United States: International Trade Remedies are Available to Enforce Intellectual Property Rights

Originally published in the Export, Customs & Trade Sentinel, Volume II, Number 4, Fall 2005

Whereas many companies are aware of the traditional means of enforcing company-owned intellectual property rights (patents, trademarks and copyrights) through litigation in federal district court, companies operating in the international arena or facing infringement from international actors have a number of additional international trade remedies available to protect intellectual property assets. International trade remedies available through the U.S. International Trade Commission ("ITC") and the U.S. Customs Service ("Customs") may offer fast, broad, and effective relief from intellectual property right infringement.

Under Section 337 of the Tariff Act of 1930, as amended, it is unlawful to import, sell for importation, or sell within the United States after importation, articles that infringe upon a valid U.S. patent, trademark, or copyright. The Tariff Act empowers the ITC to conduct "337" investigations into all allegations of unfair practices in import trade, including infringement of patents, trademarks, or copyrights. The ITC may institute a 337 investigation on its own initiative, but usually such investigations are initiated based upon the filing of a complaint. If a "Complainant" files a complaint before the ITC, certain pre-institution proceedings may be undertaken between the Complainant and the ITC staff to ensure the adequacy of the complaint. If the complaint is deemed to be sufficient, the ITC will decide to institute a formal 337 investigation within 30 days of the filing of the complaint.

After initiation of the investigation, the ITC then assigns an Administrative Law Judge ("ALJ") to conduct the investigation. While analogous to judicial proceedings before federal district courts, a 337 investigation is an administrative proceeding which consists of formal discovery leading to a full briefing and hearing on the merits in which the alleged infringer, the "Respondent," is entitled to participate. A 337 investigation operates under procedural rules similar to the Federal Rules of Civil Procedure as supplemented by additional "ground rules" set forth by the ALJ and strict regulatory deadlines. Like judicial proceedings before federal district courts, traditional intellectual property defenses, such as patent invalidity, can be raised by the Respondent during the course of a 337 investigation.

However, unlike judicial proceedings before federal district courts, counterclaims will generally not be heard. A further difference between 337 investigations and federal district court proceedings is the role of ITC staff. Along with the ALJ, the ITC assigns an ITC staff investigating attorney who serves as a full party to the 337 investigation. The ITC staff investigating attorney is responsible for representing the "public interest" in the 337 investigation. It is also important to note that parallel federal district court actions may be stayed during a 337 investigation.

At the close of 337 investigation proceedings, the ALJ submits an initial determination that adjudicates all of the issues involved in the investigation, including the ultimate issue of violation of section 337 to the full ITC for review and action. The ITC can adopt, modify or remand the ALJ initial determination.

If the ITC finds a violation of the Tariff Act, the ITC formulates a remedy and submits it to the President for approval. Two main remedies may be approved: (1) Exclusion Orders and (2) Cease and Desist Orders. An ITC Exclusion Order can be either a General Exclusion Order or a Limited Exclusion Order. A General Exclusion Order directs Customs to "exclude" from entry into the United States all infringing articles regardless of the origin or manufacturer, while a Limited Exclusion Order excludes only those infringing articles from the Respondent. ITC Exclusion Orders may have two advantages over the injunctive relief that is available in federal district court proceedings. First, Exclusion Orders will generally be obtained quicker in an ITC proceeding since permanent Exclusion Orders can be issued within 12–18 months under strict ITC timetables, while a federal district court case can last 3–4 years before any permanent injunctive relief is available. Second, ITC General Exclusion Orders cover all infringing articles, including those imported from unknown sources, while injunctive remedies in federal district court proceedings bind the opposing parties only. Cease and Desist Orders, the second ITC remedy, direct Respondents to stop selling infringing articles in the United States. Cease and Desist Orders are available under the same rigid ITC deadline schedule and, as such, are likely to be imposed faster than any similar relief in federal district court. The Tariff Act does not provide for any money damages to the Complainant under ITC 337 actions, but civil fines may be imposed for violation of ITC-issued Cease and Desist Orders. The combination of ITC Exclusion and Cease and Desist Orders can be powerful tools to protect intellectual property rights.

Customs is empowered under the Tariff Act to enforce Exclusion or Cease and Desist Orders issued by the ITC as a result of a 337 Investigation. Customs, however, has other tools available to assist companies in diligently defending their intellectual property rights. Specifically, Customs has regulations that permit the recordation of registered trademarks, trade names and copyrights. Although recordation with Customs does not provide the registered trademark, trade name, or copyright owner with any additional rights under intellectual property law, this procedure does provide additional avenues for protection. As such, the recordation procedure makes it easier for Customs to intercept and seize counterfeit products, and even allows for a means for Customs to provide samples of seized suspect merchandise to the rightful registered trademark, trade name, or copyright owner, for examination, inspection, and testing. Furthermore, the recordation procedure may alert the rightful intellectual property right holder, and Customs, to a problem in the importation of "counterfeit" or "gray market" goods that might otherwise go undetected. Customs law and regulation allows for the seizure, forfeiture, and destruction of infringing merchandise identified through the recordation procedure and provides for the imposition of civil fines based on the value of the infringing merchandise. Customs also has the authority to refer detected intellectual property rights violations to other federal agencies for criminal prosecution, if warranted.

As briefly summarized above, the International Trade Commission and the U.S. Customs Service provide additional avenues of defense and relief in the case of intellectual property infringement. In some cases, the international trade remedies afforded by these agencies of the U.S. government, may provide important information in the enforcement of intellectual property rights and may also provide expedient remedies to effectively stop infringement from overseas sources.

This article is presented for informational purposes only and is not intended to constitute legal advice.