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Section 337 Investigation FAQ'S

What is a Section 337 investigation?

Under Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337), the International Trade Commission can conduct investigations into allegations of certain unfair practices in import trade. Section 337 declares the infringement of certain statutory intellectual property rights and other forms of unfair competition in import trade to be unlawful practices. Most Section 337 investigations involve allegations of patent or registered trademark infringement. Other forms of unfair competition, such as misappropriation of trade secrets, passing off, false advertising, and violations of the antitrust laws, may also be asserted.

Section 337 investigations are initiated by the Commission following the receipt of a properly filed complaint that complies with the Commission's Rules. When an investigation is instituted, the Commission assigns an Administrative Law Judge to preside over the proceedings and to render an initial decision (referred to as an “Initial Determination”) as to whether Section 337 has been violated. The Commission also assigns an investigative attorney from the Commission's Office of Unfair Import Investigations (“OUII”), who functions as an independent litigant representing the public interest in the investigation. The staff investigative attorney is a full party to the investigation. In the notice announcing initiation of an investigation, the Commission identifies the entities that may participate in the investigation as parties, namely, the complainant or complainants that allege a violation of Section 337, the respondent or respondents that are alleged to have violated Section 337, and the OUII staff attorney, who is formally known as the Commission Investigative Attorney. Section 337 investigations are conducted in accordance with procedural rules that are similar in many respects to the Federal Rules of Civil Procedure. These Commission procedural rules are typically supplemented by a set of Ground Rules issued by the presiding Administrative Law Judge. The procedural rules and Administrative Law Judge's Ground Rules provide important details regarding such matters as the taking of discovery and the handling of motions.

A formal evidentiary hearing on the merits of a Section 337 case is conducted by the presiding Administrative Law Judge in conformity with the adjudicative provisions of the Administrative Procedure Act. Hence, parties have the right of adequate notice, cross examination, presentation of evidence, objection, motion, argument, and other rights essential to a fair hearing.

Following a hearing on the merits of the case, the presiding Administrative Law Judge issues an Initial Determination (ID) that is certified to the Commission along with the evidentiary record. The Commission may review and adopt, modify, or reverse the Initial Determination or it may decide not to review the ID. If the Commission declines to review an ID, the ID becomes the final determination of the Commission.

In the event that the Commission determines that Section 337 has been violated, the Commission may issue an exclusion order barring the products at issue from entry into the United States, as well as a cease and desist order directing the violating parties to cease certain actions. The Commission’s exclusion orders are enforced by the U.S. Customs Service. Commission orders become effective within 60 days of issuance unless disapproved by the President for policy reasons. Appeals of Commission orders entered in Section 337 investigations are heard by the U.S. Court of Appeals for the Federal Circuit.

How is an investigation instituted?

After a complaint is filed with the Commission, the Office of Unfair Import Investigations (OUII) examines the complaint for sufficiency and compliance with the applicable rules, and makes a recommendation to the Commission regarding institution of the requested investigation.

OUII's examination of the complaint may result in a request for supplementation or amendment of the complaint prior to the Commission’s determination regarding whether to institute an investigation.

The Commission will normally determine whether to institute a Section 337 investigation within 30 calendar days after the filing of a complaint. If a complaint is accompanied by a motion for temporary relief, the Commission will make its determination regarding institution of an investigation and provisional acceptance of the motion for temporary relief within 35 calendar days after the filing of the complaint and motion.

In the event that the Commission determines to institute a Section 337 investigation, a notice of investigation defining the scope of the investigation is published in the Federal Register. These notices typically appear in the Federal Register the week following the last day of the 30- or 35-day period for determining whether to institute an investigation. In addition to publishing a notice in the Federal Register, the Commission serves a copy of the complaint and notice of investigation on all of the respondents named in the investigation as well as on the U.S. embassy for the country in which they are located.

In the event that the Commission determines not to institute an investigation based upon a complaint, the complainant and all the firms named as proposed respondents in the complaint will receive written notice of the Commission's action. Decisions not to institute an investigation are rare.

When is the Judge’s Initial Determination on the merits of a case issued?

In Section 337 investigations with target dates requiring completion of Commission proceedings in 15 months or less, the Administrative Law Judge issues a decision on the merits of the case, called an "Initial Determination," at least three months prior to the target date. In investigations with longer target dates, the Judge is required to issue the Initial Determination on the merits at least four months prior to the target date. Journalists and other non-parties to an investigation should note that the Administrative Law Judges' decisions typically contain confidential business information, and thus are not available for public inspection on the date filed. Public versions of these decisions (with the confidential information redacted) are available for inspection at the Dockets Branch and via the Commission’s web site shortly after the date that the original, confidential version is filed. The Administrative Law Judge's Initial Determination is subject to review by the Commission.

