Intellectual Property Rights Protection and Enforcement: Section 337 of the Tariff Act of 1930

Intellectual Property Rights Protection and
Enforcement: Section 337 of the
Tariff Act of 1930
Shayerah Ilias
Analyst in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
Summary
Section 337 of the Tariff Act of 1930 allows U.S. companies to protect themselves
from imports that infringe intellectual property rights. The U.S. International Trade
Commission (ITC) adjudicates complaints filed by U.S. companies alleging Section 337
violations. Primary remedies under Section 337 include exclusion orders and cease and
desist orders. In recent years, there has been an increase in the number of Section 337
proceedings or actions. Members of Congress have expressed concern about the length
of time for completion of Section 337 investigations and the effectiveness of
enforcement of exclusion orders. This report will be updated as events warrant.
Section 337 of the Tariff Act of 1930
Section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) is the primary option
available to U.S. companies to protect themselves from imports into the United States of
goods made by foreign companies that infringe U.S. intellectual property rights (IPRs),
such as patents, trademarks, and copyrights.¹ The U.S. International Trade Commission
(ITC) administers Section 337 investigations. Since 2001, over 90% of unfair
competition acts asserted under Section 337 have involved patent infringement. These
cases tend to be complex and require adjudication by the ITC.² In the case of most
copyrights and trademarks, the CBP is empowered to make on-the-spot determinations
of IPR infringement.³

¹ For more information on IPR protection and enforcement, see CRS Report RL34292,
Intellectual Property Rights and International Trade, by Shayerah Ilias and Ian F. Fergusson.
² Telephone conversation with ITC official, March 19, 2008.
³ 19 U.S.C, § 156; 19 U.S.C. §1595a, and 19 C.F.R. §133.42.

Requirements for Filing a Section 337 Complaint
In general, U.S. companies must fulfill three requirements in order to assert unfair
competition under Section 337. First, there must be an importation or a sale for, sale
after, or potential future importation of the infringing product into the United States. It is
not necessary for the imports to be in commercial, or mass, quantities. Second, an unfair
act of competition relating to the imported good must occur, i.e., an infringement of a
valid U.S. patent, copyright, or trademark. Third, a domestic company must be engaged
in sufficient domestic activity, such as investment in plant and equipment or employment
of labor and capital, in the United States related to the imported product in question. U.S.
citizenship is not necessary to meet this third requirement.⁴
Standard Section 337 ITC Investigations
Investigation Process. As shown in Table 1, Section 337 ITC investigations
involve multiple steps that take place over the course of many months. The ITC issues
“target dates” for identifying when the ITC proceedings should be finished (i.e., the Final
Determination is issued). For cases with target dates of 15 months or less, the Initial
Determination must be issued at least three months before the target date.⁵ For more
complex cases with longer target dates, the Initial Determination must be issued at a
minimum of four months before the target date. Investigation periods have increased over
time. Prior to 2006, the average length for investigations (in which a final decision was
reached) was less than 15 months. In FY2007, the average length increased to 16.6
months; the shortest completion time was eight months and the longest was 23.5 months.⁶
Table 1. Summary of Section 337 Investigation Process
ActionTarget date of 15Target date greater
months or lessthan 15 months
^C^o^m^p^l^aⁱⁿ^an^t^fⁱ^l^e^s^S^ectⁱ^oⁿ^{337 cas}^e^S^t^a^rt^S^t^art
^Decisⁱ^on^{to in}^s^titu^{te Section}^{337 cas}^e^W^ith^{30 day}^s^W^ithⁱⁿ^{30 day}^s
^A^ssi^gnm^eⁿ^t^o^f^c^a^s^e^M^a^xⁱ^m^um¹²^m^o^nt^{hs (}ⁱ^.^e^.^,^Iⁿ^{itial Deter}^mⁱⁿ^atioⁿ^m^u^st
^m^u^s^t^{be is}^s^u^{ed at leas}^{t th}^ree^{be is}^s^u^{ed at leas}^{t f}^o^u^r
^m^o^nt^{hs b}^e^fo^r^e^t^a^r^g^e^t^d^a^t^e⁾^m^o^nt^{hs b}^e^fo^r^e^t^a^r^g^e^t^d^a^t^e^Ev^id^en^tiar^y^h^earⁱⁿ^g
^Iⁿ^{itial Deter}^mⁱⁿ^atioⁿ
^Fin^a^{l Deter}^mⁱⁿ^atioⁿ^I^ssu^ed^b^y^tar^g^{et d}^a^te^I^ssu^ed^b^y^tar^g^{et d}^a^te
^Presⁱ^d^en^tⁱ^a^l^R^e^vⁱ^ew^{60 day}^s^{60 day}^s
^P^o^s^sⁱ^{ble A}^ppeals^P^r^oces^s^V^aries^V^aries

