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COMMENTS OF U.S. INTERNATIONAL TRADE COMMISSION TRIAL LAWYERS ASSOCIATION IN RESPONSE TO THE REQUEST FOR PUBLIC COMMENTS ON THE INTERAGENCY
REVIEW OF EXCLUSION ORDER ENFORCEMENT PROCESS
The U.S. International Trade Commission Trial Lawyers Association (“ITCTLA”) respectfully submits these comments in response to the request of the U.S. Intellectual Property Enforcement Coordinator (“IPEC”) for comments on the interagency review aimed at
strengthening the procedures and practices used during enforcement of exclusion orders issued by the U.S. International Trade Commission (“ITC” or “Commission”), 78 Fed. Reg. 37242 (June 20, 2013). The ITCTLA applauds IPEC’s initiation of the interagency review process and, for the reasons discussed in our comments, believes that improvements in the transparency, efficiency and fairness of the enforcement process are needed.
By way of background, the ITCTLA is an association of attorneys dedicated to improving the administration of Section 337 and informing attorneys, international trade officials and
legislators about practice before the ITC. A nonprofit, nonpartisan educational organization founded in 1984, the ITCTLA publishes a newsletter devoted to Section 337 developments, the Section 337 Reporter, develops educational programs featuring ITC Commissioners,
Administrative Law Judges (“ALJs”) and other trade and intellectual property officials, and maintains committees to present the views of Section 337 bar members to the ITC, Congress and the Executive Branch. The ITCTLA has offered testimony before Congressional committees and submissions to the Executive Branch to continue to ensure that Section 337 serves as an effective remedy to prevent importation of infringing goods.
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1. Please describe your, positive or negative, experience with the exclusion order enforcement processes.
Although ITCTLA members acknowledge that Customs enforcement efforts can be efficacious and efficient in most cases, members of the ITCTLA and their clients have experienced difficulty with the processes used to enforce exclusion orders issued by the ITC where the scope of exclusion orders is unclear with respect to design around or new products not specifically adjudicated by the ITC, including where the ITC’s scope of investigation is far broader than the product types actually adjudicated in a given investigation. In our view and from the perspective of complainants, respondents and third parties in these situations, the enforcement of exclusion orders is unpredictable. Part of this difficulty stems from the divided enforcement authority that exists between the ITC, which adjudicates Section 337 proceedings and issues broadly worded exclusion orders, and Customs and Border Protection (“Customs”), which initially enforces such orders. It is the experience of many ITCTLA members that currently there is often little communication between the ITC and Customs over the scope of exclusion orders despite the fact that the ITC has devoted over one year to adjudicating the Section 337 investigation that results in an exclusion order. This leaves both complainants and respondents uncertain as to what products may, rightly or wrongly, ultimately be excluded or granted entry by Customs.
The ITCTLA members are also concerned about the lack of transparency and the potential for unequal participation by parties in the enforcement processes used by Customs. One fundamental problem with the current enforcement system is that Customs relies on ex parte processes to make key determinations such as whether a new, nonadjudicated product or a
redesign is noninfringing and thus falls outside the scope of the exclusion order. In these situations, the complainant rightsholder is neither allowed to participate in the enforcement process, nor entitled to know from Customs of the existence of the alleged noninfringing new product or redesign. Conversely, in cases where Customs does communicate with complainants regarding the scope of an exclusion order, respondents are not entitled to any notice or
opportunity to participate.
Another example is that Customs prepares “instructions” to the ports of entry to describe the scope of what is being excluded. Despite the fact that these instructions are presumably critical to fair and complete enforcement of the ITC’s exclusion order, they are not shared with the parties to the investigation at any point in the enforcement process.
Although confidentiality concerns and the limited time allowed for submitting these comments do not permit the ITCTLA to describe every instance that illustrates the at times arbitrary and unpredictable nature of the current exclusion order enforcement process, we offer a few illustrations below.
