Under Section 337 of the Tariff Act of 1930, as amended (“Section 337”), the U.S. International Trade Commission (“ITC” or “Commission”) has the authority to issue exclusion orders barring the importation of articles that infringe U.S. intellectual property rights.[1] The default remedy is a limited exclusion order (“LEO”) directed to the infringing imported articles of named respondents.[2] However, before an LEO can be issued, the Commission must determine the appropriate scope of the remedy and its effect on the four public interest factors identified in the statute.[3] A critical part of this analysis has long been whether an LEO should cover downstream products that incorporate the infringing articles. For instance, in a hypothetical case involving infringing computer chips incorporated into automobiles (the downstream products), should the LEO exclude the automobiles themselves from importation because they contain infringing chips?
Historically, investigations involving downstream products containing an infringing component warranted a special nine-factor test (the “EPROMs analysis,” named for the ITC investigation in which the test was first stated) to determine whether the LEO should reach downstream products. In 2008, the Federal Circuit held in Kyocera Wireless Corp. v. U.S. Int’l Trade Comm’n that the Commission may not exclude downstream products of non-parties to an investigation.[4] After Kyocera, a patent owner must name suppliers of downstream products as respondents if it seeks to exclude those products under an LEO. The continuing applicability of the EPROMs analysis post-Kyocera has been unclear and has not been definitively addressed by the Commission. This article assesses the current state of the EPROMs analysis as reflected in decisions by current and recently-retired Administrative Law Judges.
Background
The Commission first applied the EPROMs analysis in Inv. No. 337-TA-276 (“EPROMs”) to “balance the complainant’s interest in obtaining complete protection from all infringing imports by means of exclusion of downstream products against the inherent potential of the LEO to disrupt legitimate trade.”[5] In the EPROMs investigation, the Commission evaluated whether to exclude Respondent Hyundai’s downstream products ranging from personal computers to automobiles that incorporated infringing Hyundai-manufactured EPROM chips (a type of computer memory). The Commission applied nine factors[6] in determining that the LEO should not reach downstream Hyundai automobiles because such exclusion “per se is excessive, and would not significantly increase the relief afforded complainant.”[7]
Until 2008, a complainant could seek relief against downstream products imported by both named respondents and non-parties, subject to the EPROMs analysis. However, the Federal Circuit’s decision in Kyocera held that an LEO cannot reach downstream products of non-parties.[8] Thus, if a complainant now seeks to exclude downstream products based on an infringing component, the downstream parties must be named as respondents in the investigation.
ALJ EPROMs Decisions post-Kyocera
Since the Kyocera decision, Administrative Law Judges have wrestled with whether the EPROMs analysis still applies when determining whether or not to exclude downstream products of named respondents. Current Judges Shaw and McNamara, and former Judges Essex, Bullock, Lord, Pender, and Rogers have issued decisions concerning the applicability of the EPROMs test, while it appears that current Judges Cheney, Elliot, and Bhattacharyya have not yet had the opportunity to conclusively weigh in on the issue.
Judge Shaw has applied the EPROMs analysis in several investigations.[9] In Inv. Nos. 337-TA-781 and 337-TA-784, Judge Shaw recommended that LEOs not reach respondents’ downstream products based on the EPROMs analysis (both of those investigations were terminated prior to Commission review).
Judge McNamara has expressed doubt as to whether the EPROMs analysis remains applicable post-Kyocera. In Inv. No. 337-TA-1044, Judge McNamara stated that the EPROMs analysis was devised specifically with “products which were not themselves the subject of a finding of violation” in mind, and the concern addressed by the EPROMs analysis “has been substantially, if not entirely, obviated by the Federal Circuit’s 2008 opinion in [Kyocera].”[10] Judge McNamara concluded that the EPROMs analysis did not apply in 337-TA-1044 because all downstream products were accused in the investigation.[11] In Inv. No. 337-TA-1235, Judge McNamara allowed the parties to introduce defenses based on the EPROMs analysis, but the investigation was terminated prior to any further ruling on the issue.[12]
Former Judge Essex issued contrasting decisions, applying the EPROMs analysis in one investigation, but finding the analysis to be no longer necessary in another investigation.[13] Judge Essex also stated that he does not view the EPROMs test as having been overturned: “In looking at Kyocera, and I’ve read that one a lot and I read EPROMs, and I don’t see that EPROMs has been specifically overturned in any way. I don’t see that either in the [Federal] Circuit’s decision or in any of the subsequent Commission actions.”[14]
Former Chief Judge Bullock issued decisions suggesting uncertainty as to whether the EPROMs analysis is still applicable.[15] Chief Judge Bullock’s Order in Inv. No. 337-TA-893 highlights the uncertain state of the analysis: “In the absence of clear guidance from the Commission (or Federal Circuit) as to whether the EPROMs factors may still be a consideration for the downstream products of named Respondents, the undersigned declines to prevent a party from introducing evidence or argument regarding the same.”[16]
Former Judge Lord believed that the EPROMs analysis “addressed the question whether downstream products made by unnamed respondents should be excluded.”[17] Accordingly, in subsequent Inv. No. 337-TA-1046, Judge Lord stated in dicta that Kyocera rendered the EPROMs analysis inapplicable.[18] However, Judge Lord has echoed former Chief Judge Bullock’s view that, until the Commission provides guidance regarding the analysis, it would be inappropriate to exclude evidence relating to the factors.[19] Judge Lord also noted in Inv. No. 337-TA-910, where the Commission had delegated public interest, that some EPROMs-related evidence might also be relevant to the public interest analysis.[20]
Former Judge Pender in Inv. No. 337-TA-1073 found the EPROMs analysis inapplicable when the downstream products at-issue were specifically accused and imported by named respondents.[21] Under this view, the EPROMs analysis would have been obviated by Kyocera in the context of LEOs, because Kyocera precluded the Commission from issuing any LEOs against downstream products imported by unnamed parties.
