"In comparison with other trade measures such as anti-dumping, a Section 337 investigation could have more severe consequences since similar batteries made by all Chinese companies would never be allowed to enter the U.S. market," said Wang of the BIA.
Had it failed in this case, China's battery industry would have sustained a nearly devastating blow, since major Chinese battery companies have been relying on exports.
China is the world's largest maker and exporter of the mercury-free alkaline battery, with some 75 percent of production being exported, according to the China Daily.
Wang of Zhongyin, which was the largest Chinese battery exporter to the U.S. market, told Xinhua that Chinese battery exports to the United States were still at an early stage but had grown rapidly over the last few years.
The surge of Chinese batteries in the U.S. market had raised concerns among U.S. producers, said Wang. His company sold 350 million units of batteries in the U.S. market in 2003, the year the case began, accounting for 5 percent of total battery sales in the United States.
Recent comparable figures aren't available, but the U.S. battery market was valued at about 7 billion U.S. dollars last year, according to counsel for the defense.
The stakes were high enough that the BIA and the seven companies being accused of patent violations felt that they had no choice but to go to court.
United Front
The seven Chinese defendants, with the BIA's coordination, entered a group response to the suit. They retained some top U.S. lawyers and shared the high legal fees. The BIA's Wang explained that China is short of legal professionals who are familiar with both the Chinese and American legal systems. Thus, the organization and the seven companies were forced to hire U.S. lawyers at a staggering cost.
"High legal fees have been the chief deterrent for Chinese companies when faced with Section 337 investigations, which on many occasions have forced them to accept undesirable terms or simply withdraw from the U.S. market," he said.
In this case, the seven accused Chinese companies and some unrelated Chinese manufacturers jointly raised the legal fees, which amounted to some 3 million U.S. dollars, according to Wang.
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 1 million U.S. dollars and 3 U.S. cents in patent fees for every battery that Chinese companies would henceforth sell in the U.S. 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 U.S. 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 U.S. 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.
