Relief Against Section 337 Defaulters Not So Automatic
Section 337 investigations at the International Trade Commission frequently involve a number of small foreign respondents, and when they do, many will default. In Certain Digital Photo Frames and Image Display Devices and Components Thereof (Inv. 337-807), the Commission recently issued a notice requiring Complainant Technology Properties Limited (TPL) to provide more detail regarding its request for relief against a defaulting foreign respondent.
Background: The complaint named 20 respondents including one named Aiptek International, Inc., of Taiwan. Aiptek failed to respond to the complaint and notice of investigation, and on December 22, 2011, the presiding ALJ found Aiptek in default. On January 9, 2012, the Commission issued a notice that it was not reviewing this decision.
On March 8, 2012, the complainant filed a declaration requesting immediate relief against Aiptek. On April 9, the Commission issued a notice requesting briefing on what should be the appropriate remedy, whether there were public interest concerns, and how much the bond imposed on imports of Aiptek’s products during the presidential review period should be. TPL submitted responsive briefing on April 23; no other submissions were received (OUII is not participating in this investigation).
Request for relief: TPL requested a limited exclusion order and a cease and desist order as to Aiptek, arguing with respect to the latter that the Commission should infer the presence of commercially significant inventory (the presence of which is required before the Commission will issue a C&D). With respect to bonding, complainant argued that the statute referred only to imports under bond being allowed under subsection 1337(f) and since the exclusion order as to defaulting Aiptek would be under subsection 1337(g), no imports under bond should be allowed. Finally, TPL asserted there were no public interest concerns with excluding Aiptek’s products.
Commission’s questions: The Commission basically said “not so fast” and has asked TPL (and any other interested party) to answer the following questions:
In light of the fact that the nondefaulting respondents remaining in the investigation are contesting validity and/or enforceability of the patents asserted against Aiptek, what (if any) special circumstances warrant issuing an exclusion order against Aiptek?
What evidence is there that Aiptek maintains a commercially significant inventory in the US or otherwise has domestic ties sufficient to warrant imposition of a C&D as to a foreign respondent?
What evidence does the complainant rely on to satisfy its burden to show a particular nonzero bond is warranted?
Question 1 doesn’t look particularly new but shows that the Commission is not inclined to issue exclusion orders that it may have to rescind later should the patent be proven invalid or unenforceable. When the Commission issued its current rules, it indicated that it wanted to retain flexibility with respect to when to grant relief to defaulters. “Generally there are sound reasons for waiting until the end of the investigation before issuing limited relief against defaulting respondents.” 57 Fed. Reg. 52830, 52837 (November 5, 1992).
Question 2 is interesting in that the Commission is indicating it will not follow the practice it used in Agricultural Tractors (Inv. 337-486; which TPL argued it should follow), where it said it was inferring that a defaulting respondent had a commercially significant inventory. A probable key reason is that the defaulter in Tractors was domestic but Aiptek is foreign. The Commission has always been sensitive about issuing cease and desist orders that arguably reach activities outside of US territory and would issue such an order to a foreign respondent only as to that respondent’s activities in the US.
Question 3 doesn’t really stem from TPL’s request. TPL didn’t argue for a particular bond; it said imports under bond shouldn’t be allowed at all. It appears that the Commission understood TPL’s request for a 100% bond in the event the Commission disagreed with TPL’s notion that no imports under bond should be allowed (and it appears it has).
Submissions are due August 10. The Commission’s decision will follow.
Written by: Thomas “Monty” Fusco, Principal | Washington, DC | email@example.com.