In July 2018, the ITC instituted an investigation into Carburetors and Products Containing Such Carburetors (Inv. 1123) based on a complaint from Walbro—a company that designs and manufactures carburetors in Japan—against 35 named respondents, including foreign manufacturers and domestic retailers of lawn equipment.

Early in the investigation, some of the respondents chose to accept consent orders rather than litigate the dispute.  At the ITC, a consent order works as a kind of settlement where the respondent avoids litigation by simply agreeing not to import the accused product.

The ITC later terminated the entire investigation in October 2019 with a finding of no violation because Walbro failed to satisfy Section 337’s domestic industry requirement.  Then a month ago, one of the original respondents—a Chinese manufacturer named Fujian Hualong Carburetor Co.—asked the ITC to rescind its consent order.

The ITC published a notice this week denying the request.

[Hualong] has failed to show there is any basis for granting its petition . . .. In particular, [Hualong] has failed to show that a later determination that the complainant fails to satisfy the domestic industry requirement concerns a change in the conditions of law or fact which led to the Consent Order. Nor does [Hualong] cite any language in the Consent Order that it may be rescinded based on a later finding in the investigation of no domestic industry. Further, [Hualong] has failed to show that the public interest requires that the Consent Order be rescinded.

Hualong’s consent order stipulation follows the same standard template and boilerplate language typically used in all ITC investigations.  That language includes a clause stating that the order “shall not apply with respect to any claim of any Asserted Patent that has expired or been found or adjudicated invalid.”  But there’s no standard clause saying anything about what happens if the complainant fails to satisfy the domestic industry test.  Walbro argued, and the ITC agreed, that the consent order is therefore still valid.

Obviously, there’s a lesson in this for lawyers representing clients at the ITC on the potential consequences of consent orders and maybe an opportunity to draft a new clause in consent order stipulations.

What I think is most interesting about the ITC’s decision here is that despite its legalistic rationale for denying Hualong’s request, the Commission could easily have chosen to rescind the order on the ground that it would be contrary to the public interest to block imports that the agency itself has determined do not violate Section 337.  Its refusal to do so may be indicative of the low priority the ITC generally gives to the law’s trade-based elements—in this case the domestic industry requirement—which limit its power to function as an all-purpose administrative patent court.

Image Credit: Satish Krishnamurthy

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