Facing the "337 investigation" How big is the impact of LED Chinese companies?

The LED (light-emitting diode) industry is in the ascendant, and the number of LED products exported in China is also growing rapidly. In March of this year, the industry passed the US ITC (International Trade Commission) officially filed a case, investigating 30 companies worldwide to infringe on the "5252499" patent related to LED epitaxial technology, China's Chaoyi Optoelectronics, Jiaguang Electronics, Hongli Optoelectronics and Zhou Lei, etc. Four companies are listed. In this regard, "China Electronics News" interviewed the relevant people in the domestic LED business community, and asked them to explain the status of domestic LED companies, the background of the case and the recommendations for domestic enterprises.
Special Guest

Liang Bingwen, General Manager of Shanghai Lanbao Optoelectronics

Chen Runsheng, Deputy General Manager of Jiangsu Wenrun

Jiang Zhongyong, General Manager of Silan Mingxin

TCL shares LED business unit CTO Hong Zhen

Nanchang University Professor Jiang Feng Yizhu Hainan Branch General Manager Wu Weiguo LED chip business person

China's LED industry is booming
* The application market continues to expand
* The total export volume is growing rapidly

Liang Bingwen China's LED products in the fields of decoration, landscape lighting, display, home appliances, electronics, toys and automotive electronics are generally in good condition and have a rapid growth trend. These export products are mainly based on the end market, and of course, quite a few are semi-finished products in the form of modules and components. At present, the main product of Shanghai Lanbao Company is LED chips. The market is basically in China, and the foreign market is the direction of our medium and long-term business development. Foreign markets are different from domestic markets, especially in Europe, the United States, and Japan. The differences are mainly manifested in two aspects: First, the foreign market has higher grades and requirements, and they pay more attention to product quality, reliability, safety certification and intellectual property rights; second, the demand for product types is not the same, due to foreign countries The focus and advantages of industrial development are different, and their needs are also different. In Europe, America and Japan, automotive electronics, medium (large) size backlights and lighting demand are strong, while domestically, mainly display screens, small-size backlights, signals and landscape lighting The city often has complementary markets at home and abroad, and Chinese LED companies should gradually expand abroad.

Jiang Zhongyong

In recent years, with the vigorous development of the domestic LED industry, technology continues to advance, costs continue to decrease, LED application market continues to expand, China has gradually become a major LED production and application. In addition to meeting the needs of the domestic market, export products have increased dramatically in both categories and quantities, which is also the inevitable result of economic globalization.
Hangzhou Silan Mingxin Technology Co., Ltd. was established in Hangzhou in September 2004, and is relatively young in the domestic LED industry. As the investment company of Silan Mingxin is Hangzhou Silan Microelectronics and Hangzhou Silan Integrated Circuit Co., Ltd., with experience in microelectronics design and integrated circuit manufacturing industry, its development speed is very fast. Silan Mingxin LED chips have become the industry leader in terms of production capacity and annual sales. Silan Mingxin's products are known for their high quality. The main market is in the indoor and outdoor color screen market, and has become one of the few brand enterprises in the LED industry.
Silan Mingxin products are mainly LED chips. At present, they are the main suppliers of domestic color screen manufacturers. Some products are directly exported to foreign countries (such as South Korea), and the chips are directly exported to foreign countries. Most of Silan Mingxin's customers are color screen manufacturers (such as Shanghai Sansi, Zhoulei, Guoye Xingguang, Foshan Guoxing, etc.), and their products are exported to the United States and the European Union.
China itself is a huge market. The continuous economic growth in the past two decades has played a positive role in promoting LED applications. LED products are increasingly entering people's daily lives. The LED industry is gradually maturing, product quality is constantly improving, prices are falling, and it is gradually promoting the improvement of people's quality of life. Now LED products are ubiquitous.
Due to the continuous improvement of product quality, some products have reached the same level as the quality of similar foreign products. Some domestic companies have begun to explore foreign markets often under the conditions of similar product quality. The advantages of domestic export products are relatively low cost and competitive price. Advantage. It is believed that in the near future, more domestic LED enterprise products will enter the EU and the United States, and compete with the EU, the United States, Japan, and South Korea for market share.

Wu Weiguo

According to statistics from the Ministry of Commerce, in 2007, China's LED industry exported about US$350 million to the US, a year-on-year increase of 53.9%, involving nearly 100 companies exporting LEDs to the US. Among them, Dalian Luming, Foshan Guoxing Optoelectronics, Hebei Lide and Shenzhen Fangda Guoke Optoelectronics are domestic first-line LED manufacturers.

