The U.S. International Trade Commission is a federal agency with the authority to adjudicate cases involving companies that domestically exploit U.S. intellectual property rights and those who import allegedly infringing products under Section 337 of the Tariff Act of 1930 (19 U.S.C. Section 1337). The ITC conducts investigations into complaints regarding unfair trade practices, including patent, trademark and trade dress infringement.
Section 337 investigations are heard by an Administrative Law Judge (ALJ). The ALJ presides over all aspects of the case, from when the ITC institutes the investigation through the evidentiary hearing and post-hearing briefing. The ALJ then prepares a written decision called an Initial Determination (ID). The ID is subject to review by the full Commission, which then issues a final decision on the investigation called a Final Determination (FD).
The primary remedy available through a 337 investigation is an exclusion order issued by the Commission that directs U.S. Customs and Border Protection (Customs) to stop infringing imports at the border. The Commission may also issue cease and desist orders against named importers and other persons engaged in acts that violate Section 337 to prevent them from selling products already located in the U.S.
There are several reasons why complainants, particularly patent holders, file 337 investigations. They include:
- Potentially Stronger Injunctive Relief. Although the ITC cannot award money damages, it can issue exclusion orders preventing infringing products from entering the U.S. In federal district court cases, the court must apply a traditional four-factor test to determine whether injunctive relief is appropriate. In contrast, the ITC need not apply this test to issue exclusion or cease and desist orders.
- Extremely Expedited Proceedings. Unlike district court cases, which can drag on for years, Section 337 investigations are extremely expedited. A trial-like evidentiary hearing is typically held nine to 12 months after the complaint is filed. The statute (19 U.S.C. 1337(b)) mandates prompt hearings, so the indefinite extensions that defendants can obtain in many district courts are simply not possible.
There are key differences between cases before the ITC and before the district court. While the ITC typically applies the same substantive law as district courts, several differences exist. They include:
- Parties and the Office of Unfair Import Investigations (OUII). The parties to a 337 investigation include the complainant (the IP holder), the respondents (accused infringers) and OUII. The OUII represents the ITC and the public interest. The OUII typically assigns a staff attorney to each case, who is an actual party to the investigation, with full party rights in all aspects of the investigation. The typical plaintiff-defendant dynamic we see in district court proceedings is quite different when a neutral third party is also participating in the litigation. Depending on the ALJ, the staff attorney can have a tremendous influence on procedural and substantive issues in the case.
- Jurisdiction and Importation Requirement. The ITC asserts in rem jurisdiction over the accused products, not personal jurisdiction over the defendants. The investigation therefore concerns the accused product, not the accused party. An essential element of the ITC’s jurisdiction is that the accused products must be imported into the U.S. If not, the ITC does not have jurisdiction.
- Domestic Industry Requirement. The ITC is a trade agency that exists to protect U.S. interests from imported, “knock-off” goods that infringe valid U.S. IP rights. The domestic industry requirement ensures that the protections offered by the ITC actually benefit companies with significant investments in exploiting the relevant IP in the U.S. To satisfy the domestic industry requirement in a patent case, a complainant must demonstrate that: (1) its own products practice claims of the asserted patent(s); and (2) there is significant activity based in the U.S. related to the asserted patent. This can include: (a) production or manufacture in the U.S. of products that practice the asserted patent; (b) research and development, and investments in plants and equipment in the U.S., directed to such products; and (c) certain licensing activities.
- Discovery. Parties to a Section 337 investigation can and will engage in extensive discovery. All standard district court discovery tools are available, including interrogatories, document requests, depositions, requests for admission and discovery of third parties. Most significantly, discovery is substantially expedited. For example, responses to discovery requests are due within 10 days of service of a request (unlike 30 days in district court), and a party may have only 2 or 3 months overall to collect, review and produce all documents. In addition, the default limit on the number of interrogatories that a party can serve is 175 (compared with the 25-interrogatory limit in federal court). Complainants typically serve interrogatories in multiple waves – for example, 40 interrogatories the first week of the case, 35 more interrogatories two weeks later, etc. Given the 10-day timeframe to respond, the task of responding to interrogatories in and of itself can be very burdensome. Further, the shortened discovery period requires parties to collect and produce all relevant documents early to avoid the need for duplicate depositions.
