425 Days to Save Your Business: A Respondent’s Guide to the ITC

The International Trade Commission (ITC) is an independent U.S. federal agency with broad investigative powers and resources related to U.S. trade statistics, guidelines, and policies. The ITC has jurisdiction to investigate unfair methods of competition and importation under Section 337 of the 1930 Tariff Act. ITC investigations have increasingly been used by companies as a tool for IP enforcement over the years. The growing popularity of these investigations is in large part due to the potency of the available remedy and the speed at which it can be obtained by the IP enforcer. If the ITC finds your business in violation of a trade statute, an exclusion order may be imposed that will ban the importation of your business’s products into the United States. Moreover, the exclusion order can go into effect a mere 18 months after the filing of the initial complaint—significantly faster than the three to five years life span of a case in district court. This article will discuss the challenges a company will face if named as a respondent at the ITC, as well as the opportunities and techniques that can be used to overcome them.

The following strategies can help a business mitigate the disruption to daily operations caused by an ITC investigation:

1. Be Ready to Mobilize Fast. While a complainant has the luxury of taking several months to gather evidence, prepare its case, and secure experts before filing at the ITC, a respondent may not learn of the suit until the day it has been filed, meaning that the clock has already started. Because of the stringent deadlines that begin immediately after the Commission institutes the investigation and the high potential cost of failure, ITC respondents are faced with enormous pressures to act quickly and decisively in order to save their business. Respondents should be prepared to secure ITC counsel quickly after the filing of a complaint and begin building their case right away, as certain deadlines come within a matter of days and weeks after filing.
2. Choose Experienced Counsel. Because an ITC investigation is different than district court litigation in both pacing and procedure, selecting a legal team that has familiarity with the nuances of the ITC tribunal is of the utmost importance. A firm that regularly represents clients at the ITC will have established connections with ITC staff attorneys, know how to navigate the landscape of ITC’s continuously evolving rules, and recognize what arguments may be most persuasive for a particular Administrative Law Judge (ALJ) based on their previous experience. Lastly, Protective Orders at the ITC are particularly strong. While this provides strong protection for suppliers of confidential business information, it significantly restricts how extensively in-house counsel may participate in the investigation. This means that finding reliable outside counsel to direct your business’s defense is essential.
3. Prepare for Invasive Discovery. Discovery in an ITC investigation tends to be more disruptive to a business than discovery in U.S. district court litigation—and certainly more disruptive than litigation in courts outside the United States. ALJs at the ITC tend to favor disclosure over non-disclosure, meaning a party asked to produce documents may have to conduct more costly internal searches. Additionally, discovery responses are due within 10 days of a disclosure request at the ITC instead of the 30 days available for response at the district court level. Businesses should try to anticipate during the pre-institution phase of the investigation what documentation they may be asked to produce so as to avoid scrambling for answers during the discovery phase.
4. Retain Experts Early. ITC investigations are heavily reliant on expert witnesses. Initial expert reports are frequently due immediately after the close of fact discovery. It may be difficult to find and prepare qualified experts for your case on short notice, so it is advised to start your search for technical and economic authorities who can support your case as soon as practicable. Your counsel may also be able to assess the feasibility of coordinating with a Joint Defense Group (JDG), which may allow the sharing of experts and costs among several respondents to the same complaint.
5. Consider Design-Arounds Immediately. As soon as a respondent is notified that they are the subject of an ITC investigation, they should assess the possibility of modifying their allegedly infringing product to avoid an adverse decision by the Commission. A respondent can avoid an import ban if they are able to obtain an adjudication that they re-designed their product and sufficiently disclosed that redesigned product during fact discovery. However, fact discovery can end a mere 4 months after the institution of the investigation. While a rapid shift in production may be possible for some products, the process of a full re-design could be a yearslong project depending on the product. The feasibility of a design workaround will be dependent on a business’s particular industry and circumstances.
6. Prepare for the Possibility of an Exclusion Order. In the event of an adverse outcome at the ITC, there are still avenues that a business can take to avoid the most drastic consequences of an import ban. A respondent who is able to re-design their products after the conclusion of an ITC investigation may request a Part 177 Ruling with U.S. Customs. This adjudication offers the respondent a chance to argue that their re-designed product falls outside of an existing exclusion order. If successful, the respondent will be able to import the re-designed goods. Finally, after the ITC investigation has concluded but before an exclusion order takes effect, the President of the United States has 60 days to disapprove or modify the order. As a last resort, a respondent may seek to persuade the current administration to reject or modify the exclusion order on the basis of public interest concerns.

For more information on this topic, watch our on-demand webinar, 425 Days to Save Your Business.