At the end of March, under the suspicion of the Sino-US trade war, the domestic LED display industry was once again criticized by the US counterparts.
According to the Ministry of Commerce, on March 27, 2018, Ultravision Technologies of the United States filed an application with the U.S. International Trade Commission in accordance with Section 337 of the "U.S. Tariff Act of 1930". The company accused 11 domestic companies of infringing on their patent rights in LED lamp drivers and components (Certain Light Engines and Components Thereof) exported to, imported or sold in the United States, and requested the US International Trade Commission to issue a general exclusion order and prohibition make.
Why the domestic LED industry has more "disputes" in the United States
According to available information, it is not the first time that Ultravision Technologies, a US LED display product supplier, has filed a patent opposition to my country’s US-related LED products. On August 11, 2016, Ultravision Technologies was like suing Shenzhen Orion Optoelectronics Technology Co., Ltd. for patent infringement in the Texas court of the United States. According to the indictment, the involved patent US Patent No. 9349306, the patent name "Modular Display Panel" (modular display panel) patent has been infringed.
Incomplete data show that since 2008, the United States has filed at least 6 applications for 337 investigations against my country’s LED industry and companies. And in the past three years, there has been a "trend of high incidence" of disputes. In this regard, industry insiders pointed out that the large-scale development of LED products in my country is mainly after 2008. Previously, this type of product relied heavily on the international market from the upstream to the terminal-my country can be regarded as the "dumping destination market" for giants such as the United States, Japan and Europe.
After 2008, with the support of local industrial policies, my country's LED industry has made significant progress in terms of equipment, raw materials, key processes, core components, and finished products. The market has shifted from passive import to active export. Especially after 2012, the continuous development of local LED lighting and display products has risen to the top in the world in terms of technology level, forming a "continuous offensive trend" against European and American counterparts in the brand market. This has had an impact on the market share of LED companies in Europe, America and Japan, especially in the United States.
In fact, every 337-related incident shows a uniform law: that is, American companies try to prevent local brands from expanding in the US market. Some domestic LED display brands have more than 20% of the annual sales of these brands in the US market.
However, on the other hand, the domestic LED industry has achieved technology and product transcendence, such as the small-pitch LED display industry. Although my country's enterprises have the strongest strength, the most advanced technology, and the best products, their competitors will always be unwilling. ——Especially this industry in the United States, which used to be the "industry boss" that dominated the LED display industry, is now more unwilling to be surpassed by Chinese brands. This provides more incentives for American counterparts to use "patents" as an excuse to protect their "backward" industries. What is the essence of the US 337 investigation The legal basis for the US 337 investigation comes from the "U.S. Tariff Act of 1930". The provisions concerning intellectual property rights are mainly Section 337. Judging from these legal provisions, the 337 investigation has a design of "protection of intellectual property rights and fair competition." However, judging from actual cases, the 337 investigation is essentially a tool of "excessive trade protection".
The 337 investigation has the characteristics of convenience in filing a case and rapid investigation. Under normal circumstances, for international competitors, US companies are more willing to use the 337 investigation tool instead of court patent litigation. The latter is generally more than twice the time required for the 337 investigation. For example, Ultravision Technologies also chose to sue some patent disputes with Chinese companies in 2016, because the so-called infringing party is also the company's agency business-that is, the core partner. The 11 Chinese companies involved in the 337 investigation are all competitors in the brand market. At the same time, Section 337 investigations are also characterized by insufficient rigor in the law enforcement process and severe penalties. In other words, Section 337 surveys generally place more emphasis on process rather than results. As stated in the statement of the LED Display Application Branch of the China Optics and Optoelectronics Industry Association, Ultravision Technologies’ patents for LED displays are neither core technology nor essential technology. The effectiveness is not high, doubtful, and the application time is later than that of my country. The time the product entered the US market-but none of these "consequential facts" are the key to the 337 investigation. The focus of 337 investigations often focuses on the legitimacy of the process within a limited scope, and this system design is conducive to the plaintiff’s victory. ——From the perspective of the punishment results, the high fines are one aspect. The 337 investigation also implements the "continuous sitting" system. That is to say, as long as one respondent loses the lawsuit, the others will also be punished at the same time; those who do not participate in the respondent will directly declare the applicant's victory.
In addition, judging from the practice of previous 337 investigations, there is another "trap" in this system design: the cost of responding to the suit is relatively high-especially for small and medium-sized enterprises and companies with a small share in the United States, they will almost be in the process of responding. "The gain is not worth the loss." Therefore, a common result of the Section 337 investigation of this rule in the United States is that "the subject under investigation chooses to voluntarily withdraw from the US market." In other words, sometimes this tool is used to "scare others away" to exert its power.
