Recent U.S. Court Developments Of Note For Japanese Companies And Their Counsel

Recent months have produced U.S. court decisions with significant consequences for Japanese companies doing business with the United States; we summarize recent developments that could inform a call with your clients.:

• The status of Phase III IEEPA tariff refunds for fully liquidated claims
• The status of legal challenges to IEEPA’s successor tariffs, under Sections 122 and 301
• How “stream of commerce” jurisdiction can sweep your client into US courts with limited forum contacts – and what to do about it
• An illustration of how §1782 discovery in the US can advance litigation in Japanese courts
• How a Japanese supplier of component parts was hit with a $229 million patent verdict in a Texas court

IEEPA Tariff Refunds: Phase 3 Opens the Door for Importers Who Sue

In re Tariffs Collected in Reliance on the International Emergency Economic Powers Act (IEEPA), U.S. Court of International Trade.

Our last update noted that U.S. Customs and Border Protection (“CBP”) had refunded large amounts of IEEPA duties through Phases 1 and 2 of its Consolidated Administration and Processing of Entries (“CAPE”) system, but that there was not yet a mechanism for refunding duties on entries that had become finally liquidated. That has now changed.

In July, the Court of International Trade (“CIT”) largely resolved the problem for importers that had already brought refund actions. Judge Richard K. Eaton ordered CBP to reliquidate without IEEPA duties finally liquidated entries of plaintiffs in approximately 3,700 pending IEEPA refund cases. The order was significant because the government had maintained that CBP lacked legal authority to reopen finally liquidated entries without a court order. Judge Eaton expressly stated that his order supplied that authority. CBP subsequently announced that Phase 3 of CAPE—the administrative mechanism for implementing those court-ordered reliquidations—will become operational on October 6, 2026.

The court has indicated that July was not a deadline; it has continued to grant orders requiring reliquidation of finally litigated claims that have been raised with the court in individual litigations. The CIT has announced that refunds will be processed for these claims on a rolling basis after the initial focus on refunding claims made at the time of the Court’s decision.

Why it matters: Japanese companies that have liquidated claims and have not yet filed a claim in the CIT should seriously consider that option at this point There are other options: there are pending class actions that could encompass their claims that have not yet been certified. The federal government could also lose on appeal, and the appellate court conclude that the CBT does not require a court order in an individual action to relitigate claims. But at this point, filings in the CIT are fairly mechanical: they typically turn on legal argument, with limited reference to the fact of an individual case Japanese companies should consider whether the value in obtaining finality and getting in the queue for Phase III refunds is worth the legal expense in bringing an individual claim. 

The Successors to the IEEPA Tariffs, Under Sections 122 and 301, Are Also Under Challenge

State of Oregon v. Trump, No. 26-1804 (Fed. Cir.); In re Section 301 Forced Labor Cases, Court No. 26-03555 (Ct. Int’l Trade).

After the Supreme Court invalidated the administration’s IEEPA tariffs, the administration imposed a temporary 10% worldwide tariff under Section 122 of the Trade Act of 1974. On May 7, a divided CIT held that the tariff exceeded the authority Congress granted under Section 122. The legal dispute turns principally on the statute’s prerequisite for imposing such tariffs: Section 122 authorizes temporary import restrictions to address “large and serious United States balance-of-payments deficits.” The CIT majority concluded that the trade deficit, current-account deficit, and related modern measures relied upon by the administration were not the “balance-of-payments deficits” Congress meant when it enacted Section 122 in 1974. The Federal Circuit has stayed the judgment pending appeal, saying that the CIT majority’s opinion “may be incorrect.” The Section 122 tariffs themselves expired at the end of their statutory 150-day period in July, but the appeal remains important to determining the legality of the duties already collected and potential refunds.

When the Section 122 tariffs expired, the administration turned to Section 301 of the Trade Act, imposing new tariffs on imports from 60 economies based on USTR findings concerning those economies’ failure to impose and effectively enforce prohibitions on imports made with forced labor. For Japan, the new tariff is structured to produce a 12.5% total tariff rate after taking account of the product’s ordinary U.S. tariff rate (historically referred to as the “most-favored-nation” or MFN rate). Thus, if a Japanese product ordinarily carries a 4% U.S. tariff under the Harmonized Tariff Schedule, the additional Section 301 duty is 8.5%, producing a combined rate of 12.5%. If the ordinary U.S. tariff is already 12.5% or higher, no additional Section 301 duty applies. Certain products are exempt altogether.

Importers and states have challenged those tariffs in consolidated litigation before the CIT. The challengers contend, among other things, that Section 301 does not authorize tariffs of this breadth based on the stated forced-labor rationale and raise additional statutory and constitutional objections. The government maintains that USTR made the findings required by Section 301 and acted within the authority Congress granted. The CIT heard argument on September 30; no decision had been issued as this update was prepared.

Why it matters: Japanese companies exporting to the United States have now faced three successive tariff regimes—IEEPA, Section 122, and Section 301—with the first invalidated and the latter two subject to continuing litigation. Companies should maintain entry-level records that separately identify duties paid under each regime. The experience with IEEPA demonstrates that, if a tariff is ultimately invalidated, the ability to recover payments may depend not only on the merits of the court challenge but also on procedural steps taken by individual importers, and close attention to a refund mechanism if one emerges.

