TRADE SPEECH, SOLAR CELLS, DEVELOPMENTS–CUSTOMS, ANTITRUST, PATENTS, SECURITIES

Qianmen Zhengyang Gate Wide Tiananmen Square Beijing China Night

Dear Friends,

I have been remiss in posting on this blog , but I have had three oral arguments and two major filings in the Court in the last two weeks.

Last week, I also gave a major speech here in Minneapolis at a Dorsey conference entitled “Avoiding the Inferno: Making Import and Export Issues Predictable in the Year of the Dragon.”  The Dorsey conference speech was divided into three panels, which all focused on trade business with China.

The First Panel was on the Foreign Corrupt Practices Act and featured two Dorsey lawyers, J. Jackson, one of the heads of our litigation group here at Dorsey, and Tom Gorman, who is formerly with the Enforcement Division of the Securities and Exchange Commission.

The Second Panel was on antidumping, countervailing duty, and Customs law.  In addition to myself and Emily Lawson, my colleague, who specializes in Customs law issues, Don Bonker, the Executive Director of APCO, joined me in discussing the US Politics Behind the China Trade situation.

The Third Panel was on civil and criminal litigation under the Customs law and the False Claims Act, aimed in particular at evasion of US antidumping and countervailing duty orders.  In addition to Emily and myself, another Dorsey lawyer, Ed Magarian, who specializes in Civil and Criminal litigation, including litigation under the False Claims Act, spoke about litigation with an emphasis on enforcement litigation against evasion of US AD and CVD orders by way of transshipment through third countries.

Attached are the PowerPoints that were distributed for that speech.  Avoiding the Inferno_FINAL_PowerPoint  If anyone wants copies of the backup materials for the speech, please feel free to contact me.

DEVELOPMENTS

While in Court and speaking in Minneapolis, however, the US China Trade War continued with developments in a number of different litigation areas, including Trade, Customs, 337/Patent litigation, Antitrust and Securities law.

TRADE

SOLAR CELLS CASE

Eurobiz in China published my article on the Solar Cells Trade War.  See the attached document.  FINAL PUBLISHED SOLAR TRADE WAR ARTICLE

WOOD FLOORING CASE

Last week Commerce initiated antidumping and countervailing duty review investigations against a number of products from China, including Wood Flooring, Hand Trucks and Pencils.  Attached is the initiation notice that lists the Chinese companies in the review investigation.  WOOD FLOORING REVIEW INVESTIGATION DOC INITIATION

CUSTOMS

TRANSSHIPMENT PROBLEM

For the first time since instituting its “e-Allegations” system in 2008, in January  the U.S. Customs and Border Protection (CBP) this month reported in detail on the number of allegations of trade remedy violations it was able to act upon or throw out, revealing that — in fiscal year 2012 at least — there was a significant backlog of submissions that were not handled.

Of the 149 allegations submitted, CBP “confirmed and took action on” only 15 of them, and found no violation or insufficient information for another 11. That leaves 123 allegations for which “work continues,” according to a Jan. 14 release on the agency’s fiscal year 2012 antidumping (AD) and countervailing duty (CVD) enforcement results.

Of the total 289 AD/CVD orders in place as of the beginning of this year, 118 were against imports from China — more than any other country, according to the U.S. International Trade Commission. Chinese exports also account for the bulk of the duty circumvention problem.

CBP has indicated in previous reports that e-allegations can be seen as a black hole.  This may be why many competing companies will use the private right of action for Customs fraud under the False Claims Act more to enforce AD and CVD orders.

Customs mentioned that uncollected AD/CVDs on imports from China were a “major component” of the overall duties that CBP was not able to collect, the report said. “The top five AD/CVD cases for uncollected AD/CVD duties, comprising $977.6 million (or 87 percent) of the $1.1 billion in unpaid duties, all involve imports from China,” it explained.

See the attached article.  CUSTOMS E-ALLEGATION CHINA FRAUD

PENALTIES ON ANTIDUMPING AND COUNTERVAILING DUTY ORDERS

As indicated in the attached notice from Customs, Fiscal Year 2012 AD_CVD Enforcement Results – CBP.gov Antidumping/Countervailing duty (AD/CVD) enforcement is a priority trade issue for U.S. Customs and Border Protection (CBP). CBP stepped up its agency-wide efforts in Fiscal Year 2012 to enforce AD/CVD laws in coordination with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).

