Section 337 Temporary Exclusion Order
/'sɛkʃən θri θri 'sɛvən 'tɛmpəˌrɛri ɪk'skluʒən 'ɔrdər/
A Section 337 Temporary Exclusion Order (TEO) is a provisional remedy issued by the U.S. International Trade Commission (ITC) under Section 337 of the Tariff Act of 1930. It prohibits the importation of certain articles into the U.S. during the pendency of an ITC investigation into alleged intellectual property infringement or other unfair trade practices.
In Detail
Section 337 of the Tariff Act of 1930, codified at 19 U.S.C. § 1337, grants the ITC authority to investigate unfair practices in import trade, most commonly involving the infringement of U.S. patents, trademarks, or copyrights. During such an investigation, the ITC may issue a Temporary Exclusion Order (TEO) if it finds reason to believe that a violation has occurred. The purpose of a TEO is to prevent immediate and irreparable harm to the domestic industry while the full investigation proceeds, acting as a powerful deterrent against infringing imports.
To obtain a TEO, a complainant must typically demonstrate a likelihood of success on the merits of their infringement claim and that they would suffer irreparable harm without the order. Unlike a Permanent Exclusion Order, which requires a presidential review period after issuance, a TEO takes effect immediately upon issuance by the ITC. Importers of goods subject to a TEO may still bring the articles into the U.S. if they post a bond, the amount of which is determined by the ITC, typically set to compensate for the competitive advantage gained by the alleged infringer.
A common challenge with TEOs arises from their broad scope, often covering all allegedly infringing products regardless of the specific importer, unless specifically tailored. This "general exclusion order" characteristic means that even importers not named in the initial complaint can find their goods detained by CBP. Misunderstanding the scope of a TEO or underestimating the bond requirements can lead to significant delays, increased costs, and ultimately, the inability to import crucial products, even if a permanent violation is not ultimately found.
Classification Significance
Failure to accurately identify whether imported goods are subject to an active Section 337 Temporary Exclusion Order or bond requirement carries severe consequences for importers. Goods found to be covered by a TEO without the requisite bond will be detained or seized by CBP, leading to costly delays, storage fees, and potential penalties. Incorrectly classifying goods or failing to declare their status under a TEO can expose importers to formal enforcement actions, including liquidated damages for bond breaches and substantial fines, while also undermining supply chain stability and brand reputation.
How Kanon Handles This
Kanon integrates comprehensive data on all active Section 337 exclusion orders, including Temporary Exclusion Orders, into its classification process. By cross-referencing product descriptions against the specific terms and scope of TEOs, Kanon's engine identifies potential matches and flags products that may be subject to import restrictions or bond requirements. This proactive identification ensures that importers and brokers are alerted to these critical trade remedies, allowing them to take appropriate compliance measures and build a robust Classification Support Package for audit defense.
Call to Action
Frequently Asked Questions
What is the difference between a Temporary and a Permanent Exclusion Order?
A Temporary Exclusion Order (TEO) is a provisional remedy issued during an ITC investigation to prevent immediate harm and requires a bond for continued importation. A Permanent Exclusion Order is issued at the conclusion of an investigation if a violation is found, permanently prohibiting importation of infringing goods without a bond, and is subject to presidential review.
Can a Section 337 TEO apply to goods from any country?
Yes, Section 337 investigations and their resulting Temporary Exclusion Orders apply to all imported articles, regardless of their country of origin. The focus is on whether the goods infringe U.S. intellectual property rights or engage in other unfair trade practices within the U.S. market, not the national origin of the product or its manufacturer.