United States: Downstream Remedy At The ITC: The Continuing Applicability Of The Eproms Analysis

Last Updated: November 10 2016
Article by G. Brian Busey, Lynn I. Levine and Aaron D. Rauh

Appreciation to the Federal Circuit Bar Association October 2016 Newsletter, a publication of the Federal Circuit Bar Association, for this limited use.

To remedy violations of Section 337 of the Trade Act of 1930, as amended ("Section 337"), the U.S. International Trade Commission ("ITC" or "Commission") "shall" issue an exclusion order barring the importation of infringing articles.1 The default remedy is a limited exclusion order ("LEO") directed to the infringing imported products of named respondents.2  However, before an LEO can be issued, the appropriate scope of the remedy and the effect of the remedy on the four public interest factors identified in the statute must be determined.3  A critical part of the analysis regarding the proper scope of an ITC exclusion order has long been whether an order should cover downstream products.  Historically, investigations involving downstream products containing an infringing component (e.g., a computer containing an infringing chip) warranted a special nine-factor test (the "EPROMs analysis") to determine whether the LEO should reach downstream products.  Following the Federal Circuit's decision in Kyocera Wireless Corp. v. U.S. Int'l Trade Comm'n,4 the continuing applicability of the EPROMs analysis has been unclear.  To date, the Commission has not definitively addressed the continued viability of the EPROMs test.  This article analyzes the current state of EPROMs analysis, including decisions by the current Administrative Law Judges, and its continuing potential applicability in Section 337 investigations.

Background

The Commission first applied the EPROMs test 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 that ranged from personal computers to automobiles that incorporated infringing Hyundai-manufactured EPROMs.  The Commission applied nine factors6 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 obtain relief against downstream products imported by both named respondents and unnamed third parties.  However, the Federal Circuit's decision in Kyocera held that an LEO cannot reach downstream products of non-respondents.8 Thus, if a complainant now seeks to exclude downstream products based on an infringing component, downstream parties must be 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.  Of the current slate of ALJs, Judges Shaw, Essex, Bullock, and Lord have issued decisions concerning the applicability and validity of the EPROMs test, while it appears that Judges Pender and McNamara have not yet had the opportunity to conclusively weigh in on the issue.

Judge Shaw has applied the EPROMs test in several investigations.9  In fact, 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.  However, both investigations were terminated prior to Commission review.

Judge Essex has issued contrasting decisions, applying the test in one investigation, but finding the analysis to be no longer necessary in another investigation.10  Judge Essex has 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."11

Similarly, Chief Judge Bullock has issued decisions both indicating that the EPROMs analysis may or may not still be required.12  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."13

Judge Lord has echoed 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.14   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.15

Commission Uncertainty

As both Chief Judge Bullock and Judge Lord have recently 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-661.16  However, the Commission has issued at least one opinion adopting recommended remedy determinations where the assigned Judge performed an EPROMs analysis.17  In that decision, the Commission explicitly noted that, because the remedial orders in that 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."18

Conclusion

Until the Commission conclusively rules on the continued vitality of the EPROMs analysis, and given the potential relevancy of certain EPROMs factors to the public interest analysis, downstream respondents likely should 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.

Circuit Bar Association or any other affiliates.

Footnotes

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 (EPROM), 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:

  1. the value of the infringing articles compared to the value of the downstream products in which they are incorporated;
  2. the identity of the manufacturer of the downstream products;
  3. the incremental value to the complainant of the exclusion of downstream products;
  4. the incremental detriment to respondents of the exclusion of downstream products;
  5. the burdens imposed on third parties resulting from exclusion of downstream products;
  6. the availability of alternative downstream products which do not contain the infringing articles;
  7. the likelihood that the downstream products actually contain the infringing articles and are thereby subject to exclusion;
  8. the opportunity for evasion of an exclusion order which does not include downstream products; and
  9. 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. 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. . . .").

11. Certain Radio Frequency Integrated Circuits and Devices Containing Same, Inv. No. 337-TA-848, Hearing Tr. 10:25 – 11:3 (Aug. 17, 2012).

12. 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).

13. Order No. 51 at 3 (Sept. 29, 2014)

14. 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.").

15. 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.").

16. 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).

17. 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).

18. Id. at 5 n.3.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
G. Brian Busey
Lynn I. Levine
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions