Overview
The International Trade Commission (ITC) saw a notable increase in activity in the 2016 fiscal year (the ITC’s fiscal year ended September 30, 2016), with 79 complaints filed, 64 completed investigations, and 117 active investigations. These numbers represent a significant uptick from FY2015, in which 47 complaints were filed, 50 investigations were completed, and 88 investigations were begun. The increases in 2016 were 68%, 28%, and 33%, respectively.
Under 19 U.S.C. 1337 (Section 337), the importation of articles is unlawful if there are “[u]nfair methods of competition and unfair acts…the threat or effect of which is (i) to destroy or substantially injure an industry in the United States; (ii) to prevent the establishment of such an industry; or (iii) to restrain or monopolize trade and commerce in the United States.” While 97 of the 117 active investigations in 2016 relate to patent infringement, a variety of other unfair acts are also being litigated at the ITC including:
- Three (3) investigations related solely to trademark infringement;
- Three (3) investigations related to solely trade secret misappropriation;
- Ten (10) investigations related to a combination of patent, trademark, and/or copyright infringement, trade secret misappropriation and/or other unfair acts; and
- Four (4) investigations related to any of the above categories as well as unfair competition and/or false advertising.
We highlight three of these investigations below.
Carbon and Alloy Steel Products (Inv. No. 337-TA-1002) was instituted in June 2016 based on a complaint filed by U.S. Steel. U.S. Steel’s complaint alleges that a number of Chinese steel manufacturers and distributors have engaged in trade secret misappropriation, falsely designated the country of origin in order to avoid import duties imposed on certain Chinese steel products, and engaged in a pricing conspiracy in violation of US antitrust law. On November 14, 2016, the administrative law judge granted respondents’ motion to terminate U.S. Steel’s pricing claim for failure to adequately plead a cause of action under antitrust law. The commission is reviewing the judge’s decision and has indicated that it may hear argument on the issue in March 2017. On January 11, 2017, ALJ Lord terminated the false designation claim, again based in part of U.S. Steel’s failure to properly plead the requirements of such a violation. While the commission has not yet decided whether it will review this initial determination, the case proceeds as to U.S. Steel’s allegations of trade secret misappropriation.
In Passenger Vehicle Automotive Wheels (Inv. No. 337-TA-1006), Daimler AG’s complaint alleged infringement of 30 trademarks and 22 design patents related to passenger vehicle automotive wheels. The complaint further alleged false designation of origin and various forms of trademark infringement under both federal and common law. The investigation was instituted on June 17, 2016 against 11 respondents. A number of the respondents settled or agreed to consent orders, and on January 17, 2017, Daimler withdrew its complaint as to the three remaining respondents.
In June 2016, a group of pharmaceutical companies filed a complaint based on the importation of a potassium chloride drug that is not approved by the US Food and Drug Administration (FDA). In Certain Potassium Chloride Powder Products (Inv. No. 337-TA-1013), the complainants alleged that they had the only FDA-approved potassium chloride powder on the market, and the respondents unfairly competed with that drug with false and misleading packaging, marketing, promotion, distribution, and sale of the unapproved powder. The parties settled the investigation before the judge or commission determined whether such activities could constitute a violation of Section 337.
In short, 2016 was a very busy year at the ITC, and a number of investigations presented facts and issues different than those found in the typical patent infringement cases brought at the ITC. Where a company believes that a competitor is importing goods into the US by unfair acts or using unfair methods of competition, bringing a complaint at the ITC may be a powerful tool to combat such practices.
Thank you to Beau Goodrick for his assistance with this alert.