Former Judge Rogers was more unequivocal in holding that the EPROMs analysis no longer applies in Section 337 investigations after Kyocera. In Inv. No. 337-TA-735, Judge Rogers rejected an expert report on the EPROMs analysis after concluding that “[t]he Commission’s concern articulated in EPROMs has been obviated by the Federal Circuit’s decision in Kyocera.”[22]
Commission Uncertainty
As both former Chief Judge Bullock and Judge Lord have noted, there is a lack of clear guidance as to whether the EPROMs analysis should still apply in downstream remedy analysis. In support of the proposition that Kyocera eliminated the analysis in its entirety, certain Judges and parties have pointed to the Commission’s decision granting downstream relief without consideration of the EPROMs factors in Inv. No. 337-TA-661.[23] However, the Commission has issued at least one opinion adopting recommended remedy determinations where the assigned Judge performed an EPROMs analysis.[24] In that opinion, the Commission explicitly noted that, because the remedial orders in the investigation applied only to the downstream products of a named respondent, the orders “do not run afoul of the Federal Circuit’s holding in Kyocera.”[25] To this day, the continuing applicability of the EPROMs analysis to LEOs remains unclear, with the two current Judges who have examined the issue seemingly holding opposite views.[26]
Conclusion
Until the Commission conclusively rules on the continued vitality of the EPROMs analysis, and given the overlap between certain EPROMs factors and the public interest analysis, downstream respondents would be well-advised to continue to offer EPROMs-related evidence where the exclusion of downstream products is sought, especially in investigations in which the public interest analysis has been delegated to the Judge.
[1] See 19 U.S.C. § 1337(d)(1).
[2] See Kyocera Wireless Corp. v. U.S. Int’l Trade Comm’n, 545 F.3d 1340, 1356 (Fed. Cir. 2008) (citing 19 U.S.C. § 1337(d)(2)) (“Kyocera”).
[3] See 19 U.S.C. § 1337(d)(1) (“[The Commission] shall direct that the articles concerned. . .be excluded from entry into the United States, unless, after considering the effect of such exclusion on the [1] public health and welfare, [2] competitive conditions in the United States economy, [3] the production of like or directly competitive articles in the United States, and [4] United States consumers, it finds that such articles should not be excluded from entry.”)
[4] Kyocera, 545 F.3d 1340, 1358.
[5] Certain Erasable Programmable Read-Only Memories (EPROMs), Inv. No. 337-TA-276, USITC Pub. No. 2196 at 125 (May 1989), aff’d sub nom. Hyundai Elec. Indus. Co. v. U.S. Int’l Trade Comm’n, 899 F.2d 1204 (Fed. Cir. 1990).
[6] The non-exhaustive factors include:
- the value of the infringing articles compared to the value of the downstream products in which they are incorporated;
- the identity of the manufacturer of the downstream products;
- the incremental value to the complainant of the exclusion of downstream products;
- the incremental detriment to respondents of the exclusion of downstream products;
- the burdens imposed on third parties resulting from exclusion of downstream products;
- the availability of alternative downstream products which do not contain the infringing articles;
- the likelihood that the downstream products actually contain the infringing articles and are thereby subject to exclusion;
- the opportunity for evasion of an exclusion order which does not include downstream products; and
- the enforceability of an order by Customs.
[7] Id. at 127-128.
[8] Kyocera, 545 F.3d at 1358.
