Chinese metal ribbon producer wins in a 337 investigation

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Qingdao Yunlu’s recent victory in a United States International Trade Commission (ITC) 337 investigation shows that respondents in such cases need to be brave and take early action, according to a legal expert.

As one of the world’s largest producers of amorphous metal ribbon, Qingdao Yunlu was the respondent in an ITC Section 337 investigation that an international metal production company and its subsidiary (the complainants) had filed, alleging misappropriation of trade secrets.

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JAY CHIU

One of the complainants’ accusations was that Yunlu engaged in unfair competition in manufacturing, selling, and/or exporting to the US certain amorphous metal products made with alleged misappropriated trade secrets that the filers owned. They also accused the Chinese government of aiding and abetting the Chinese amorphous metal manufacturing industry in a conspiracy to steal the complainants’ trade secrets.

A cross-border team of global law firm K&L Gates acted for Yunlu in the case. At the close of fact discovery, the K&L Gates team managed to convince the complainants and the Office of Unfair Import Investigations that the complaint lacked merit. The move prompted the complainants to voluntarily withdraw their complaint.

K&L Gates’ Asia managing partner David Tang believed this was a complete victory for Yunlu, and the voluntary withdrawal was the first of its kind in a trade secret case involving Chinese respondents before the ITC.

With the Yunlu case included, the ITC litigation team of K&L Gates successfully convinced the complainants to withdraw their complaints voluntarily prior to trial in three separate 337 investigations against Chinese respondents in the past year and half.

“These cases show that infringement allegations by some complainants are not well founded and have serious weaknesses, and the best defence for some respondents may be to go on the offensive early to explore any weaknesses and use that as leverage in negotiations,” Jay Chiu, a partner at K&L Gates, told China Business Law Journal.

“At the same time, respondents must be smart and act reasonably in discovery and, more importantly, select the right IP litigation team with team members, who know how to work closely with them, can come up with a highly effective overall strategy, can run the case efficiently, can devise a good discovery plan, and have a track record of helping Chinese respondents win their cases.”