Jiang Fengyi

LED is gradually being transformed from China to China. With more than ten years of support from national ministries and local science and technology projects, China's LED technology and industry have made great progress in epitaxial materials, chip manufacturing, device packaging and applications, and the gap with foreign countries has narrowed, in the original innovation and integration. Innovation, digestion, absorption and innovation have achieved iconic innovations at all three levels, which has far-reaching significance for the future development of LED and semiconductor lighting industry in China. As long as the state increases its support, the enterprises and research units will work together in substantial cooperation, and LED China will soon come.

Intellectual property protection should be more valued

* Domestic enterprise patents have not yet formed a protective barrier
*Intellectual property protection should be in line with international standards

Liang Bingwen

In recent years, domestically, more and more attention has been paid to intellectual property rights, and both the quantity and quality of patents have been significantly improved.
However, there is still a big gap between the two countries, mainly because the number of applications for international patents is too small. Due to the high cost of international patent applications, long application time and inconvenient language, the patents of domestic enterprises are mainly applied in China. In this way, we are at a distinct disadvantage in international intellectual property rights, and it is difficult for our high-tech products to compete internationally. In addition, due to the relatively low cost of IPR infringement in China, people pay less attention to independent R&D and patents, and the gap between Europe and America and Japan is still very large. Some areas that need improvement include: strengthening patent protection, increasing the crackdown on patent infringement, making necessary infringements and paying sufficient price; further encouraging independent innovation and making it intellectual property, strengthening patent holders Awareness of the protection of intellectual property rights; training a large number of professionals related to intellectual property rights and patents, especially legal personnel related to patent law, so that patent protection, litigation and other work can be carried out and carried out normally.
When many foreign companies start a research and development project, the first thing that R&D personnel must do is to conduct research and analysis on existing patents that may be relevant. In doing so, the first is to learn from others' experiences, and the second is to consider how to avoid other people's patents. In China, very few people do this. Therefore, it is a very sad thing to invest a lot of manpower, material resources and time to develop the results, and finally infringe on the patents of others. We must attach great importance to patents from the development strategy and attach importance to the protection of intellectual property rights. The concept of the patent pool is very good, and everyone has been talking for a long time, but I have not seen the work of real operation, because the patent is a legal-related work, it must be operated in the scope of the law, so it requires the participation and planning of lawyers. . But most of what I have seen so far is to talk about it, or to do something in the administrative sphere or by administrative means, so that there will be no substantive results.

Wu Weiguo

Domestic LED industry enterprises should strengthen their awareness of intellectual property protection and implement effective response strategies. Domestic companies should cooperate with patented foreign companies to purchase their LED chips and phosphors, and use the patented LED packaging technology and LED driver chips to develop cost-effective LED light sources and lamps. Domestic companies should also focus on patents and intellectual property rights in learning and inquiry. In addition, we should also understand the protection period of related patent technologies in other countries and regions, which will play an important role in China's future product development and product intellectual property protection.

Chen Hesheng

Domestic LED intellectual property, accumulation, volume and surface in the field of packaging and application, is a more realistic choice, and it is entirely possible to achieve sustainable development of the LED industry. After all, the largest part of the market value is still in LED applications. Under the conditions of market economy, it is almost impossible to achieve a comprehensive restriction on the entire industrial chain by the upstream and controversial upstream technology.
China’s backwardness in intellectual property rights is both a status quo and it has to be acknowledged that it will continue. On the surface, it seems to be a scientific research and technical issue. In fact, it is essentially a market economy problem, because the so-called "intellectual property rights" are essentially the products of the market economy (more derived from Western values), and there is a gap in the market economy. There must be a gap in intellectual property rights. Reflecting at the current stage, the economic structure dominated by SMEs determines that our survival model, profit model and development model are different from those of mature market economy countries. In the development model of small and medium-sized enterprises, objectively lacking the supporting strength of high-end talents and high-end scientific research conditions, subjectively, it is easy to be satisfied with one or several products at present, and holding the luck of being unable to "turn around and running", so There must be gaps in intellectual property rights, and there are new gaps. In the end, this problem still needs to be solved by relying on the development of the market economy--developing large enterprises and establishing a large-enterprise-oriented scientific research mechanism to solve a series of core problems such as the combination of production, study and research, technology reserve and enterprise development.

