Another cross-border seller is under Section 337 investigation

With the dividends of the cross-border e-commerce industry, Chinese brands are setting sail to expand overseas, and Chinese-made clothing, home furnishings, electrical appliances and other products are also occupying an increasing market share overseas. However, when Chinese brands expand overseas markets, they will inevitably encounter a series of difficulties, and the road to brand expansion is long and difficult.

Recently, the U.S. International Trade Commission launched a 337 investigation into Tineco Intelligent, a brand under the cross-border home furnishing brand Ecovacs .

Tineco Intelligent is under Section 337 investigation

On March 4, 2022, the United States International Trade Commission (USITC) voted to initiate a 337 investigation into certain wet and dry surface cleaning devices of Tineco Intelligent .

It is understood that the investigation was a complaint filed on February 2, 2022 by Bissell , one of Tineco's strong competitors in the US market.

Bissell 's two U.S. companies, Bissell Inc. of Grand Rapids, MI and Bissell Homecare, Inc. of Grand Rapids, MI, filed an investigation application with the USITC, claiming that the products exported to, imported into, and sold in the U.S. infringe their patent rights (U.S. registered patent numbers 11,076,735, 11,071,428, 11,122,949, 11,096,541, and 10,820,769), and requested the USITC to issue a limited exclusion order and a permanent injunction .

Tineco Intelligent Technology Co. , Ltd. of China, TEK (Hong Kong) Science & Technology Ltd. of Hong Kong , and Tineco Intelligent, Inc. of Seattle, Washington, are named defendants.

At this time , the USITC has not made any decision on the merits of the case. The USITC Chief Administrative Law Judge will assign the case to an administrative law judge at the USITC , who will schedule and conduct an evidentiary hearing and subsequently make a preliminary determination on whether Tineco violated Section 337 of the Tariff Act of 1930 .

The editor learned that the US International Trade Commission will determine the end date of the investigation within 45 days after the case is filed . Except for the case where the US Trade Representative vetoes it for policy reasons, the relief order issued by the US International Trade Commission in a 337 case will take effect on the date of issuance and will be final on the 60th day after the date of issuance.

Subsequently , Tineco also responded to the investigation on its official website. Tineco said:

" As a high-tech enterprise with global operations, the company strictly abides by all local intellectual property laws and regulations, always follows the principle of fair competition, and respects the intellectual property rights of its competitors . The company attaches great importance to intellectual property rights, has a dedicated intellectual property department, and is equipped with relevant professionals to carry out intellectual property application, protection and operation and maintenance. Before implementing new technologies, all of the company's products will undergo strict patent screening to avoid possible infringement risks. In response to this investigation, the company will do its best to safeguard the legitimate rights and interests of the company and all shareholders in accordance with relevant laws. "

With dual investment in marketing and research and development, own-brand revenue accounts for over 80%!

According to public information, Ecovacs was founded in 1998 and is headquartered in Suzhou, Jiangsu Province. It is a professional manufacturer of home service robots and small cleaning appliances . Like many overseas brands, Ecovacs has gone through a development process from OEM to independent research and development, and from OEM to establishing its own brand.

Since its establishment, Ecovacs has undergone three transformations: from traditional robot manufacturing to sweeping robots; from sweeping robots to a complete product line of household robots; from household robots to robotization, Internetization, and internationalization. Currently, Ecovacs has established sales subsidiaries in Germany, the United States, Japan and other places, and has successfully opened up markets in 108 major countries and regions around the world .

Ecovacs has two major businesses, namely service robots and smart home appliances. The brands corresponding to these two businesses are Ecovacs and Tineco .

Among them, the main products of the Ecovacs brand include sweeping and mopping robots, window cleaning robots and air purifiers, etc., and the product line is relatively concentrated. In comparison, Tineco's product line is richer, including smart home cleaning series (floor scrubbers, vacuum cleaners), smart cooking (food processors, water purifiers), smart personal care (hair dryers, hair combs, eye beauty devices), and smart healthy life (air purifiers).

According to Ecovacs ' 2021 first-half financial report, Ecovacs achieved revenue of 5.359 billion yuan in the first half of 2021, a year-on-year increase of more than 123%; the net profit attributable to shareholders of the listed company was 850 million yuan, a year-on-year increase of more than 543.25%.

Among them, the revenue of the two major businesses of service robots and smart home appliances accounted for 49.63% and 48.17% respectively . The revenue of the two major brand businesses of Ecovacs and Tineco accounted for 48.74% and 38.01% respectively, accounting for a total of 86.75%, an increase of 13.51% from 73.24% in the same period last year. It is worth noting that the revenue of the Tineco brand business increased by more than 817% compared with the same period last year !

In terms of cross-border business, in the first half of 2021, the overseas market revenue of the Ecovacs brand and Tineco brand accounted for 31% and 34.6% respectively .

The substantial increase in revenue from its own brands proves Ecovacs' success in branding. This is inseparable from Ecovacs' investment in marketing and research and development. In the first three quarters of 2021, Ecovacs' sales and research and development expenses were 1.893 billion yuan and 330.6 million yuan, respectively, accounting for 22.96% and 4.01% of revenue, respectively. According to its official website, Ecovacs Group has nearly 1,000 patented technologies worldwide, including nearly 300 invention patents.

Many companies are subject to 337 investigations. What exactly are 337 investigations?

In recent years, with the development of cross-border e-commerce and the increase in China's export trade, the frequency of 337 investigations appearing in the public eye has also increased. So, what kind of investigation is it?

Simply put, a 337 investigation refers to an investigation conducted by the U.S. International Trade Commission in accordance with Section 337 of the U.S. Tariff Act of 1930 and related amendments. The investigation targets the infringement of U.S. intellectual property rights by imported products and other unfair practices in import trade, with the aim of prohibiting all unfair competition or any unfair trade practices in products exported to the United States.

According to the editor, many companies in China have experienced 337 investigations, and the final results were not unsatisfactory.

As early as February 2005, Flextec applied to the USITC to launch a 337 investigation into rubber antioxidants against Sunac and other companies. In July 2006, the USITC reviewed and ruled that Sunac had infringed some of Flextec's US patents, and certain products were banned from being sold in the US. Later, however, Sunac won the case after arguing on its merits. This was the first time that the rubber industry had won a decisive victory in an intellectual property dispute.

In 2016, my country's self-balancing vehicle companies encountered three 337 investigations. Under this circumstance, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products established a self-balancing vehicle branch. Under the guidance of the Ministry of Commerce and the Chamber of Commerce, it jointly responded to the 337 Investigation Coordination Meeting and finally won the case.

There was also a 337 investigation in the cleaning appliance industry , where iRobot of the United States sued 11 Chinese sweeping robot companies. In this case, only Shenzhen Yinxing Intelligent persisted to the end and ended up in a tie, while many other companies either took the initiative to reach a settlement with iRobot or gave up the confrontation halfway and chose to pay huge fees.

In recent years, with the favorable export policies of China , the trend of brands going overseas has been encouraging , and a large number of excellent cross-border enterprises have shined on the international market stage. However, where there is a market, there is competition, especially when it comes to foreign markets, enterprises will face more challenges. Only by relying on themselves, accelerating industrial upgrading, strengthening independent innovation, and possessing independent intellectual property rights can enterprises remain invincible in the fierce international market competition .

Infringement

Cross-border e-commerce market

337 Investigation