⁴ Thus, foreign companies with sufficient U.S. activity are able to file Section 337 complaints.
⁵ For instance, in a case with a target date of twelve months, the Initial Determination must be
issued nine months before the target date.
⁶ Office of Unfair Import Investigations, reported in ITC, “Performance and Accountability
Report: FY2007.”

Filing a Section 337 Complaint. Any company seeking relief under Section 337
must prepare a detailed complaint with information supporting the claims with the ITC,
including background information on the intellectual property asserted in the claim and
evidence of infringement.⁷
Institution and Assignment of Case. Upon receiving a complaint, the ITC has
thirty days to determine whether or not to initiate a Section 337 investigation. If an
investigation is instituted, the ITC assigns the case to an Administrative Law Judge (ALJ),
who will oversee and conduct the investigation. The ITC also assigns an investigative
attorney from its Office of Unfair Import Investigations (OUII), who provides his or her
views to the ALJ regarding whether or not a Section 337 violation has taken place. The
attorney also represents the public interest during the investigation. A target date for
completion of the investigation also will be set.
Evidentiary Hearing. The ALJ will conduct a formal evidentiary hearing,
typically lasting one to two weeks, generally within seven to ten months of the filing.
Initial Determination of Case. The ALJ then will issue a preliminary ruling (an
“Initial Determination”) determining whether or not a Section 337 violation has occurred
and proposing remedies (discussed in next section) if violations are found. The ALJ
decision will be based on the merits of the case. For instance, in a Section 337 case
involving U.S. patents, the ALJ will evaluate the case based on patent infringement
issues. For cases in which the target date is 15 months or less, the Initial Determination
must be issued at least three months before the target date. For longer target dates, the
Initial Determination must be issued at least four months before the target date.
Final Determination of Case. Within 45 days of the Initial Determination, the
ITC Commissioners decide whether or not to review the Initial Determination. The
Commissioners may decide to adopt the ruling. Alternately, they may elect to change all
or some parts of the Initial Determination, or to completely reject or remand it. Generally,
within three months of the Initial Determination, the ITC Commissioners issue a “Final
Determination,” which takes into account public interest considerations, such as the
impact on the public’s health and safety or on the ability to satisfy U.S. market demands.
Settlement. Some cases before the ITC are settled before a final decision is made.
Complainants (typically the patent holder) and respondents (the alleged infringer) may
move to terminate an investigation. For instance, they may agree to cross-licensing or to
resolve the dispute through arbitration.
Review of Determination. The Final Determination is sent to the President for
review based on national security considerations. This decision is enforceable within 60
days if no actions are taken by the President. The President rarely has overturned the Final
Determination. During the 60 day review process, respondents who continue activities
ruled by the ITC to be in violation of Section 337 do so under bond.

⁷ For more information on filing a Section 337, see ITC, “Section 337 Investigations: Answers
to Frequently Asked Questions,” Publication No. 3708, July 2004. 19 C.F.R. Part 210 discusses
the ITC investigation process, time frame, and parties involved.

