Abstract
Section 337 investigations have become a significant tool used by the United States to impose trade barriers against Chinese enterprises. Once a company is subject to cease and desist orders or exclusion orders, it stands to lose access to the U.S. market. Based on the characteristics of Section 337 investigations, this article constructs a three-stage dynamic game model between Chinese and U.S. enterprises, analyzing the factors influencing settlement decisions from a cost-benefit perspective.
The model demonstrates that the probability of settlement by the respondent is positively correlated with the probability of retrieving invalidation evidence, the complainant’s probability of winning the case, and the market share the complainant stands to lose due to the respondent. Conversely, it is negatively correlated with the complainant’s litigation costs and the requested licensing fees. The complainant's willingness to settle is positively correlated with the respondent's cost of retrieving invalidation evidence.
Using two Section 337 investigation cases in China’s LED industry as comparative case studies, the article validates the robustness of the model’s conclusions. Finally, based on these findings, the article offers recommendations for Chinese enterprises on how to strategically respond to Section 337 investigations.
Keywords
Section 337 Investigation; Game Theory; Patent Litigation Strategy; Settlement Probability
Author Profiles
Zhu Xuezhong (b. 1962), male, native of Poyang, Jiangxi Province, Professor and Doctoral Supervisor at the School of Economics and Management and the Shanghai International College of Intellectual Property, Tongji University. Research interests include intellectual property management.
Xu Chenqian (b. 1993), female, native of Zhuzhou, Hunan Province, Ph.D. Candidate at the School of Economics and Management, Tongji University. Research interests include intellectual property management.
Original Source: Science Research Management, 2021, Vol. 42, No. 06, pp. 112-119. DOI:10.19571/j.cnki.1000-2995.2021.06.014.
