatters will register in first to file system
Could be costly for you later
Registering in the United States also helps
with statutory remedies for infringement –
such as in the copyright context.
Alexander Koff
Page 75 of 81
akoff@wtplaw.com 75
All Rights Reserved
76. If You Do Go, Consider Segmenting
Your Production Process
If you decide to manufacture in China, you may wish to
compartmentalize the production process, i.e., produce only
elements of the product in the weak IPR-environment that do not
contain the trade secrets at issue.
This is known commonly also as “segmenting production.”
In effect, best practices require segmenting the manufacturing
process:
Make the “low-level” parts of production in the weak-IPR
environment and finish production using trade secret technology in
a country with stronger IPR controls (to safeguard the companies’
IPR crown-jewels).
Another option is to produce one component in a factory in
Shenzhen, another in a different location outside of Shanghai, and
assemble both in a third factory unrelated to the other two.
Alexander Koff
Page 76 of 81
akoff@wtplaw.com 76
All Rights Reserved
77. Keep Apprised of Developing
Trends Used Against You
There is a growing trend in China to download patent
applications filed in the U.S. and elsewhere, copy them, and
then file for a Chinese patent based on the blatantly copied
prior art.
U.S. firms sometimes need fight to invalidate a patent granted
to a Chinese entity that copies their own patent application.
Patents are meant to encourage innovation. The quid pro quo
is a limited monopoly in exchange for sharing the new
invention with the world. Abusing that process needs to be
addressed, and companies need to be aware that this practice
is happening, particularly if future fights are going to be in
China as U.S. companies try to export in the coming years.
Alexander Koff
Page 77 of 81
akoff@wtplaw.com 77
All Rights Reserved
78. Key Considerations When
Engaging China
“Make the decision. Give serious thought about whether to
make the leap eastward.
Cultural dynamics matter. If you do decide to go, spend time
learning the unique characteristics of doing business in China,
such as understanding that whom you know is critical.
Proceed with caution. Build relationships with potential partners,
conduct due diligence, and identify those who know China and
can help you achieve your goals.
Protect yourself. Of course protect your IP, but understand that
managing a relationship based strictly on legal documents may
be a mistake. While getting it in writing helps, personal
relationships matter.”
Source: Engaging China, ASAE, December 2004.
Alexander Koff
Page 78 of 81
akoff@wtplaw.com 78
All Rights Reserved
79. Key Considerations When
Engaging China
Think about what can go wrong - consider your exit
strategy before going into China
Remember that arbitration is not possible for all
disputes.
Because parties must agree to arbitrate disputes,
enforcing IP rights against counterfeiters and
trademark violators (i.e., those with whom there is no
contract) often requires using the local courts or
resorting to administrative remedies.
Alexander Koff
Page 79 of 81
akoff@wtplaw.com 79
All Rights Reserved
80. Key Considerations When
Engaging China
Dealing with counterfeiters:
The Technical Supervision Bureau (TSB) has the authority and ability to examine
documents and conduct investigations. It may also conduct raids quickly. Reportedly, the
Shanghai TSB office can make a raid decision could be made in "several days" (as opposed
to the three to six months it takes to navigate the system to a formal decision).
Dealing with trademark violations:
The State Administration of Industry and Commerce (AIC) has much of the same power in
the trademark context that the TSB has against counterfeits, reportedly to seize products.
Be creative:
“Call the fire department. Look at child labor, safety, health, and fire code laws. Such
“departments may not have the power to seize counterfeit products, [but there may be ]
some advantage in having them conduct a surprise inspection, which would disrupt
production at the factory and may result in penalties for non-IP issues. [I]f counterfeits are
found during the surprise visit, the trademark owner will be in a better position to lodge a
complaint with the [relevant] administrative bodies."
Source: American Bar Association, Section of Intellectual Property Law Newsletter, Spring 2007, pp. 10-12.
Alexander Koff
Page 80 of 81
akoff@wtplaw.com 80
All Rights Reserved
81. Conclusions
1. Read the tea leaves - larger political dynamics do affect the
U.S.-China relationship and will impact your business. Take
advantage of them.
2. Protect Your IP and R&D – institute travel abroad policies,
compartmentalize production, be proactive in patent
enforcement, register trademarks and copyrights (with global
watch services), execute NDAs, vet licensing requests, etc.
3. Understand that in China, negotiation is key and politics are
important (particularly if you can call on a powerful trade
association, embassy official, or local government contact to act
as a pressure point for what is right).
4. Legal proceedings (including arbitration) help your
negotiation, sometimes, but often are not a total fix. Be
prepared to compromise and actively seek to avoid disputes.
Alexander Koff
Page 81 of 81
akoff@wtplaw.com 81
All Rights Reserved
82. Contact Information
Alexander W. Koff +410 347 8745
Chair, Global Practice +410 223 3730 fax
Whiteford, Taylor & Preston, LLP +202 262 1197 mobile
7 St. Paul Street, Suite 1500 akoff@wtplaw.com
Baltimore, MD 21202-1636 www.wtplaw.com
Dana O. Lynch +410 347 8703
Partner, Intellectual Property Law +410 223 3483 fax
Whiteford, Taylor & Preston, LLP dlynch@wtplaw.com
7 St. Paul Street, Suite 1500 www.wtplaw.com
Baltimore, MD 21202-1636
M. Trent Zivkovich +410 347 8778
1991898 Counsel, Environmental Law +410 223 3730 fax
Whiteford, Taylor & Preston, LLP +443 668 6598 mobile
7 St. Paul Street, Suite 1500 tzivkovich@wtplaw.com
Baltimore, MD 21202-1636 www.wtplaw.com
Alexander Koff
Page 82 of 81
akoff@wtplaw.com
82
All Rights Reserved
