Violating intellectual property rights (IPRs) can have consequences that extend far beyond the disputing parties, affecting consumers, disrupting supply chains, and fundamentally altering competitive forces. Although courts typically adjudicate these disputes in the United States and internationally, plaintiffs often seek relief from the US’ independent, nonpartisan federal International Trade Commission (ITC) agency by requesting an unfair import (or Section 337) investigation. The ITC typically issues exclusion orders, restricting an infringing party from importing products but not compensating for any economic injuries suffered, which are particularly attractive to plaintiffs because an ITC ruling tends to be faster than a court ruling.
The ITC’s rulings are intended to cause no significant harm to public interest, though there is no evidence to show the ITC has quantified consumer harm in making its determinations, as is common for other regulatory agencies to conduct rigorous and structured quantitative assessments of consumer harm. As such, its investigations, which appear to focus on whether consumers would continue to have access to so-called functional substitutes under a ban, is not a sufficient criterion to conclude there are no public interest ramifications for an import ban.
In their new article “An Economic Framework for Assessing Public Interest Harm in ITC Exclusion Orders” published in the American Bar Association Landslide Magazine, Senior Managing Director Christian Dippon, Managing Director Andrew Stivers, and Senior Consultant Erdem Yenerdag review the ITC’s assessment of the public interest implications arising from exclusion orders issued in response to intellectual property rights (IPR) violations. They argue public interest harm arising from excluding a consumer product should be measured by losses in consumer surplus and present a suitable economic framework for quantifying the public interest harm of a requested exclusion order. Their proposed framework is consistent with economic principles and with practices pursued by other public agencies tasked with protecting the public interest.
