ANTIDUMPING, NEW 337 PATENT CASES, TRADE LEGISLATION, SECURITIES AND PRODUCTS LIABILITY

US Treasury Department Albert Gallatin Statue Washington DC There have been some developments in the antidumping, 337/IP/Patent areas, Customs Legislation, Securities and Products Liability Areas.

TRADE—WIND TOWERS

 Attached is the December 17th Commerce Department’s final determination in the Wind Towers case.  WIND TOWERS FINAL The antidumping rates range from 44 to 47% with 70% being the all other rate.  The Countervailing Duty rates range from 21-34%.  The antidumping cash deposit is reduced in part to offset part of the countervailing duty levied on the Chinese wind towers. 

SECTION 337/IP/PATENT CASES—TOUCH KEYBOARDS AND PAPER SHREDDERS

As mentioned in my last newsletter, on December 17, 2012, Nuance Communications sued in Federal District Court Shanghai Hanxiang (Cootek) Information Technologies Co., Ltd. and Personal Communications Devices LLC (“Defendants”) for patent infringement.  In the complaint, Nuance alleges that Defendants infringe Nuance’s patent by selling and importing for sale mobile handset devices with infringing touch keypad software technology, not limited to the PCD Venture device with CooTek TouchPal software.

Yesterday, two new 337 cases were filed against Chinese companies.  See the notices below.  The first case was by Nuance Communications against Shanghai Hanxiang and is the companion case to the Patent case filed in district court.

Docket No: 2923 

Document Type: 337 Complaint

Filed By: Brian E. Ferguson

Firm/Org: Weil, Gotshal, & Manges LLP

Behalf Of: Nuance Communications, Inc.

Date Received: December 20, 2012

Confidential: Yes

Commodity: Mobile Handset Devices and Related Touch Keyboard Software Technology

Country: None

Description: Letter to Lisa R. Barton, Acting Secretary, USITC; requesting that the Commission conduct an investigation under section 337 of the Tariff Act of 1930, as amended regarding Certain Mobile Handset Devices and Related Touch Keyboard Software Technology. The proposed respondents are Shanghai HanXiang (Coo Tek) Information Technology Co., Ltd., China and Personal Communications Devices, LLC, Hauppauge, New York.

The second 337 case on paper shredders was filed against a number of companies in China, including companies in Shenzhen and Jiangsu, China.  The notice is below

Docket No: 2924 

Document Type: 337 Complaint

Filed By: Kevin M. O’Brien

Firm/Org: Baker & McKenzie

Behalf Of: Fellowes, Inc. and Fellowes Office Products (Suzhou) Co. Ltd.

Date Received: December 20, 2012

Confidential: Yes

Commodity: Paper Shredders

Country: none

Description: Letter to Lisa R. Barton, Acting Secretary, USITC; requesting that the Commission conduct an investigation under section 337 of the Tariff Act of 1930, as amended regarding Certain Paper Shredders, Certain Processes for Manufacturing or Relating to Same and Certain Products Containing Same. The proposed respondents are New United Co. Group Ltd., China; Jiangsu New United Office Equipments Co. Ltd., China; Shenzhen Elite Business Office Equipment Co. Ltd., China, Elite Business Machines Ltd., China; New United Office Equipment USA, Inc., Northbrook, Illinois; Jiangsu Shinri Machinery Co. Ltd., China; Zhou Licheng, China; Randall Graves, China; and “Jassica” Wang Chongge, China. 

If anyone wants copies of these 337 complaints, please feel free to contact me.

IP/PATENT

 On December 18, 2012, Cellpoint filed a patent case against ZTE for infringement on its mobile cell phone patents.  See the attached complaint. CELL PORT ZTE

DUELING CUSTOMS AND TRADE BILLS

In response to the bill submitted by the Republicans in the House of Representatives, the Democratic Congressmen in the House of Representative have submitted their own trade and customs enforcement bill, which is attached.  DEMOCRACTIC ENFORCE ACT The bill is more tough than the Republican bill because it allows US Customs to raise the bonds of US importers if it feels that there is a substantial chance that they will not be able to pay future antidumping and countervailing duties.  It also requires US Customs to respond within a certain time period to allegations to Customs that there have been attempts to evade US antidumping and countervailing duty orders.  The political situation is getting even tougher in Washington DC.

