The Consequence of Being in Default
This month’s ITC wrap-up reviews the Commission’s Opinion In the Matter of Certain Vacuum Insulated Flasks and Other Components Thereof, Investigation No. 337-TA-1216, wherein the Commission issued a General Exclusion Order (“GEO”) regarding three design patents and three trademarks. Specifically, the Commission found that the respondent violated Section 337 and issued a GEO for certain vacuum insulated flasks and components thereof that infringe the components of the Asserted Patents and Trademarks. Additionally, the Commission imposed a bond amount of 100% of the entered value of the products covered by the GEO during the Presidential review period.
In the 1216 Investigation, the amended complaint alleged violation of Section 337 in the importation into the United States, sale for importation, and sale within the United States after importation, of certain vacuum insulated flasks and components thereof by reason of infringement of the Asserted Patents and the Asserted Trademarks.” Comm’n Op. at 2. The Complaint provided a visual identification of the Asserted Patents and Trademarks:
Complaint ¶ 19. “On March 22, 2021, the Commission found the thirteen Defaulting Respondents to be in default.” Comm’n Op. at 3 (quoting Order No. 21 (Mar. 22, 2021), unreviewed by Comm’n Notice (Apr. 14, 2021)). And on April 8, 2021, Hydro Flask Steel Technology, LLC d/b/a Hydro Flask and Helen of Troy Limited (collectively “Hydro Flask”) filed a motion for summary determination of a violation of Section 337 and request for entry of a GEO. Id. at 3–4. On September 3, 3021, the presiding administrative law judge granted summary determination of a violation of Section 337 with respect to the Asserted Patents and Trademarks. Id. The Commission agreed.
Having found a violation of Section 337, the Commission then evaluated the appropriate remedy to address the violation, the public interest, and the amount of bond to impose on infringing imports during the period of Presidential review. Id. at 6. Section 337(d)(2) provides that “[t]he authority of the Commission to order an exclusion from entry of articles shall be limited to persons determined by the Commission to be violating this section unless the Commission determines that—(A) a general exclusion from entry of articles is necessary to prevent circumvention of an exclusion order limited to products of named persons; or (B) there is a pattern of violation of this section and it is difficult to identify the source of infringing products.” 19 U.S.C. § 1337(d)(2); see also 19 C.F.R. § 210.50(c).
The Commission reasoned that a GEO was necessary to prevent the circumvention of a limited exclusion order (“LEO”). Id. at 10. The Commission stated that, “[t]he evidence [] shows that the Defaulting Respondents can easily circumvent an LEO by engaging in deceptive business practices, such as changing their storefront name, providing a false address, or masking their identity.” Id. (quoting Recommended Determination at 94). The Commission, however, declined to issue Cease and Desist Orders (“CDOs”) because none of the Defaulting Respondents has domestic operations or commercially significant inventories, and Hydro Flask did not renew its CDOs request in its remedy submission, nor did it address the CALJ’s recommendation against issuing CDOs. Id. at 15.
Next, the Commission considered the public interest factors. Section 337 requires the Commission, upon finding a violation of section 337, to issue an exclusion order “unless, after considering the effect of such exclusion upon the public health and welfare, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, and United States consumers, it finds that such articles should not be excluded from entry.” 19 U.S.C. § 1337(d)(1). Here, the Commission found that none of the four public interest factors indicated that the proposed remedy would be against the public interest or require any tailoring. Comm’n Op. at17.
Finally, the Commission considered the appropriate amount of bond during the Presidential review period. When the Commission enters an exclusion order, a respondent may continue to import and sell its products during the 60-day period of Presidential review under a bond in an amount determined by the Commission to be “sufficient to protect the complainant from any injury.” 19 U.S.C. § 1337(j)(3); see also 19 C.F.R. § 210.50(a)(3). Here, the Commission imposed a bond amount of 100% of the entered value of the products covered by the GEO during the Presidential review period because the record lacked sufficient reliable information about prices for the infringing products in the United States. Comm’n Op. at 21.
