The increasing number of Section 337 investigations and affirmative determinations by the Commission and the possibility that downstream products will be included indicate that foreign producers and importers should monitor Section 337 proceedings to keep informed of potential disruptions to trade that may result if it is determined that an important part or component infringes a United States patent. Unfortunately, exporters and importers often learn of pending Section 337 investigations too late to participate in the proceeding and never know whether the Commission will grant relief covering downstream products until after the Commission issues its determination.

If the Commission issues an exclusion order covering a downstream product that catches foreign suppliers unaware, considerable cost and effort can be required to design around the infringing article or replace it with a part or component from another supplier. Companies may be willing to incur this expense, however, to avoid the greater expense caused by the disruption that would result from an order excluding downstream products from the United States market altogether. These potential business costs make it advisable to monitor Section 337 cases to determine whether they might cover a product that a foreign or domestic manufacturer includes in its final product line. Decisions to design around a part or component or to obtain an article from an alternative source in face of infringement allegations also can provide incentive for the supplier of the allegedly infringing article to reach a settlement or licensing agreement with the United States patent holder earlier than would otherwise be the case.

Section 337 cases can have adverse consequences even for foreign suppliers of goods that do not contain infringing articles. When there is a question as to whether an imported product contains an infringing article, United States Customs often imposes a certification procedure. Under this procedure, the exporter and importer must certify that the article does not contain the infringing article. Although this sounds simple enough, in fact, it means that importers and exporters must incur the cost of investigating the source of the product and/or its components and demonstrating that the product does not contain the infringing article in question.

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