Strengthening Intellectual Property Rights Protection Under Section 337 of the Tariff Act of 1930

Testimony was given on proposed ways to strengthen protection of intellectual property rights under the Tariff Act of 1930. GAO found that: (1) section 337 of the act was originally intended as a trade statute to protect U.S. firms against all types of unfair foreign trade practices, whereby relief is contingent on complainants' meeting certain economic tests requiring them to demonstrate that they were substantially injured by the unfair trade practice; (2) since the Trade Act of 1974 was amended, 11 complainants have been unable to meet all of the economic criteria and 6 of them were denied relief solely for that reason; (3) firms have terminated their legal proceedings or accepted settlement agreements because they could not meet all of the statute's economic tests; (4) using a federal district court to protect intellectual property rights can take as long as 3 to 5 years because complainants must initiate numerous proceedings to stop several domestic distributors from marketing infringing goods; and (5) a section 337 exclusion order is a more effective vehicle for addressing the importation of infringing goods since a firm needs only one order to stop all such imports, regardless of their source. GAO also found that: (1) although the International Trade Commission (ITC) takes 7 months or longer to provide expedited relief, ITC could make temporary relief effective at the time of the initial positive determination; (2) if it takes 12 months to conclude default proceedings, ITC could presume that the facts alleged in the complaint are correct and issue temporary relief; (3) defaulting respondents could continue to import goods but only under bond and subject to re-exportation should the temporary order be made permanent; (4) ITC could effectively remedy unfair trade practices by issuing both exclusion orders and cease and desist orders to remedy the same violation; and (5) ITC could use its authority to direct the Customs Service to seize goods when dealing with predatory infringers that have tried, on more than one occasion, to violate existing exclusion orders.