SI Group is claiming victory after a U.S. International Trade Commission ruling imposed a decade-long ban on certain resins imported by a Chinese competitor believed to have stolen trade secrets from the Niskayuna-based company.
The commission determined there was enough evidence to show Sino Legend Chemical Co. was importing so-called tackifiers — chemical compounds used in adhesives — almost identical to proprietary ones produced by SI Group. SI Group’s formula for the valuable rubber-bonding resin is sold to many of the world’s premier tire manufacturers.
The ruling means Sino Legend or any subsidiary company is barred from importing the resin to manufacturers in the United States for 10 years. The products still can be imported during a federal review period for the ruling, but only after the company has forwarded a 19 percent bond, the ruling states
“It’s a major victory for SI Group,” said Frank Bozich, the company’s president and CEO, in a statement. “The [commission’s] final decision reinforces what we’ve been saying all along: Our intellectual property was stolen. The 10-year exclusion order helps to right that wrong.”
Sino Legend had a much different interpretation of the ruling, claiming it overturns a 10-year import ban on several of its other resins that was imposed in 2013. The company also claims the decision won’t prevent its customers from using its resins at production facilities outside the United States and then importing their products without restriction.
“We are in the process of reviewing the multifaceted ruling in its entirety, including our options to appeal the few remaining elements,” said Corey Xie, Sino Legend’s general manager.
Phenolic resins produced by SI Group are found in roughly 90 percent of the tires produced in North America. These same chemicals are used in a variety of belts and hoses, helping rubber to bond with steel fibers.
For years, SI Group has maintained Sino Legend — also known as Zhangjiagang — illegally stole trade secrets for tackifier resins. The company alleged Sino Legend hired away a manager from its Shanghai manufacturing plant in 2007 and then began aggressively producing resins virtually identical to SI Group’s proprietary compound.
One of Sino Legend’s founding shareholders came from the management of Red Avenue Chemical Co., which previously distributed SI Group resin products. The two companies are also affiliated through ownership.
SI Group filed a civil lawsuit against Sino Legend in China in 2010. The company filed another pair of lawsuits in 2011 on behalf of both its Chinese and U.S. holdings.
Sino Legend claims it prevailed in those lawsuits and a court in Shanghai found no factual or legal basis in SI Group’s claim last year. The company claims the court cases gave the commission the basis it used for overturning some of the bans on resins.
Still, SI Group officials felt comfortable with what they perceive as a victory. Spokeswoman Brooke Manrique called the decision “momentous” and said the import ban will prevent Sino Legend from selling the product it stole from SI Group. It was not immediately clear how much Sino Legend’s actions were affecting SI’s profits.
“It’s a significant victory for our business because it supports and protects our intellectual property rights,” Manrique said.