By John Presper

On October 4, 2021, the ITC issued a notice of violation of section 337 and general exclusion order (“GEO”) in Certain Balanced Armature Devices, Products Containing Same, and Components Thereof (Inv. No. 337-TA-1186).

By way of background, this investigation was based on a complaint by Knowles Corporation and Knowles Electronics, LLC of Itasca, Illinois, and Knowles Electronics (Suzhou) Co., Ltd. of China (collectively, “Knowles”) alleging violations of section 337 due to the importation/sale of certain balanced armature devices, products containing same, and components thereof by reason of misappropriation of trade secrets.  The notice of investigation named 12 respondents, seven of which were later terminated based on consent orders.  On January 14, 2021, ALJ Dee Lord issued Order No. 46 (“Sanctions ID”) granting-in-part Knowles’ motion for sanctions against Respondents Shenzhen Bellsing Acoustic Technology Co. Ltd., Suzhou Bellsing Acoustic Technology Co. Ltd., Dongguan Bellsing Precision Device Co., Ltd., and Bellsing Corporation (collectively, “Bellsing”) on the grounds that Bellsing failed to disclose spoliation of evidence, that its failure to do so was in bad faith, and that the appropriate sanction was default.  The Commission determined to review the Sanctions ID in its entirety, and issued its final determination on March 17, 2021 affirming the Sanctions ID, with modification, and finding Bellsing in default.  On June 1, 2021, Chief ALJ Charles E. Bullock issued Order No. 50 (“ID”) granting Knowles’ motion for summary determination of violation of section 337 by Respondents Bellsing and Mr. Liang (Ryan) Li.

According to the notice, the Commission determined to review the ID in part.  Specifically, the Commission determined to review (1) whether Bellsing can participate in briefing on remedy and bonding before the ALJ, and briefing on remedy, the public interest, and bonding before the Commission notwithstanding its default; (2) importation; (3) use by Mr. Li of Representative Trade Secret (“RTS”) Nos. 1-10; (4) all findings related to RTS No. 6; and (5) domestic industry.  The Commission also reviewed the issues raised in the parties’ arguments relating to due process, comity, and collateral estoppel.  Having considered the record, the Commission determined that a violation of section 337 occurred as to Mr. Li and Bellsing, which had previously been found in default.  In particular, the Commission (1) found that Mr. Li has met the importation requirement on modified grounds, and affirmed the ID’s remaining findings on importation; (2) found that Mr. Li has used and/or disclosed each of RTS Nos. 1-10; (3) found that RTS No. 6 has been misappropriated; and (4) affirmed the ID’s findings on domestic industry.  The Commission further determined that the appropriate remedy is a GEO, as well as cease-and-desist orders directed to each of the Bellsing respondents and Mr. Li.

We will post the public version of the Commission’s opinion when it becomes available.

UPDATE:  On October 29, 2021, the Commission issued the public version of its opinion.  Notably, the Commission ruled that the scope of GEO should cover certain balanced armature devices as well as downstream products regardless of the source.

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