ITC Is a Powerful Tool for Rights Holders to Protect IP at Border

The US built a virtual wall at the border in the 1930s to protect the economy from products and materials containing US intellectual property from entering the country illegally. The wall—the International Trade Commission—is a tool that recently blocked import of a popular consumer device, the Apple Watch.

Many savvy companies that compete with international imports are increasingly eyeing this US forum as a way to block unfairly imported products that infringe US IP.

The ITC is a fast-paced forum—it takes about 12 months to make an initial decision compared to three years for average district court litigation. The ITC can’t issue monetary damages awards for infringement. But it can issue injunction-like remedies, exclusion orders, and cease and desist orders.

The ITC is a powerful tool for US rights holders to protect their IP at the border and, in turn, can help strengthen the economy.

Litigation is an economically inefficient mechanism. But it’s sometimes necessary to protect rights. IP rights holders can use the ITC to stop articles imported into the US that infringe IP. Federal statute 19 U.S.C. § 1337 (Section 337) of the Tariff Act of 1930 governs the ITC.

The six commissioners who lead the ITC are appointed by the president and confirmed by the Senate to nine-year terms. In addition to the private party adversaries, the Office of Unfair Import Investigations and its staff attorneys may participate to represent the public interest.

Section 337 expressly encompasses infringement of US intellectual property, including patents, copyrights, trademarks, and certain other statutory IP. The statute also extends to “unfair methods of competition and unfair acts,” such as trade-secret misappropriation and non-IP claims. Most Section 337 investigations are patent infringement disputes.

In ITC proceedings, proof of infringement or misappropriation must be made. The right’s holder must also prove an article was imported, and that a domestic industry has been or is being established through “significant investment in plant and equipment, significant investment of labor or capital, or a substantial investment in engineering, research and development or licensing.” For trade secrets and other non-statutory IP, the right’s holder typically must also prove real or threatened injury to its domestic industry.

Administrative law judges preside as the trial court, and each of the current six ALJs has their own practices and procedures. The ALJs are experienced patent trial judges and their determinations may be reviewed by the commission, who may affirm, modify, reverse, or remand all or part of the ALJ’s determination(s).

Customs and Border Protection enforces ITC orders at US ports of entry. The ITC may also consider public interest factors to narrow or refrain from entering an exclusion order or CDO order. Such factors include “public health and welfare, competitive conditions,” as well as “production of like or directly competitive articles in the US, and US consumers.”

If the commission allows the issuance of remedy, the president may review the decision. The president is authorized to disapprove the ITC’s final determination within 60 days for any “policy reasons.” The final ITC decision may be reviewed by the Court of Appeals for the Federal Circuit and, ultimately, the US Supreme Court.

ITC Power

While legislative reforms have been proposed to modernize the ITC, it’s an impactful forum for US rights holders without further amendments.

And, with the Supreme Court’s decision in eBay v. MercExchange, the bar to securing an injunction to ban infringing articles is higher. The ITC has seen steady increase in investigations related to IP rights.

In 2022, the ITC logged its highest number of active investigations in the last two decades at 142, and in 2006, there were only 70 active investigations.

The breadth of techologies before the ITC has also diversified. This is illustrated by recent notices on technologies ranging from trending weight loss products such as Mounjaro to fitness devices like Peloton to marine air conditioning systems.

Securing IP

The ITC’s superior ability to secure IP at the border is shown in one investigation it opened based on a complaint filed on behalf of Masimo Corporation and Cercacor Laboratories, Inc. In that investigation, the ITC imposed a strong remedy for infringement against Apple and one of its flagship products, the Apple Watch.

Apple disputed the allegations with respect to infringement and domestic industry and asserted affirmative defenses of invalidity and unenforceability.

The investigation moved fast. A hearing was held about 12 months after the investigation began. Other typical ITC investigation activity also happened, including fact and expert discovery, a technology tutorial, and a claim construction hearing, which preceded the evidentiary. Following post-hearing briefing, the final determination occurred about 17 months after institution. The ALJ and commission found that Apple had committed an unfair act (patent infringement).

The ITC issued a cease-and-desist order and exclusion order against certain Apple Watches found to infringe Masimo’s patents. In December 2023, President Joe Biden decided against setting aside the order. The case is on appeal.

This example and others before it show a fast time to resolution and highly experienced judges. Companies and their in-house counsel should appreciate that the ITC is a model tool to block unfairly imported products that infringe US IP.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Scott McBride is shareholder at McAndrews, Held & Malloy, focusing on patent and complex technology cases in federal courts.

Will Rao is a patent lawyer at McAndrews, Held & Malloy, focused on all facets of IP, including ITC litigation in patents and trade secrets.

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