Chinese Drone Maker Turns to US International Trade Commission to Settle Patent Dispute

By Frank Fang, Epoch Times
September 5, 2018 Updated: September 5, 2018

A Chinese drone maker has turned to a U.S. federal agency in hopes of settling a patent-infringement complaint against a Chinese competitor, in a case that highlights how a drone maker, through Chinese government subsidies, has risen to be a global leader.

DJI, the world’s largest maker of civilian drones, is the target of a complaint filed at the U.S. International Trade Commission (ITC) by Autel Robotics USA, a U.S. subsidiary of China-based Autel, according to an ITC notice issued on Aug. 30. Both DJI and Autel are based in Shenzhen, a metropolis in southern China that borders Hong Kong.

The complaint alleges that DJI violated Section 337 of the Tariff Act of 1930, a trade law that enforces U.S. intellectual-property rights at the border. If ITC determines that DJI violated Section 337, the import and sale of its drones would be halted and the company would be shut out of the U.S. market.

The dispute centers around drones used for aerial photography, videotaping, and agricultural purposes.

The unmanned devices have many applications, including mapping and surveying, meaning that they can take aerial photos and analyze farms. When equipped with a small canister, they can be used to spray farms with fertilizers and pesticides. DJI is accused of infringing on some of Autel’s patented drone features, including rotor assembly; a way to switch out battery packs; and how a drone follows a flight path while avoiding obstacles, according to a Bloomberg report.

DJI and Autel have been embroiled in a legal battle in U.S. court for several years. In August 2016, DJI filed a lawsuit against Autel at a federal court in Delaware, saying Autel’s X-star series of drones infringed on one of its patents, claiming similarities in the drones’ design compared to the drawing outlines in a DJIs patent. A year later in May, DJI filed another suit against Autel at a federal court for the Western District of Washington. 

In April, Autel filed its own lawsuit against DJI at a federal court in New York City. Autel accused DJI of infringing on one of its patents across several lines of drones, including the Mavic, Spark, Phantom, and Inspire series, given the similarities in features such as the intelligent braking system and sensors.

DJI

According to data from market research company Markets and Markets, the international unmanned aerial vehicles (UAV) market is expected to grow from $17.82 billion in 2017 to $48.88 billion by 2023.

Currently, the top two drone makers in the world are based in China. According to data from the U.S. think tank Center for Strategic and International Studies (CSIS), DJI held a 72 percent market share in 2017, followed by Yuneec with 5 percent. U.S. drone maker 3D Robotics was No. 3  with 4 percent, followed by French maker Parrot with 2 percent. Autel ranked fifth with 2 percent market share.

DJI’s dominance in the global market didn’t come solely from its own research and development. The company has received millions of dollars worth in subsidies from the Shenzhen government, where the company is based.

DJI began receiving Shenzhen subsidies beginning in 2014, according to information from Jin Bo Shi Management and Planning Corporation, a private company that helps Chinese companies file for government subsidy programs, obtain national certification, and file for patents. Jin Bo Shi cites data from the Shenzhen government.

In 2015, DJI obtained 2 million yuan ($292,270) in subsidies from the Shenzhen government to develop 3D view technology on drones. The following year, it obtained subsidies of 10 million yuan (about $1.46 million) for research and development purposes.

In 2017, the Shenzhen government gave DJI 5 million yuan ($731,325) for development of the drone’s navigation system, 10 million yuan ($1.46 million) for research and development, and 1.89 million yuan (about $276,440) for a project on drones’ lifecycle management.

Agricultural Subsidies

China’s drone companies also have been boosted by the central government’s subsidy program to encourage the use of drones on farms.

In September 2017, China’s Ministry of Agriculture announced that it would provide subsidy funding of up to 10 million yuan ($1.46 million) for each of the five provinces—Zhejiang, Anhui, Jiangxi, Hunan, and Guangdong—and one municipality, Chongqing, to provide local farmers with drones for agricultural purposes including spraying pesticides, according to state-run media Xinhua.

Since then, the governments in these six locales have each enacted their own drone subsidy program. For example, in November 2017, the Chongqing government announced that it would subsidize farmers 29,000 yuan (about $259) for the purchase of a single rotor drone, and 16,000 yuan (about $2,340) for a multi-rotor drone.

Follow Frank on Twitter: @HwaiDer
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