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Article: June 2015: ITC Litigation Update

Business Litigation Reports

ITC Introduces New Pilot Program for Modification and Advisory Opinion Proceedings for New and Redesigned Products. In order to obtain remedial relief at the ITC, a complainant must establish that products imported into the United States violate Section 337. This typically requires months of discovery, a full evidentiary hearing, and exhaustive review by the ITC. In many cases, the products that form the basis for a finding of violation are obsolete by the time the remedial orders are issued, leaving complainants and importers to question whether new or redesigned products fall within the orders’ scope. The ITC’s new pilot program seeks to reshape, simplify and expedite the procedures used to answer this important question.

In reaction to concerns expressed by both importers and complainants about how to obtain clear and timely rulings on whether new or redesigned products are covered by existing remedial orders, the ITC launched a pilot program in February 2015 with the stated goals of improving and expediting existing procedures to better meet the needs of those impacted by ITC remedial orders. In particular, the new program is designed to test potential revisions to existing procedures for modification proceedings and advisory opinions.

Under Rule 210.76, any person may petition the ITC to modify the scope of an existing remedial order based on “changed conditions of fact or law.” 19 C.F.R. § 210.76(a)(1). Similarly, if a petitioner has previously been found by the ITC to be in violation of Section 337 and can present “new evidence or evidence that could not have been presented at the prior proceeding . . .” (e.g., that the new or redesigned product does not infringe), the ITC will typically institute a modification proceeding. 19 C.F.R. § 210.76(a)(2). Modification proceedings are conducted inter partes, resulting in an evidence-based determination based on the record, and are appealable to the U.S. Court of Appeals for the Federal Circuit. Resolution of modification proceedings typically takes 6 to 12 months.

Under the ITC’s pilot program, a modification proceeding may be commenced by filing a petition that alleges facts as to why a new or redesigned product should be carved out of the existing remedial order. For petitions involving purely legal questions, the Office of General Counsel (“OGC”) will conduct the proceeding and provide its recommendation to the ITC, which will then issue a decision within 60-90 days. Petitions requiring minimal fact-finding will be referred to the Office of Unfair Import Investigations (“OUII”), which will provide a recommendation to the ITC. The ITC’s decision will normally issue within 90-180 days. If the petition indicates a need for extensive fact-finding, the ITC may refer the proceeding to an Administrative Law Judge (“ALJ”) to develop the record and issue an initial determination. The ITC’s decision will normally issue within 6-9 months. (See USITC Pilot Program for Rulings on Redesigned Products in Commission Post-Order Proceedings: Background and Facts, available at http://www.usitc.gov/press_room/featured_news/pilot_program_will_test_expedited_procedures_usitc.htm.)

A party seeking a ruling on whether a new or redesigned product will violate an existing remedial order may also seek an advisory opinion under Rule 210.79(a). Pursuant to that rule, the requesting party must show that it has “a compelling business need for the advice and has framed his request as fully and accurately as possible.” 19 C.F.R. § 210.79(a). As with modification proceedings, advisory opinion proceedings are inter partes and typically involve fact-finding. Unlike rulings in modification proceedings, however, advisory opinions are not appealable to the Federal Circuit. Advisory opinion proceedings have historically ranged from 9 to 12 months.

Much like the procedures outlined in the ITC’s pilot program for modification proceedings, the new procedures for advisory opinion requests are designed to provide expedited resolution. Requests involving purely legal questions are referred to the OGC to be resolved within 60-90 days. Requests involving minimal fact-finding are referred to OUII to be resolved within 90-180 days. If the request involves more extensive fact-finding, the ITC may refer the proceeding to an ALJ to develop the record and issue an initial determination. The ITC’s decision will normally issue within 6-9 months.

To date, the procedures reflected in the new pilot program have been used only once. (Certain Kinesiotherapy Devices and Components Thereof, Inv. No. 337-TA-823. While the advisory opinion in the 823 investigation issued in June 2014, the procedures used in that investigation closely resemble those outlined in the ITC’s new pilot program.) In that investigation, the ITC issued a general exclusion order and cease and desist order against several respondents. One of the respondents filed a request for an advisory opinion under Commission Rule 210.79 as to whether its new products were covered by the exclusion order. The ITC instituted the proceeding, referred it to OUII, and ordered OUII to issue a report within 90 days. OUII issued its report, finding that the products at issue fell outside of the exclusion order. The ITC adopted the report.

The success of the ITC’s pilot program remains to be determined. But the Commission’s recognition that its current procedures are inadequate is an important first step in addressing the problem.