By: Levent Hergüner and David Maiorana – In another example of why defaulting at the ITC can be a dangerous strategy, the ITC recently found all eight named respondents in default and concluded a general exclusion order (GEO) was the appropriate remedy. Since the ITC did not receive a response from any of the eight respondents, Complainant Bear Archery filed a motion for summary determination seeking a finding of a Section 337 violation and entry of a GEO. ALJ Bullock granted the motion and, upon review, the Commission agreed that a GEO was the appropriate remedy. See Certain Full-Capture Arrow Rests and Components Thereof, Inv. No. 337-TA-1117, Comm’n Op. (July 31, 2019).
As we have discussed previously (here), a GEO prohibits all importations of excluded goods, even from non-parties. While, enjoined non-parties can appeal the Commission’s order to the Federal Circuit, it is clear that a GEO can be a powerful remedy for complainants. See LSI Computer Sys., Inc. v. ITC, 832 F.2d 588, 588 (Fed. Cir. 1987). In addition to showing a violation of Section 337, to obtain a GEO the ITC must determine (1) a GEO is necessary to prevent circumvention of an exclusion order limited to products of named respondents or (2) there is a pattern of violation and it is difficult to identify the source of infringing products. In this investigation, the ITC found that both requirements were met.
Since none of the respondents contested the allegations made by the Complainant, the ITC relied on the evidence in the complaint and the associated exhibits to find that Complainant presented reliable, probative, and substantial evidence that a domestic industry existed and that a violation of section 337 had occurred. The ITC also found that Complainant met the requirements for a GEO that encompassed the infringing products.
The ITC concluded a GEO was the appropriate remedy because Complainant met the grounds for a GEO under section 337(d)(2)(A) and (B). In particular, the ITC found that Complainant presented sufficient evidence of a widespread pattern of violation, demonstrating that it was difficult, if not impossible, to identify the source of the infringing products. They noted that there were numerous other online sources that sold infringing arrow rests and that it would have been impossible for Complainant to identify all sources given the anonymity with which counterfeiters conduct business through online retailers. Additionally, the ITC found that Complainant showed a limited exclusion order (LEO) would likely be subject to immediate evasion because many of these sales were made online, making it difficult to gain information about the entities selling the infringing products. ALJ Bullock noted that the Defaulting Respondents and other entities rename their companies, hide behind anonymous seller profiles, or sell to other companies who then import their infringing products into the United States under a different name in an effort to avoid detection.
In recent years, the ITC appears more willing to issue a GEO. Perhaps this reflects the ITC’s recognition that corporate supply chains are becoming more complex and, in some circumstances, it may be too easy to circumvent an LEO. This case highlights that the ITC will issue a GEO in the appropriate circumstances, including when the named respondents default. Respondents should consider the potentially significant ramifications of defaulting at the ITC and complainants should be mindful of the potential advantages of presenting the necessary evidence to support the issuance of a GEO in their complaint when dealing with a widespread pattern of unauthorized use.
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