Therefore, in summary, it must not be understood that Section 337 investigation is a defense of truth, fairness and justice under the “legal framework”. The existence of this investigation has been completely reduced to "disgusting" trade protectionist measures. Therefore, my country's corresponding industry associations will declare, "This is to rob and disrupt the order of the LED market." Although the US 337 system design is very conducive to "excessive trade protection", but in the face of China's strong LED industry and innovation capabilities, this fig leaf may not be effective. This is the basis for the calm performance of the domestic companies involved in this incident: that is, the US opponents chose to challenge the most powerful Chinese giants in the global market, and they are probably looking for the wrong target.
How to deal with the "system" design of the US 337 investigation
Before this LED industry encountered a 337 investigation application, my country's Baosteel and Shagang just won the 337 investigation. Historical data shows that there is still a 2-3% chance of winning in the 337 investigation. Therefore, actively responding to the suit should be the first choice. Because market disputes and patent disputes are not a "moment-to-moment" benefit, but are related to the company's long-term strategic layout-this time actively retreating, and it will be more difficult to enter the market next time.
However, any contest requires "not fighting an unprepared battle."
my country's LED industry, especially the LED display industry, has developed a strong momentum in recent years, and its technological level has been at the forefront of the world. However, due to a longer historical period, our LED industry is in the stage of "being behind, chasing, and following". Some companies are still accustomed to learning mature technologies and applying mature technologies, and have not established a "forward-looking technical reserve." And R&D” strategic awareness.
The specific performance is,
1. The forward-looking, non-profitable R&D investment of some companies is still insufficient;
2. Although most companies have established a complete patent database at home and abroad, some companies still lack overseas patent awareness and the global protection of patented technology is weak;
3. The awareness of competition between the domestic market and brands is far greater than cooperation. Patent sharing and crossover between companies and brands, the initiative to establish patent pools is relatively weak, and it is easy to be "smashed" by people in international disputes; 4. Basic patents, general purpose The number of type patents is less than that of foreign giants. This is the result of decades of accumulation by European and American companies.
The above characteristics of my country's LED industry are also the reason why Ultravision Technologies dared to challenge 11 Chinese companies from the field of patented technology.
From the perspective of dispute settlement, the best result of commercial disputes is settlement. The essence of reconciliation is the exchange of interests. Patent disputes between large companies, such as Apple and Samsung, often "sue each other"-that is, cross-use, authorization, and cross-infringement of patents. This kind of entanglement of interests makes the other party "fearful" when choosing a patent war. Once a dispute arises, it is easier to "reconcile" through the exchange of interests. Therefore, the core of patent and intellectual property strategy is not only to seize the innovation highland, but also to "build a great wall of self-protection." Even, sometimes this Great Wall needs to be built by colleagues from related industries in a country.
In recent years, the development of my country's LED industry has advanced by leaps and bounds, and it has stood at the commanding heights of the global industry. In particular, as domestic brands continue to move toward the international market, their participation in the global market has evolved from "helping people to work" to "brand going to sea", and the front line of direct collision with industry opponents in the international market is gradually advancing. This kind of international patent dispute has occurred. The risk is still high.
In this regard, on the one hand, the local LED industry should establish its own patent pool and intellectual property library, and always pay attention to the intellectual property actions of competitors in the international market, and be familiar with international intellectual property rules; on the other hand, it should further develop and innovate "Foresighted", using more advanced research and development, take the lead in occupying the "patent position" of future products. For the LED display industry, COB technology, flip chip technology, chip-level CSP, mini-led, Micro LED, etc. are all strategic commanding heights that need to be "planned in advance." The layout in the technical fields of these products that have not yet been marketed is the key to winning the future intellectual property wars.
In short, Ultravision Technologies' application for the 337 investigation of LED companies in my country is not an isolated incident or an accidental incident. Although Ultravision Technologies’ reasons may not be tenable, from the perspective of the other party, the use of systems, patents and all means to protect its own market is a “competitive response” that, although not necessarily reasonable, is inevitable (even in Under the 337 system framework, patent hooliganism is an inevitable product). Especially in the context of my country's LED industry going overseas, this kind of collision will never go away. In other words, the "almost unreasonable" brutal challenge of the other party is a certification that we are already relatively strong; at the same time, it is also a ridicule that we are not strong enough.
And the final result of this collision and challenge is only two: Either we retreat; or through a period of fierce battle, through technological upgrading and innovation, industrial market mergers and acquisitions, the other party loses the ability to pick up intellectual property weapons.
