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INFRINGING IMPORTS: HOW TO PROTECT YOUR IP RIGHTS AT THE BORDER

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For many intellectual property rights holders, concerns of infringement occurring abroad are heightened by the fact that imported goods can often slip through the cracks. Intellectual property law has long held that in the end, it is up to the rights holder to identify and take action violators when their ideas are being infringed upon.

What Constitutes a Section 337 Violation?

The importation of goods that infringe valid United States patents, trademarks and copyrights, as well as other unfair practices in import trade, are prohibited by Federal law. This prohibition was first introduced in section 337 of the Tariff Act of 1930 (“section 337”), and is codified in Title 19 of the U.S. Code, section 1337. Under section 337, the International Trade Commission (ITC) has the duty of investigating alleged violations of intellectual property rights after receiving substantiated complaints.

The ITC is an independent Federal agency that administers certain U.S. trade laws that prevent unfair competition from imported goods, including section 337 violations. Section 337 violations involve (1) unfair competition or an unfair act, e.g., patent infringement, (2) importation, sale for importation, or sale after importation into the United States of accused products, and (3) the existence of a domestic industry relating to the products or IP in question.

Who Can Submit a Complaint?

U.S. companies with U.S. or foreign operations can benefit from section 337; however, it is also possible for foreign owners of U.S. intellectual property rights to take advantage of the section. To do so, foreign rights holders must demonstrate the requisite amount of domestic activity related to the IP right. As long as there is significant or substantial activity with respect to the exploitation of an intellectual property right, section 337 may be used to protect against infringement.

Opening an Investigation

ITC investigations most often involve claims regarding patent and trademark infringement by imported goods. Both utility and design patents, as well as registered and common law trademarks, may be asserted in a rights holder’s initial complaint. Additionally, other forms of unfair competition include infringement of registered copyrights, mask works or boat hull designs, misappropriation of trade secrets or trade dress, passing off, and false advertising.

After a rights holder submits a detailed, fact-based complaint, the ITC will notify the Secretary of Commerce of an investigation and an ITC Administrative Law Judge will be appointed to preside over the matter. While temporary relief is available before a decision is made, such relief is rarely granted due to the high standard of proof that is required. If the ITC determines that there has been a violation of section 337 after completing an investigation, the Secretary of Treasury will issue an exclusion order directing U.S. Customs and Border Protection to seize and exclude the infringing goods and block them from entering the country. If appropriate, the ITC will also issue cease and desist orders against named importers and persons engaged in acts violating the section, including businesses already selling infringing imported articles out of existing U.S. inventory.

Difference from Patent Litigation

While a section 337 complaint is similar to patent litigation in District Court, an ITC investigation is generally resolved in only 12 to 16 months. Conversely, patent litigation can take anywhere from two to four years, often at an uncertain pace. Not only does the ITC have nationwide subpoena power, but it also has more resources in obtaining relevant information from overseas during discovery. Therefore, the ITC investigation process provides a timely and cost-efficient means of putting an end to infringing imports once they are identified.

Protecting Your IP Rights

It is important to remember that obtaining formal intellectual property rights is only the first step towards protecting your ideas. While patents, trademarks and copyrights do serve as deterrents, it is ultimately up to the rights holders themselves to be vigilant in identifying and taking action against would-be infringers. In essence, IP rights only grant the right to excludeothers from unauthorized use rather than actively preventing it. As with any and all rights, IP rights must be exercised in order to be effective.

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