In FY 2012:

CBP and HSI seized 57 shipments with a domestic value of $13,681.270.

CBP levied over 50 monetary penalties for $24,256.361 on importers for fraud, gross negligence, and negligence for AD/CVD violations under 19 USC 1592.

CBP completed over 50 audits of importers of AD/CVD commodities and identified AD/CVD discrepancies with a value of approximately $41 million, and so far collected over $13 million.

CBP in partnership with U.S. industry expanded the Trade Intelligence program and received 149 allegations of AD/CVD evasion and noncompliance.

CBP conducted several Special Operations including Operation Piping Hot in August 2012 targeting illegal importations of steel pipe and tubing.

337/IP

On January 22, the ITC initiated a 337 patent investigation on Paper Shredders against a number of Chinese companies, including:

New United Co. Group Ltd. of Changzhou, Jiangsu, China;

Jiangsu New United Office Equipment Co. Ltd. of Yaoguan, Jiangsu Province, China;

Shenzhen Elite Business Office Equipment Co. Ltd. of Shenzhen City, Guangdong Province, China;

Elite Business Machines Ltd. of Mong Kok, Kowloon, Hong Kong Special Administrative Region, China;

New United Office Equipment USA, Inc., of Northbrook, IL;

Jiangsu Shinri Machinery Co. Ltd. of Changzhou, Jiangsu Province, China;

Zhou Licheng of Changzhou City, Jiangsu Province, China;

Randall Graves of Changzhou City, Jiangsu Province, China; and

“Jessica” Wang Chongge of Xi’an City, Shaanzi Province, China.

The Petitioners are Fellowes, Inc., of Itasca, IL, and its Chinese subsidiary, Fellowes Office Products (Suzhou) Co., Ltd.

JANUARY PATENT CASES

SMP Logic Systems Versus Guangdong Yifang Pharmaceutical Co., Ltd.

Plaintiff SMP Logic Systems, LLC sued Guangdong Yifang Pharmaceutical Co., Ltd. (“Yifang”) for patent infringement on certain pharmaceutical products.  See attached complaint. GUANGDONG YIFANG PATENT

SWIPE INNOVATIONS LLC VS PAX TECHNOLOGY, PAX GLOBAL TECHNOLOGY AND HI SUN TECHNOLOGY

Swipe sued Pax Global in Hong Kong and Hi Sun Technology in China for patent infringement for imports of payment terminal products and/or systems capable of encrypting confidential account information (including at least the PAX Technology SP30 product and/or system).  See attached complaint.  PATENT FINANCIAL SYSTEMS

ANTITRUST

The Vitamin C antitrust trial against Chinese companies will start up next month in the Eastern District of New York.  See the attached scheduling order.

SECURITIES

In January, several Class Action Securities cases were filed against Chinese companies.  The first case is Jiewen Zeng vs Qiao Xing Mobile Communication Company, Zhi Yang Wu, Rui Lin Wu, David Li and Kok Seong Tan

The second case is Chris Basnett v. Longwei Petroleum Investment Holding Ltd., Cai Youngjun, James Crane, and Michael Toups.

The third case is Michael Dao vs. Silvercorp Metals Inc. and several individuals.

See the three attached complaints.  CHINA MOBILE CASE LONGWEI PETROLEUM SILVERCORP CASE

CHINESE ANTIDUMPING CASES AGAINST US COMPANIES

Last Friday, the Chinese Ministry of Commerce (“MOFCOM”) China levied anti-dumping duties on U.S. and EU imports of ethylene glycol monobutyl ether and diethylene glycol monobutyl ether, two chemicals commonly used in varnishes and paint solvents.  The antidumping duties against US companies range from 10.6% percent for Eastman Chemical Co., 14.1% for Dow Chemical Co. and a 10.6 for Equistar Chemicals LP, as well as a 18.8% for BASF SE, a German chemical company, 9.3 % for Swiss company Ineos Group Ltd. and 10.8% percent rate Sasol Germany GmbH.

Other U.S. companies will face a US wide rate of 14.1 percent and other EU Companies an EU wide rate of 10.8 percent.

