Pleading Importation: ITC Decisions Highlight Need for Adequate Evidentiary Support
The International Trade Commission is empowered to block the importation into the United States of products that infringe U.S. intellectual property rights, In the past, the ITC generally instituted investigations without questioning the importation allegations in the complaint, however in several recent cases, the ITC declined to institute an investigation as to certain proposed respondents due to inadequate pleading of importation.
November 13, 2024 at 02:50 PM
9 minute read
Intellectual PropertyWhat You Need to Know
- Section 337 of the U.S. Tariff Act empowers the International Trade Commission to block the importation into the United States of products that infringe U.S. intellectual property rights.
- A well-pled ITC complaint should adequately describe specific instances of importation or sales and provide exhibits supporting those allegations.
- As the ITC's recent decisions reveal, failure to include such evidence in a complaint can lead to a denial of institution.
Section 337 of the U.S. Tariff Act empowers the International Trade Commission (ITC or Commission) to block the importation into the United States of products that infringe U.S. intellectual property rights, including patents, copyrights, trademarks, and trade secrets. Under the ITC's pleading requirements, a Section 337 complaint filed at the ITC must "[d]escribe specific instances of alleged unlawful importations or sales." 19 CFR §210.12 (a)(3). In the past, the ITC generally instituted investigations without questioning the importation allegations in the complaint. In several recent cases, however, the ITC declined to institute an investigation as to certain proposed respondents due to inadequate pleading of importation. This article surveys those decisions and offers advice for parties filing an ITC complaint and those opposing institution of an investigation with respect to importation allegations.
A well-pled ITC complaint should adequately describe specific instances of importation or sales and provide exhibits supporting those allegations. Typically, importation can be readily established by submitting photographs of the accused products purchased in the United States, clearly showing the labels indicating foreign manufacture (e.g., "Made in China"). Receipts and other documents reflecting the purchase of the products in the U.S. should also be included. For certain products, such as semiconductor chips incorporated into electronic devices, a teardown of the device may be necessary to take photographs of the chips hidden inside.
As the ITC's recent decisions reveal, failure to include such evidence in a complaint can lead to a denial of institution.
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Inv. No. 337-TA-1332
In this investigation, Daedalus Prime filed a complaint on Aug. 23, 2022, relating to MediaTek and NXP chipsets used in automotive entertainment systems that allegedly infringed its semiconductor patents. Certain Semiconductors and Devices and Products Containing the Same, Including Printed Circuit Boards, Automotive Parts, and Automobiles ("Semiconductors"), Inv. No. 337-TA-1332, Complaint, ¶¶ 146, 156 (Aug. 23, 2022). The ITC declined to institute an investigation with respect to the accused Mediatek chipset due to inadequate importation allegations. Semiconductors, Letter to C. Lehman (Oct. 7, 2022). For the NXP chipset, the ITC instituted an investigation as to some respondents but not others. While the ITC did not explain the reasoning behind its denials, an analysis of the complaint and exhibits offers some insights into the issues the ITC may have spotted.
MediaTek Chipset
The ITC declined to institute an investigation as to the proposed respondents who were only accused of importing MediaTek's Autus I20 chip. Those chips were allegedly incorporated into infotainment systems sold by Visteon for certain cars imported into the United States. The complaint included evidence that: 1) MediaTek's website listed the Autus I20 as its only product for infotainment systems; and 2) MediaTek was listed as a chipset manufacturer for the accused Visteon systems. However, the complaint lacked direct evidence showing a specific Autus I20 chip in a specific imported Visteon infotainment system. It appears that the ITC was unwilling to infer that the imported Visteon infotainment systems included the Autus I20 chip simply based on the circumstantial evidence that MediaTek supplied the chips to Visteon.
NXP Chipset
The ITC declined to institute an investigation with respect to proposed respondents Arrow and Future, who were accused of importing NXP's i.MX 8QuadMax chipset. The exhibits tying Arrow and Future to sales of the NXP chipset indicated that those products were backordered and not presently available. The ITC may have deemed this evidence unsatisfactory to establish importation or imminent importation because the products were unavailable.
Dissenting Opinion
ITC Commissioner Schmidtlein entered a dissent indicating her view that the allegations and exhibits supported "at least a circumstantial showing" that all proposed respondents import, sell for importation, or sell after importation the accused products. Semiconductors, Dissent at 3, Letter to Secretary (Oct. 6, 2022). This raises the question as to what extent direct as opposed to circumstantial evidence is required to establish importation in a complaint, a matter that seems to have arisen again in subsequent ITC institution decisions.
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Inv. No. 337-TA-1340
In this case, the ITC declined to institute an investigation as to proposed respondent Qualcomm due to inadequate evidence of importation. Complainant Bell Semiconductor alleged that Qualcomm produced an infringing chip that was being incorporated into Motorola phones. Notably, the complaint did not provide direct evidence of the Qualcomm chip being imported. The exhibits did not include a receipt of a U.S. sale of the accused Qualcomm chip or photographs showing that the Qualcomm chip was incorporated into the imported Motorola phones. Certain Electronic Devices, Semiconductor Devices, & Components Thereof ("Electronic Devices"), Inv. No. 337-TA-1340, Complaint, ¶¶ 64-70, Exs. 28-29 (Oct. 6, 2022). The Commission found that the complaint did "not sufficiently describe the specific instance(s) of importation or sale for" a Qualcomm chipset accused of infringement. Electronic Devices, Letter to A. Pratt (Nov. 8, 2022).