How long do Section 337 investigations last?

By statute, Section 337 investigations must be completed “at the earliest practicable time.” Accordingly, the Commission places great emphasis on the expeditious adjudication of Section 337 investigations. Historically, the Commission has strived to complete most investigations in 12 to 15 months. However, factors such as the complexity of the subject matter and number of unfair acts at issue, as well as the workloads of the Judges during a particular period, have resulted in longer target dates in a number of investigations.

If the Commission finds a violation of Section 337, what remedies are available?

The Commission is authorized under Section 337 to issue two types of remedial orders -- exclusion orders and cease and desist orders. Both types of orders may be issued in the same case. An award of money damages is not available as a remedy for violation of Section 337.

An exclusion order directs the U.S. Customs Service to exclude articles from entry into the United States. There are two types of exclusion orders -- general exclusion orders and limited exclusion orders. A general exclusion order directs the U.S. Customs Service to exclude all infringing articles, without regard to source. In contrast, a limited exclusion order directs the Customs Service to exclude all infringing articles that originate from a specified firm that was a respondent in the Commission investigation. If an entity has previously attempted to import an excluded article into the United States and the article was previously denied entry by the U.S. Customs Service, the Commission may order the seizure and forfeiture of subsequent shipments of the article.

A cease and desist order directs a respondent in the Commission investigation to cease its unfair acts, including selling infringing imported articles out of U.S. inventory. Unlike exclusion orders, cease and desist orders are enforced by the Commission, not by the Customs Service.

When do Commission remedial orders become effective?

Upon issuance, Commission remedial orders are sent to the President who may then, within 60 days, disapprove them for policy reasons. Such disapprovals are rare. During this period, called the “Presidential review period,” infringing articles may enter the United States provided the importer posts a bond with the Customs Service in an amount determined by the Commission. Similarly, activities prohibited by a Commission cease and desist order may continue during the Presidential review period provided the respondent posts a bond with the Commission. If the President does not disapprove the Commission's remedial orders within the 60 day review period, at the conclusion of that period, infringing imports may no longer be imported and the complainant may seek to have previously posted bonds forfeited to it.

Are Commission decisions in Section 337 investigations appealable to a court?

Yes. Any person adversely affected by a Commission decision under Section 337 may appeal the decision to the U.S. Court of Appeals for the Federal Circuit. Any such appeal must be filed within 60 calendar days of the date that the Commission decision became final. A party that prevailed at the Commission may intervene in the appeal in defense of the Commission decision. Commission decisions that find no violation of Section 337 are final when issued. Commission decisions that find a violation of Section 337 and result in the issuance of remedial orders become final at the conclusion of the Presidential review period.

Is preliminary relief available?

Yes. A complainant may request at the time it files a complaint that the Commission conduct expedited temporary relief proceedings and issue a temporary exclusion order and/or a temporary cease and desist order during the course of the investigation. In determining whether to grant a request for temporary relief, the Commission applies the standard employed by the U.S. Court of Appeals for the Federal Circuit in reviewing lower court decisions granting preliminary injunctions. This determination will be made by the Commission no later than the 90th day after the date on which an investigation involving a temporary relief request is instituted, or, if the case is deemed to be complex, no later than the 150th day after institution of the investigation.

Can an investigation be settled by agreement or consent order?

Yes. The Commission Rules provide that a party may move to terminate an investigation as to one or more of the respondents on the basis of a licensing or other settlement agreement, including an agreement to present the matter for arbitration. Thus, for example, a complainant in a patent-based investigation may enter into a license agreement with one of the respondents and file a motion to terminate the investigation as to that respondent. Assuming the judge and ultimately the Commission conclude that the agreement is not contrary to the public interest, the investigation may be terminated on the basis of such a motion.

The Commission Rules also provide that an investigation may be terminated as to one or more respondents on the basis of a Consent Order. Consent Orders are typically entered upon the joint request of the complainant and a respondent in the form of a motion which contains the parties' joint proposed Consent Order, but can be proffered by a respondent alone.

The above is intended as a general introduction and should not be construed as legal advice or legal opinion for your particular case. Please contact the Law Offices of Yu & Associates with any specific questions. Tel: (301) 838-8986, Email: syu@yulegal.com, Address: 110 N Washington Street, Suite 328E, Rockville, MD 20850.




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