SECURITIES

 A second class action securities case was filed against Suntech Power on December 18th by a Kent Ji.  The Complaint is attached.  KENT JI SUNTECH CASE

PRODUCTS LIABILITY–MAJOR DECISION IN DRYWALL PRODUCTS LIABILITY CASE

Back in September 2012 there was the attached major decision in the Drywall Products Liability case, SEPT 2012 SEPT 2012 DRY WALL DECISION which has the effect of extending jurisdiction and personal jurisdiction using long arm statutes to Chinese companies that export products to the United States and cause tortious injuries.  In addition, the Court refused to lift a default judgment against the Chinese defendant companies, which took too long to respond to the complaint and Court orders in the case.

In Multi District Litigation decision, the Federal District Court in the Eastern District of Louisiana in the case of In re Chinese Manufactured Drywall Prods. Liab. Litig., affirmed the court’s jurisdiction over two closely affiliated Chinese companies—Taishan Gypsum Co. Ltd. and Taian Taishan Plasterboard Co. Ltd.— whose drywall was exported to various states in the U.S.

The Taishan defendants after receiving a default judgment came into Court and vigorously challenged the Court’s ruling on jurisdiction and the default finding.  In the attached decision, the Court found personal jurisdiction over the Taishan group even though it had no physical contacts with the states of Virginia, Florida, and Louisiana.  In the case of Virginia, no Taishan company official had ever traveled to the State of Virginia.  Taishan simply supplied products to a Virginia company—Venture Supply, Inc., which had approached Taishan in China about importing their products into Virginia.

The Court did find that Taishan had advertised in the US market by way of an English websites, which was accessible in the United States.  The Court also found that Taishan had encouraged and welcomed US companies to visit its drywall factory in China, which are standard business practices in China.

The Federal Judge concluded in the attached opinion that Taishan’s activities taken together were sufficient for the State of Virginia and the other States to assert personal jurisdiction over Taishan through their long arm statutes, despite the lack of physical contacts with Virginia and the other states.

In another important part of the decision, the Federal Court refused to lift the default judgment against Taishan for “excusable neglect”.  The Federal Court specifically determined:

“Considering the facts under this law, the Court finds that vacating the Default Judgment on the basis of TG’s excusable neglect is not warranted. While the Court does not conclude whether the failure to respond on TG’s behalf was “willful,” it does note that TG was served with the original Complaint in its native language, and it was aware that it had previously sold its drywall to several Florida-related companies, all suggesting TG was properly put on notice of the claims against it in Gross. Additionally, the plaintiffs invested substantial amounts of money, time and effort in serving TG. Whether or not TG’s defense is meritorious is speculative, especially since the Court finds personal jurisdiction exists over Taishan in Mitchell and it has voluminous evidence before it indicating that TG and TTP manufactured and sold a defective product, placed this product into the stream of commerce, and profited from its sales. The public has an interest in seeing that persons harmed by defective, foreign products be accorded relief for their damages. The Court recognizes that TG will suffer significant financial losses if ordered to pay under the Preliminary Default, but at the same time Taishan incurred a financial gain by its Florida-related sales. Finally, whether TG acted expeditiously is also questionable; it appears that TG did not act in the MDL ( Multi District Litigation), until it was notified of the Default Judgment against it in Germano and it appeared the last day permissible to appeal that Default Judgment. “

I suspect that in all probability, when Taishan was served the complaint and the notice of the proceeding, it thought that US Courts could not touch Taishan in China.  But now the situation has changed, possibly because Taishan has assets outside of China and is very afraid those assets could be seized as a result of this litigation.

The lesson of this case is that Chinese companies need to respond in US litigation cases.  If they do not respond and try to hide away in China, they will lose their rights to fight the case in the United States and contest liability and the amount of the damages.

If you wish copies of the 337 complaints or have any questions about these cases or about the trade, IP/Patent/337 Law, securities or products liability law in general, please feel free to contact me. 

Best regards,

Bill Perry

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