Research On Patent Strategy Of Chinese Enterprises To Deal With Section 337 Investigation

President Xi Jinping pointed out that in the new stage of development,China should strengthen the protection of national security in the field of intellectual property.Section 337 investigation is one of the major overseas intellectual property barriers faced by Chinese enterprises,threating the “going out” of Chinese firms,the steady development of the industry and the security of national intellectual property.Therefore,how to resist the intellectual property risk caused by overseas patent disputes attracts the attention of both academic community and practical fields.From the practical perspective,Section 337 investigation is one of the most powerful and critical intellectual property tools in the United States,which has intensified the threat to the integrity of industrial chain and the stability of supply chain in the context of great power competition.Moreover,for enterprises,Section 337 investigation is a typical external environment turbulence factor,which will affect the daily operation of enterprises,innovation as well as corporate reputation,etc.These negative effects remind enterprises to raise the response to Section 337 investigation to the strategic level of enterprises.From the theoretical perspective,on the one hand,the existing studies on Section 337 investigation are mainly from legal perspective,such as discussing the countermeasures of the defendant enterprises,while ignore the construction of enterprise patent strategy system from the view of management.On the other hand,the process of an enterprise deals with Section 337 investigation represents a series of competitive interactions with its competitors,and it is necessary to adopt the dynamic competition perspective to construct a theoretical analysis framework.Hence,these practical and theoretical challenges require further thinking in academia and industry: how to formulate and implement a systematic patent strategy in a dynamic competitive environment to provide theoretical support and guidance for enterprises to deal with Section 337 investigations?To answer this core research question,this thesis designs four systematic substudies.First,regarding the question of “how do firms choose patent strategy portfolio under the competitive environment of Section 337 Investigation?” Following the logic that competitive strategy needs to match the competitive environment,this paper analyzes the competitive environment of Chinese enterprises under Section 337 investigation and discusses the combination of patent strategy that enterprises can choose under such environment.The results show that the industries involved in Section337 investigation tend to be high-tech industries,and the riskiest technology fields are mobile communication industry and biomedical industry.Besides,through the social network analysis of the disputants in above industries,this paper finds that most Chinese enterprises are acting as victims,and with the development of China in related fields,the number of enterprises that become the defendants has increased significantly in recent years.Based on these results,this paper analyzes the external threats,internal advantages and disadvantages faced by Chinese enterprises under Section 337 investigation.This paper proposes that enterprises should establish the patent intelligence early warning strategy before the investigation,the patent dispute settlement strategy during the investigation and overseas patent distribution strategy after the investigation.The second sub-study to the fourth sub-study propose the specific implementation measures of patent strategy in each stage respectively.Regarding the question that “How can enterprises use patent intelligence to realize a risk warning of the Section 337 investigation in advance?”,this paper establishes a regression model between patent characteristics and Section 337 investigation,thereby identifying the high-risk patents in Section 337 investigation and completing early warning of competitive behaviors to avoid competitive threats.Considering the tight time limit and heavy task of defense,the main goal of this sub-study is to realize efficient risk warning of Section 337 investigation in advance.The results show that firms can use litigated patents as intelligence sources to build probability prediction model to identify Section 337 investigation patents with higher legal quality,technical quality and economic value.In addition,this paper applies the probability forecasting model to the patent infringement lawsuit cases of telecommunications and biological medicine industry to identify high-risk patents.This conclusion can help enterprises to identify the risk of Section 337 investigation promptly and make responses in advance.The third sub-study answers the question that “How should enterprises make settlement decisions during the competitive interaction of Section 337 investigation?”Since Section 337 investigation will cause high economic burden and time cost to the enterprise,the enterprise does not have to go through the whole process of the lawsuit,instead,they can choose to settle under appropriate conditions.Based on the evolutionary game tools,this study constructs a three-stage dynamic game model between applicants and respondents,and analyzes the factors which can influence the reconciliation between two parties.The conclusion shows that the respondents’ probability of settlement is proportional