Section 337 Litigation at the ITC

As a trade statute, in order to be entitled to relief under Section 337, the complainant must establish that a domestic industry for articles protected by the asserted patent(s) exists or is in the process of being established as demonstrated by significant investment in either plant and equipment or labor or capital, or substantial investment in the exploitation of the intellectual property, including engineering, research and development, or licensing. Given that these factors are discrete, satisfaction of any one of them is sufficient to meet the domestic industry requirement.

The Commission’s decision in Certain Multimedia Display and Navigation Devices and Systems, Components Thereof, and Products Containing Same (Inv. No. 337-TA-694) (“Multimedia Display Decision”) addressed the extent to which a complainant can establish a domestic industry based solely on U.S. investments in licensing. The Brattle Group represented the complainants in this matter and, as a result, has in-depth knowledge of the decision and the impact it will have on litigation at the ITC.

Our team has conducted rigorous economic and financial analyses to evaluate whether a complainant’s investments are sufficient to establish that a domestic industry exists. The Brattle Group has worked on behalf of both complainants and respondents.

Public interest factors can override the finding of a violation of Section 337 at the ITC. Upon finding a violation, the ITC considers the impact that exclusion orders would have upon 1) the public health and welfare, 2) competitive conditions in the US economy, 3) the production of like or directly competitive articles in the US, and 4) US consumers. The ITC weighs these factors against the public interest in protecting U.S. intellectual property rights by excluding infringing imports.

Given the changing economic environment in the US, economists must help the ITC find a more useful economic framework that addresses the loss to competition and welfare of a significant, albeit not singular, supplier in a multi-competitor market, including more creative ways to tailor a remedy to the situation. We have assisted our clients in addressing these issues using in-depth research, innovative economic modeling, and financial analysis.

While Section 337 investigations at the ITC mostly involve claims regarding intellectual property rights, other forms of unfair competition involving imported goods, such as misappropriation of trade secrets, breach of contract, and false advertising, may also be asserted. The formal domestic industry requirement for ITC complainants in statutory intellectual property investigations does not apply to non-statutory intellectual property, such as trade secrets, common law trademark, breach of contract, and false advertising, amongst others. Instead, the statute’s subsection governing non-statutory intellectual property applies to only one of the following three sub-provisions: (i) to destroy or substantially injure an industry in the United States; (ii) to prevent the establishment of such an industry; or (iii) to restrain or monopolize trade and commerce in the United States.

Economists at Brattle have significant experience in evaluating economic issues in non-statutory intellectual property investigations. Brattle economists assisted complainant Manitowoc in Certain Crawler Cranes and Components Thereof (Inv. No. 337-TA-887) to demonstrate injury to the domestic industry from misappropriation of trade secrets by the respondent, Sany. The ALJ granted a motion for summary determination, finding that Manitowoc had shown that actions by Sany had injured or threatened to injure the domestic crawler crane industry. In its opinion, the Commission affirmed related parts of the ALJ’s ID and issued a cease and desist order against Sany with respect to the asserted trade secrets for 10 years.

The Brattle Group has provided expert testimony and assisted clients in evaluating the nature and scope of the remedy sought, including whether downstream products containing infringing articles should be excluded as part of any remedy based on evaluation of factors set out in the Certain Erasable Programmable Read-Only Memories (EPROMs) case; the propriety and scope of cease and desist orders; and propriety and amount of bond.