If the Final Determination is not disapproved by the President, respondents engaging
in such activities stand to lose a significant amount of money. In some cases, the bond
is 100% of the total value of the imported products. Thus, while remedies are not
enforceable until the conclusion of the 60 day review period, the bond frequently serves
as a deterrent from engaging in the Section 337 violating activities. This is especially the
case because the President rarely disapproves of ITC Final Determinations.
Appeals. Within the 60 day Presidential review period, the respondent (or anyone
adversely affected by the Final Determination) can file an appeal of the decision to the
U.S. Court of Appeals for the Federal Circuit. Depending on the circumstances, the final
determination may or may not be enforceable while the appeal is being heard.
Amendments to Section 337. In the original enactment of Section 337,
Congress stipulated that the ITC complete investigations within 15 months (from
institution of a case to Final Determination). Section 337 was later amended to become
compliant with the General Agreement on Tariffs and Trade (GATT), whose national
treatment provision requires that member states not treat foreign member states’ nationals
any less favorably than their own nationals. There was concern that Section 337, as
initially enacted, may not allow foreign companies to defend themselves adequately
because the ITC adjudication process generally takes place at a faster pace than litigation
in federal district courts. The ITC is now required by statute to complete investigations
“at the earliest practicable time.”
Trends in Section 337 Cases. Section 337 cases cover a range of products, with
about one-third involving electronics, telecommunications, computers, semiconductors.
Other cases involve products such as chemical, biotechnological, pharmaceutical,
mechanical, and consumer goods.
Since 2002, there has been a general uptick in the number of Section 337 cases. In
FY2007, the number of new cases was nearly 60% more than the number of new cases
started in FY2003. There also were close to 80% more active cases in FY2007 than there⁸
were four years ago. The overall rise in international IPR infringement has contributed
to the increase in Section 337 activity. Additionally, there has been increased publicity⁹
of the ITC as an IPR border enforcement entity, partly due to recent high-profile rulings.
Moreover, there is greater corporate awareness of the potential benefits of filing a Section

337 case rather than engaging in litigation through U.S. district courts (see next section).

Alternative to Section 337. U.S. companies also may bring lawsuits against
foreign entities in the venue of U.S. district courts to challenge the entry of infringing
products into the United States. Federal district courts, unlike the ITC, can award
monetary damages to the IPR holder and issue injunctions against infringers. If the
adjudicated infringer violates the injunction by continuing to import the infringing
product, it may face sanctions if the rights holder claims the infringer has acted in
contempt of court. However, the federal courts do not possess direct authority to block

⁸ Office of Unfair Import Investigations, reported in ITC, “Performance and Accountability
Report: FY2007,” p. 71.
⁹ For instance, in the 2007 Certain Baseband Processor Chips (337-TA-543) case, Broadcom
obtained a limited exclusion order prohibiting Qualcomm from importing infringing chips.

imports, as the ability to issue exclusion orders enforced by the CBP rests with the ITC.
If the adjudicated infringer lacks assets in the United States, enforcing a U.S. court’s
orders may prove difficult.¹⁰ In addition, litigation in U.S. district courts tends to be more
costly and to take longer to yield decisions than the Section 337 venue.
Section 337 Remedies and Enforcement
The ITC grants two primary remedies to U.S. companies: exclusion orders and cease
and desist orders. In FY2006, the ITC completed twelve Section 337 investigations,¹¹
issuing three general exclusion orders, five limited exclusion orders, and two cease and
desist orders.¹² The ITC may not issue monetary damages to U.S. companies.
Exclusion Orders. Exclusion orders prohibit the importation of the infringing
good into the United States. They are effective for as long as the patent is valid. Limited
exclusion orders, the most commonly issued type of exclusion order, prohibit the
importation of only those infringing goods originating from the parties named in the ITC
investigation. In contrast, general exclusion orders prohibit the importation of all goods
of the kind determined to be infringing, irrespective of the source of the infringing good.
Because general exclusion orders are broad in their scope, they may disrupt international
trade significantly. In general, they are issued only when circumvention of a limited
exclusion order would be likely or it would be difficult to identify all infringing parties.
The U.S. Customs and Border Protection (CBP) enforces exclusion orders.
Cease and Desist Orders. Cease and desist orders require the termination of
infringing-related activities, such as selling infringing articles previously imported that
are currently in domestic inventories. These orders frequently are issued in conjunction
with exclusion orders, particularly in situations where the infringing goods are imported
in commercial quantities. Cease and desist orders are enforced by the ITC, which is
authorized to impose civil penalties on U.S. importers that violate cease and desist orders.¹³
Penalties per day may be as high as $100,000 or double the value of the goods involved.
Time Length for Enforcement. The time that it takes for remedies to become
enforceable may vary because of differences in target dates and the possibility of appeals
by respondents. For example, for a standard investigation with a 15 month target date,
from the time that a company files a complaint, the maximum time that it would take for
an exclusion order to be enforceable would be about 18 months.
Preliminary Relief
U.S. companies may request that the ITC conduct expedited temporary relief
proceedings and issue a temporary exclusion or cease and desist order while the regular

