Background
For nearly 40 years, when a court found that a statute was ambiguous, it deferred to the reasonable interpretation of the federal agency administering the statute. This principle—known as Chevron deference, after the 1984 Supreme Court case Chevron U.S.A. v. Natural Resources Defense Council—had led courts, Congress, and regulated entities to rely on agency expertise in interpretating ambiguous statutes in developing and implementing complex regulatory programs. On June 28, 2024, the U.S. Supreme Court overruled Chevron and held that courts “may not defer to agency interpretation of the law simply because a statute is ambiguous.”
With deference to the regulatory agencies’ interpretation of their authorizing statutes no longer the law of the land, courts must revert to the pre-Chevron framework of Skidmore v. Swift & Co., which held that an administrative agency’s interpretation of rules must be assessed on a case-by-case basis and shall be decided according to the persuasiveness of the individual arguments.
The decision may impact thousands of administrative programs and may inject additional uncertainty into litigation challenging agency regulations. As to the ITC, the key takeaway is that the Commission’s interpretation of its enabling statute (Section 337) will no longer be entitled to Chevron deference, as discussed below.
Also this term, the Supreme Court ruled in Jarkesy v. SEC that the SEC may not use administrative proceedings to seek civil penalties for securities fraud—instead those proceedings must be tried in an Article III court, where the accused has a right to a jury trial. While the ruling applies only to securities laws, the Court’s reasoning potentially could be expanded to other administrative agencies. This ruling, and its potential impacts at the ITC, are discussed below.
Potential Impact of Loper Bright at the ITC
The U.S. International Trade Commission (ITC), as an independent trade administrative agency involved in statutory interpretation, will not be immune to the effects of Loper Bright. Actions for infringement of intellectual property rights and other unfair trade actions at the ITC are governed by 19 U.S.C. § 1337, as amended. The Commission has had several occasions to interpret that statute in finding and issuing exclusion orders. Post-Chevron, such determinations by the ITC are no longer entitled to the same deference, and previous interpretations relying on Chevron may be at risk.
The clearest example is Suprema v. ITC.[1] There, the Federal Circuit held in an en banc decision that the ITC’s interpretation of Section 337’s “articles that infringe” clause was subject to the two-step deference established in Chevron. Consequently, the Federal Circuit upheld the ITC’s interpretation of Section 337 that would allow the ITC to issue exclusion orders for induced infringement, even where the required direct infringement occurs after importation of the accused articles. Relying on Chevron deference, the Federal Circuit reversed an earlier panel decision that held there was a temporal limit on “articles that infringe,” meaning that the ITC could not exercise jurisdiction unless infringement occurred prior to importation of the accused products.
With Chevron overruled, it is likely that the ITC and Federal Circuit will be asked to revisit the Suprema decision. In particular, Respondents in ITC investigations facing claims of infringement based on inducement, contributory infringement, or the practice of a method claim within the United States are likely to challenge the ITC’s interpretation of Section 337 in Suprema. Indeed, the issue has already been raised at the Federal Circuit in Google’s pending petition for rehearing en banc in a case involving high-tech speakers. Google argued that if Chevron is overruled, the ITC’s determination that Google infringes certain Sonos patents under Suprema cannot stand. Although the Federal Circuit ruled against Google in a panel opinion, it has not yet acted on the petition for rehearing en banc.[2]
The Court in Loper Bright did make clear that overruling Chevron was not an invitation to revisit settled cases, as previous holdings relying on Chevron deference “are still subject to statutory stare decisis despite our change in interpretive methodology.” In other words, prior decisions interpreting statutes are subject to a heightened form of stare decisis, making them more difficult to overturn. And as the Loper Bright Court explained, “the mere fact that a case relied on Chevron deference “cannot constitute a ‘special justification’ for overruling such a holding,” because it is “at best, ‘just an argument that the precedent was wrongly decided.’” This guidance likely will not keep litigants from challenging past statutory interpretations, however, and if the Federal Circuit does revisit Suprema, it could sharply curtail Section 337 investigations where induced infringement by end users is asserted.