In a number of recent post exclusion order cases, respondents have sought clearance for the importation of redesign products through a ruling letter from Customs, pursuant to 19 C.F.R. § 177. Under this regulatory scheme, Customs typically uses an ex parte process to determine whether redesigned models fall within the scope of the exclusion order. In such cases,
complainant rightsholders have requested, but been denied, an opportunity to be heard by
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the ruling letter until weeks after it issued, the rightsholder filed a complaint seeking injunctive relief at the U.S. Court of International Trade (“CIT”), arguing that the Customs decision to permit importation of the redesigned product was ultra vires. However, the CIT dismissed the complaint for lack of jurisdiction, precluding the rightsholder from challenging the ruling letter. In another very recent case filed just days ago in the U.S. District Court for the District of Columbia, the rightsholder sued Customs and the Department of Homeland Security asserting that an ex parte decision by Customs to permit importation of redesigned product after the issuance of an exclusion order was arbitrary and capricious and exceeded the agencies’ statutory authority.
In another scenario confirmed by several ITCTLA members, information contained in the “instructions” issued by Customs to the ports of entry may have been inaccurate. Customs reportedly includes in its instructions information to assist the ports with enforcement, such as a description of the infringing articles, a list of model numbers adjudicated to infringe, the
identities of ports of entry used for past importation, importers of record, Customs brokers, HTS numbers, and, if applicable, the identity of downstream products. Again, the parties are not allowed access to these instructions before or after they are issued to the ports and therefore cannot correct inaccuracies in the instructions. In several instances, ITCTLA members have had their clients report that infringing goods properly within the scope of exclusion orders were allowed entry, or goods that were clearly outside the scope of exclusion orders or were never accused of infringement were improperly interdicted.
Another example of an enforcement inconsistency on the part of Customs, corroborated by several ITCTLA members, is failure to properly enforce the bond requirement under Section 337. Pursuant to the statute,1 a respondent may continue to import articles found to infringe by the ITC during the 60-day Presidential review period by posting a single entry bond. However, the ports of entry do not collect these bonds until and unless Customs issues the field instructions for their collection. In numerous instances in the past, the instructions for collecting the required bond were not issued by Customs until much more than 30 days after the ITC issued its
exclusion order. This is not only a failure of effective enforcement of the exclusion order but it harms a complainant who has a right to seek forfeiture of the bond amount after the review period.2 In other cases, bonds were inappropriately required for products that were not covered by exclusion orders.
It is also common in our members’ experience for different ports to implement exclusion orders inconsistently. A particular exclusion order is often enforced at some ports but not at others. In addition, even at a particular port, some shipments may be detained and excluded, while other shipments of the identical article are permitted entry. It is unclear to what extent these differences between ports reflect the problems with Customs’ enforcement instructions noted above, as opposed to being a consequence of ports of entry being under-resourced with respect to IPR enforcement. Given that Customs must choose between allocating its dwindling resources to address security threats and health and safety concerns, in addition to enforcing intellectual property rights, it is perhaps not surprising that exclusion orders may go under-enforced or ununder-enforced at certain ports of entry.
1 19 U.S.C. § 1337(j)(3). 2
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2. Are the procedures, criteria, and regulations utilized by CBP when enforcing exclusion orders clear, accessible and understood?
In the ITCTLA’s view, the procedures, criteria, and regulations utilized by Customs when enforcing exclusion orders are not as clear, accessible and understood as they should be. In large part, this is due to lack of guidance and transparency.
