From Deseret News archives:

Chinese firms hard to sue

U.S. competitors face myriad legal hurdles

Published: Saturday, Feb. 9, 2008 12:12 a.m. MST
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A federal judge dismissed the Patmont lawsuit 2 1/2 years after it was filed because Patmont had been unable to deliver the lawsuit to the defendants, as court rules require.

The failure was not for lack of trying, said a Patmont lawyer, Brian R. Irvine.

"It's like the Whac-A-Mole game. Once you serve them at one address, you get a letter back saying they are not there," Irvine said.

Patmont founder Steven J. Patmont said the lawsuit persuaded some American companies to stop selling the Chinese-made knockoffs but that China has failed to adhere to trade agreements and his company has barely survived a tenfold drop in sales since 2000.

"They were allowed to come into our country," Patmont said. "But they did not lower their trade (barriers)." As a result, Patmont's Go-Ped motor scooters face a 167 percent markup in China he said, due to a 150 percent tariff and a 17 percent value-added tax.

While the number of lawsuits pending is not available, experts say lawsuits against Chinese companies are proliferating, asserting claims of product piracy, impure ingredients and unsafe products.

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"My sense is, we're just seeing the tip of the iceberg," said Michael Lyle, a Washington-based lawyer at Weil, Gotshal & Manges who represents companies in product liability and trade cases. "Because of our global economy, and the fact that China is a major player, you are going to be seeing more of these cases."

Most Chinese companies have no assets in the United States, so they have no trouble ignoring a U.S. court order.

"There is no treaty between the United States and China that requires the enforcement of each other's judgments," said Lyle, a former Clinton White House official.

China is a signatory to an international accord known as the Hague Convention but does not accept all of the treaty's articles.

Chinese companies are not the only tough lawsuits; judgments are difficult to enforce in Russia, Lyle said. In contrast, the judgments of U.S. courts face smoother sailing in Canada and the United Kingdom, he said.

The expansion of Chinese companies into global markets, with offices and operations in the U.S. and elsewhere, could give them a greater incentive to cooperate in legal proceedings, Lyle said.

But until then, Chinese companies will assert that U.S. courts have no jurisdiction.

That's what happened after lawyer Jeffrey B. Killino filed a class-action lawsuit in U.S. District Court in Camden against a Chinese tiremaker on behalf of people who claim they were hurt by defective products.

Hangzhou Zhongce Rubber Co. countered that the lawsuit should be dismissed because the manufacturer does not do business in New Jersey or anywhere else in the United States.

Recent comments

At some point the items get delivered to the U.S. and payment is made...

l | Feb. 9, 2008 at 7:14 p.m.

If we really felt any sympathy for domesitc firms, we'd buy from...

my two cents | Feb. 9, 2008 at 12:14 p.m.

Sounds like a laywer would have a tough time making a living in China...

Dave | Feb. 9, 2008 at 8:05 a.m.

Image

Steve McElvain works on a push scooter at Patmont Motor Werks in Minden, Nev. The scooter company filed an antitrust lawsuit over Chinese trade practices in an effort to level the playing field for American companies asserting claims of product piracy, impure ingredients and unsafe products.

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