Section 337 Cases on the Rise

August 1, 2006
By: Matthew T. McGrath

The U.S. International Trade Commission (ITC) has become an increasingly popular forum for litigation involving intellectual property rights infringement by imported products.  Section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337, provides that when the ITC determines that an unfair act has occurred in connection with the importation or sale of an imported product, the ITC may order the exclusion of that product from the U.S. market.  This year, filings of Section 337 complaints before the ITC, will likely exceed the record for such cases in the past 5 years.  The ITC instituted 16 new investigations in fiscal year (FY) 2002, 21 cases in FY 2003, 27 cases each in FY 2004 and 2005.  As of August 1, 2006, the ITC had already instituted 21 new investigations for the year, with 8 cases pending institution (with 2 months left in the fiscal year).

For several reasons, it is anticipated that this number will only continue to rise over the next few years.   First, the ITC offers complainants a forum to seek expedited enforcement of patent rights, as opposed to the lengthier litigation schedules in most federal district courts.  Most Section 337 proceedings are scheduled by the ITC for final determination within 12 to 14 months after institution, with trials often occurring roughly six months after institution. 

Secondly, though the ITC lacks the power to award damages to patent holders, it is authorized to grant a form of injunctive relief – exclusion of the infringing merchandise from importation, enforced by the Bureau of Customs and Border Protection, or cease-and-desist orders prohibiting distribution of infringing U.S. inventories – which is considered very effective by IP rights owners.  Furthermore, the ITC’s four administrative law judges handle Section 337 cases exclusively, most of which are patent-based.  Investigations are conducted through evidentiary hearings, and the ALJ’s activities are limited to such proceedings.