“Stream of Commerce” Jurisdiction Strikes: A Japanese Supplier Can Be Sued in Illinois Even Though Its Direct Sales Occurred in Japan

Taylor v. Japan Brake Industrial Co., Ltd., 2026 IL App (5th) 241277 (Sept. 8, 2026).

An Illinois appellate court held that Illinois could exercise specific personal jurisdiction over Japan Brake Industrial Co., a Japanese brake-component manufacturer, in an asbestos wrongful-death action. Japan Brake argued that its relevant commercial activity occurred in Japan: it sold brake products to Japanese component manufacturers, which incorporated them into assemblies ultimately supplied to automobile manufacturers including Honda and Mazda. Japan Brake did not itself control the ultimate distribution of the completed vehicles into Illinois.

The court nevertheless concluded that the company’s contacts were sufficient. Among other things, the record indicated that Japan Brake knew its products were destined for vehicles sold in the United States, designed products to satisfy U.S. safety requirements, tracked U.S. automobile sales, obtained certifications relevant to the U.S. market, and undertook activities directed toward U.S. customers. The court affirmed the denial of Japan Brake’s motion to dismiss for lack of personal jurisdiction.

Why it matters: The “stream of commerce” doctrine provides the most expansive basis for U.S. jurisdiction over a non-US manufacturer. Under the broadest version, it is enough for a non-U.S. manufacturer to put its product into the international “stream of commerce,” knowing that stream may flow to the U.S., to subject it to the jurisdiction of a U.S. court. That doctrine has been refined to require some indication that the foreign manufacturer aimed its conduct, not just at the U.S., but at the state where jurisdiction is asserted. This case demonstrates how minimal that showing can be. Japan Brake did very little to indicate that its products were directed toward Illinois: the court notes for example Japan Brake’s conformance with U.S. federal safety standards and the fact that its sales projections included revenues from all U.S. states. This case demonstrates how difficult it can be to contest “stream of commerce jurisdiction in certain courts. While the case highlights practices that could be considered in seeking to avoid US jurisdiction, it also suggests that any jurisdiction-avoidance effort should be subject to cost-benefit analysis, considering the standards that will be applied by jurisdictions that endorse a broad version of the stream of the stream of commerce theory. 

Section 1782 U.S. Discovery Furthers a Japanese Litigation

In re Ex Parte Application of Kensuke Tanaka, No. 26-mc-80044 (N.D. Cal. June 30, 2026).

The founder of the Japanese company that created the online browser game Kantai Collection was pursuing defamation litigation in Tokyo against anonymous users of X. Under an order of the Tokyo District Court, X disclosed identifying information concerning users, but that led to Gmail addresses. The plaintiff had to obtain an order for Google to disclose information about the owners of those addresses; the Tokyo District Court could not grant that relief. 

The plaintiff then turned to a U.S. court. Relying on 28 U.S.C. § 1782, which permits federal district courts to order discovery for use in proceedings before foreign tribunals, he sought discovery from Google concerning the Gmail accounts, including documents sufficient to show names, addresses, e-mail addresses, and telephone numbers associated with the accounts of the Gmail account holders. The Northern District of California largely granted the application. Among the considerations favoring relief was that Google was outside the Japanese court’s jurisdiction and therefore could not itself be compelled by that court to produce the information.

Why it matters: Section 1782 can give parties to Japanese litigation access to evidence located in the United States that a Japanese court may not itself be able to compel. The procedure may be particularly useful where information is held by U.S.-based technology companies such as Google, but it is not limited to Internet disputes. Japanese counsel handling commercial, intellectual-property, fraud, or other litigation should consider at an early stage whether potentially important documents, testimony, or identifying information are held by a person or company located in the United States that could be accessed under Section 1782.

Kioxia Hit With $229 Million U.S. Patent Verdict Over Component Product

Viasat, Inc. v. Kioxia Corp., No. 6:21-cv-01231 (W.D. Tex.) — jury verdict July 16, 2026.

A federal jury in Waco, Texas found that Japanese flash-memory manufacturer Kioxia infringed a patent held by U.S.-based Viasat concerning error-correction technology used in flash memory. The jury awarded $229,025,021, calculated as a running royalty for past infringement through March 30, 2026. Final judgment was subsequently entered, and Kioxia has indicated that it intends to pursue post-trial and appellate remedies.

The size of the award illustrates how patent damages can accumulate where patented technology is incorporated into high-volume components. The $229 million award compensates only for past infringement through the date specified by the jury and therefore does not necessarily resolve issues concerning subsequent sales or future relief.

Why it matters: U.S. patent exposure can become substantial even where patented technology constitutes only one aspect of a sophisticated product. Japanese technology companies selling high-volume components into the U.S. market should evaluate U.S. patent risk not only when a product is introduced but also as U.S. sales increase. The case also illustrates the potentially significant consequences of resolving complex technology and damages issues before a U.S. jury.