China

Tariff Chess Match Escalates Between China and the United States

Trade Secrets Watch has been covering the escalating economic tension between China and the U.S., including the U.S. Trade Representative’s investigation on China’s alleged IP theft under Section 301 of the Trade Act of 1974, dueling imposition of tariffs in March 2018, and the USTR announcement of products against which it proposed to impose 25 percent import duties. READ MORE

UPDATE: Home Remedies Remain Best Medicine for Politically Charged IP Theft

In July 2018, a federal judge in Wisconsin imposed a $1.5 million penaltythe maximum statutory fine—against Chinese wind turbine manufacturer, Sinovel Wind Group Co. Ltd., for stealing trade secrets from Massachusetts-based technology company, AMSC Inc. In addition to the fine, Sinovel was sentenced to 1 year probation and ordered to pay $57.5 million in restitution to AMSC, an amount the companies had settled on prior to the ruling. Sinovel also agreed to pay $850,000 to Massachusetts wind turbine operators. READ MORE

Seedy Business: Chinese Scientist Sentenced to Ten Years for Stealing Proprietary Rice Seeds

In 2013, U.S. Customs and Border Protection agents caught researchers attempting to smuggle a $75 million trade secret from the United States to China.  Unlike the trade secrets we usually discuss, the trade secrets in tow were rice seeds.  But not just any rice seeds:  these valuable seeds were genetically modified to create proteins used to treat gastrointestinal disease, antibiotic-associated diarrhea, hepatic disease, osteoporosis and inflammatory bowel disease.  READ MORE

The Tariff Chess Match Between China and the U.S. Continues: Orrick’s International Trade & Compliance Team Provides Insights on the Announcement of Potential Chinese Products Subject to Tariffs

Trade Secrets Watch previously had its eye on the U.S. Trade Representative’s investigation on China’s alleged IP theft under Section 301 of the Trade Act of 1974. As an update, late last month, President Trump announced the imposition of tariffs on as much as $60 billion worth of Chinese goods due to China’s alleged IP theft and intimidation tactics to obtain American technology. China, in turn, proposed tariffs of its own on 128 American products, valued at $3 billion. READ MORE

Home Remedies for Politically Charged IP Theft

In January of this year, Chinese wind turbine manufacturer Sinovel Wind Group Co. Ltd. was convicted of stealing trade secrets from U.S. company AMSC Inc. The theft caused AMSC, more than $800 million in losses and forced the company to lay off more than half its global work force. Sinovel’s sentencing—which could include fines exceeding $1 billion and a multiyear probationary period—is scheduled for June 2018. READ MORE

Rising Tensions as Trump Administration Prepares to Announce Results of Section 301 Trade Investigation into China’s Alleged Intellectual Property Rights Violations

As we previously reported, on August 14, 2017, President Trump signed an executive memo asking U.S. Trade Representative Robert Lighthizer to determine whether to launch an investigation into China’s alleged theft of intellectual property under Section 301 of the Trade Act of 1974. Later that week, after a review of Chinese laws, policies, and practices relating to IP, Lighthizer recommended and launched an investigation “to determine whether acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S. commerce.” READ MORE

Trade Secret Misappropriation by Ex-Employees in China: How to Confront “Inside Theft”

Article 123 of the General Provisions of the Civil Law of the People’s Republic of China (effective Oct. 1, 2017) confirmed that trade secrets are intellectual property, signifying China’s recognition of the importance of trade secret protection.  Nevertheless, trade secret misappropriation remains rampant in the country.  READ MORE

Accounts Frozen: DOJ Alleges Seven Defendants Conspired To Misappropriate Trade Secrets

Competition from Chinese companies shows no signs of slowing. Likewise, allegations of trade secret theft against Chinese companies are increasingly common. In this case, the U.S. Department of Justice linked allegations of trade secret theft with wire transfers from a Chinese company in order to freeze bank accounts and real property held by several defendants charged with conspiracy to steal trade secrets. READ MORE

New Measures to Combat Chinese Trade Secrets Theft: Will They Work?

For trade secret owners, international IP theft is of particular concern because of the difficulty in catching and enforcing remedies against the thieves.  For many U.S. companies with a global reach, an overriding concern has been how to combat economic espionage from Chinese state-owned companies or individuals.  During his campaign, President Trump certainly had China on his mind. READ MORE

Supreme Court Deflates Sino Legend Cert Petition

On Monday, January 9, the Supreme Court denied a petition for certiorari from Sino Legend Chemical Co., Ltd., concluding litigation that began with a Section 337 complaint filed more than four‑and‑a‑half years ago by SI Group, Inc. In January 2014, the International Trade Commission found that Sino Legend, a Chinese company, misappropriated SI Group’s rubber resin trade secrets and issued an exclusion order, barring the importation of Sino Legend products made using these trade secrets for 10 years.

The TSW has extensively covered this case with posts on the ITC Administrative Law Judge’s Initial Determination, the Commission’s decision, the Federal Circuit’s Rule 36 affirmance, and Sino Legend’s cert petition.

The case attracted the attention of the Chinese government, which filed an amicus brief in support of Sino Legend’s cert petition—the first amicus brief ever filed by the Chinese government in the U.S. Supreme Court, according to Sino Legend. The Chinese Trade Remedy and Investigation Bureau (“TRB”), a branch of the Ministry of Commerce, forcefully argued that the Supreme Court should grant Sino Legend’s petition and reverse the ITC’s decision:

The TRB is disappointed by recent actions of the ITC. In wrongly interpreting Section 337 of the Tariff Act to allow the ITC to bar imports into the United States based on alleged actions conducted, and adjudicated, wholly within the borders of China, the ITC has impugned the sovereignty of China and refused to accord the comity expected of a trade partner.

TRB Brief at 2.

The TRB criticized the ITC’s “expansion” of the Federal Circuit’s TianRui decision “to bar products from entering the United States for conduct that not only occurred completely within China’s borders by Chinese citizens working at Chinese companies, but also conduct that was adjudicated in China to have been lawful.” (Id. at 1.) Citing Judge Moore’s dissent, Sino Legend’s petition also criticized TianRui as incompatible with the presumption against extraterritorial application of federal statutes.

The Supreme Court’s denial of Sino Legend’s petition for certiorari is significant because it appears to cement the extraterritorial reach of Section 337 inasmuch as the offending conduct relates to products that are imported into the United States. Thus, the ITC remains a powerful forum for companies with significant operations in the United States to seek redress for misappropriation of trade secrets. Read more broadly, TianRui and its progeny may provide the ITC with the authority to investigate other types of “unfair acts” that occur outside the United States, provided—again—that those acts pertain to products that are imported into the United States.

 

The ITC Investigation was captioned Certain Rubber Resins and Processes for Manufacturing Same, Inv. No. 337-TA-849.

The Supreme Court docket was captioned Sino Legend (Zhangjiagang) Chem. Co. Ltd. et al. v. Int’l Trade Comm’n et al., No. 16-428.