(Xinhua)
Updated: 2008-05-17 11:40

Their case suffered a severe setback about one year after Energizer lodged the complaint.

In June 2004, the ITC issued a preliminary ruling that the seven Chinese battery makers, and two from the Hong Kong Special Administrative Region, had infringed the legitimate and valid patent of Energizer. The agency recommended a ban on imports of mercury-free alkaline batteries.

The result was what the companies had expected, since defendants rarely won patent cases in the United States and about 80 percent of defendants opted for conciliation proceedings with the plaintiffs in Section 337 investigations, according to Wang.

Following the preliminary ruling, Energizer offered a harsh compromise: an initial payment of US$1 million and 3 US cents in patent fees for every battery that Chinese companies would henceforth sell in the US market.

"It was unacceptable and unfair. Our profit on exports was just about one cent per battery. The terms were tantamount to asking us to leave the US market," Wang said.

So the BIA and most of the Chinese companies carried on their joint fight.

Their perseverance paid off four months later when the ITC ended its investigation and ruled that Energizer's patent was invalid, because it was "indefinite as a matter of law."

Six days later, Energizer appealed the ITC's action to the US Court of Appeals for the Federal Circuit, naming the ITC as defendants. In early 2006, the court reversed the ITC ruling and asked the commission to review the case.

The ITC upheld its original judgement in February 2007 and declared Energizer's patent invalid.

Energizer again appealed to the court.

Last month, the court voted 2-1 to dismiss Energizer's second appeal. The court only allows a plaintiff to appeal twice.

Energizer didn't respond to Xinhua's e-mail requests this week for comment on the result or whether it would take further legal action.

But according to Zou Guorong, the Beijing-based attorney for the US law firm Hogan and Hartson, which helped the Chinese companies with this suit, Energizer is technically entitled to request an en banc trial at the Court of Appeals (involving the full bench, rather than the panel that has already heard the case) or petition the U.S. Supreme Court.

Zou said he believed that neither course would change the outcome.

COSTLY BUT RARE VICTORY

So, with what appears to be a final decision, the Chinese companies won the lengthy legal case.

The outcome was greatly encouraging for Chinese battery companies and protects the industry's export interests, the BIA's Wang said.

With Section 337 cases increasing, the legal victory was a good example for other disputes involving Chinese companies, Wang added.

BIA officials said that the win hadn't solved all of the industry's problems. The lengthy suit had led to a slowdown of exports to the US market in the first two years of the case.

"But exports to the United States have been recovering gradually," Wang said.

Zou warned that China's exports to the U.S. battery market, which he said was valued at more than US$7 billion in 2007, face a tougher path amid increasing exports.

Since 2002, China has been the largest target of lawsuits concerning Section 337. In 2007 alone, the United States trade agency initiated 17 cases of Section 337 investigations against Chinese enterprises. The products mainly included recorders, digital TVs, memory cards and media players, according to China's Commerce Ministry.

The Section 337 investigation has been a hot issue in Chinese legal and trade circles because of the severe penalties involved. An adverse ruling means that it isn't just the accused companies whose exports are affected: it also applies to other enterprises in the same sector, even though they might not have engaged in any violations.

Ding Liang, a Beijing-based lawyor, attributed the increase of actions involving Chinese companies to the restructuring of Chinese industry and the rapid growth of high-tech Chinese exports to the United States.

Some in China have described the Section 337 investigation process as a trade barrier in the United States.

Gong Bohua, a law professor at the Shanghai-based Fudan University, told Xinhua that there were signs of Section 337 investigations being abused by American companies in recent years.

"In lawsuits concerning Section 337, the time for investigation is relatively short and the cost to institute the investigation is low but the punishment against companies ruled to be violating patent rights is very severe. So American companies make easy use of it," Gong said.

Legal experts have also urged Chinese companies to raise their consciousness of patent rights and to draw up their strategies regarding intellectual property rights.