One unique aspect of the International Trade Commission’s authority under
Section 337 is the power to issue general exclusion orders (GEO). Under
such orders, companies never named as a respondent in an ITC complaint can
find their products seized by U.S. Customs and Border Protection.
Because the ITC’s investigations are published in the Federal Register,
companies worldwide are presumed to be on notice of them. Thus, when a
company that imports products to the United States becomes aware of an ITC
investigation that may produce a GEO, it must decide whether to wait it out
and hope for a good outcome or intervene in the investigation and attempt
to shape the outcome. Many companies resist the temptation to incur such
expenses and endure the unforgiving deadlines and distractions that
accompany Section 337 investigations.
A recent opinion by the U.S. Circuit Court of Appeals for the Federal
Circuit highlights one of the risks in not intervening. In
Mayborn Group, Ltd. v. Int’l Trade Comm’n, 2019-2077 (Fed. Cir. July 16, 2020), the court considered the following
situation: After the ITC complainant settled with various named
respondents, the ITC judge found the two remaining named respondents in
default. The ITC judge recommended entry of a general exclusion order
because it was difficult to obtain information about the entities selling
the infringing self-anchoring beverage containers. The ITC issued the GEO.
While Mayborn had been informed of the ITC action by the complainants,
Mayborn took no action during the course of the ITC investigation. When the
complainant informed Mayborn that its products violated the GEO, Mayborn
petitioned the ITC to rescind its GEO under the law that allows the ITC to
rescind or modify an order if the conditions that led to the order no
longer exist. Mayborn claimed that the patent claim giving rise to the GEO
was invalid such that the GEO should be rescinded. The ITC denied the
petition, noting that Mayborn’s discovery of invalidating prior art after a
GEO issued was not a changed condition under the law.
On appeal before the Federal Circuit, the ITC argued that this was not a
changed condition and that it did not have statutory authority to consider
an invalidity challenge outside an investigation or enforcement proceeding.
Despite Mayborn’s arguments that the public interest weighed in favor of
such an exercise of authority by the ITC, the Federal Circuit agreed with
The court found that the ITC had properly denied Mayborn’s petition for two
independent reasons. First, the ITC may “only adjudicate patent validity
when an invalidity defense is raised by a respondent in the course of an
investigation or an enforcement proceeding.” (See Mayborn at 9.)
Because Mayborn did not raise an invalidity defense in the course of an
investigation or an enforcement proceeding, the ITC could not adjudicate
the issue. Second, Mayborn’s claim of invalidity was not a changed
condition; only a determination of invalidity (perhaps by the Patent Trial
and Appeal Board or in a district court) could be such a changed condition.
Thus, the law that Mayborn invoked was inapplicable.
If a company has notice that an ITC investigation could result in a general
exclusion order that would require seizure of its products by Customs, it
should consider thoroughly whether to intervene in the investigation to
protect its interests and present whatever defenses it may have to such an
order. While intervention will be more expensive than waiting on the
sidelines in the short run, it may prove to be more expensive in the long
run. Too, if a company holding an ITC exclusion order decides to begin an
enforcement proceeding at the ITC, it must be aware that defenses such as
invalidity that were not raised previously could well be raised in such an