¹⁰ Telephone conversation with USITC official, March 19, 2008.
¹¹ ITC, “Performance and Accountability Report: Fiscal Year 2007.”
¹² ITC, “Year in Review: Fiscal Year 2006.”
¹³ Steven D. Hemminger, “Section 337 of the Tariff Act: Global IP Protection in Our Global
Economy?,” Intellectual Property & Technology Law Journal, Vol. 19, No. 4, April 2007.

investigation takes place. For preliminary relief, U.S. companies must provide
significantly more evidence prior to the hearing than for a standard case. The ITC’s
decision to grant preliminary injunctions is based on: the likelihood of success for the
complainant’s case and the extent to which the domestic industry, respondents, and the
public interest would be adversely affected if a preliminary injunction was not issued.
For temporary relief proceedings, a Final Determination (following an Initial
Determination by the ALJ) is granted 90 days after institution for standard cases. For
more complex cases, a Final Determination is granted 150 days after institution of the
case. In cases where the complainant receives a temporary remedy, the complainant is
required to put up a bond. Following the preliminary ruling, the full Section 337 standard
case will proceed. If the preliminary injunction is not upheld in the regular investigation,
the complainant may lose the bond money.
Issues for Congress
Some members of Congress have expressed concern that the Section 337 venue does
not provide immediate relief to U.S. companies facing unfair import competition.
Proponents of a faster process have argued that the U.S. economy and public health and
safety may be adversely affected by the continued importation of IPR-infringing goods
while Section 337 investigations take place.¹⁴ ITC proponents maintain that the length
of time for investigation has risen because of increased Section 337 activity, which has
contributed to heavier dockets for ALJs and investigation backlogs. In addition, they
indicate that recent cases tend to involve more technologically complex products and that
filings increasingly name multiple respondents, whereas previous cases generally named
one respondent.¹⁵ Others point out that ITC investigations are generally faster than
litigation in federal district courts, where proceedings may take several years.
Concerns also have been raised about CBP enforcement of exclusion orders. A
recent Government Accountability Office (GAO) report notes that U.S. companies spend
millions of dollars to file Section 337 complaints before the ITC, but that enforcement of
exclusion orders is limited because of a lack of resources. As of July 2007, CBP reported
that 66 exclusion orders were in effect. The number of exclusion order exams carried out
by CBP has declined since FY2002. While U.S. capacity to carry out IPR enforcement
has increased, according to GAO, challenges remain because IPR enforcement frequently
may not be a top CBP priority and there may not be adequate resources targeted to this
effort.¹⁶

¹⁴ Ford, Greg P. Brown, Testimony before Senate Finance Committee, March 13, 2008.
¹⁵ Telephone conversation with ITC official, April 24, 2008.
¹⁶ GAO-08-157, “Intellectual Property: Federal Enforcement Has Generally Increased, but
Assessing Performance Could Strengthen Law Enforcement Efforts,” March 2008.