- Evidentiary Hearings and Post-hearing Briefing. An ITC evidentiary hearing is similar to a district court trial, except that: (a) there is no jury; and (b) the federal rules of Evidence are more liberally applied (e.g., hearsay may be allowed, and documents are generally presumed to be authentic). For each issue tried, a significant amount of detail must be presented in a very short time. In light of this, there is extreme pressure to limit the issues for trial. Some ALJs also permit or require that direct witness testimony be offered through written witness statements rather than through live testimony. Without live direct testimony, the first substantive live testimony provided by the witness is on cross-examination by opposing counsel. Any live direct testimony from friendly counsel must wait until re-direct.
Under typical case schedules, the parties file opening post-hearing briefs and proposed findings of fact two weeks after the conclusion of the hearing. Responsive post-hearing briefs and findings of fact are filed two weeks after opening briefs are filed. Compared with a district court proceeding, the ITC briefing is significantly more voluminous and time-intensive than its district court counterpart.
- Initial Determination. An ALJ must make detailed findings of fact and conclusions of law in an ID covering all contested issues and elements of a 337 violation. These decisions are typically very detailed and run over 100 pages. Despite this level of detail, an ALJ must file the ID no later than four months before the Target Date for completion of the investigation (19 C.F.R. Section 210.42(a)(1)(i)). Under typical case schedules, this means the ID is due only 6 to 8 weeks after the parties have filed their post-hearing briefs.
- Remedies. The ITC has no authority to award monetary damages. Instead, it issues exclusion orders and cease and desist orders. There are two types of Customs exclusion orders: (1) a limited exclusion order (LEO) and (2) a general exclusion order (GEO). A LEO is limited to the products of the specific named respondent(s). GEOs, on the other hand, exclude all infringing products regardless of whether the manufacturer or infringer is named as a party to the ITC proceeding. In addition to, or instead of, an exclusion order, the ITC may issue a cease-and-desist order that targets domestic respondents with an existing inventory of infringing products (19 USC Section 1337(f)). The purpose of this remedy is to prohibit the further marketing, sale, or distribution of infringing products already located in the U.S.
- Commission Review of Initial Determination and Appeal. The Commission has the authority, but is not required, to review every ID. A party may file a petition for review of the ID within 10 days after issuance. Acceptable grounds include when: (a) a finding or conclusion of material fact is clearly erroneous; (b) a legal conclusion is erroneous, without governing precedent, rule or law, or it constitutes an abuse of discretion; and/or (c) the ID is one affecting Commission policy. (19 CFR Section 210.43(b)). A party who does not prevail before the Commission may appeal a disputed issue to the U.S. Court of Appeals for the Federal Circuit.
- Defenses. The same substantive defenses generally are available to a defendant in a district court litigation and in a Section 337 investigation. For example, with respect to the complainants’ asserted patents, respondents can seek to prove that the asserted claims are invalid and/or unenforceable, or are not infringed by the accused products.
- Timing. Section 337 Investigations are statutorily required to be completed as early as practicable. (19 USC 1337(b)(1)). Every investigation includes a Target Date set by the ALJ, by which the investigation must be concluded. The Target Date must initially be set within 16 months from the date the investigation commences. Anything longer requires approval by the Commission. (19 CFR 210.51(a)).
- Pleadings. The ITC complaint and the pre-filing investigation by the ITC are quite different from a district court complaint. Because of the stringent requirements for ITC complaints and the short time frame for ITC investigations, complainants have a significant burden to perform a detailed pre-suit investigation and compile voluminous materials regarding the accused products. A detailed investigation is necessary because the ITC requires detailed factual allegations. Procedurally, unlike district court complaints, notice pleading is not permitted in an ITC complaint. For example, the ITC complaint must include: (a) detailed contentions; (b) a description, with evidence, of the complainant’s domestic industry; and (c) detailed information regarding the proposed remedy. The complaint must be accompanied by specific background materials relating to the asserted rights. See 19 CFR Section 210.12(c)-(g). Each respondent must file its response to the complaint within 20 days of service of the complaint and Notice of Investigation. 19 CFR 210.13(a). A proper response requires compiling detailed client information and information on applicable defenses on an accelerated timeline.