Will the US Section 337 investigation into LED companies further ignite the trade war?
Published Time:
2021-08-03
Data released by China's Ministry of Commerce on November 21, 2017, shows that bilateral trade between China and the United States from January to November 2017 reached US$527.2 billion, a significant year-on-year increase of 12.8%, exceeding the total trade value of US$524.3 billion for the whole of 2016.
Data released by China's Ministry of Commerce on January 21, 2017, shows that from January to November 2017, bilateral trade between China and the United States reached US$527.2 billion, a significant year-on-year increase of 12.8%, exceeding the total trade volume of US$524.3 billion for the whole of last year. Bilateral trade between China and the European Union reached US$556.9 billion, a significant year-on-year increase of 12.7%. With the further expansion of bilateral trade volume, trade friction incidents are bound to increase.
The "337 Investigation" Ignites Sino-US Trade Warfare
In 2018, the United States launched a "337 investigation" targeting lighting equipment, LED power supplies, and their components. Now, as the impact of the large-scale tariffs imposed by the United States on Chinese goods continues to spread, another "337" investigation has arrived on March 27, this time targeting LED displays.
According to the applicant's document No. 3302, the Chinese LED display companies involved in this case are: Absen, AOTO Electronics, Leyard Optoelectronics, Shanghai Sansi Electronics, Unilumin Group, Yuanheng Optoelectronics, Lianjie Optoelectronics, and Unilumin. All are named in the lawsuit.
According to an associate researcher at the Chinese Academy of International Trade and Economic Cooperation, the 337 investigation is a method used by the United States to eliminate competitors. These trade protection measures are designed by the US to protect its domestic industries and prevent competitive products from entering the US market. The current 337 investigation against China is intended to restrict China's exports to the United States, giving the United States a greater competitive advantage in global industrial division of labor.
List of LED Display Companies Named in the Lawsuit:
Before the United States announced on March 6th the imposition of US$50 billion in tariffs on China, the US company Fraen Corporation filed an application with the US International Trade Commission (ITC) under Section 337 of the US Tariff Act of 1930, alleging that LED lighting equipment and components exported to, imported into, or sold in the United States infringed its patents, and requesting that the ITC issue a general exclusion order and cease and desist order. This involved 6 Chinese companies.
China Becomes the Country Most Frequently Targeted by 337 Investigations
Statistics show that from 2007 to March 2015, the United States launched 362 Section 337 investigations, with 152 involving China, accounting for 42.0%. Xinhua News Agency previously reported that China has been the country most frequently targeted by Section 337 investigations for 13 consecutive years. Statistics show that the number of "337" investigations targeting China is increasing, as shown in the chart below.
Statistics indicate that the United States has initiated 337 investigations into Chinese LED products for many years.
In 2008, six mainland Chinese LED companies were sued, four of which were included in the ITC's "337 investigation" list.
In 2012, 13 companies, including ZTE, Huawei, Samsung, HTC, and LG, were targeted in US 337 investigations.
In 2013, seven companies, including Lenovo and MediaTek from China, LG and Samsung from South Korea, and Nintendo, Panasonic, and Toshiba from Japan, were also targeted in 337 investigations.
Statistics show that the United States has wielded the "big stick" of Section 301 investigations more than 120 times to date.
Economic Observer Network analysis found that the timing of US Section 337 investigations against China is concentrated in May and January, with June also a peak month for initiating investigations. The proportion of investigations targeting China in all US-initiated "337" investigations is also significantly increasing.
The categories of investigated products have also increased. The table shows that in 2017, investigations into communications equipment, computers, and other electronic equipment accounted for 40%, clearly demonstrating the increasing probability of LED companies being investigated. The United States' "337" investigations are intensifying their scrutiny of Chinese goods.
Warnings from 337 Investigations
Although many 337 investigations, 301 investigations, and patent infringement cases appear to target upstream areas such as epitaxy and chips, they will also affect downstream companies. For example, once disputes occur among chip suppliers, product prices will fluctuate and supply interruptions may occur, affecting normal production in downstream industries.
Due to China's relatively weak industrial foundation and intellectual property strength, Chinese companies often face intellectual property barriers when exporting, especially the investigations and remedial measures conducted against Chinese LED companies under Section 337 of the US Tariff Act.
As companies accelerate their "going global" efforts, adapting to the foreign intellectual property environment and protecting their own interests becomes particularly important. In the future, for LED lighting products to successfully enter foreign markets, it is crucial to be proactive and establish intellectual property layouts in the target countries, thereby improving the prevention of intellectual property litigation risks abroad.
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