CHAPTER 3 THE EVOLUTION OF LIMITED EXCLUSION ORDER RELIEF
3.2 D OCTRINES E STABLISHED B ETWEEN 1974 AND 1981
The USITC inherited legal doctrines from the Tariff Commission. It revisited difficulties that had frustrated its predecessor. Some earlier rules created serious new problems. The first Limited Exclusion Order was issued in 1981. Before its issuance, there had been many events that challenged Section 337 investigation’s fundamental rules. This section discusses three such doctrines that were abolished in 1981:
• Abolished: The in rem doctrine for General Exclusion Orders;
• Argued over: The flexibility doctrine for Cease-and-Desist Orders; and
• Abolished: The “Exclusive Or” doctrine for remedial order issuance.
These doctrines are unofficially named by the author for the sake of simplicity.
159 19 U.S.C. § 1337(f) (1974).
160 19 U.S.C. § 1337(f) (1988).
3.2.1 The In Rem Doctrine for Exclusion Orders
One may derive this in rem doctrine of exclusion orders by reading the 1922, 1930 and 1974 statutes literally. As shown by the next three cited paragraphs, the texts of the statutes used the magical phrase “by any person” over and over.
19 U.S.C. 316(e) (1922) (emphasis supplied):
(e) That whenever the existence of any such unfair method or act shall be established to the satisfaction of the President he shall … direct that such articles …, imported by any person violating the provisions of this act, shall be excluded from entry into the United States, … .
19 U.S.C. 337(e) (1930) (emphasis supplied):
(e) Exclusion of Articles from Entry. — Whenever the existence of any such unfair method or act shall be established to the satisfaction of the President he shall direct that the articles concerned in such unfair methods or acts, imported by any person violating the provisions of this Act, shall be excluded from entry into the United States, … .
19 U.S.C. § 1337(d) (1974) (emphasis supplied):
(d) If the Commission determines, as a result of an investigation under this section, that there is violation of this section, it shall direct that the articles concerned, imported by any person violating the provision of this section, be excluded from entry into the United States … .
This in rem reading can also be supported by patent surveys provided by the Customs from 1956 to 2004 (see Section 3.8). Patent surveys based on an article’s tariff category were designed to uncover any possible patent infringement rather than doing so against a focused group of named exporters.
The exclusion of imported articles as defined by the Trade Act of 1974, according to the author’s own strict word-by-word interpretation of the statutory text, was also purely in
rem in nature (“imported by any person violating the provisions of this section”; emphasis
supplied). All of the earliest exclusion orders functioned as General Exclusion Orders. This reading is also supported by the practice of exclusion orders since 1920s. Based on the law, the ALJs did not have a choice then.This
in rem nature of exclusion order had been confirmed by one of the USITC’s
earliest landmark determinations, Doxycycline, Inv. No. 337-TA-3:161 “[t]his action [of exclusion] is in rem and is applicable to all infringing imports irrespective of the importation.”162ALJ Duvall cited the above statute to prove his point. The same idea of in rem and General Exclusion Order was also clearly affirmed by the CCPA:163
[A] product found to be itself an infringement, and all products identical to it, may be excluded, without regard to which foreign manufacturer was exporting it to the United States, and without regard to how it was made.
Even though the text of this section remained practically unchanged even as of today, the URAA amendment of 1994 added section 1337 (d)(2) and, as a result, the default remedy against an unfair act became Limited Exclusion Order (see Chart 4.1).
3.2.2 The Flexibility Doctrine for Cease-and-Desist Orders
According to a 1974 Congress legislative report,164 Cease-and-Desist Orders were created to provide flexibility as exclusion orders were thought to be extreme sometimes.
Each time an exclusion order caused any problem, someone may propose to replace it with Cease-and-Desist Orders. However, Cease-and-Desist Order may not be as helpful as advertised. Before 1981, the meaning of “flexibility” has been subjected to heated debates.
Some aspects of these debates will be outlined in this thesis..
3.2.3 The “Exclusive Or” Doctrine for Remedial Order Issuance
This “either … or” doctrine was created to interpret the Trade Act of 1974. Between 1922 and 1974, the Tariff Commission could only recommend the President. From 1930 to 1974, the U.S. President could only issue exclusion orders. The USITC held that granting both types of remedy against one unfair act was prohibited by the “in lieu of” language of the
161 Opinion of Chairman Parker and Commissioner Bedell; concurred by Vice Chairman Alberger; concurring in part and dissenting in part by Commissioners Moore and Stern. This disputed investigation had established some frequently cited precedents for many future investigations.
162 Opinion of Chairman Joseph O. Parker and Commissioner Catherine Bedell in Commission Determination and Order and Commissioners’ Opinions in Support of Commission Action, Inv. No. 337-TA-3, April 12, 1979.
163 645 F.2d 976 (C.C.P.A. 1981).
