An Introduction to Section 337 Intellectual Property Litigation at the U.S. International Trade Commission

An Introduction to Section 337 Intellectual Property Litigation at the U.S. International Trade Commission

Updated January 8, 2024
An Introduction to Section 337 Intellectual Property Litigation
at the U.S. International Trade Commission
In recent decades, parties asserting patent infringement and
sold for importation into the United States, or sold within
other intellectual property (IP) claims have increasingly
the United States after importation. Although respondents
looked to the U.S. International Trade Commission (ITC) as
do not always contest importation, it can be challenging for
a fast-paced forum with authority to stop the importation of
complainants to determine whether and how the infringing
infringing products. This In Focus provides an overview of
articles are imported, especially if the articles are merely
these “Section 337” (or “unfair import”) investigations; the
components of other products.
special legal issues and remedies involved; the litigation
process; and changes proposed by some in Congress.
Domestic Industry
A crucial and often litigated condition for the ITC to find a
Background on the ITC and Section 337
violation of Section 337 is the so-called domestic industry
Congress created the ITC as the U.S. Tariff Commission in
(DI) requirement. For claims involving patents or other
1916 and gave the agency its current name in 1974. The
statutory IP, Section 337 essentially requires the
ITC is an independent, nonpartisan agency led by six
complainant to prove there are both (1) articles that practice
commissioners who are appointed by the President and
the IP (the “technical prong”) and (2) a U.S. industry
confirmed by the Senate to nine-year terms. The President
relating to those articles consisting of significant
appoints one commissioner each to serve as chair and vice
investments in (a) plant and equipment; (b) labor or capital;
chair for a two-year term. No more than three
or (c) exploitation activities such as engineering, research
commissioners may be of the same political party, and the
and development, or licensing (the “economic prong”).
chair cannot be of the same party as either the prior chair or
the vice chair. In addition to unfair import investigations,
By contrast, for claims involving other “unfair acts,”
the ITC conducts other trade-related investigations,
including trade-secret misappropriation, complainants meet
including import injury investigations involving
the DI requirement by proving that the “threat or effect” of
antidumping and countervailing duties. The ITC also
the respondents’ actions is “(i) to destroy or substantially
administers the U.S. tariff schedule and provides
injure an industry in the United States; (ii) to prevent the
information and analysis to the President and Congress.
establishment of such an industry; or (iii) to restrain or
monopolize trade and commerce in the United States.”
The ITC’s authority to investigate unfair imports is
Thus, unlike patent cases, complainants in trade secret cases
governed by Section 337 of the Tariff Act of 1930 (19
must prove real or threatened injury to their DI, although
U.S.C. § 1337). Section 337 expressly encompasses
the DI need not practice the asserted trade secrets.
infringement of patents, copyrights, trademarks, and certain
other “statutory” IP. It also extends generally to “unfair
It is often challenging to apply these tests to the facts of
methods of competition and unfair acts,” which include
specific cases. One controversy is the extent to which non-
trade-secret misappropriation and non-IP claims. The vast
practicing entities, which hold patents but do not practice
majority of Section 337 claims allege patent infringement.
the patented technologies, should be able to satisfy the DI
requirement through patent licensing programs. The AAIA,
The ITC’s Section 337 caseload increased in this century,
which aims “to ensure that the resources of the [ITC] are
with 140 active investigations in FY2022 compared with 27
focused on protecting genuine domestic industries,” would
in 2000. These proceedings have drawn congressional
amend Section 337 to limit the ability of complainants to
interest. One bill introduced in the 118th Congress—H.R.
rely on licensing to satisfy the DI requirement.
3535, the Advancing America’s Interests Act (AAIA)—
would amend Section 337 as described below.
Remedies
Unlike district courts, the ITC cannot order money damages
Legal Issues in Section 337 Cases
for IP infringement. Rather, the ITC may issue unique
Like plaintiffs in U.S. district court cases, complainants
injunctive remedies. If the ITC finds a violation, it typically
asserting IP claims under Section 337 must prove
enters a limited exclusion order, preventing specific persons
infringement or misappropriation of their IP rights. As a
from importing infringing articles into the United States. It
trade statute, however, Section 337 requires the ITC to
may also enter general exclusion orders, not limited to
consider special additional issues. The ITC also has
specific persons, “to prevent circumvention” or address “a
different remedies at its disposal than district courts.
pattern of violation.” U.S. Customs and Border Protection
enforces exclusion orders at U.S. ports of entry.
Importation
For the ITC to find a violation of Section 337, the
In addition, the ITC may enter cease-and-desist orders
infringing articles must be imported into the United States,
(CDOs) enforceable by civil fines. CDOs are typically
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An Introduction to Section 337 Intellectual Property Litigation at the U.S. International Trade Commission
entered against respondents who have significant inventory
Section 337 allows the President to disapprove the ITC’s
or operations in the United States and might therefore be
final determination within 60 days for any “policy reasons,”
able to circumvent an exclusion order. In 2022, for instance,
