By Eric Schweibenz
Public interest factors can override the finding of a violation of Section 337 at the ITC.  Upon finding a violation, the administrative law judge (“ALJ") considers the impact that exclusion orders would have upon (1) the public health and welfare, (2) competitive conditions in the U.S. economy, (3) the production of like or directly competitive articles in the U.S., and (4) U.S. consumers.  The ALJ next weighs these factors against the public interest in protecting U.S. intellectual property rights by excluding infringing imports.

In making this public interest determination, the ALJ considers whether there are alternative sources (such as the complainant or its licensees) for the accused products that can adequately meet the demands of the U.S. market, whether there are alternative and non-infringing products that would not be subject to the remedial order, and the effect such an order would have on U.S. consumers.  See Certain Circuit Telecommunications Chips, Inv. No. 337-TA-337.

Although relatively uncommon, the ITC has, on four occasions, limited remedies due to public interest factors despite finding Section 337 violations.  For example, during an oil shortage in late 1979, the ITC found that it was not in the public interest to exclude the importation of crankpin grinders (which are used to make pins on crankshafts for internal combustion motors) because of an overriding national interest in the supply of fuel efficient automobiles, where domestic industry was unable to supply domestic demand.  See Certain Automatic Crankpin Grinders, Inv. No. 337-TA-60. 

By way of further example, the ITC also denied relief in Certain Inclined Field Acceleration Tubes due to an overriding public interest in continuing basic atomic research using imported acceleration tubes which were of higher quality than the domestic product.  See Certain Inclined Field Acceleration Tubes, Inv. No. 337-TA-67.  Four years later, the ITC denied relief in Certain Fluidized Supporting Apparatus, finding it was not in the public interest to exclude the importation of specialized hospital beds for burn patients, where the domestic producer could not supply beds within a commercially reasonable time and where no therapeutically comparable substitute was available.  See Certain Fluidized Supporting Apparatus, Inv. No. 337-TA-182/188.

More recently, the ITC has cited the public interest factors in crafting an exclusion order to reduce the burdens such order imposed on third parties and consumers.  In Certain Baseband Processor Chips, Broadcom asserted a patent regarding power saving features of mobile wireless communications devices against Qualcomm, and several mobile phone manufacturers and service providers intervened.  See Certain Baseband Processor Chips and Chipsets, Transmitter and Receiver (Radio) Chips, Power Control Chips, and Products Containing Same, including Cellular Telephone Handsets, Inv. No. 337-TA-543.  For its part, Qualcomm argued that an exclusion order would operate against the public interest by decreasing the effectiveness of first responders during an emergency.

In response, the ITC limited its remedy regarding infringing chips and chipsets for 3G wireless communication devices, including mobile phones and PDAs, by excepting previously imported models from the exclusion order.  The ITC cited this limitation as “necessary to reduce the burdens imposed on third parties and consumers particularly in light of the limited availability of alternative devices that do not contain infringing chips or chipsets.”  The ITC further determined that, “while exclusion of handheld wireless communications would have some impact on the public interest, particularly the public health and welfare, competitive conditions in the U.S. economy, and U.S. consumers, the exemption for previously imported models sufficiently reduced this impact such that the exclusion order should issue.”

Other respondents have been less successful with their public interest arguments.  For example, in Certain Automotive Parts, Taiwanese auto parts manufacturers argued that eliminating the importation of infringing replacement automotive parts would harm the public interest by eliminating all competition for replacement parts for Ford F-150 trucks, creating a monopoly for Ford in parts for repairing those trucks.  The ITC determined, however, that “[e]vidence that an exclusion order could lead to higher prices is not dispositive of the public interest.”  See Certain Automotive Parts, Inv. No. 337-TA-557. 

In addition, after the ITC finds a Section 337 violation and issues an exclusion order, public interest factors may further be considered during the 60-day Presidential Review period.  During this period, the U.S. Trade Representative may disapprove of the ITC’s order “for policy reasons.”  19 USC § 1337 (j); Presidential Memo of July 21, 2005, 70 Fed. Reg. 43251 (July 26, 2005) (assigning this power to the U.S. Trade Representative).  This Presidential power has been exercised five times.  See Certain Dynamic Random Access Memories, Inv. No. 337-TA-242; Certain Alkaline Batteries, Inv. No. 337-TA-165; Certain Molded-In Sandwich Panel Inserts, Inv. No. 337-TA-99; Certain Multi-Ply Headboxes, Inv. No. 337-TA-82; Welded Stainless Steel Pipe and Tubes, Inv. No. 337-TA-29.

Accordingly, prospective respondents should consider the public interest factors that may favor their case, and complainants should be prepared to respond to such arguments.