First, there are few, if any, criteria or guidelines offered by Customs as to what
information would be helpful to Customs in crafting its field instructions. Before or shortly after the ITC issues an exclusion order, Customs IPR Branch attorneys review such exclusion orders and underlying case files and often hold ex parte meetings with counsel for the parties. Customs maintains that these meetings are confidential and typically will not disclose the substance of the meetings to the adverse party. The IPR Branch then creates field instructions but, as previously noted, these instructions also are not shared with the parties. The ITCTLA believes that the meetings would be substantially more helpful and advantageous to the enforcement process if the meetings were more transparent and provided the opportunity for parties to respond to or correct inaccurate or misleading information presented by opposing parties or third parties. In the past, Customs has expressed the view that it is not able to share information from such ex parte meetings with the adverse party because of confidentiality concerns. Specifically, the ITC’s protective order governing the use of confidential business information while the investigation is before the ITC does not authorize Customs to share communications with ITC signatories to that agreement, and Customs has no comparable provision for either entering or enforcing a
confidentiality agreement.
Second, Customs often decides whether an exclusion order covers a redesigned product through an ex parte decision-making process pursuant to 19 C.F.R. § 177 that, based on present regulations being drafted from the perspective of an importer’s rights and obligations, favors importers over rightsholders. This process may result in a binding ruling, known as a “ruling letter,” from Customs that covers future shipments of products that can be demonstrated to be outside the scope of the exclusion order. Rightsholders do not receive notice when an importer seeks a ruling letter on a redesigned product, and are precluded from participating in Customs’ enforcement determinations. Moreover, rightsholders are barred from appealing an adverse ruling (i.e. one in favor of the importer that sought the ruling) to any court, in essence because they are not considered to be a party to the import transaction giving rise to the ruling request. The CIT recently confirmed that complainant rightsholders have no right to participate in protest proceedings brought by importers to challenge the interdiction of goods covered by ITC
exclusion orders, further limiting the rightsholders’ ability to obtain effective enforcement of their rights.3
Third, there is little guidance as to the role of the newly-established Centers of Excellence and Expertise (CEEs). It is generally understood that CEEs aim to centralize decision-making authority to achieve uniformity at the ports of entry for their respective industries. The ITCTLA commends the overall goal of the CEEs to provide more uniform and effective coordination around enforcement of exclusion orders. However, it is not clear whether
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the CEEs or the IPR Branch in Washington, D.C. will oversee enforcement of exclusion orders or whether such responsibility will be shared. It is also not clear whether the IPR Branch or the CEEs in the future will be responsible for adjudicating and issuing ruling letters on redesigns pursuant to 19 C.F.R. § 177.
a. Please provide recommendations for enhancements to procedures, criteria, and regulations used during enforcement of exclusion orders.
The ITCTLA recommends that several improvements are needed in the procedures, criteria and regulations used to enforce exclusion orders.
• Customs should be required to seek input from both complainants and respondents on the development of field instructions to the ports, and in doing so should disclose to each party, as much as confidentiality obligations permit, the positions taken by other parties. The ITCTLA is mindful that involving the parties in development of the instructions could result in delaying issuance of such instructions but believes Customs can avoid such delay while still seeking party input.
• Customs should be required to issue preliminary field instructions promptly to collect any applicable bond required during the Presidential review period. It should be noted that the bond will be returned to the party posting the bond if it turns out that the imports were not covered by the exclusion order, so that any harm to the party posting the bond due to the immediate collection requirement should be minimal. • Customs should consult with and obtain guidance from the ITC concerning the scope
of exclusion orders so that it obtains the full benefit of the ITC’s expertise and knowledge of the extensive adjudicatory record of the original investigation. • The ITC should, at the request of Customs, conduct expedited (90-120 day), inter
partes, non-APA proceedings to determine whether design around or nonadjudicated products are within the scope of exclusion orders. During the pendency of such proceedings the ITC could direct and Customs could require posting of bonds on the subject goods or could conditionally release them to the importer.
• Customs should create an inter partes procedure for use in resolving situations involving significant disputed issues. Customs should implement appropriate safeguards for information exchanged pursuant to such procedures, including exploring whether the administrative protective orders issued by the ITC to protect against disclosure of confidential business information, including trade secrets, while the action is before the ITC could be extended to cover inter partes proceedings before Customs which arise out of the ITC investigation.