[9] See, e.g., Certain Microprocessors, Components Thereof, and Products Containing the Same, Inv. No. 337-TA-781, Initial Determination at 377-383 (Dec. 14, 2012); Certain Light-Emitting Diodes and Products Containing the Same, Inv. No. 337-TA-784, Recommended Determination on Remedy and Bonding at 9-12 (July 23, 2012); Certain Audiovisual Components and Products Containing Same, Inv. No. 337-TA-837, Recommended Determination at 5-6 (July 31, 2013) (“the Federal Circuit’s opinion in Kyocera does not reach the question of whether the Commission should consider the EPROMs factors…”); Certain Graphics Processing Chips, Systems on a Chip, and Products Containing the Same, Inv. No. 337-TA-941, Recommended Determination on Remedy and Bonding at 5-9 (Jan. 5, 2016).
[10] Certain Graphic Systems, Components Thereof, and Consumer Products Containing the Same, Inv. No. 337-TA-1044, Initial Determination at 136-41 (Apr. 13, 2018).
[11] Id. Similar to Judge McNamara’s Initial Determination, the Commission Opinion in 337-TA-1044 held that the EPROMs analysis did not apply to the specific facts in that investigation.
[12] Certain Vehicle Control Systems, Vehicles Containing the Same, and Components Thereof, Inv. No. 337-TA-1235, Denying Without Prejudice Complainants’ Motion to Strike Respondents’ Seventh Affirmative Defense (Apr. 26, 2021).
[13] Compare Certain Semiconductor Chips and Products Containing Same, Inv. No. 337-TA-753, Initial Determination and Recommended Determination on Remedy and Bond at 372 (Mar. 2, 2012) (applying most EPROMs factors), with Certain Computers and Computer Peripheral Devices and Components Thereof and Products Containing the Same, Inv. No. 337-TA-841, Initial Determination and Recommended Determination on Remedy and Bond at 162 (Aug. 2, 2013) (“The ALJ disagrees with Respondents’ assertion that an EPROMs analysis is warranted. Respondents provide no basis for arguing that the EPROMs analysis is necessary in light of Kyocera and Certain Semiconductor Chips, [Inv. No.] 337-TA-661. . . .”).
[14] Certain Radio Frequency Integrated Circuits and Devices Containing Same, Inv. No. 337-TA-848, Hearing Tr. 10:25 – 11:3 (Aug. 17, 2012).
[15] Compare Certain Static Random Access Memories and Products Containing Same, Inv. No. 337-TA-792, Initial Determination and Recommended Determination on Remedy and Bond at 62 (Oct. 25, 2012) (recommending downstream remedy without analyzing the EPROMs factors), with Certain Flash Memory Chips and Products Containing Same, Inv. No. 337-TA-893, Order No. 51 at 3 (Sept. 29, 2014) (denying motions in limine to preclude respondents from introducing testimony or argument with respect to the EPROMs factors).
[16] Order No. 51 at 3 (Sept. 29, 2014).
[17] Certain Semiconductor Devices, Semiconductor Device Packages, and Products Containing the Same, Inv. No. 337-TA-1010, Initial Determination at 256-58 (June 30, 2017) (emphasis added).
[18] Certain Non-Volatile Memory Devices and Products Containing the Same, Inv. No. 337-TA-1046, Recommended Determination on Remedy and Bonding at 2 (May 10, 2018) (citing to Inv. No. 337-TA-1010 as “finding the EPROMs analysis inapplicable to limited exclusion orders after Kyocera”).
[19] See Certain Television Sets, Television Receivers, Television Tuners, and Components Thereof, Inv. No. 337-TA-910, Order No. 57 at 2 (Nov. 21, 2014) (“I agree with Chief ALJ Bullock that there is no clear precedent on this issue and it would thus be inappropriate to preemptively exclude [EPROMs] evidence.”).
[20] See id. at 2-3 (“Moreover, the Notice of Investigation directs me to take evidence and hear arguments with respect to the public interest in this investigation, and some of the evidence that Complainant seeks to exclude may be relevant to the statutory public interest factors even if I do not conduct an analysis based on the EPROMs factors.”).
[21] Certain Thermoplastic-Encapsulated Electric Motors, Components Thereof, and Products Containing the Same II, Inv. No. 337-TA-1073, Recommended Determination at 14 n.3 (Nov. 27, 2018)
[22] Certain Flash Memory Chips and Products Containing Same, Inv. No. 337-TA-735, Order No. 32: Granting –In-Part & Denying –In-Part Complainant’s Motion For Leave to Submit the Supplemental Expert Report of Kathryn L. Kobe, at 8 (May 9, 2011).
[23] Certain Semiconductors Chips Having Synchronous Dynamic Random Access Memory Controllers and Products Containing Same, Inv. No. 337-TA-661, Comm’n Op. (Aug. 10, 2010).
[24] See Certain Liquid Crystal Display Modules, Products Containing Same, and Methods for Using the Same, Inv. No. 337-TA-634, Comm’n Op. at 4-5 (Nov. 24, 2009).
[25] Id. at 5 n.3.
[26] See, supra, discussions regarding Judges Shaw and McNamara.
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