What goes around, comes around and the Trade War continues.

If anyone has any questions about these cases or wants additional information, please feel free to contact me.

Best regards,

Bill Perry

DEVELOPMENTS–TRADE, CUSTOMS/TARIFFS, 337/IP/PATENT, DRYWALL PRODUCT LIABILITY, ARBITRATION

Zhengyang Gate from Walking Street Tiananmen Square Beijing Chin There have been major developments in the Trade, Customs, 337/IP, Patent, Products Liability and Arbitration areas.

TRADE DEVELOPMENTS

SHRIMP FROM CHINA, VIETNAM, INDIA AND OTHER COUNTRIES

A new countervailing duty case has been filed against Shrimp from China and a number of other countries.  See the announcement below.  If anyone wants a copy of the complaint, please feel free to contact me.

Docket No: 2928 

Document Type: 701 Petition

Filed By: Elizabeth J. Drake

Firm/Org: Stewart and Stewart

Behalf Of: Coalition of Gulf Shrimp Industries (COGSI)

Date Received: December 28, 2012

Commodity: Frozen Warmwater Shrimp

Country: People’s Republic of China, Ecuador, India, Indonesia, Malaysia, Thailand, and the Socialist Republic of Vietnam

Description: Letter to Lisa R. Barton, Secretary, USITC; requesting the Commission to conduct an investigation under section 701 of the Tariff Act of 1930 regarding the imposition of countervailing duties on U.S. imports of Certain Warmwater Shrimp from the People’s Republic of China, Ecuador, India, Indonesia, Malaysia, Thailand, and the Socialist Republic of Vietnam.

Status: 701-TA-491-497

XANTHAN GUM FROM CHINA–COMMERCE DEPARTMENT PRELIMINARY ANTIDUMPING DETERMINATION

Today, the Commerce Department announced its preliminary antidumping duty determination in the Xanthan Gum from China.  Fufeng Biotechnologies Co., Co., Ltd.  received 21.69% and Deosen Biochemical Ltd. 127.65%.  The separate rate companies received 74.67%, and the rate for the rest of China is 154.07%.

Attached are the preliminary Federal Register notice and fact statement. Xanthan Gum Prelim FR (signed)  Xanthan Gum FS Prelim

CURTAIN WALL DECISION APPEALED TO THE COURT OF INTERNATIONAL TRADE

The Commerce Department’s decision to extend the Aluminum Extrusions antidumping and countervailing duty orders to cover imports of Chinese curtain wall/sides of buildings has been appealed to the Court of International Trade.  See the attached complaint.  Complaint and Aluminum Extrusion and Curtain Wall (2)

WOODFLOORING REVIEW INVESTIGATION STARTS UP

The US wood flooring industry has requested an antidumping and countervailing duty review investigation of numerous Chinese exporters.  If anyone wants a list of the Chinese companies named in the letter, please feel free to contact me.

CHINESE ANTIDUMPING AND COUNTERVAILING DUTY ON PULP FROM THE US, CANADA AND BRAZIL

Possibly in response to the numerous US cases against Chinese wood products, we have learned that the Chinese government is on the verge of initiating a major antidumping case against imports of wood pulp, cotton pulp, and bamboo pulp from the US, Canada and Brazil.  If anyone wants a copy of the target companies in the US, Canada or Brazil, please feel free to contact me.

CUSTOMS—NEW TARIFF BILL

On January 1, 2013, The House of Representatives introduced this week a major tariff reduction bill, The U.S. Job Creation and Manufacturing Competitiveness Act of 2013.  Attached is a copy of the bill, which must still go to the Senate.  TARIFF BILL  The bill represents a bipartisan effort to lower costs for US manufacturers by lowering tariff rates to zero on hundreds of products, including numerous chemical products.  Since both Republicans and Democrats sponsor the bill, it will pass the House.  According to the attached announcement by the House Ways and Means Committee, the Senate Finance Committee has reviewed the same proposals in the House Bill so this bill should eventually pass the Senate and go to the President for his signature.  HOUSE ANNOUNCEMENT

 NEW 337 PATENT CASE AGAINST HUAWEI AND ZTE

On January 2, 2013, a new 337 patent case was filed at the International Trade Commission against Huawei and ZTE.  See notice below.

