September saw six complainants file seven new Section 337 complaints with the Commission:

The Commission also instituted six investigations in September:

This month’s ITC Wrap-Up focuses on a recent trend among several Commissioners that could increase the number of cease and desist orders (“CDOs”) against defaulted respondents.

In a series of recent decisions, including one last month, Commissioners Rhonda K. Schmidtlein and Amy A. Karpel have increasingly supported issuing CDOs to respondents found in default. To date, Commissioners Schmidtlein and Karpel have been outnumbered 3-to-2 by Commissioners David S. Johanson (Chairman), Jason E. Kearns, and Randolph J. Stayin. However, the recent initiative may see an uptick in the number of CDOs issued to defaulted respondents in the near future.

In the crosshairs of Commissioners Karpel and Schmidtlein is the application of Section 337(g)(1), particularly with respect to foreign defaulted respondents. As explained regarding their most recent dissent to a Commission determination that declined to issue CDOs to foreign defaulted respondents:

Commissioner Schmidtlein and Commissioner Karpel agree that subsection 337(g)(1) is the appropriate authority for issuance of relief in this case, but they disagree with the determination not to issue the CDOs requested by NOCO. Specifically, Commissioners Schmidtlein and Karpel support issuance of both the requested LEO and the requested CDOs against defaulting respondents Zhejiang Quingyou and Mediatek because the criteria for issuance of such relief under subsection 337(g)(1)(A)-(E) are met as to these respondents. Here, in addition to an exclusion order, NOCO has requested CDOs as to these two defaulting respondents both in its post-hearing briefing before the ALJ and in its remedy submission before the Commission. Given that subsections 337(g)(1)(A)-(E) are satisfied, in Commissioner Schmidtlein’s and Commissioner Karpel’s view, the statute directs the Commission to issue the requested CDOs, subject to consideration of the public interest. Commissioners Schmidtlein and Karpel further find that the public interest factors enumerated in subsection 337(g)(1) do not preclude the issuance of the CDOs directed to defaulting respondents Zhejiang Quingyou and Mediatek. Accordingly, Commissioners Schmidtlein and Karpel support issuance of the CDOs, in addition to the issuance of the LEO discussed above, under subsection 337(g)(1).

Certain Portable Battery Jump Starters and Components Thereof, Inv. No. 337-TA-1256, Comm’n Notice (August 29, 2022, internal citations omitted).

Commissioners Karpel and Schmidtlein have expressed similar views in a series of investigations starting in February 2021, including:

In these investigations, the ongoing debate over CDOs centers on whether to issue a CDO against a foreign defaulted respondent. The majority and minority disagree as to whether a complainant must show that a foreign defaulted respondent has commercially significant inventory or domestic operations in the United States as a predicate to issuing a CDO under Section 337(g)(1).

Even when all Commissioners agree that Section 337(g)(1) applies, differences remain as to its application. The recent Portable Battery Jump Starters investigation provides an example. There, the majority applied Section 337(g)(1) but held that “[a]lthough [complainant] requested the Commission to issue [CDOs] directed to these defaulting respondents, the Commission has determined not to issue CDOs because of the lack of evidence or allegations that [foreign respondents] Zhejiang Quingyou or Mediatek maintain commercially significant inventory and/or engage in significant commercial operations the United States.”

Commissioners Karpel and Schmidtlein disagreed, however, and reiterated their view that satisfaction of the elements enumerated in Section 337(g)(1)(A)-(E) requires the Commission to issue a requested CDO regardless of the defaulted respondent’s inventory or commercial operations in the United States. As Commissioner Karpel explained in an earlier matter, “[w]hen the conditions listed in subsections 337(g)(1)(A)-(E) are satisfied, the plain language of section 337(g)(1) directs the Commission to presume the facts alleged in the complaint are true and to issue a requested remedy – in this case cease and desist orders against each of the Defaulting Respondents . . . provided doing so would not be contrary to the public interest.” Certain Powered Cover Plates, 337-TA-1124, Comm’n Op. at 21-22 n.20 (July 10, 2020).

While the debate over CDOs to foreign defaulted respondents is an ongoing one, it is one worth monitoring in the coming months. Should Commissioners Schmidtlein and Karpel gain additional support for their view, foreign defaulted respondents may find themselves subject to CDOs more frequently than in years past.

[1] In other investigations, Commissioners Karpel and/or Schmidtlein have offered similar views but were not in disagreement as to the remedy issued by the majority. See, e.g., Certain Vacuum Insulated Flasks and Components Thereof, 337-TA-1216, Comm’n Op. (February 3, 2022); Certain Pocket Lighters, 337-TA-1142, Comm’n Op. (February 1, 2022); Certain Powered Cover Plates, 337-TA-1124, Comm’n Op. (July 10, 2020). The list provided herein includes only those investigations in which the remedy recommended by Commissioners Karpel and/or Schmidtlein differed from that issued by the Commission.

DISCLAIMER: 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.

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