The impact of the Loper Bright decision is not limited to Suprema, however, as any ITC interpretation of Section 337 will now be subject to greater scrutiny by the Federal Circuit. Previous ITC interpretations of Section 337 that relied on Chevron deference include the ITC’s view that it has the authority to impose civil penalties, that it has jurisdiction over cases where there was a contract for sale of an infringing product but the product had not yet been imported into the U.S., and the ITC’s interpretation of how the domestic industry requirement can be satisfied.
The ruling in Loper Bright did not entirely eliminate the role of agencies in interpreting ambiguous statutes. While the Court found that an agency’s interpretation of a federal statute “cannot bind a court,” the Court also held that the agency’s interpretation can be informative “to the extent it rests on factual premises within [the agency’s] expertise.” Additionally, the Court emphasized that Congress can always “endow agent[s] with the power to make findings of fact which are conclusive, provided the requirements of due process which are specially applicable to such an agency are met.” The fact-intensive nature of ITC investigations therefore may insulate the ITC from the impact of the Loper Bright decision when compared to other federal agencies.
Jarkesy v. SEC – Unlikely to Directly Impact Proceedings at the ITC
In Jarkesy, the Supreme Court ruled that the right to a jury trial applies in suits “at common law,” which, it explains, includes claims that are “legal in nature.” The Court found the SEC’s enforcement action against Jarkesy falls into this definition—and does not implicate “public rights”—because it seeks a monetary penalty and is based on a claim that resembles common law fraud. Therefore, the SEC was required to bring the suit in an Article III court, where trial by jury is available. Although limited to the SEC, the Court’s reasoning could potentially be applied to enforcement proceedings by other administrative agencies.
The ITC, for example, conducts quasi-judicial investigations to determine whether a domestic industry should be protected from unfair trade practices and whether the relevant products should be blocked from importation into the U.S. Because the ITC’s primary remedy of an exclusion order is equitable in nature, its ability to block infringing imports is unlikely to be affected by Jarkesy.
However, the ITC also has the statutory authority to impose fines for violations of its orders. Under Title 19 of the U.S. Code, Section 1337(f)(2), the ITC can impose a “civil penalty for each day on which an importation of articles, or their sale, occurs in violation of the order” of up to $100,000 or twice the domestic value of the offending imports. If such penalties were challenged, the question would be whether they implicate “public” or “private” rights, and accordingly whether the right to a jury trial attaches. The answer to this question may be complicated, given that an ITC investigation involves private parties and roughly parallels a comparable district court action (which, in the case of patent infringement, the Supreme Court has ruled is subject to a jury trial right).[3]
The Court in Jarkesy did not reach the Fifth Circuit’s finding that the SEC’s ALJs violate separation of powers, sparing the ITC and other agencies (for now) the need to examine the impact on their own ALJs.
Conclusion
Given the return to the Skidmore framework for agency deference and the uncertainty that comes with it, clients should continue to monitor the evolving ITC landscape to ensure they remain up to date on any changes or challenges to agency interpretation. Frequent ITC litigants should be aware that the extent of the impact of Loper Bright will not be known for some time and should plan their claims and defenses with potential different statutory interpretations in mind.
Likewise, it will almost certainly take years to fully understand Jarkesy’s effects on various administrative agencies, including the ITC. But the ITC’s ability to adjudicate unfair trade practices and issue equitable remedies should not be affected. ITC litigants should monitor developments in this area, however, as post-Jarkesy guidance could impact whether and how the ITC seeks civil penalties.
[1] Suprema v. ITC, 796 F.3d 1338 (Fed Cir. 2015).
[2] Sonos, Inc. v. Int’l Trade Comm’n, Nos. 2022-1421, 2022-1573 (Fed. Cir. Apr. 8, 2024).
[3] Markman v. Westview Instruments, 517 U.S. 370, 377 (1996).
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