A Shenzhen bestseller was sued by an American giant, and its popular products were accused of infringement!

Faced with increasingly scarce market resources, the smoke of war has already spread invisibly across the industry.

In recent years, with the acceleration of the process of globalization, more and more Chinese brands have entered the global competition arena and occupied a place in the hearts of overseas consumers. What follows is the inevitable competition with overseas brands.

It is learned that recently, a US giant has filed an application to the US International Trade Commission (hereinafter referred to as "ITC") to "initiate a 337 investigation", directly targeting its strong competitor - the Chinese sports camera brand Insta360.

It is learned that recently, according to the Ministry of Commerce, the well-known American sports camera manufacturer GoPro has filed charges against the Chinese Shenzhen sports camera brand Insta360 Technology (hereinafter referred to as "Insta360"), claiming that the latter's products infringe its patent rights , and requested the ITC to initiate a "337 investigation" and issue a limited exclusion order and a cease and desist order.

According to the application report submitted by GoPro, the specific infringing products mentioned are: Insta360's ONE X, ONE R, ONE R1-inch, ONR X2, ONE RS, ONE RS 1-inch 360, X3, GO3, Ace and ACE Pro, etc. , which almost include all consumer products sold by Insta360.

If the ITC determines that infringement is established, these products will most likely be banned from sale in the United States, which will have a significant impact on Insta360.

However, it is worth mentioning that it is currently impossible to confirm what details GoPro is using to accuse Insta360 of infringement. In response to the relevant accusations, Insta360 has recently responded: After careful comparison and analysis with professional Chinese and American lawyers, Insta360 is fully confident of winning the case. The company will resolutely safeguard the rights and interests of independent technological innovation.

It is learned that the so-called "337 investigation" refers to a quasi-judicial procedure in which the ITC investigates intellectual property infringement and other unfair competition practices in U.S. import trade in accordance with the relevant provisions of Section 337 of the U.S. Tariff Act of 1930, to determine whether there is infringement and whether it is necessary to take remedial measures. It is also one of the important trade protection measures of the United States.

Due to the tight time limit of the "337 investigation" procedure (generally 12 or 15 months), the large amount of materials that need to be prepared, the heavy workload of collecting evidence, and the high cost of responding to lawsuits (generally between US$3 million and US$10 million), many Chinese companies have chosen "not to respond" when faced with such cases in the past, which ultimately led to a large number of "automatic losses" and their products were expelled from the US market.

Data shows that after the relevant clauses have been revised and developed many times, the application threshold for the US "337 investigation" has been greatly lowered, and the number has increased year by year: from "a handful" in 1970 to about 70 in 2012, half of which were against Chinese companies. In the cases that have been decided, the losing rate of Chinese companies is as high as 60%, far higher than the world average of 26%.

According to people familiar with the matter, Shenzhen companies have encountered 11 "337 investigations" in 2020 alone , 2.2 times that of 2019. Zhihe data also shows that in 2023, there were 20 "337 investigations" involving Chinese companies, accounting for 48.7%, or about half of the annual investigations.

Based on this, many industry insiders believe that the "337 investigation" is now seen by many American companies as a market competition strategy against Chinese companies . That is, American companies will apply to initiate a "337 investigation" in order to achieve the vision of expelling related products of Chinese companies from the US market.

After GoPro applied to launch a "337 investigation" against Insta360, many people in the industry speculated that there were market competition motives behind GoPro's accusations.

As the former "No. 1 sports camera", GoPro's early resume was extremely brilliant:

• In 2004, GoPro launched its first action camera, creating a precedent for action camera brands;
• In 2014, GoPro was listed on the Nasdaq, with a market value of up to $13 billion .
• In 2015, GoPro's revenue exceeded $1.6 billion.

It is understood that GoPro was once synonymous with sports cameras, with a market share of over 90% in this market.

However, since 2015, GoPro's development momentum has taken a sharp turn for the worse, and it has not yet gotten out of trouble: revenue reached a low of $890 million in 2020, $1 billion in 2023, a net loss of $53 million, and in March this year, it announced a layoff of about 4% of its employees in order to cut costs. By the end of 2023, GoPro's total market value was only $331 million, a decrease of more than 97% from its peak market value.

The root cause is, on the one hand, GoPro’s own business transformation failed (its drone business failed completely), and on the other hand, the external competition from the market intensified: Chinese brands such as Insta360 and DJI have risen strongly and occupied a place in the global market.

It is learned that Shenzhen Insta360 Innovation Technology Co., Ltd. (hereinafter referred to as "Insta360") was established in 2015. At the beginning of its establishment, it took the panoramic sports camera segment as an entry point, quickly opened up the market, and made rapid progress overseas.

According to an industry research report by Frost & Sullivan Consulting, Insta360's market share of panoramic sports cameras reached 41% in 2021 , followed by Japan's Ricoh with 22%, while GoPro ranked third with only 19%.

Public data shows that in 2021, Insta360's revenue has exceeded 1 billion yuan, nearly 10 times more than in 2017. Overseas markets account for 70% of its overall revenue, and sales on Amazon are 140 million yuan. By 2022, Insta360's revenue has achieved year-on-year growth of more than 50% for three consecutive years.

Comparing the development trends of GoPro and Insta360 in overseas markets, it is indeed hard not to speculate on the deeper meaning behind GoPro's application to initiate a "337 investigation".

In fact, this is not the first case this year where a US company has applied to initiate a "337 investigation" against a Chinese company. According to the Ministry of Commerce, on March 22, 2024, US Conec, Ltd. also filed an application to the US International Trade Commission to "initiate a 337 investigation", involving a total of five Chinese companies.

As of now, it is still unknown whether the "337 investigation" against Insta360 will be officially launched, but what is certain is that based on previous "337 investigation" cases, actively responding to the lawsuit is an important condition for winning the case, compared to the "default judgment" of not responding to the lawsuit.

According to statistics, in previous "337 investigation" cases, 15% of Chinese companies that chose to respond would win the complaint, 32% of the complainants withdrew the complaint without completing the litigation for various reasons, 35% of the parties reached a settlement, and only 5% of the companies lost the complaint after responding to the lawsuit.

Take Shenzhen Yinxing Smart, another Chinese cross-border giant, for example. In 2017, the US company iRobot launched a "337 investigation" against Yinxing Smart, but the final ruling showed that none of Yinxing Smart's eight products infringed. Afterwards, Yinxing Smart sued iRobot in the Shenzhen Intermediate Court. In the end, three iRobot companies were found to have infringed Yinxing Smart's patent for a "cleaning robot that facilitates the removal of trash boxes" and were ordered to compensate Yinxing Smart for rights protection costs.

From this point of view, Insta360’s response to this case saying that it has full confidence in winning the case is not groundless.

In general, if Chinese cross-border sellers want to seize the trend of going overseas, compliance and intellectual property awareness are absolutely essential. Under this premise, when faced with unfair accusations, brands can use legal weapons to safeguard their own interests.

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