On November 18, 2011, new rules relating to public interest determinations in Section 337 investigations at the International Trade Commission ("ITC") will go into effect. 76 Fed. Reg. 64803 (Oct. 19, 2011). Historically, public interest issues have been a mere afterthought in most Section 337 investigations. With the new rules, however, the ITC has put in place specific procedures to "gather more information on public interest issues arising from [Section 337] complaints." The new rules will make it easier for the ITC to collect, and thereby consider, comments from the general public, in addition to comments from the parties, on the public interest aspects of a Section 337 investigation.

The New Rules and What They Mean for You

Section 337 of the Tariff Act prohibits unfair methods of competition in the importation of goods into the United States. Although the majority of Section 337 investigations involve the importation of goods that allegedly infringe U.S. patents, the ITC will investigate any unfair method of competition, including trade secret misappropriation. Upon finding a violation of Section 337, the ITC will enter a remedy (generally, an exclusion order prohibiting the importation of infringing goods), unless doing so is against the public interest.

Historically, the ITC typically would consider the effect of a proposed remedy on American consumers, i.e., "the public interest," only after it had found a violation of Section 337. The Administrative Law Judge in a Section 337 investigation would issue an Initial Determination, including the proposed remedy. The Initial Determination would first be reviewed by Commissioners at the ITC, then by the President. Although rare, if either the ITC Commissioners or the President believed that an exclusion order or other proposed remedy was not in the public interest, the proposed remedy could be denied or modified.

Under the new rules, the ITC will now place greater emphasis on considering the effect that an exclusion order and/or cease and desist order will have on the public interest. Among other things, the new rules require the following:

  • Complainants must file a statement of public interest along with the complaint. The statement of public interest must address how the requested relief (i.e., an exclusion order and/or a cease and desist order) could affect "the public health and welfare in the United States, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, or United States customers." 76 Fed. Reg. 64803, 64808.
  • The ITC will solicit comments from the public, including proposed respondents, regarding public interest statements before investigations are instituted. Complainants will have the opportunity to reply to any comments addressing their public interest statements.
  • Respondents must file a statement of public interest in response to the statement of public interest filed by the complainant.
  • The ITC may order the judge presiding over the investigation to issue a recommended determination on the public interest, which would be based on the statements of public interest submitted by the parties and the comments submitted by the public.

Although the new rules are not intended to change the ITC's substantive consideration of public interest factors, the new rules likely will affect all stages of a Section 337 investigation. Respondents and other third parties must be prepared from the outset to address public interest concerns, even before the investigation is formally instituted. Complainants must be prepared to set forth how their requested relief will affect the public interest and combat arguments raised by respondents and other third parties. Based on the initial comments, the ITC likely will increase the number of investigations in which it requires recommended determinations on the public interest. As such, discovery efforts on the public interest will increase, and more focus will be on the public interest at the hearing and in the pre-hearing and post-hearing briefs.

In addition to the proposed respondents, anyone who may be affected by the results of a proposed investigation should consider commenting on the public interest issues raised by a complaint before an investigation is instituted and throughout the process. You may want to consult with attorneys who are experienced in ITC investigations and can assist you in monitoring requests for investigations relevant to your business and preparing comments addressing issues that may affect your business.