ITC Policy Project Series: Public Interest Provisions in the Advancing America’s Interests Act
This is our second post on the recently reintroduced Advancing America’s Interests Act (AAIA). The act revises the 19 U.S. Code § 1337 – Unfair practices in import trade (Section 337), which gives the International Trade Commission (ITC) patent-enforcement authority over imports. The AAIA refocuses Section 337 on trade policy by reining in the ITC’s wide-ranging enforcement actions.
Importantly, the AAIA does not affect a patent holder’s rights to enforce its patents in the federal district courts. Patent holders can still seek full damages for infringement under 35 U.S.C. § 284 and an injunction against infringement (including imports) under 35 U.S.C. § 283.
The AAIA’s changes fall into three categories: Domestic industry provisions, public interest provisions and timeliness provisions. Our first post analyzes the domestic industry provisions; this post delves into the revised public interest provisions in the AAIA. We will lay out changes made to the current statute, explain the reasons behind the changes and examine the empirical case for making them.
R Street has previously discussed the ITC’s public interest practices here, here and here.
Revised Public Interest Provisions
The AAIA’s public interest provisions elevate the public interest from indifferent to integral by:
- Allowing the ITC to consider the public interest throughout the investigation
- Redefining the third public interest factor, production of like articles, to focus on the complainant’s production
- Requiring the ITC to affirmatively conclude that an exclusion order would serve the public interest
First, subsection 1337(c)(1) of the current statute requires the ITC to complete each investigation by determining whether infringement has occurred unless the parties settle the case:
The Commission shall determine, with respect to each investigation conducted by it under this section, whether or not there is a violation of this section, except that the Commission may, by issuing a consent order or on the basis of an agreement between the private parties to the investigation, including an agreement to present the matter for arbitration, terminate any such investigation, in whole or in part, without making such a determination.
This section generally prevents the ITC from considering the public interest until the remedy phase of each proceeding.
The revised statute maintains these settlement exceptions under newly designated paragraph 1337(c)(1)(A) while adding a public interest exception in new paragraph 1337(c)(1)(B). The new exception allows the ITC to cut an investigation short if it determines that an exclusion order is not in the public interest.
The Commission:
(A) …
(B) may determine during the course of the investigation that the exclusion of articles under investigation would not be in the interest of the public, after considering the nature of the articles concerned and the effect of such exclusion upon the public health and welfare, the United States economy (including competitive conditions), the production of like or directly competitive articles by the complainant and its licensees, and United States consumers, and terminate any such investigation, in whole or in part, without making any further determination.
Under the first proposed change, the ITC may decide early in the proceedings whether an exclusion order or other relief would be in the public interest. If not, the proceeding ends.
Second, the third public interest factor found in new 1337(c)(1)(B) and throughout Section 337 has been modified. Under the current statute, before issuing an exclusion order, the ITC must consider the effect the order would have on four factors:
- Public health and welfare
- Competitive conditions in the U.S. economy
- U.S. production of articles that are like or directly competitive with those subject to investigation
- U.S. consumers
The revised statute modifies the third public interest factor throughout Section 337 to limit consideration of U.S. production of like articles to just those articles produced by the complainant and its licensees:
- U.S. production of articles by the complainant and its licensees that are like or directly competitive with those that are subject to investigation
This change makes sense within an adversarial proceeding designed to halt unfair practices in import trade. This link to a complainant’s production ensures that any exclusion order is about curing the adverse effects of infringement on the party complaining of an “unfair” action in trade. If a complainant does not produce similar products to the banned articles, it is fair to require them to rely on the monetary damages available in court.
Removing third-party production—which requires third-party discovery to prove or disprove—from the public interest balance makes it more difficult for non-practicing entities (NPEs), particularly patent assertion entities (PAEs), to get an exclusion order when they produce nothing. But it protects the subclass of NPEs, including universities and start-ups, that partner with commercial producers.
Finally, under current subsection 1337(d)(1), if the ITC finds “a violation”—typically a finding of patent infringement by the respondent(s)—it must exclude the infringing articles from import unless after considering the four public interest factors “it finds that such articles should not be excluded.”
Thus, the ITC has wide discretion. While the statute requires that the ITC consider the public interest factors, it provides no guidance on how they should be weighed. Typically, the ITC merely discusses the factors and then finds that they do not outweigh the public interest in enforcing intellectual property rights.
The AAIA’s public interest provisions require the ITC to determine whether “exclusion of the articles concerned is in the interest of the public.” By requiring an affirmative finding that exclusion benefits the public, this change raises the standard for an exclusion order. It also eliminates some of the discretion inherent in the current statute by providing a clear standard for reviewing courts to judge the ITC’s public interest decisions.
These Changes Are Needed
Public interest is essentially a dead letter at the ITC. Per the U.S. Court of Appeals for the Federal Circuit, the “Commission has found public interest considerations to outweigh the need for injunctive relief … in only three investigations.” Given that the ITC has instituted over 1,300 investigations since 1975, three is essentially zero.
The need to revive the public interest is particularly acute because NPEs and PAEs have flocked to the ITC since the U.S. Supreme Court ended the practice of granting near-automatic injunction in the 2006 decision eBay v. MercExchange. Between 2007 and 2022, the ITC instituted 139 investigations at the behest of known NPEs. Roughly half were requested by PAEs. In 2022 alone, the ITC instituted 19 of its total 59 investigations for NPEs (11 of which were PAEs).
How effective the public interest provisions will be is difficult to predict. But at least the revised standard, its focus on a complainant’s U.S. production, and its consideration of the public interest factors in the nascent stages of investigations should put some teeth into the public interest.