Section 337 is a specialized remedy that dates back to 1922 and is intended to protect United States industries. Several requirements must be satisfied before a company can bring a Section 337 action. First, there must be an unfair act or practice. In most cases, this means that the company filing the complaint must be the owner or exclusive licensee of a valid and enforceable United States patent, copyright, registered trademark or mask work. The company must also be able to show that the patent, copyright or other intellectual property is being infringed by imported merchandise.

Another requirement under Section 337 concerns the domestic industry. Because the law was written to protect domestic industries, a Section 337 complainant must show that there is a domestic industry in the United States relating to the articles that are protected by the patent, copyright, trademark or other intellectual property. (This is known as the economic prong of the domestic industry test.) In general, it is not difficult to make this showing. The statute specifies that an industry in the United States will be considered to exist if there is in the United States with respect to the articles concerned: (1) significant investment in plant and equipment; (2) significant employment of labour or capital; or (3) substantial investment in its exploitation, including engineering, research and development, or licensing.

It is not sufficient, however, to merely show that a domestic industry exists. A Section 337 complainant must also show that the domestic industry is exploiting the intellectual property at issue. (This is known as the technical prong of the domestic industry test.) For example, where the allegation of an unfair act involves patent infringement, the complainant must show that the patent is practised in the United States and that there is significant activity exploiting the patent. Thus, if the entire manufacturing, packaging, and quality control of the patented product occurs outside of the United States, the technical prong of the United States industry requirement may not be satisfied. If the patents cover the elements of an article and those elements are considered essential to the finished product, however, the Commission has found that the assembly of the elements into the finished article in the United States is sufficient to satisfy the technical prong of the domestic industry test.

Prior to 1988, it was not sufficient to simply show that a domestic industry existed and that the industry exploited the intellectual property in question. To be entitled to relief under Section 337, the complainant also had to show that the domestic industry was being injured as a result of the infringing imports. Growing concern about lost sales attributed to foreign counterfeiting and infringement of United States intellectual property rights, however, led to the elimination of the injury requirement in the Omnibus Trade and Competitiveness Act of 1988 for alleged unfair practices involving intellectual property rights. If other unfair methods of competition and/or unfair acts involving imported merchandise are alleged, the complainant must show that the threat or effect of the imports is to: (1) destroy or substantially injure an industry in the United States; (2) prevent the establishment of such an industry; or (3) restrain or monopolize trade and commerce in the United States.

Source: Business Guide to Trade Remedies in the United States: Anti-dumping, countervailing and safeguards legislation practices and procedures