Section 337 investigations at the US International Trade Commission (ITC or Commission) almost always involve at least some non-US-based companies. Because the ITC exercises in rem jurisdiction over accused imports, complainants can effectively reach many foreign manufacturers and distributors that otherwise might be beyond the personal jurisdiction of a US federal district court. The ITC’s in rem jurisdiction also makes it easier to take discovery of foreign respondents which are required to cooperate in Section 337 investigations or risk serious adverse consequences. In addition, approximately 30% of complainants at the ITC are foreign entities. Foreign companies with US manufacturing facilities, as well as companies whose operations are not primarily based in the United States but whose revenue is driven primarily by US-based research and development or patent licensing, can qualify as domestic industries and thereby invoke Section 337. A recent decision in Certain Sintered Rare Earth Magnets, Methods of Making Same and Products Containing Same (Certain Sintered Rare Earth Magnets), Inv. No. 337-TA-855, illustrates some of the issues that can arise when a foreign entity is a litigant at the ITC.
In Certain Sintered Rare Earth Magnets, 14 respondents moved to compel complainants Hitachi Metals, Ltd. and Hitachi Metals North Carolina (collectively, Hitachi Metals) to provide their employee inventors and corporate designees for depositions in the United States or, alternatively, to pay for all costs and fees associated with holding depositions in Japan. The respondents argued that holding depositions in Japan would cause them to suffer unreasonable hardship and would prejudice respondents because all of their attorneys would not be able to participate in the depositions. They noted that the United States-Japan Bilateral Consular Convention of 1963 requires that all depositions conducted in Japan by American attorneys must be held at the US Consulate in Osaka or the US Embassy in Tokyo. The largest room available at either location can hold a maximum of 15 people. All the attorneys for the investigation’s 29 named respondents could not be in the deposition room due to the small room sizes. Further, respondents noted that the Consular Convention also prohibits participation in the deposition by telephone or video conference.
In opposition, Hitachi Metals first noted that the employees it offered for deposition reside and work in Japan and that Japan would be the most convenient location for those witnesses. Hitachi Metals argued that “the procedural requirements for depositions in Japan do not constitute the ‘hardship or unusual circumstances’ required to depart from the Commission’s practice of holding depositions at a convenient location for the witness.” Hitachi Metals stated that Administrative Law Judges (ALJ) typically compel Japanese witnesses to be deposed in the United States only when there is insufficient time to comply with the Japanese procedural requirements before the deadlines given in the investigation’s procedural schedule. Hitachi Metals asserted that there was ample time to complete the procedural steps necessary to depose the witnesses in Japan before the procedural schedule’s deadlines. Further, Hitachi Metals claimed that the respondents failed to explain how their interests diverge to the extent that they need to be represented by separate counsel at the depositions.
The Commission Investigative Staff (Staff) also opposed the motion and asserted that the respondents “failed to make the requisite showing of hardship or unusual circumstances.” The Staff found respondents’ concern with being represented by other counsel to be disingenuous given that many respondents share counsel or had decided not to send an attorney to Japan to participate in the depositions.
ALJ Bullock held that the parties are to hold depositions in a mutually agreeable location outside of Japan because neither room at the US Consulate or the US Embassy can accommodate all the people who are entitled to attend the depositions. The ALJ’s Order is available online. ALJ Bullock determined that all respondents have a right to have an attorney present at the depositions, and the space constraints coupled with the prohibition against telephone and video conference would prevent the respondents from exercising that right. Accordingly, ALJ Bullock granted-in-part respondents’ motion, but denied the motion with respect to respondents’ requests for costs and fees.
- Parties should be prepared to proceed with international discovery as early as possible, particularly if the discovery must be pursued through the Hague Convention or a similar treaty for international judicial assistance. Effective use of interrogatories, document requests, and 30(b)(6) depositions will assist the parties in identifying key documents, individuals, and third parties that may present international discovery problems. Acting early also provides the parties with more time for follow-up or to manage potential translation issues.
- While ALJs expect the parties to work together to resolve issues, parties should raise discovery problems with the ALJ early in the investigation if they cannot be negotiated with opposing counsel.
- Coordination among co-respondents is critical to avoid inconsistent positions on international discovery issues.
Below please find other examples of international discovery decisions issued in Section 337 proceedings:
- Inv. No. 337-TA-380, Certain Agricultural Tractors Under 50-Power Takeoff Horsepower, Order No. 23 – Complainants moved to compel certain respondents to appear at depositions in the United States. Respondents argued that since they had answered complainants’ interrogatories and produced documents, no further discovery was necessary. Respondents also asserted that the witnesses were located in Japan, and it would be very costly to produce the witnesses in the United States. ALJ Luckern granted complainants’ motion, finding it unlikely that the depositions could take place in Japan before the end of fact discovery.
The ALJ’s Order is available online.
- Inv. No. 337-TA-692, Certain Ceramic Capacitors and Prods. Containing the Same, Order No. 12 – Respondents moved to compel complainants to provide their Japanese employees for deposition outside of Japan, preferably in the United States. Complainants argued in opposition that depositions could be conducted most efficiently if they were held near the corporation’s headquarters so that the witness could obtain and review documents and consult with colleagues, if necessary. ALJ Gildea granted respondents’ motion and held that complainants chose to assert their patent rights in the United States and that the parties would not be able to complete depositions in Japan before the deadline for initial expert reports.
The ALJ’s Order is available online.
- Inv. No. 337-TA-855, Certain Sintered Rare Earth Magnets, Methods of Making Same, and Products Containing Same, Order Nos. 81 & 82 – Complainants filed a motion to compel respondent Maxon Precision Motors, Inc. to produce documents from Maxon Motor AG, a Swiss company, and to make a Maxon Motor AG employee available for deposition. Additionally, complainants filed a second motion seeking approval of a request for international judicial assistance pursuant to the Hague Convention in procuring the evidence from Maxon Motor AG. In response, the Swiss Ambassador noted that Switzerland has strict laws governing the collection of evidence and requested that the ALJ require the use of international judicial assistance via the Hague Convention. Based upon the arguments of the Swiss Ambassador, ALJ Bullock granted complainants’ motion for international judicial assistance and, accordingly, denied complainants’ motion to compel.