Section 337 Consent Order
/'sɛkʃən θri θri 'sɛvən 'kɑnsɛnt 'ɔrdər/
A Section 337 Consent Order is a formal agreement approved by the U.S. International Trade Commission (ITC) to resolve an investigation into unfair import practices, typically involving intellectual property infringement. This order allows parties to settle a dispute without an admission of guilt, while still imposing specific remedies or restrictions on the importation of infringing articles. It functions as an enforceable settlement that guides future conduct related to the importation and sale of products.
In Detail
Investigations under Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337) concern unfair methods of competition and unfair acts in the importation of articles, most commonly patent, trademark, and copyright infringement. The ITC has broad authority to issue various forms of relief, including exclusion orders (general or limited) and cease and desist orders. A consent order represents a negotiated alternative to these remedies, allowing parties to reach an agreement before a full litigation process concludes.
Rather than litigating a Section 337 investigation to a final determination, parties may negotiate a consent order, which is then approved by the ITC. This order typically includes provisions that prohibit the respondent from importing, selling, or otherwise distributing the allegedly infringing products, often includes specific reporting requirements to ensure compliance, and may involve other stipulated actions. It allows respondents to avoid a formal finding of a Section 337 violation while agreeing to discontinue the challenged conduct, providing a predictable resolution to the dispute.
A common misconception is that entering into a consent order implies the products are not infringing or that the matter is entirely resolved without consequences. While a consent order avoids a formal finding of infringement, the order itself carries the full force of law. Any breach of its terms can result in severe penalties, including significant civil penalties (up to $100,000 per day or twice the domestic value of the articles), enforcement actions by the ITC, and direct import restrictions enforced by U.S. Customs and Border Protection (CBP). Parties must meticulously monitor compliance and understand that modifications to or termination of the order require formal ITC approval.
Classification Significance
Misunderstanding the scope and enforceability of a Section 337 Consent Order can lead to severe import compliance failures. Importers and brokers who fail to properly identify and restrict subject merchandise risk immediate exclusion from entry by CBP, substantial civil penalties, and the potential for new investigations or contempt proceedings by the ITC. Such breaches can significantly disrupt supply chains, damage reputation, and incur substantial legal and operational costs, highlighting the critical need for accurate compliance with all ITC trade remedy directives.
How Kanon Handles This
Kanon's robust legal corpus incorporates extensive references to Section 337 actions, including consent orders and exclusion orders, providing critical context for classification decisions. When merchandise is potentially subject to such orders, our system flags these specific trade remedies and import restrictions, ensuring that importers and brokers are fully aware of any limitations that directly impact HTSUS classification and admissibility. This proactive identification fortifies the Classification Support Package against audit challenges and helps prevent costly compliance errors.
Frequently Asked Questions
What is the primary difference between a Section 337 Consent Order and a General Exclusion Order?
A Consent Order is a negotiated settlement between the ITC and specific respondents, imposing restrictions on those particular parties without a formal finding of infringement. A General Exclusion Order, conversely, is issued after a full investigation finding a violation and prohibits the importation of infringing articles from *all* sources, regardless of whether they were parties to the investigation.
Can a Section 337 Consent Order be modified or terminated?
Yes, a Section 337 Consent Order can be modified or terminated, but only with the approval of the International Trade Commission. This typically requires a petition demonstrating changed circumstances, such as a change in technology, a change in law, or the expiration of the intellectual property right at issue.