The China Timber Distribution Association is calling on Chinese laminate flooring makers to respond to an intellectual property rights infringement lawsuit in the United States.

"The enterprises involved, large or small, shall unite together to deal with the case," Yang Meixin, an official with the association, told China Daily yesterday.

She explained that as some enterprises were not able to afford to challenge the lawsuit, which is likely to cost US$2 million to US$3 million, they might consider giving up the case as well as pulling out of the US laminate flooring market.

"But we hope they will work together for a favourable solution to this issue," she said.

Meanwhile, Yang said her association would strive to co-ordinate the enterprises and keep them informed.

The association has consulted with lawyers over this case in recent days.

Association officials declined to reveal any detailed information, but said it would be very difficult to win the case.

Unilin, a Holland-based flooring company, and three US flooring manufacturers, filed petitions in a US court asking the court to launch investigations into Chinese products under article 337 of the US tariff law.

They claim that Chinese firms have infringed their patents by using a locking system for the laminate flooring.

"If the petition is approved it will be a big blow to some companies as the United States is the largest export market for Chinese laminate flooring," Yang said.

She said the case showed that Chinese enterprises were not yet fully aware of the significance of intellectual property rights.

She also suggested that domestic companies attached more importance to technical innovation.

"They should develop more designs and apply for more patents instead of simply importing them from their foreign rivals," she said.

However, the expert regarded the lawsuit as just one of their foreign rivals' methods to restrict imports from China.

Chinese floorboard exporters are still suffering from anti-dumping rulings in Canada, the second largest overseas market for Chinese floorboard makers.

Earlier this month, the Canadian trade court charged Chinese floorboard makers with dumping and decided to levy a punitive tariff ranging from 0 to 17 per cent of the products' price.

Certain foreign-funded enterprises or joint ventures were charged a comparatively low tariff rate while most Chinese firms were given higher rates.

The expert said that the impact of article 337 was even more severe than that of an anti-dumping charge.

If the enterprises are found to have violated article 337 their products will be totally banned from the US market.

It is not the first time that Chinese enterprises have encountered lawsuits relating to article 337.

A number of foreign DVD player manufacturers, including Dolby, Toshiba, Panasonic, JVC, Matsushita, Times Warner, Sony, Royal Philips, IBM and DTS, levied patent fees, either jointly or independently, from their Chinese counterparts between 1999 and 2004.

The high patent fees, which greatly increased costs for Chinese DVD player makers, has led to a decline in the number of DVD player manufacturers in Shenzhen in South China's Guangdong Province, which was once famous for DVD manufacturing.

The figure has shrunk from nearly 150 to less than 40 since the fee was levied.

(China Daily July 20, 2005)