an authority delegated to the U.S. Trade Representative
the ITC entered both a limited exclusion order and a CDO
(USTR). The only such disapproval in recent decades came
regarding wind turbine parts found to infringe General
in 2013, when USTR set aside a CDO and exclusion order
Electric’s patent rights (Investigation No. 337-TA-1218).
against some of Apple’s iPhone and iPad products found to
infringe one of Samsung’s patents. USTR found the
Public Interest
exclusion order was against the public interest, since the
Even if the ITC finds a violation of Section 337, it may
patent appeared to be a “standard-essential patent” on an
tailor or refrain from issuing a remedy based on public-
invention needed to comply with a technical standard for
interest factors of “public health and welfare, competitive
mobile devices. In December 2023, USTR decided not to
conditions . . . , the production of like or directly
set aside an ITC CDO and exclusion order against certain
competitive articles in the United States, and United States
Apple Watches found to infringe Masimo Corporation’s
consumers.” In the wind turbine investigation noted above,
patents. Apple has appealed the ITC orders to the Federal
for instance, the ITC made an exception to its remedies to
Circuit, which has temporarily stayed (suspended) the
allow for service and repair of already existing turbines.
orders. Apple has asked the court to continue staying the
CDO and exclusion order for the duration of the appeal.
The AAIA attempts to give more weight to the public-
interest analysis. The bill would prevent the ITC from
The ITC has experimented with ways to resolve
entering an exclusion order without finding that doing so is
investigations even faster. An ongoing pilot program allows
in the public interest. It would also allow the ITC to
ALJs to enter interim initial determinations following a
terminate an investigation early if it finds that excluding the
hearing on one or more significant issues that may facilitate
accused articles would not be in the public interest.
settlement or dispose of the case. In addition, an “early
disposition” program allows ALJs to hold a hearing and
Litigation Process for Section 337 Cases
issue an initial determination on a single dispositive issue
In addition to the substantive issues above, Section 337
(e.g., importation or DI) within the investigation’s first 100
litigation has unique procedural characteristics, including
days. ALJs usually deny requests for early disposition
the judges and parties involved, the fast pace, and the
proceedings, often citing the complexity of the issues
opportunities to appeal adverse decisions.
involved. To increase the use of these proceedings, the
AAIA would direct the commissioners to require ALJs to
Judges and Parties
conduct early disposition proceedings in appropriate cases.
Each Section 337 investigation is assigned to one of the
ITC’s six administrative law judges (ALJs). The parties to a
Parallel Litigation
Section 337 investigation include not only complainants
Complainants in a Section 337 investigation may assert
and respondents, but also the ITC’s Office of Unfair Import
their claims in U.S. district court as well as the ITC—for
Investigations, which represents the public interest.
instance, to seek money damages in addition to ITC
remedies. Respondents, however, have the right under 28
Litigation Process and Appeals
U.S.C. § 1659 to stay (i.e., pause) a parallel district court
Section 337 requires the ITC to resolve investigations “at
action to the extent that it involves the same issues as the
the earliest practicable time,” and the ALJ must set a date
ITC case until the ITC reaches its final determination.
for the ITC’s final determination. This “target date” cannot
be more than 16 months after institution of the investigation
Similarly, respondents in a Section 337 investigation may
without the commissioners’ consent. In FY2023, the
challenge the validity of an asserted patent both in the ITC
average duration of investigations reaching a final
case and by filing a petition for proceedings with the U.S.
determination on the merits was between 17 and 18 months.
Patent Trial and Appeal Board (PTAB). Following new
guidance issued in June 2022, PTAB cannot decline to hear
Civil procedure in Section 337 investigations is governed
these challenges on the basis of a pending Section 337
by the ITC Rules of Practice and Procedure and the ALJ’s
investigation as it had often done previously.
personal “ground rules.” As in district court cases, the
parties conduct fact and expert discovery via depositions
Considerations for Congress
and other disclosures, albeit on an accelerated time frame.
As one of the main vehicles for high-stakes IP litigation
involving imported products, Section 337 investigations
Unless the investigation is terminated earlier—e.g., due to
have drawn congressional interest. Should Congress seek to
settlement—it proceeds to a trial-like evidentiary hearing
change the existing Section 337 legal requirements and
governed by the Administrative Procedure Act. The ALJ
litigation process, it could consider amendments to the
presides over the hearing and makes findings via an initial
statute such as those envisioned by the AAIA. Congress
determination. The commissioners may review the initial
could also consider whether trade-secret misappropriation
determination at a party’s request or of their own volition
claims should continue to be subjected to a different DI test
and may affirm, modify, reverse, or remand all or part of it.
than patent and other statutory IP claims.
Otherwise, the initial determination becomes final. A party
may appeal a final determination to the U.S. Court of
Christopher T. Zirpoli, Legislative Attorney
Appeals for the Federal Circuit.
IF12295
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An Introduction to Section 337 Intellectual Property Litigation at the U.S. International Trade Commission

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