Jiang Zhongyong

In the past decade or more, China's LED companies have made great progress, product varieties and categories have been increasing, new technology development has also made great progress, and the market is expanding. However, the history of LED industrialization in China is too short to form an independent intellectual property pattern, and the technologies covered by LED terminal products include knowledge of chemistry, physics, electronics, and materials. In the early stage of industrial development, when the scale has not yet formed, foreign companies or patent holders will not file intellectual property litigation against domestic enterprises. Once the domestic industry develops to a certain scale, they will inevitably use intellectual property rights to curb domestic enterprise development or Earn high royalties.
At present, the main manufacturers of LED in China are not long. The focus of most companies is on the market and the scale of enterprises. However, in terms of intellectual property rights, especially in patent applications, the number of patents owned by a company is not only Relevant to the history of the company, it is also related to the awareness of intellectual property rights of personnel engaged in technology development.
Some domestic enterprises and scientific research units have also obtained some patents, but there is a big gap between them in terms of quantity and practicality compared with foreign countries, and they cannot form a barrier to effectively protect their own industries.
The best way to circumvent intellectual property infringement is to have patents related to your own products. First, you need to see the future development of the company with a long-term perspective, make precautions, and do some basic and forward-looking technology development in technology development. At the same time, we attach importance to the development of new technologies and the formation of intellectual property at the same level. On the other hand, it is closely related to the incentive mechanism for technology developers to apply for patents. Enterprises should reward patent applicants who may be associated with future products to enhance their enthusiasm. The government should also give certain incentives to encourage technological innovation. Preventing in advance is the most effective means of avoiding infringement lawsuits. In the future, there may be practical patents, not only to apply in China, but also to apply for patents in countries where the market may be in the future.

"337 investigation" has a huge impact

* Protecting market share is the true purpose of the US
* The impact of the investigation will affect the entire industry

Liang Bingwen

This time it involves patents related to LED epitaxy. The destructive patent has a great lethality because epitaxy is the source. If you infringe on the extension patent, all chips, packages and applications made with this patented technology will be banned. In the future, we may encounter patent technology litigation directly related to GaN, and the difficulty of responding at that time will increase. What we can do is to increase research and development efforts, quickly form a patent group with independent intellectual property rights, and form alliances with industry-related enterprises and research and development units to prevent similar legal disputes.

Chen Hesheng

At present, the export of domestic LED products is mainly concentrated in packaging and application. Therefore, although the “337” survey involves few domestic enterprises, it has great hidden dangers. Because the investigation is aimed at the patented technology of extension, but the domestic extension does not currently have the ability to directly export, so it seems that important LED companies, all extensions and chip companies are not involved, but once the domestic LED packaging, applications are affected Strike, the extensions and chips that have just started in China will undoubtedly face a more severe situation, even the disaster.
At present, the domestic LED enterprises, the market for epitaxy and chips are basically all in China, and the overall export of the packaging market is estimated to be around 30%, but the ratio of the mid-to-high-end packaging market and the secondary assembly into application products for re-export will be high. Much more, it may take up to 70%. Foreign markets may not be as important to low-end products, but they are very important for high-end products and brand products, and more important for cultivating truly international companies.

Wu Weiguo

As far as the "337" incident is concerned, LED industry enterprises should first attach great importance to it and respond actively. For example, if the US ITC finally issues a general exclusion order for China's products, during the validity period of the plaintiff's patent, the LED products produced by any enterprise in China and the downstream products containing LEDs will be completely banned from exporting to the United States. Therefore, the impact of the case on China's LED industry and downstream industries is very intense and should be given high priority.
Due to the exclusive trade characteristics of the "337" case itself, if the case is not actively responded, the consequences will be very serious. In addition to the loss of China's LED manufacturing companies in the US market, it may affect the export of products to Europe, South America, etc., and will lose tens of billions of dollars of international LED products. More and more companies in the United States are using " The 337 investigation "this unique law frequently sets obstacles to Chinese goods, and its real purpose is not to protect intellectual property rights, but to protect its market share. The main method is to first apply for investigations to my more competitive export products or smaller enterprises, and then use the prohibition order to restrict all enterprises in related industries in China from exporting to the United States. Therefore, the incident is not only related to the four companies involved, but also a major event in our entire industry.

A certain LED chip company is very obvious. The "337" investigation initiated by foreign companies is a way of asking for directions. Although it is only for extension and chip, their purpose is to look at our reaction, so Chinese enterprises should actively respond to the lawsuit. In the future, our response strategy is to actively carry out technological innovation and take different technical routes. Second, it is necessary to form a patent pool by relevant enterprise alliances and research institutions. In the future, we may encounter more “337” investigations. We call on the industry to respond to the lawsuit, respond actively, and not back down.

