U.S. Steel Withdraws Intellectual-Property Theft Claim Against Chinese Rival -- Update
February 15 2017 - 2:24PM
Dow Jones News
By William Mauldin
U.S. Steel Corp. is withdrawing a legal claim that hackers in
China stole a key recipe for high-tech steel, a move that shows the
challenges American firms face in fighting the growing threat of
cyberespionage.
Pittsburgh-based U.S. Steel on Wednesday said that it will
continue pressing claims on alleged antitrust violations in China
and third-country shipment to avoid tariffs for various steel
products, and that it reserves the right to refile charges of
cybertheft.
But the move Wednesday to drop the intellectual property claim,
at least for now, is a setback in a case that trade lawyers hoped
would have set a precedent.
"When we filed the case, we highlighted the significant cyber
threat every company faces, and we began a dialogue about the need
to reform our antiquated laws," U.S. Steel said in a statement. "We
have made strides in that arena, but we believe more cooperation
and collaboration is needed between the federal government and the
private sector to address the continued threat of malicious cyber
crimes."
U.S. Steel said it faced an "unbearable burden" pursuing the
complicated international case without sufficient help from the
government.
The company's case was filed with the U.S. International Trade
Commission in April, after the U.S. unveiled criminal indictments
in 2014 against Chinese nationals for commercial hacking against
U.S. Steel, Alcoa Inc., the United Steelworkers union and other
entities.
China's Foreign Ministry has said the criminal indictment was
based on "fabricated facts." The country's Commerce Ministry has
said U.S. Steel's allegations of intellectual-property infringement
"are completely without factual basis."
U.S. Steel alleged that one of its secret steel formulas was
stolen in 2011 by hackers from China and that Chinese state-owned
steel company Baosteel Group Corp. subsequently introduced a new
line of products that included that type of high-strength steel,
known as Dual-Phase 980, and shipped it to the U.S.
Baosteel has said it "consistently acted in accordance with
regulations; respected intellectual property rights."
U.S. firms and labor groups complain that the low-cost imports
they compete with were made using American research and
development.
"If someone steals your trade secrets, makes it into a product,
and ships it back to your country, you might think this is
important for a lot of people," said Tom Conway, international vice
president at United Steelworkers, on Wednesday. "We ought to have
laws that are updated and deal with this potential now."
The trade case is overseen by a U.S. International Trade
Commission administrative law judge. The ITC also handles more
traditional cases involving international patent infringement,
dumping of imported products and improper government subsidies
provided to the overseas rivals of U.S. firms.
Congress has recently updated some of the laws for such trade
cases, showing lawmakers are receptive to complaints by the steel
industry and others that allege unfair pressure from overseas
rivals. Several of President Donald Trump's trade advisers have
ties to the steel industry, and many analysts expect the new
administration to defend the metals sector to the hilt.
American consumers of steel and other imported products,
including the U.S. auto industry, are frequently on the other side
of the trade debate. Punitive tariffs levied on foreign products
can raise the price for their inputs, squeeze margins and boost
retail prices.
Auto makers are seeking thinner and lighter metals after the
U.S. and other governments began implementing tougher fuel
efficiency standards. By 2025, 18% of all vehicles in North America
are expected to have all-aluminum bodies, compared with less than
1% in 2014.
After filing its intellectual-property case, U.S. Steel faced an
unusual burden of repeated travel to China, the translation of a
"tsunami" of Chinese-language documents and procedural barriers in
the U.S., according to people familiar with the matter.
"At the end of the day our hands are tied, and we don't have the
resources to spend millions of dollars more," said one of the
people, adding that Congress and the new administration should work
with companies to improve the procedures.
Write to William Mauldin at william.mauldin@wsj.com
(END) Dow Jones Newswires
February 15, 2017 14:09 ET (19:09 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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