Docket No: 2929 

Document Type: 337 Complaint

Filed By: Bert C. Reiser

Firm/Org: Latham and Watkins

Behalf Of: Inter Digital Communications, Inc., Inter Digital Technology Corporation, IPR
Licensing, Inc. and Inter Digital Holdings, Inc.

Date Received: January 2, 2013

Commodity: Wireless Devices with 3G and/or 4G Capabilities and Components

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 Wireless Devices with 3G and/or 4G Capabilities and Components Thereof . The proposed respondents are Samsung Electronics Co., Ltd., Korea; Samsung Electronics America, Inc., Ridgefield Park, NJ; Samsung Telecommunications America, LLC, Richardson, TX; Nokia Corporation, Finland; Nokia Inc., White Plains, NY; ZTE Corporation, China; ZTE (USA) Inc., Richardson, TX; Huawei Technologies Co., Ltd., China; Huawei Device USA, Inc., Plano, TX; and Future Wei Technologies, Inc., d/b/a Huawei Technologies (USA), Plano, TX.

Status: Pending Institution

If anyone wants a copy of the complaint, please feel free to contact me.

MORE PATENT CASES AGAINST HUAWEI AND ZTE

Attached are the companion complaints filed in Federal District Court by Interdigital against Huawei and ZTE.  INTERDIGITAL HUAWEI INTERDIGITAL ZTE

In addition, Steelhead Licensing has filed a new patent case against ZTE.  See attached complaint.  STEELHEAD ZTE 

 DRYWALL PRODUCTS LIABILITY LEGISLATION

On Tuesday, January 1, 2013, the House of Representatives passed legislation banning the sale of contaminated drywall imported from China.  In the bill, Congress insisted that the Chinese government force Chinese manufacturers to compensate American homeowners who have faced property damage and health problems caused by the tainted product.

The U.S. House of Representatives voted 378-37 in favor of the Drywall Safety Act.  On December 21, 2012, the same bill went through the US Senate on a unanimous, 100 to 0, vote so the bill is on President Obama’s desk for signature.

The bill stipulates that contaminated drywall be treated as a banned hazardous substance under the Federal Hazardous Substances Act and as an imminent hazard under the Consumer Product Safety Act. 

Attached is a copy of the bill going to the President for signature.  US LEGISLATION

Section 2 of the Bill reads as follows:

SEC. 2. SENSE OF CONGRESS.

“It is the sense of Congress that—

(1)  the Secretary of Commerce should insist that the Government of the People’s Republic of China, which has ownership interests in the companies that manufactured and exported problematic drywall to the United States, facilitate a meeting between the companies and representatives of the United States Government on remedying home owners that have problematic drywall in their homes;

and

(2)  the Secretary of Commerce should insist that the Government of the People’s Republic of China direct the companies that manufactured and exported problematic drywall to submit to jurisdiction in United States Federal Courts and comply with any decisions issued by the Courts for home owners with problematic drywall.”

As mentioned in a previous post on this blog, there is a major multidistrict litigation, which includes 10,000 or more cases ongoing in the Eastern District of Louisiana.  Recently, in September, the Court rejected an effort by a Chinese company to lift a default judgment in the case and the Court found jurisdiction over the Chinese company.

One Chinese drywall manufacturer Knauf Plasterboard Tianjin Co., a subsidiary of a German company, in December 2011 settled the personal injury and other claims in a settlement worth between $800 million and $1 billion. This settlement covers about 4,500 homes.

ENFORCEMENT OF ARBITRATION AWARD BY CHINESE COMPANY AGAINST US COMPANY

Attached is a complaint filed January 2, 2013 by Chongqing Hengsheng Xintai Trade Co., Ltd. against Baja, Inc. a/k/a Baja Motorsports, LLC, a Delaware Corp., in the US District Court of South Carolina seeking to enforce an arbitration award from the China International Economic and Trade Arbitration Commission (“CIETAC”) against a US company.  CHONGQING CIETAC AWARD COMPLAINT

If anyone wants any information about these complaints, developments or general information on US Trade, Customs, antitrust, securities, products liability or arbitration law, please feel free to contact me. 

Best regards,

Bill Perry

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