• Customs should receive additional funding for IPR enforcement, so that all major ports of entry have sufficient personnel dedicated to IPR enforcement issues to permit Section 337 exclusion orders to receive appropriate attention at the same time
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3. Are the procedures and criteria used by CBP to evaluate the scope of an exclusion order effective and clearly understood?
a. If not, please provide a description of the problem experienced?
Customs’ process for interpreting the scope of ITC exclusion orders suffers several flaws. First, there is no formal, transparent process in place that Customs uses to interpret the scope of exclusion orders. To determine the scope on an exclusion order, Customs sometimes consults with some, but not all of the following parties involved: 1) the complainant whose IP rights are at the center of the exclusion; 2) the ITC’s Office of the General Counsel; and 3) one or more of the parties whose products are subject to the exclusion order, and, in the case of General Exclusion Orders, even third-parties that were not named parties in the original investigation. Because Customs does not have a formal procedure in place to consult with all interested parties, the process often results in incomplete enforcement. Moreover, Customs does not make its consultations open to the other parties involved. As noted previously, the “instructions” Customs creates, which detail what products should be excluded, are not made available to the parties at any time.
The result of the ex parte process is that interested parties are unable to review and respond to comments made by others. For example, if Customs consults with the complainant and receives written comments on the scope of the exclusion order, there is no formal process for a party whose products may be subject to the exclusion order to receive and respond to the complainant’s submissions. Similarly, if a party communicates with Customs on why some of its products do not fall within the scope of the exclusion order, there is no formal process for the complainant to receive copies of those communications and to provide a response.
b. What improvements could be made to the procedures and criteria used by CBP when evaluating the scope of an exclusion order to assist with the determining whether an import is covered by the claims of the infringing patent?
There are a number of steps Customs can take to improve the process it uses to determine the scope of an ITC exclusion order. Creating and putting in place a formal procedure for
determining the scope of exclusion is a first step. Customs should then make this formal process known to all interested parties to eliminate some of the mystery from this process and to provide notice so that interested parties can participate when appropriate.
Any formal process Customs puts in place should be an inter partes process. In other words, it should allow for participation from all interested parties. This allows Customs to hear both sides of any issue before making an informed decision regarding the scope of an exclusion order.
Another improvement would be for Customs to seek guidance from the ITC in all cases, and in particular the Office of General Counsel and/or the Office of Unfair Import Investigations (“OUII”), on the scope of the exclusion order. The ITC often spends a year to eighteen months developing a detailed record by conducting an inter partes proceeding to determine whether there is a violation of Section 337. Customs, which only becomes involved after an exclusion order issues, should rely more on the ITC’s expertise and the record developed at the ITC.
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c. Under CBP's current ruling request process, 19 CFR part 177, an importer may seek a prospective ruling on whether a redesigned or new product falls within the scope of an exclusion order. Determinations of this kind are often initiated at the request of the importer (typically the product manufacturer) and are conducted through an ex parte proceeding. Would development of an inter partes proceeding involving relevant parties to the ITC investigation enhance the efficiency, transparency and efficacy of the exclusion order enforcement process with respect to determining the scope of the exclusion order?
As noted above, the ex parte nature of Customs decision-making regarding scope and enforcement of exclusion orders creates uncertainty regarding how orders are enforced and interpreted. Development of an inter partes proceeding would enhance the transparency and fairness of the process. Notably, however, that inter partes proceeding, if it involves difficult substantive patent determinations, could be more efficiently conducted by the ITC. The ITC, unlike Customs, conducts substantive investigations (typically lasting around 16 to18 months) before exclusion orders issue. The ITC, therefore, has extensive knowledge of the patents, the technology and the products at issue before an exclusion order ever reaches Customs.
Moreover, the ITC already has in place a mechanism to consider legal argument through briefing, as well as to hold evidentiary hearings if needed. The ITC also has the authority to issue protective orders and, therefore, to share information with counsel for all concerned parties. Notably, the ITC also has statutory authority, derived from 19 U.S.C. § 1337(k), to consider design-arounds and new products.
