1 SECTION 337 INVESTIGATIONS Managing Intellectual Property IP In China April 30, 2013 New York, New York

2 Summary of Section 337 Investigations The U.S. International Trade Commission conducts investigations under section 337 of the Tariff Act of 1930 Section 337 counteracts any unfair act in the importation of goods in the U.S., typically intellectual property infringement ITC makes substantive determinations of patent infringement under section 337

3 Summary of Section 337 Investigations The complainant must have a domestic industry if the alleged violation involves a patent, trademark, copyright, mask work, or design; the complainant must establish injury for other types of unfair acts The unfair act -- typically patent infringement -- must involve an imported article The remedy consists of an exclusion order against imports of infringing or unfairly traded articles and a cease and desist order against named respondents--in other words the infringing imported article is totally knocked out of the market The remedy must be in the “public interest”--though this is not a major issue thus far

4 Section Substance - Prohibited Unfair Acts Section 337 counteracts any unfair act in the importation of goods in the U.S., including ― Acts that infringe U.S. patents, trademarks, copyrights, mask works, or designs ― Misappropriation of trade secrets ― Gray market goods ― Antitrust violations ― Possibly other kinds of unfair acts

5 Section 337 Investigations -- Substance -- Domestic Industry Domestic industry with respect to articles protected by a patent can be established by ― Significant investments in plant and equipment ― Significant employment of labor or capital ― Substantial investments in the exploitation of the patent through engineering, research and development, or licensing Sales and marketing alone do not constitute a domestic industry

6 Section Substance -- Remedies The ITC can issue General Exclusion Orders, Limited Exclusion Orders, and Cease and Desist Orders General Exclusion Orders direct U.S. Customs to exclude all infringing articles, even those of importers who are not respondents in the investigation--can be a very broad and helpful remedy The ITC can issue a General Exclusion Order if (a) it is necessary to prevent circumvention of an exclusion order limited to products of named persons; or (b) there is a pattern of violation and it is difficult to identify the source of infringing products

7 Section Substance -- Remedies, cont’d Limited Exclusion Orders direct U.S. Customs to exclude the infringing articles of named respondents in the investigation Cease and desist orders prohibit named respondents from importing, selling, marketing, or advertising infringing or unfairly traded articles--generally deals with conduct within the U.S. market rather than at the border No damages are available under section though many cases settle for significant payments

8 Section Substance -- Public Interest The Commission will not issue an exclusion order that is contrary to the public interest Under the public interest test, the Commission considers the effect of the exclusion order on ― the public health and welfare, ― competitive conditions in the United States economy, ― the production of like or directly competitive articles in the United States, and ― United States consumers

9 Section Procedure Investigations are conducted by Administrative Law Judges, who are experts in patent law, which are reviewed by the Commission Discovery is similar to discovery in the Federal Courts The ITC has nationwide jurisdiction and can compel international discovery Investigations are typically completed in 16 months Appeal is to the U.S. Court of Appeals for the Federal Circuit Exclusion orders are subject to presidential review within 60 days of the final Commission decision

10 Section 337- Enforcement Customs enforces ITC exclusion orders; it is not authorized to make substantive determinations of patent infringement Customs has seizure and forfeiture authority Parties frequently try to “design around” the infringed patent to avoid the exclusion order Customs can issue ruling letters on the design around claims The Commission can undertake enforcement proceedings The Commission can issue advisory opinions on the scope of its exclusion orders

11 For Further Information, contact Jeffrey M. Telep King & Spalding LLP 1700 Pennsylvania Ave., N.W. Washington, D.C (202)