Joint response is an urgent task

* Give full play to the role of government and industry associations
* Active response requires more industry support

Liang Bingwen

For the current "337 investigation" incident, because most domestic LED companies are small in scale, limited in strength, and less aware of foreign affairs, they generally do not have the ability to handle foreign-related legal proceedings. This requires our industry associations and alliances to play an important role in organizing Coordinating and integrating resources, so that our company can unite to deal with foreign-related litigation, especially similar to the current "337 investigations" involving a wide range of issues. Such a bad handling of litigation will cause many Chinese LED companies to suffer long-term negative effects. Even in the future, Chinese LED products will not be able to enter the US market for a long time. Therefore, Chinese LED industry enterprises should unite and integrate resources and division of labor. Responsible and work together to get the job done. At the same time, we must learn more about foreign laws and legal procedures related to intellectual property rights and previous cases. For the current events, China Semiconductor Lighting R&D and Industry Alliance has done a lot of fruitful coordination and organization. They communicated and understood the situation with all parties in the first time, and organized relevant enterprises to discuss countermeasures and communicate with relevant government departments for help.
As the standing director unit of the alliance, Sapphire Optoelectronics has also done its utmost to do what we can. We are willing to follow the unified arrangements of the alliance, what the alliance needs and what we do. Other companies and R&D units have expressed great enthusiasm and support for the work of the Alliance. Everyone is passionate and willing to contribute to the response. Of course, the outcome of this incident is still difficult to draw conclusions, but as long as everyone is united, there will be no difficulties that cannot be overcome.
In addition, through this incident, it is necessary to recognize that with the further development of China's economy and the continuous increase of exports, there will be more and more legal proceedings related to intellectual property rights in foreign countries. To make China's enterprises bigger and stronger, we must carry out long-term planning as soon as possible, and work hard on the research of intellectual property strategy. We must clearly define our goals and minimize and avoid similar legal disputes. Even one day, intellectual property litigation became an effective legal means for Chinese companies to protect their own interests.

Chen Hesheng

The status quo of domestic enterprises is mainly small and medium-sized enterprises. The technical strength and capital strength of individual enterprises are insufficient, and the professional ability of litigation is low. Moreover, in an industry, once it encounters patent litigation from abroad, it often means that the self-discipline of the domestic industry itself is already very urgent. Under such circumstances, it is neither realistic nor unfair to respond to individual enterprises. Therefore, in a similar situation, relying on the strength of the government and industry associations is still the preferred policy.
In this lawsuit, if it is completely hoped that the organization or industry association will respond to it, it is unlikely that a basically unanimous opinion will be formed, and there will be no unified action. It is estimated that it is difficult to complete the mission, and it is almost the same as not responding. At present, the "Semiconductor Lighting Industry Alliance" under the leadership of the Ministry of Science and Technology is more appealing and has a certain restraining effect within a certain scope. It is recommended that the principles of effectiveness, efficiency and fairness be considered together, and the Ministry of Science and Technology and the Ministry of Commerce jointly organize a response. The specific measures are: the Ministry of Science and Technology and the Ministry of Commerce make an assessment of the impact and potential impact of the two major segments of the epitaxial chip industry and the packaging application industry in this lawsuit, and it is determined that these two parts should be shared for this lawsuit. The cost ratio; afterwards, the organization and cost sharing of the epitaxial chip industry enterprises are distributed to the industry alliance under the leadership of the Ministry of Science and Technology (and may also be associated with the relevant ministries and commissions such as the Ministry of Information Industry), because these enterprises are relatively concentrated and the number of enterprises It is limited, and in theory, it should be obtained or already supported by the national ministries and commissions. At this time, it should contribute to the development of the domestic LED industry and to its future development; and the cost sharing of packaging and application enterprises is from the Ministry of Commerce. For implementation, it will be calculated and apportioned according to the amount of customs exports in the previous year. In this way, both of these parts should be able to formulate corresponding control measures -- of course, this is only an idea. Although theoretically feasible, it is still to be demonstrated whether it can actually be done.