The ITC, therefore, is already in a position to consider efficiently, transparently, and effectively new products and/or product features and to make a timely determination regarding whether that product or feature falls within the scope of an exclusion order.
4. Are the processes used by CBP timely and effective in notifying interested parties, for example ITC litigants, importers, and the general public, of determinations made regarding the scope of an exclusion order and, in turn, applicability to the imported product.
The ex parte and opaque nature of Customs’ current process means that importers, IP rightsholders, and members of the public receive notice of Customs’ decisions regarding the scope of an exclusion order and applicability to an imported product at different times. As described above, Customs’ IPR Branch attorneys review ITC exclusion orders and underlying case files, and often hold ex parte meetings with counsel for the parties. Customs maintains that these meetings are confidential and typically will not disclose the substance of the meetings to the adverse party. IPR Branch then creates field instructions but, as previously noted, these instructions also are not shared with the parties. As a result, the IP rightsholders often do not receive timely notice of entry of goods into the United States and frequently discover that such articles have been admitted only if they have the resources and ability to actively monitor the marketplace and is able to detect imports on that basis.
If an importer seeks a ruling letter or protests Customs’ decision to the exclude the article from entry into the United States, it will receive formal notice of Customs’ decision under the
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standards applicable to Customs’ administrative process. By contrast, the IP rightsholder, the ITC complainant, does not receive formal notice of Customs’ decision. Moreover, ruling letters and decisions denying the importers’ protests frequently contain confidential information and are only partially or not at all made public.
Furthermore, the IP rightsholder frequently does not receive formal notice of an action commenced by an importer challenging Customs’ denial of protest at the CIT under 19 U.S.C. § 1514 and 28 U.S.C. § 1581(a). Actions by importers name the United States as the defendant, which receives notice by means of a summons, but rarely name the IP rightsholder as a party except when needed for just adjudication under Rule 19 of the Court of International Trade Rules, even though the IP rightsholder has an obvious interest in the matter being adjudicated. Accordingly, the IP rightsholder is left to discover the action by monitoring the CIT docket. Even if the IP rightsholder is diligent in identifying CIT actions, it is not permitted to intervene under 28 U.S.C. § 2631(j)(1)(A). In sum, notice of Customs’ decisions regarding the scope of an exclusion order and applicability to an imported product is not uniformly and consistently
provided to the parties with an interest in the enforcement of an exclusion order or to the public.
5. What further procedural changes or collaborative steps could be undertaken between the ITC and CBP to improve the efficacy of exclusion order enforcement efforts?
The ITCTLA considers that Customs’ enforcement efforts are efficacious and efficient in many cases, although those efforts can be problematic in situations in which Customs must determine whether redesigned or new products are covered by an exclusion order. Even in these situations Customs in many cases acts effectively and efficiently, but some cases have given rise to appropriate concerns by respondents with delays in making determinations, by complainants in an inability to adequately participate in the process of determining whether a product is covered, and by either respondents or complainants as to whether Customs was sufficiently understanding of the product or the ITC reasoning on infringement so as to arrive at a sound decision. These situations are typically generated by chronic understaffing at Customs’ IPR Branch at its Washington, D.C. headquarters, where the expertise to address issues involving redesigns and new products has in the past resided, or by the complex nature of the redesign or the underlying technology and the fact that Customs and its IPR Branch have a limited time to understand the technology and the facts, and to verify the operation of the redesigns/new products.
With this in mind, the ITCTLA recommends the following be considered to address the issues raised in some cases before Customs involving redesigns/new products:
A. Initial responsibility for enforcement of exclusion orders as border remedies should remain with Customs, and the practice of guidance to parties and the ports emanating from Customs should continue to be the norm. Customs should be given sufficient resources to fully carry out its enforcement functions at both the headquarters and port level.
B. The current process of using a Section 177 letter ruling request (19 CFR §177) should continue to be the norm for Customs to address redesigns/new products coverage by
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an exclusion order, however, the process should be modified so that it is an inter partes process.
