Under Section 337 of the Tariff Act of 1930 (“Section 337”), the U.S. International Trade Commission (ITC) investigates unfair trade practices involving U.S. intellectual property rights.  Specifically, Section 337 makes unlawful the “importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer, or consignee, of articles that - (i) infringe a valid and enforceable United States patent . . . or (ii) are made, produced, processed, or mined under, or by means of, a process covered by the claims of a valid and enforceable United States patent.”

ITC proceedings differ from actions brought in federal district court in that: (1) monetary damages are not available at the ITC; (2) Section 337 proceedings typically are far quicker than similar actions in district court; and (3) there never is a jury.  Despite the fact that the ITC cannot award monetary damages, it may issue limited and general exclusion orders, which often provide better prospective relief to complainants.

Overview of a Section 337 Investigation

A Section 337 action normally consists of a complaint, a hearing, an Administrative Law Judge’s (ALJ's) initial determination, ITC review of the initial determination, Presidential review of the ITC’s final determination, and an appeal where applicable.

A party initiates an investigation by filing a complaint with the ITC.  Within 30 days of filing, the ITC determines whether or not it will institute an investigation.  If an investigation is instituted, it is referred to one of four ITC ALJs.  The ALJ presides over the proceedings, sets the ground rules, and establishes a target date for completion of the investigation—typically less than 15 months.  The ITC also assigns an investigative attorney from the Office of Unfair Import Investigations (OUII) to represent the public interest in the investigation.

Once an investigation is instituted and the complaint served, a respondent has 20 days to answer.  It is not unusual for respondents to receive additional time with which to answer, but an extension is by no means guaranteed.  Once a complaint is filed, a prospective respondent should not wait until the investigation is instituted to begin preparing its defense.

After a period of discovery, the parties present evidence, cross-examine witnesses and make arguments at a hearing, which takes place roughly three months before the ALJ renders his final opinion.  Based upon evidence presented at the hearing, the ALJ issues a written decision on the merits called an initial determination.  The initial determination includes the ALJ’s opinions, findings of fact, and conclusions of law.

Once the ALJ issues an initial determination, the parties are permitted to petition the ITC to review the initial determination, or the ITC may review it on its own authority.  The parties have 10 days from the date the initial determination is served to submit a petition for review to the ITC.  The ITC considers the petition and determines if it will review the initial determination. If the ITC declines to review the initial determination, it then becomes the final determination of the ITC.  If the ITC decides to review the initial determination, the ITC will identify the issues it plans to review and typically will ask for additional briefing on those issues.  Ultimately, the ITC then will either adopt, modify, or reverse the initial determination.

All ITC determinations finding a Section 337 violation are subject to a 60-day review period by the President.  The President may disapprove the determination based on policy reasons rendering the ITC’s determination without force or effect, but such disapprovals are very rare.  After the 60-day review period, the ITC’s determination becomes final.

After the ITC’s determination becomes final, aggrieved parties have 60 days to appeal it to the United States Court of Appeals for the Federal Circuit.

Remedies

The unique nature of the remedies available in Section 337 actions is one of the elements that makes such actions so popular.  The ITC may issue “exclusion orders” or “cease and desist orders” in these actions.

Exclusion orders direct U.S. Customs and Border Protection to exclude infringing articles from entry into the United States.  Such orders are of two types: general and limited.  General exclusion orders bar entry for all imported goods, regardless of whether or not the source was a party in the investigation.  The ITC tends to issue general exclusion orders when the items at issue are cheap or fungible or if the source of the goods is difficult to identify.  Limited exclusion orders, on the other hand, bar imported goods only from the parties found to have violated Section 337 in the particular investigation.  Exclusion orders are enforced by U.S. Customs and Border Protection at the ports of entry into the United States.

Cease and desist orders bar companies from engaging in unfair acts within the U.S., such as the act of selling out of U.S. inventory infringing goods that were imported before the ITC’s exclusion order.  Cease and desist orders are enforced by the ITC, rather than directly by the U.S. Customs and Border Protection.  Penalties for the violation of a cease and desist order may be as high as $100,000 per day of violation.

A Unique Feature Of Section 337 Litigation

Unlike federal district courts, ITC jurisdiction is in rem and nationwide.  Accordingly, the ITC has the authority to issue subpoenas, compel discovery, and impose sanctions throughout the United States.  In addition, as mentioned above, ITC remedies and protections extend throughout the United States and are enforced by the U.S. government.

Reasons to Proceed Before the ITC

The ITC enjoys several advantages over district courts, including:

• Expedited schedules;
• Experienced jurists who hear IP actions only;
• No juries;
• National jurisdiction; and 
• Expansive injunctive relief enforced by U.S. Customs and Border Protection.