Foreign Corrupt Practices Act

It is uncertain how the International Trade Commission may fare under President Trump’s second administration. But two issues could get renewed scrutiny: the scope of ITC’s jurisdiction and how the agency considers the effect of a remedial order on public interest.

The question of ITC jurisdiction over unfair importation claims has come to the fore with the US Supreme Court’s Loper Bright decision last year overturning the Chevron doctrine. In Loper Bright Enterprises v. Raimondo, the court overruled its 1984 opinion in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. which held that if courts find that a statute administered by a federal agency is ambiguous about an issue, they should defer to the agency’s interpretation of it.

Aarti Shah, a partner at Kilpatrick Townsend & Stockton and a former ITC investigative attorney, said the statute authorizing the ITC has a lot of room for administrative interpretation, which has shaped the jurisdiction of the rules of the ITC. “There could be some significant changes due to the fall of Chevron, making it possible for the Federal Circuit to overcome important ITC precedent if it wants to,” Shah said.

She noted that there has been speculation as to whether the U.S. Court of Appeals for the Federal Circuit will overturn its 2015 en banc decision in Suprema, Inc. v. International Trade Commission, which expanded ITC jurisdiction to cover imported products that induce infringement. The court held that articles that do not directly infringe until after they are imported into the United States may qualify as infringing articles that the ITC can exclude from entry into the country.

If the jurisdiction of ITC were to contract, intellectual property holders may have a more difficult time getting an injunction, Shah said. The ITC has been the preferred route as it is much more difficult to obtain an injunction in district court.

Shah is co-chair of the American Conference Institute’s Annual Practitioners’ Think Tank on ITC Litigation & Enforcement to be held March 31-April 1 in Washington, DC. The event will include discussion of these and other topics.

Considering Public Interest

Another fundamental feature of ITC enforcement is the agency’s analysis of how its orders may impact public interest. Under Section 337 of the Tariff Act, the commission investigates claims of unfair importation and issues an exclusion order or cease-and-desist order if it finds a violation, unless it determines the order would be contrary to the public interest. The factors it considers are the effects of the order on public health and welfare, competitive conditions in the US economy, the domestic production of similar goods, and the impact on US consumers.

Since 2010, the commission has delegated authority to the administrative law judge to take evidence and hear arguments on the statutory public interest factors in 155 investigations, according to ITC statistics as of February 3.

The statute gives the president veto power over exclusion orders. A president has only denied an exclusion order issued by the commission three times. The last time was in 2013 when President Obama vetoed an ITC determination to issue an exclusion order prohibiting the importation of certain electronic devices manufactured for Apple Inc. Shah noted that the consideration of public interest has been used to tailor a remedy, such as the amount of time medical researchers need to be able to transition to something else.

Congress recently drew attention to the topic when Rep. John Moolenaar, chairman of the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, sent a public interest statement to the ITC concerning its investigation of certain active matrix organic light-emitting diode display panels and modules for mobile devices. He objected to the ITC administrative law judge’s recommendation against an exclusion order banning imports of BOE Technology Group Co, Ltd.’s displays on the basis that BOE’s infringement lacked sufficient “impact on the industry in the United States.”

Moolenaar said that if the commission declines to ban imports of BOE’s displays, BOE’s growing dominance in the display industry will leave the United States overly reliant on the People’s Republic of China for an advanced technology critical to military operations.

Legislation has been introduced that reaffirms the ITC’s obligation to consider public interest in exercising its remedial powers and affirmatively determine that any exclusion serves the public interest.

The bill, Advancing America’s Interests Act, introduced for the third time in 2023, also establishes a “domestic industry” standard, which would require that a US company cannot be used as a plaintiff/complainant unless they voluntarily join a complaint requesting the ITC’s relief. This provision is directed at non-practicing entities who subpoena companies with a license to asserted patents for information to show there is a domestic industry, referred to as “domestic industry by subpoena.”