C. In making decisions in such situations, Customs should continue to make every effort to arrive at a determination on coverage within 90-120 days from the date of the letter ruling request in order to prevent unnecessary and inappropriate interference in legitimate trade and to aid commercial certainty.
D. The principal proposed change recommended by the ITCTLA is that, at Customs’ option when it believes it will advance the process of arriving at a well-founded decision within the 90-120 day period referenced above, Customs may request that the ITC provide guidance as to whether a product is covered by an exclusion order. Making the request for guidance discretionary with Customs as opposed to mandatory in all cases recognizes that Customs can sometimes act effectively and appropriately without guidance, would not lead to an overburdening of ITC resources, and
recognizes that Customs decisions are in any event effectively reviewable by the ITC in an advisory opinion or enforcement action.
The process envisioned by the ITCTLA that would be used by the ITC in providing guidance should have the following characteristics:
1. It should be advisory, and non-APA;
2. It should be time limited, i.e., the guidance should be provided within 90 days of Customs’ request;
3. It should have both the requesting party (importer or respondent) and the complainant as participants;
4. It should occur under a protective order so that information concerning the redesign/new product is available to complainant’s counsel;
5. It should be a process generally conducted “on the papers,” with a brief “hearing” if the unit at the ITC providing the guidance determines it appropriate;
6. The guidance need not come from the Commission or an Administrative Law Judge level at the ITC, but could be delegated (with Commission oversight) to come from the staff level, such as from the ITC’s Office of Unfair Import Investigations (to which pre-institution reviews are currently delegated) or the Commission’s Office of General Counsel (to which reviews of petitions for review are currently delegated) or the Commission’s Office of General Counsel (to which reviews of petitions for review are currently delegated) with
Commission oversight;
7. The guidance provided would be expected to be followed by Customs absent good cause; and
8. The guidance provided should not be binding on the ITC in an advisory opinion or enforcement investigation subsequently conducted, and would be reviewable by way of the party seeking review requesting commencement of either an advisory opinion proceeding or an enforcement investigation under existing Commission rules.
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The proposed process would address the principal issues raised respecting Customs enforcement of exclusion orders in the context of redesigns and new products. The ITC is more likely to be familiar than is Customs with the record at the ITC, the basis for finding
infringement, claim construction, etc. This will likely mean guidance on coverage can be provided relatively quickly, making it more likely that the 90-120 day period for Customs’ decision can be maintained. It also means that the agency most familiar with the products, patents and issues involving a determination of infringement is involved with the decision on coverage in complicated cases, likely increasing the soundness of Customs’ determination. Further, the well-established protective order procedure at the ITC should permit more adequate participation by all parties in the process. To accomplish this function, the ITC may also need to be provided with additional resources, as presently the ITC has to make decisions as to which investigations will have a member of the OUII staff assigned. Where an enforcement issue arises in an investigation that did not have OUII staff participation initially, existing resources would be stretched.
The ITCTLA believes that both the ITC and Customs could adopt this proposal without the need for statutory amendments, by either revising or adding to their existing rules. For example, the ITC already has rules in connection with enforcement of exclusion orders requiring the provision of information by relevant parties (19 C.F.R. § 210.71), providing for
confidentiality of information (19 C.F.R. § 210.72), providing for an informal, non-APA proceeding managed by staff (19 C.F.R. §210.75(a)), and providing for advisory opinions (19 C.F.R, §210.70). The process set forth above could be accommodated within these provisions, with any appropriate amendments the ITC may choose. Indeed, there is no reason that the ITC could not provide for such a process as part of an exclusion order itself.
Similarly, it is believed Customs could make amendments to its Section 177 procedure, if needed, to accommodate the proposed process. There is no statutory prohibition of which the ITCTLA is aware that would prevent Customs from seeking guidance from the ITC in the process of administering the ITC’s exclusion order. Most of the issues of confidentiality of information provided by the ruling letter requestor can be addressed by extending an ITC protective order to post-determination proceedings, and by Customs amending its regulations concerning ruling letters to provide for the suggested process.