Jiang Zhongyong

The current situation of China's LED industry in terms of intellectual property protection is that each enterprise has more or less patents, but the coverage is small and has not yet reached the surface distribution. In the face of the US ITC "337" investigation of LED enterprises, the LED intellectual property lawsuit should be led by the LED industry association to gather the existing patents of domestic research institutions and large-scale LED enterprises, and organize human and financial resources. v. The domestic LED industry should not care about the company's gains and losses, starting from the overall situation, from the perspective of protecting the national industry, the rich money, powerful efforts, concentrated efforts to deal with the US 337 investigation, to avoid being defeated by each other.

An LED chip business person

At present, most of the intellectual property rights in the LED industry are in the hands of Japanese, German and American companies. They are staking, and in the intellectual property of the LED industry, it can be said that the "bamboo fence" has been built, but Chinese enterprises must Before these "bamboo fences" became "steel fences", they actively made a fuss about intellectual property rights. This process can be compared to the process of mine clearance. You must know where the minefield is, avoid it, and actively move forward. I think we still have room for development.
Judging from the investigation of China's LED enterprises by "337", the National Semiconductor Lighting Engineering R&D and Industry Alliance has done a lot of work, including the Ministry of Commerce, the Ministry of Science and Technology, and the former Ministry of Information Industry. . I think that the points they have done are very helpful to our industry enterprises. First, after receiving the information of the “337” investigation, the company is informed that it is very timely, so that the company can have sufficient time to prepare for the response; the second is to do A lot of communication work, including full communication with various enterprises, local governments, other relevant government departments, responded enterprises, lawyers, other industry associations and alliances. From a business perspective, I believe that enterprises should actively respond to two aspects: first, do their own intellectual property reserves and protection work, and second, they must actively respond to intellectual property disputes.
In response to this intellectual property dispute, I feel that the development of the LED industry is still in the growth stage. Many companies, including us, have only been involved in this industry in recent years. Therefore, in response to US intellectual property rights. At the time of the dispute, compared with American companies, we are not in the same order of magnitude in terms of financial and human resources. Like this "337 investigation", it will cost millions of dollars, and we hope that industry companies can financially support the two companies that stand out. Because this "337" investigation only sued several companies, it is actually aimed at the entire industry. If there is no enterprise to respond to the lawsuit, our industry will be defeated, and exports will suffer a huge blow, so enterprises need to stand up. To respond actively, I also hope that all industries can provide support.

Wu Weiguo

The heads of domestic LED companies have expressed their willingness to pay attention to this incident, to participate in the joint response, and said that they will contribute money and jointly solve the huge litigation costs. At the same time, they have suggested that the National Semiconductor Lighting Engineering R&D and Industry Alliance take the lead in organizing fundraising. And fight for government support, we must win this lawsuit. With the rapid development of China's LED industry, the intellectual property issue of China's LED industry will face greater challenges in the future. Strengthening the awareness of intellectual property protection and implementing effective coping strategies are a long-term and arduous task for China's LED industry to jointly raise vigilance.

Hong Zhen

I think that the "337 investigation" in the LED industry is only the beginning. With the rapid development of China's LED industry, the intellectual property issue of China's LED industry will face greater challenges in the future. Strengthening the awareness of intellectual property protection and implementing effective coping strategies are a long-term and arduous task for China's LED industry to jointly raise vigilance.
Judging from the previous "337 investigation" cases, the general response fee must be 6 million US dollars, so China must prepare at least 3 million US dollars of funds. On March 18, the Semiconductor Industry Alliance also specially organized the "337 investigation" countermeasures. meeting. At the meeting, the person in charge of the domestic LED company should pay attention to the incident and participate in the joint response, and said that it will contribute money and jointly solve the huge litigation costs. At the same time, it is recommended that the semiconductor industry alliance take the lead and strive for government support, and we must win this lawsuit. This matter not only involves four LED companies in China, but also may jeopardize the entire Chinese LED industry. Due to the high cost of responding to the lawsuit, the Semiconductor Industry Alliance is organizing and coordinating to determine the response plan and response strategy, and it is more likely that the group will respond to the lawsuit.
We can no longer be high-tech "sick people in East Asia"! Can we plan ahead as soon as possible, formulate "national strategy" and "industry strategy", solve the relationship between "short-term" and "long-term", foster strengths and avoid weaknesses, train domestically and consistently. Governments, industry associations, industry alliances, chambers of commerce, consumer associations, and quality supervision departments should work together to form a national team and regulate market behavior. Let us hear the voice of the Chinese on the high-tech stage and have the right to speak in China!
In the final analysis, enterprises must operate according to the laws of the market, but they must have long-term plans and long-term strategies. "337 investigation" is not far away, it is not too late to make up for it! We are already "on the road"!

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