337 investigation "explodes" patent shortcomings, and the domestic LED industry is ushering in patent changes

The National "Two Sessions" have just concluded. In his report, Premier Li Keqiang proposed to strengthen the implementation of the going global strategy, focus on risk prevention, and improve the rights to protect overseas rights and interests, so that Chinese enterprises can go out smoothly and steadily, and develop and grow in international competition. Just as the 15th World Intellectual Property Day is approaching on April 26, the U.S. International Trade Commission (ITC) launched a Section 337 investigation against four LED companies accused by CREE, arousing strong concern in the industry.

On the surface, the Section 337 investigation is an intellectual property dispute, but in essence it is considered to be market competition among enterprises. Our country has always been the country involved in the most cases. Data released by the ITC official website shows that there were 12 337 investigation cases of Chinese companies last year, accounting for 30% of the total. Among them, Guangdong was involved in 7 cases, making it the province with the most cases in the country.

A few days ago, Shenzhen University held an emergency countermeasures meeting due to the "Section 337 investigation of four LED companies". Official organizations, private institutions, colleges and universities, entrepreneurs and representatives from the legal profession have stepped forward to try to help LED companies recite the "tightening curse" and prepare the "combination punch" to meet possible patent changes.

Influence geometry

Guangdong may be more affected in the future

Chai Guangyue, a professor at the School of Optoelectronic Engineering of Shenzhen University, analyzed that the 337 investigation initiated by CREE involves 8 patents, ranging from epitaxial chips to packaging applications, basically covering the entire LED industry chain.

How big is the impact of this investigation? Can LED companies that have not been sued be able to watch the fire from afar and sit back and relax?

Sui Shirong, chairman of the Guangdong LED Industry Patent Alliance, believes: "Not necessarily, it only means that domestic companies are not strong enough to threaten CREE's interests."

He analyzed that in addition to obtaining legal protection in the United States, CREE has also obtained patent protection in China through priority rights for some of the LED patents involved in this case. If one day CREE joins forces with international giants Philips, GE, Osram, etc. to use their patents to establish a patent pool or patent alliance to completely prevent Chinese LED companies from manufacturing and selling the above-mentioned patented products in mainland China, some or many companies in the Chinese LED industry may suffer a heavy blow.

Li Qiang, director of the Guangdong Provincial Intellectual Property Research and Development Center, believes that although this "337 investigation" is not targeting Guangdong, Guangdong is a major LED province and may be greatly affected in the future. "To say the least, we can sacrifice part of our economic interests, but the bottom line is that we cannot lose this market. If we don't turn the 'tightening curse' into a 'golden cudgel' as soon as possible, we will be in a difficult situation, so everyone must make a comprehensive plan."

Li Yang, a professor at Shenzhen University Law School, believes that the biggest problem for companies is not paying enough attention to the 337 investigation. "First, the company being sued does not pay enough attention to it; second, it is not directly involved in the lawsuit, but companies related to the technology involved in the lawsuit always have a mentality that it has nothing to do with them. Once the 337 investigation is involved, the companies involved and related companies should pay attention to it and not be like ostriches."

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How to respond

A thorough analysis of the opponent’s patents

Xiao Zhiguo, chairman of Luming Technology Group, believes that the patent foundation provided by CREE this time is very solid and can be extended, making it difficult to avoid. Therefore, it is very important to plan ahead and plan ahead. One of the most effective weapons is to form a group to form a negotiating weight.

Li Qiang believes that the LED Industry Patent Alliance currently needs to unite companies to establish a patent pool to jointly deal with foreign patent issues. "Each enterprise can sign an agreement with the alliance and hand over the entire litigation rights to the alliance. This alliance will establish a strong team of experts including technology, law, and patents, and unanimously report to the outside world."

He also reminded enterprises: "After paying attention, they must avoid going to extremes and don't admit defeat all at once. We must learn this from Huawei."

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Li Jun, President of Zhihui Vision, also expressed the same view: "Our three founders were previously directors of the intellectual property department of ZTE, Coolpad, and Midea Group. Based on our experience, once sued, it is necessary to actively respond to the lawsuit. However, the current situation is that many business leaders do not have a comprehensive or deep understanding of intellectual property work, which is a difficulty."

He believes that when facing litigation, companies must first thoroughly analyze the opponent's patents. "Coolpad entered the U.S. market in 2012. Why didn't there be any big lawsuits like Xiaomi and Samsung? How did it do it? We have thoroughly analyzed the patent situation of every flagship product of Samsung, Apple and Motorcycle, and specially set up a database management system to analyze every model of each competitor. Therefore, before entering the U.S. market, you must be well aware of the risks to avoid them. Intellectual property rights are actually a competition rule. Pay attention to who your competitors are and analyze them." Sun Yinsheng, legal director of Beijing Deli, suggested that companies actively apply for patents. "If you have a patent in our country, no matter whether you created the patent or not, as long as you have it, you can fight against others. At least you have the qualifications and weight to negotiate. Therefore, companies must apply for more patents, especially for international applications. The government will provide a lot of funding, so companies must be good at using government resources to make a good patent layout."