6. Do exclusion orders currently provide sufficient level of detail and direction necessary to assist CBP with the challenges of enforcement?
Exclusion orders do not, alone, provide a sufficient level of detail and direction necessary to assist Customs with the challenges of enforcement. However, the ITC does in the normal course provide Customs with additional information to assist with enforcement. At a minimum, the Commission’s and the ALJ’s opinions are available to Customs. Nevertheless, as suggested below, additional guidance for Customs would be useful.
Currently, exclusion orders typically provide limited direction to Customs as they merely state that a broad category of products covered by one or more specified claims of a patent, or by a copyright, trademark, mask work, or boat hull design, are excluded from entry into the United States. In certain exclusion orders, usually directed to infringed trademarks, the order may also
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contain images of the infringed mark or infringing goods if their inclusion is requested by the complainant. Depending on whether the order is limited or general in type, the exclusion order may also identify the entities subject to the exclusion order, along with any of their affiliated companies, parents, subsidiaries, or other related business entities, or their successors or assigns.
In drafting its instructions to the ports, Customs generally relies in addition on portions of the record developed at the ITC, particularly the Administrative Law Judge’s Initial
Determination and any Opinions issued by the Commission. However, Customs does not receive those voluminous materials until shortly before, or after, the exclusion order has issued. Moreover, due to the very limited time constraints and chronic understaffing, Customs may often not be able to adequately delineate what should be covered by the exclusion order without
significant help from the parties and the ITC.
The lack of detail in the standard ITC exclusion order is apparent from Customs’ general policy of meeting with the complainant and respondents following issuance of an exclusion order to understand the scope of product coverage and discuss how Customs can identify infringing and non-infringing products, among other things. Moreover, it has become standard for exclusion orders today to contain a certification provision whereby a party subject to the order can certify that it is familiar with the terms of the order, that it has made appropriate inquiry, and thereupon states that, to the best of its knowledge and belief, the products being imported are not excluded from entry under the order. That the Commission includes such provisions in its
exclusion orders and that Customs uses certifications further illustrates that the orders themselves often do not provide Customs sufficient information on which to base enforcement of an order.
Although the detail and direction provided in exclusion orders is limited, the language of such orders is purposefully and necessarily broad. By phrasing an exclusion order in terms of the infringed IP right, the order is limited only by the scope of the IP right at issue rather than by any artificial scope articulated by the complainant or the ITC. This principle is the reason exclusion orders normally do not identify specific models that were found to infringe during the investigation and are thus subject to the order. There is a concern that, if models are specifically listed in the exclusion order, Customs will unduly limit the reach of the exclusion order to the listed models rather than to all products within the defined category that may infringe the
intellectual property right at issue. Particularly in the electronics industry where new models are introduced monthly or even weekly, as well as many sectors of the consumer products industries, limiting the exclusion order to specific models would deprive the rightsholder of effective relief. Just because the listing of models is not practicable does not mean, however, that exclusion orders could or should not include any additional information about what should be found to fall within their scope.
Additional information may be appropriate where the category of products listed in the caption of a case is broader than the actual product lines litigated during the course of an investigation. For example, an investigation may be directed broadly to “consumer electronics devices,” which can encompass a wide range of product lines, such as mobile phones, computers, televisions, blu-ray players, game consoles, etc. The investigation itself and the resulting
determination, however, may have focused on just one or a few of those product lines. Where that is the case, the exclusion order should state the specific product lines (e.g. “televisions” or
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“mobile phones”) that Customs should consider when enforcing the exclusion order, without becoming model specific (e.g. “Television Model No. xyz123”).
Another situation where additional information may be appropriate is where the
infringing product is actually a component of a larger device, such as an integrated circuit that is incorporated into a mobile device. If the top level category of products set forth in the exclusion order does not make clear the component and the downstream products that may actually
infringe the asserted patents, the exclusion order should specifically identify the component of interest and the specific downstream product categories to help focus Customs’ enforcement efforts.