164 1974 U.S.C.C.A.N. 7186.
statute. This interpretation of the law restricted the available options to the USITC to be either an in rem exclusion order or an in personam Cease-and-Desist Order but not both. The 1974 statute reads:165
In lieu of taking action under subsections (d) or (e), the Commission
may issue … an order directing such person to cease and desist from engaging in the unfair methods or acts involved … (emphasis added).To propose the issuance of both type of remedial orders against the same unfair act, the USITC had relied on an in-house statutory construction, which tried to read “in lieu of”
under an inclusive light (i.e., similar to “in addition to”; see Appendix 6.6). As shown by the legal linguistic examples collected by this research, one may have to willfully deviate from the ordinary word usage to reach the promoted reading of the “in lieu of” language. The USITC abandoned the traditional reading and adopted a new reading in 1981. Congress then amended the statute in 1988 and mooted this issue. The 1988 amendment reads:166
In addition to, or in lieu of, taking action under subsection (d) or (e), …
(emphasis supplied).The official interpretation held that in lieu of issuing an exclusion order under subsections (d) or (e), the USITC may issue a Cease-and-Desist Order instead. To rephrase this rule using a logical language, it means the USITC must follow an exclusive or, or XOR, rule.167 The truth table for the USITC’s decisions at that time may look like:
The XOR Truth Table Exclusion
Order
Cease- and-Desist Order
Truth value
Explanation
T T F The USITC may not issue both order.
T F T
F T T One order for each unfair act.
F F F Generally, the USITC may not issue any order at all.
TABLE 3-2 XOR TRUTH TABLE
165 19 U.S.C. § 1337(f) (1) (1974).
166 19 U.S.C. § 1337(f) (1) (1988).
167 In case of a Presidential veto, or any other cases that denied remedy, the truth table will look exactly like that of NAND (Not AND) logical operation.
In the beginning of the USITC, the official policy had been the “Exclusive Or”
doctrine:168 This generally accepted “Exclusive Or” doctrine remained more or less unchallenged from 1974 to 1979. For example, in Welded Stainless Steel Pipe and Tube, Inv.
No. 337-TA-29 (1978), the USITC refused to issue an exclusion order because a Cease-and-Desist Order was supposed to be adequate remedy:169
This investigation, unlike most other intellectual properties-based ones, was based on pricing allegations. The unusual situation of this investigation made General Exclusion Orders enforced by the Customs Service particularly difficult.
The above case was not strong enough to prove the existence of an “Exclusive Or”
doctrine because exclusion order relief was impractical to that case, the USITC did not plan to issue both remedies anyway. The “Exclusive Or” doctrine was officially established by
Doxycycline, Inv. No. 337-TA-3 (1979), when the USITC denied complainant’s petition to
issue both orders because the USITC “has no broad, general, equity powers to fashion any remedy it thinks best”:170… The Commission has only powers which are delegated to it by the statute. It has no broad, general, equity powers to fashion any remedy it thinks
best irrespective of how one may perceive the merits. Since the Commission
can only direct as a remedy what is authorized by the statute, we should examine the applicable statutory provisions.[Complainant’s request for both orders], would require a complete distortion of the clear words and plain meaning of the statute and would, in effect, be tantamount to the Commission’s legislating a complete rewrite of the statute. It would, in effect, have the Commission delete the words in section 337(f), “In lieu of taking action under subsections (d) or (e)” and substitute therefor the words “In addition to the actions under subsection (d) or (e) the Commission may … .”
… [Complainant’s proposed statute construction] distorts the clear and plain meaning of the statute and to do so would result in administrative usurpation of the legislative power of Congress by an administrative agency.
… Commission counsel and complainant’s counsel attempt to seize upon a single sentence in a Senate committee report. The sentence is, “The power to issue cease and desist orders would add needed flexibility.” They
168 E.g., 72 F.R.D. 239 (1976). (statement of Hon. George E. Hutchinson) (“if the Commission finds a violation to exist, it weigh the effect of whatever action it may take (exclusion of the articles involved from entry into the United States or issuance of a cease and desist order) on the public health and welfare …”).
169 Welded Stainless Steel Pipe and Tube, Commission Determination and Action, Inv. No. 337-TA-29 (1978).
(“We believe it is contrary to the objectives of the 1974 Trade Act to issue an exclusion order in precisely the type of proceeding for which the cease and desist order was added as a remedy in 1974”).
170 Doxycycline, Commission Determination and Order and Commissioners’ Opinions in Support of Commission Action, Inv. No. 337-TA-3, 1979 WL 61161 (1979).
would then attempt to give the word “flexibility” an entirely different thrust and meaning than those given to it by the committee and, as a result, would defeat, rather than further, the will of Congress. (emphasis added)
In this 1979 case, the USITC’s Investigative Attorney stood by complainant’s side.
The USITC’s Commissioners found their “flexibility” theory unsupported by law based on Section 337’s legislative history. This restrictive doctrine has been affirmed by Hollow Fiber
Artificial Kidneys, Inv. No. 337-TA-81 (1980).
171 In this determination, respondents were one Japanese company (exporter) and its U.S. subsidiary (importer). The USITC held that if they had found another unfair act,172 the USITC would have been allowed to issue both orders separately against each account of unfair act.Many complainants requested both an exclusion order and a Cease-and-Desist Order.
Even though this rule had only been explicitly declared in 1979, many earlier investigations were determined in accordance to this restrictive rule.
This doctrine was overturned in 1981 by the USITC’s General Counsel to pave way for Limited Exclusion Order and other changes. It is noteworthy that the USITC’s General Counsel proposed the same flexibility theory again with the same set of evidence and the rest was history.