By John Presper

On October 29, 2021, the Commission issued the public version of its opinion affirming, with modifications, the final initial determination (“ID”) of no violation of section 337 in Certain Foodservice Equipment and Components Thereof (Inv. No. 337-TA-1166) based on a lack of domestic industry.

By way of background this investigation was based on a May 30, 2019 complaint filed by Illinois Tool Works, Inc. of Glenview, Illinois; Vesta Global Limited of Hong Kong; Vesta (Guangzhou) Catering Equipment Co., Ltd. of China; and Admiral Craft Equipment Corp. of Westbury, New York (collectively, “Complainants”) alleging violations of section 337 by five Chinese respondents that import and/or sell in the U.S. certain commercial kitchen equipment and components thereof for use in restaurants, bars, cafes, cafeterias, etc. whose manufacture involves the misappropriation of trade secrets and unfair competition through tortious interference with contractual relationships.  On June 4, 2021, Chief ALJ Charles E. Bullock issued the ID finding no violation of section 337 based primarily on his conclusion that Complainants failed to establish the existence of a domestic industry.  See our June 9, 2021 post for more details regarding the ID.

According to the opinion, the Commission agreed with the ID in finding that Complainants’ investments in warranty service activities that they perform themselves in the U.S. may be credited towards the existence of a domestic industry.  Regarding payments made by Complainants to third parties for warranty services provided in the U.S., Respondents and the Commission Investigative Staff (“OUII”) argued that the ID erred by including these expenditures because (1) Complainants did not show that such activities are distinguishable from the activities of a mere importer, and (2) Complainants did not show what portions of the payments to third parties went to qualifying activities by the third parties.  The Commission noted that it has permitted qualifying payments to third parties (such as contractor payments) for warranty services in some prior investigations, but took no position as to either argument because it found that even if the payments to third parties in this investigation are included in their entirety, the Commission agreed with the ID that “Complainants have not shown that the minimal investments in the domestic industry by these entities are quantitatively or qualitatively significant.”  In particular, the ID found (and the Commission agreed) that “Complainants’ estimation of the size of the relevant marketplace is unreliable, and that the only reliable contextual analysis offered in the record was offered by Respondents’ expert, Dr. Vander Veen.”


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