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Inv. No. 337-TA-1381
Tobacco giant R.J. Reynolds faced similar difficulties in the 1381 Investigation, a case involving vaporizer devices. The ITC declined to institute an investigation as to proposed respondent Shenzhen Pingray Technology (Pingray) because the complaint, amendment, and supplements did not adequately allege importation or sale of the accused products. Certain Disposable Vaporizer Devices and Components and Packaging Thereof ("Disposable Vaporizer Devices I"), Inv. No. 337-TA-1381, Letter to H. Davis (Dec. 15, 2023).
In its statement regarding specific instances of importation by Pingray, R.J. Reynolds cited two exhibits: 1) a photograph of an "ESCO Bar" vaporizer indicating the product was made in China but not noting Pingray as the manufacturer; and 2) an FDA import alert noting that Pingray "may be importing/manufacturing/shipping a new tobacco product ([]Esco Bar[]/ 'Escobar') without marketing authorization." Disposable Vaporizer Devices I, Complaint, ¶ 362, Exs. 48, 14 (Oct. 13, 2023). The ITC declined to institute an investigation as to Pingray based on this evidence.
With respect to another proposed respondent, Shenzhen Innokin, R.J. Reynolds cited to the same photograph of the "ESCO Bar," but also included an FDA warning letter in which the FDA more definitively noted that Shenzhen Innokin manufactures and distributes Esco Bars in the U.S. The ITC instituted the investigation as to Shenzhen Innokin.
Based on the cited exhibits, it appears that the ITC may have found the irresolute language of the FDA's import alert ("may be importing") to be inadequate to institute an investigation as to Pingray, while the more definitive language in the warning letter was sufficient.
Commissioner Schmidtlein dissented in this case, noting her opinion that the import alert supported institution of an investigation as to Pingray. Disposable Vaporizer Devices I, Dissent at 2 (Dec. 14, 2023).
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Inv. No. 337-TA-1401
GTUL LLC similarly missed the mark in its complaint asserting a patent related to pistol disassembly tongs. The ITC declined to institute an investigation as to two proposed respondents, Homelifegoods and Anthony Drouget. Certain Firearm Disassembly Tongs, Inv. No. 337-TA-1401, Letter to S. Daniels (May 14, 2024).
With respect to respondent Homelifegoods, the complaint included a U.S. sales receipt and a physical sample of the accused product, the SlideLocker tool. Certain Firearm Disassembly Tongs, Amended Complaint, ¶ 20, Ex. 4 (Apr. 12, 2024). However, the complaint did not provide any photographs or other evidence showing that the product was manufactured overseas. For Drouget, the complaint attached his LinkedIn profile, with the headline "Designer 3D chez Slide Tool 3D" and noting his location as the "Greater Nice Metropolitan Area."
For other proposed respondents, the complaint had evidence of overseas manufacture. For example, an accused product from proposed respondent "OFFROADCALI" was marked "Made in India."
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Inv. No. 337-TA-1410
In another vaporizer technology case, the ITC determined not to institute an investigation as to seven of R.J. Reynold's proposed respondents. Certain Disposable Vaporizer Devices ("Disposable Vaporizer Devices II"), Inv. No. 337-TA-1410, Letter to D. Maiorana at 1 (July 17, 2024). By way of example, the ITC did not institute an investigation as to KMT Services, an accused distributor of an accused product. The complaint identified the accused product on the KMT Services website but did not provide evidence of a product purchased from that website. Disposable Vaporizer Devices II, Second Supplement to Complaint at 4-5 (July 1, 2024). Instead, the complaint attached sales receipts from other tobacco shops without connecting the purchased products to KMT Services. Disposable Vaporizer Devices II, Second Supplement to Complaint at 4-6 (July 1, 2024), Complaint, Exs. 4-1, 4-3 (June 11, 2024).
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Satisfying the Importation Pleading Requirement
The ITC's recent decisions indicate increased pre-institution scrutiny of importation allegations in ITC complaints. Complainants should be cognizant of the need to describe in their complaints at least one instance of importation of the accused product, with information showing that a sample product is present in the U.S. and was manufactured overseas. See, 19 CFR §210.12 (a)(3) ("the complaint shall … [d]escribe specific instances of alleged unlawful importations or sales"). On the flip side, proposed respondents should look for opportunities to challenge institution of investigations when the complaint does not adequately plead importation.
Accused devices that are embedded in larger products, such as semiconductor chips in electronic products, may require teardowns or other analysis to obtain sufficient evidence to show importation. For example, in the 1332 Investigation, a teardown of an imported Visteon system revealing the Autus I20 chip inside would most likely have sufficed to establish importation. Alternatively, had the Visteon website listed the Autus I20 chip model specifically rather than simply listing MediaTek as a chip supplier, that might have weighed in favor of institution. In view of the ITC's enhanced scrutiny of importation evidence, complainants should not neglect this critical component of an ITC Complaint
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Dan Muino is a Partner with Morrison Foerster based in its Washington, DC office. He is an intellectual property litigator and trial lawyer with more than two decades of experience litigating patent, trade secret, and copyright matters in federal courts around the country and at the U.S. International Trade Commission (ITC). He is Co-Lead of the firm's ITC Litigation Working Group and an editor of the MoFo@ITC guide to Section 337 investigations. He can be reached at [email protected]. Charles Provine is an associate in the Intellectual Property Litigation Group based in Morrison Foerster's Washington, DC office. He can be reached at [email protected].
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