Trump Orders

Trump issued at least two executive orders during his first administration that impacted the ITC. One executive order changed how administrative law judges are hired. Previously, agency ALJ appointments were made through the competitive service selection procedure, with individuals chosen form an existing pool of ALJs. Trump gave agency heads the ability to consider prospective appointees outside these procedures.

Todd Taylor, counsel at Goodwin Procter LLP and a former ITC senior investigative attorney, said this broadened the pool of potential applicants and permitted the commission to hire individuals from private practice who had experience in section 337 litigation. He noted that one ALJ appointed from private practice after this hiring change was Doris Johnson Hines, who came from Finnegan, Henderson, Farabow, Garrett & Dunner.

Trump also issued an executive order at the beginning of his first administration requiring agencies to eliminate two regulations for every one new regulation issued. He expanded this deregulation effort in an executive order issued Jan. 31 that requires agencies to identify at least 10 existing regulations to be repealed for every new rule issued. The White House noted that Trump exceeded the 2-for-1 goal in his first term and eliminated five-and-a-half regulations for every new regulation issued.

Trump also issued a hiring freeze in January that applies to all executive departments and agencies. No federal civilian position that is vacant may be filled and no new position may be created. Taylor said the hiring freeze could affect section 337 litigation if the ITC is unable to hire attorney advisors for the ALJs and staff for the Office of General Counsel. “That would slow down investigations, which would make them less attractive to companies,” he said. “One of the strengths of section 337 litigation is that it’s relatively fast compared to district court litigation so you can get a remedy quickly.”

According to the ITC, the average length of time for an investigation in which the commission rendered a final determination was 18 months in fiscal year 2024.

The Trump administration has issued one directive to halt an investigation. The ITC announced in a Federal Register notice that on Feb. 4 it received a letter from the Office of the U.S. Trade Representative withdrawing its 2023 request for the commission to prepare a series of public reports on the potential distribution effects of goods and services trade and trade policy on U.S. workers and underrepresented and underserved communities. The ITC said it terminated the investigation.

Appointment Of New Commissioners

The ITC has three commissioner openings for Trump to fill following the resignation of Rhonda Schmidtlein in January. The six-member commission now consists of two Democrats, chair Amy Karpel and Jason Kearns, and Republican David Johanson. Commissioners are nominated by the president and confirmed by the Senate and no more than three commissioners may be of any one political party.

Shah noted that the commissioners shape ITC jurisprudence and have the most impact on issues like domestic industry, which is a major topic at the agency. The domestic industry requirement for section 337 investigations mandates that a complainant asserting patent infringement at the ITC must show a domestic industry exists in the US for articles protected by the patent. The commissioners have different views on how to apply the requirement.

Trump also will eventually nominate a director of the US Patent and Trademark Office. Coke Morgan Stewart was appointed acting director in January following Kathi Vidal’s resignation from the post. The new leader of the USPTO could make policy changes that impact ITC litigation.

For example, during her tenure Vidal limited when an inter partes review could be stayed for the pendency of an ITC case. In Apple Inc. v. Fintiv, Inc., the Patent Trial and Appeal Board established a framework for the board to apply when evaluating whether to exercise its discretion to institute an IPR when there is co-pending litigation in district court. Vidal subsequently issued a guidance memo in which she identified three scenarios in which PTAB would not deny institution of an IPR while parallel litigation was underway.

The ITC, which has a permanent staff of approximately 360 employees, does not appear to face the turmoil confronting other federal agencies. While the Trump Administration laid off staff at several agencies, including the Food and Drug Administration, Centers for Disease Control and Prevention and the National Institutes of Health, the ITC may have been spared such cuts. The agency declined to confirm this, saying it does not comment on personnel matters.

For section 337 work, “it may be a plus for the administration to have an agency that’s stopping unfair imports,” Todd said. “It is an agency you might want to expand and provide more funding for.”