Exclusion orders need not and should not be considered in a vacuum. Exclusion orders represent the culmination of an extensive record, including detailed determinations, developed over, on average, a 17-month period before the Commission. The record, taken as a whole, will generally contain the level of detail and direction necessary to assist Customs with the challenges of enforcement. Indeed, as noted earlier, when transmitting an exclusion order to Customs, the Commission typically also provides a copy of its final opinion along with portions of the record from the investigation that it deems useful. Although the investigation record can provide detail and direction to assist Customs’ enforcement of an exclusion order, the record usually is long, difficult to navigate, and filled with information unnecessary to Customs’ enforcement. Thus, Customs may benefit from further assistance from the Commission in reviewing such materials. Specifically, and in addition to increased interaction between Customs and the Commission as recommended by the ITCTLA, there could be regularized communication between Customs and OUII, and the Office of General Counsel. Although regular communication by Customs with knowledgeable persons at the Commission has occurred in the past, it appears that Customs no longer avails itself as frequently or regularly of the built-up knowledge base which the
Commission has. Reinstating this communication, however, could provide much needed assistance to Customs.
When transmitting materials to Customs, the Commission generally also provides the identity of the owner of the intellectual property right at issue and its counsel, and an
identification of Harmonized Tariff Schedule (“HTS”) numbers under which the products in question are believed to be imported. While this additional information may be helpful to an extent, it does not ultimately offer much guidance to Customs. The non-limiting list of HTS numbers only points Customs in the direction of general categories of products. Such categories contain both infringing and non-infringing imports. Thus, HTS numbers provide Customs with no technical guidance on how to identify infringing products.
In light of the foregoing, it is clear that exclusion orders themselves do not provide a sufficient level of detail and direction necessary to assist Customs with the challenges of
enforcement in many cases. Although such orders are necessarily broad so as to avoid the risk of circumventing an order limited to a specific model number, there are certain instances where providing additional guidance to Customs in the order would be appropriate. Moreover, the additional information provided by the ITC, such as copies of the opinion and portions of the record, as well as additional ITC resources, such as regular communication with the Office of General Counsel and OUII, could taken together provide Customs with more concrete guidance
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concerning what products are at issue, what qualifies as an infringing product, and, thus, what should be admitted or excluded.
7. Please identify any additional areas of consideration regarding improvements that could be undertaken by CBP or the ITC to further improve upon the exclusion order enforcement processes?
There are several additional measures that could be taken to improve the effectiveness and efficiency of enforcement of exclusion orders.
First, as the ITCTLA has noted in previous submissions to Congress and at points above, additional resources are needed at both Customs and the ITC to improve enforcement. In the past, Customs’ IPR Branch has been charged with coordinating enforcement of exclusion orders, yet the office is responsible for numerous other tasks, including the recordation and enforcement of trademarks and issuance of various types of Customs rulings, and only a handful of its
attorneys devote part of their time to ITC exclusion orders. The ITCTLA recognizes that the recent creation of the Customs CEEs may be a step in the right direction but remains concerned that additional resources still may need to be dedicated to enforcement of ITC exclusion orders for the process to be effective.
Second, to improve the effectiveness of exclusion order enforcement by Customs, the ITCTLA believes that there should be a specific office created within Customs that is devoted exclusively to administration of ITC exclusion orders. Under the current system, the IPR Branch simply has too many other responsibilities to devote the necessary resources to enforcing
exclusion orders transparently, efficiently and fairly. Again, the ITCTLA recognizes that the new CEEs within Customs may form part of the solution but remains concerned the CEEs’ wide-ranging responsibilities will prevent sufficient focus on exclusion order enforcement.
Third, the ITCTLA recommends that consideration be given to the creation of an Office for Section 337 Enforcement within the ITC.