to the probability of searching the invalid evidence,the win rate of the applicant and the US market-share lost by the applicant,while is inversely proportional to the applicant’s expense and the required license fee.Moreover,the applicants’ probability of settlement is proportional to the cost of respondents searching invalidation evidences.Therefore,by considering the special procedural rules of Section 337 investigation,a more realistic game model is established,so that enterprises can judge the possibility of settlement according to the conclusion and make the decision of settlement after weighing the pros and cons.The last sub-study discusses how enterprises can achieve overseas patent layout after encountering resource constraints caused by Section 337 investigation.Theoretically,when an enterprise encounters Section 337 investigation,its resource constraint will be intensified,increasing the difficulty of applying international patents.However,in practice,some enterprises can break through the dual constraints of external environment and internal resources to achieve the strategy of patent internationalization.This study uses fs QCA to discuss this phenomenon and explains the path by combining dynamic capability with dynamic competitiveness.Through dividing the dynamic capability into marketing dynamic capability,governmententerprise relationship capability,learning capability and coordination capability,this study finds that there are four different paths for Chinese enterprises to realize patent internationalization after suffering Section 337 investigation,including “internal competency-external ability” type,“internal resource-external ability” type,“internal resource” type and “external ability” type.Through the systematic progress of discussing above four sub-studies,this study introduces cross-level perspective in Section 337 investigation,analyzes the competitive environment from both the macro level and the medium level,and then constructs the patent strategy system at the micro level.Moreover,by constructing risk warning model,dynamic game model of settlement decision and capability structure model of patent internationalization,the research responds to the call for the study of dealing with overseas patent disputes.In addition,via discussing a series of competitive interaction of Chinese multinational enterprises as new entrants into the U.S.market and face Section 337 investigations launched by local incumbent firms,this paper builds the Awareness-Motivation-Capability framework of developing countries’ firms dealing with patent disputes in developed market and use practical cases to verify,providing direction and advice for firms to deal with Section 337 investigation.The research has following theoretical contributions.First,in response to the academic community’s calling for more research on overseas patent disputes,this study complements the research of Section 337 investigation from the perspective of management and extends the relevant research from the traditional legal research to the level of enterprise strategic management.Second,this study builds the theoretical framework of systematic patent strategy system to deal with cross-border patent infringement disputes,and thereby improve the research on patent strategy.More specifically,this study refines the patent strategy literature in the context of economic transition,supplements the research perspective by using dynamic social network and dynamic game method,and proposes the cross-level framework by combining macro and micro elements.Third,this paper applies the analytical framework of dynamic competition theory to the Section 337 investigation research,thereby complementing the research content and broadening application context of dynamic competition theory.Fourth,this paper applies the dynamic capability theory to the scenario of Chinese enterprises responding to the Section 337 investigation,thereby complements a new interpretation of the components of dynamic capability.Also,the research provides some practical contributions: at the enterprise level,first,take the initiative to improve the awareness and ability of prevention,understand the competition situation and main competitors in the international market,and promote the early warning of intellectual property risks via using patent intelligence.Second,improve the ability to deal with international patent disputes and make a reasonable settlement decision based on litigating capability.Third,make good use of various resources,including seeking support and guidance of government,establishing defense alliance with the help of industry associations and building a good firm image by news media.Fourth,apply international patents proactively.Not only can they establish the spirit of independent innovation,but also can exert the “learning effect” from the passive intellectual property pressure to obtain legal and technology knowledge.Regarding to the government level,first,build a public service system in response to Section 337 investigation to accelerate the internationalization development of enterprises.Second,strengthen the ability of enterprises in key industries to get intellectual property rights in the United States.Third,help enterprises to establish a good image of intellectual property protection,improving their recognition in the overseas market.Last,optimize the intellectual property protection system,and thereby provide legal protection for enterprises at the top-level design level.