US Section 337 Investigations for Chinese Companies

What Section 337 investigations are

Section 337 investigations are proceedings before the US International Trade Commission (USITC) under Section 337 of the Tariff Act of 1930, which prohibits unfair methods of competition and unfair acts in the importation of goods into the United States. Most cases allege that imported products infringe a US patent, but the statute also covers registered trademarks, copyrights, registered designs, trade secret misappropriation, false advertising and other unfair practices. If a violation is found, the Commission can order US Customs and Border Protection (CBP) to stop the infringing products at the border.

For Chinese manufacturers and exporters, these proceedings matter for three reasons. First, they are fast: a case typically reaches a final determination in around 16 to 18 months. Second, they act on the goods themselves, so the USITC does not need personal jurisdiction over a Chinese company in the usual sense; a respondent that does not appear can still be excluded. Third, an exclusion order can shut a product, and sometimes a whole product category from many suppliers, out of the US market.

The USITC cannot award damages. Complainants therefore often pair a Section 337 case with a parallel lawsuit in a federal district court, which is usually stayed while the ITC case runs. The combination gives a patent owner a quick route to exclusion and a slower route to money, and it puts heavy pressure on respondents to settle or redesign.

Chinese companies are regularly among the most frequently named respondents, reflecting their share of US imports in electronics, lighting, consumer products, batteries, machinery and medical devices. Many are named alongside their US distributors, retailers and importers, which brings commercial relationships into the dispute from the first day. Customers often ask immediately for assurances, indemnities or alternative supply, so the commercial response must be planned alongside the legal one.

The timeline of Section 337 investigations

The procedure is governed by the statute, the Administrative Procedure Act and the USITC's rules of practice. The table below gives a typical sequence; exact dates are set in each case by the administrative law judge (ALJ).

Discovery is the stage that most surprises Chinese respondents. Responses to written discovery are due quickly, often within ten days, and complainants seek technical documents, source code, sales data, supplier information and witness testimony. Failure to produce can lead to sanctions or adverse inferences. Respondents must therefore organise documents in China, translate key materials and identify witnesses long before the hearing.

The USITC also offers procedures that can shorten or narrow a case. The Commission can direct an early ruling on a potentially dispositive issue, such as domestic industry or standing, within roughly 100 days. Consent orders and settlements can terminate an investigation against particular respondents. The Office of Unfair Import Investigations, a staff party representing the public interest, participates in some investigations and its views can influence the ALJ.

The domestic industry requirement after Lashify

A complainant relying on a patent, copyright, registered trademark or design must show that a US industry exists, or is being established, for the articles protected by the right. This has two parts. The technical prong asks whether the complainant's own products, or its licensees' products, practise the right. The economic prong asks whether there is significant investment in plant and equipment, significant employment of labour or capital, or substantial investment in the exploitation of the right, including engineering, research and development or licensing.

In March 2025 the Federal Circuit's decision in Lashify v. ITC broadened the economic prong. The court held that expenditure on sales, marketing, warehousing, quality control and distribution can count as employment of labour or capital, rejecting the narrower approach the Commission had applied. The practical consequence is that brand owners who manufacture abroad, including in China, but run substantial US commercial operations may now qualify as a domestic industry more easily.

For Chinese respondents, this widens the pool of potential complainants in Section 337 investigations. Competitors that outsource manufacturing, including to other Chinese factories, may now bring cases that would previously have failed for lack of a domestic industry. Challenging the domestic industry case remains worthwhile, but it should no longer be assumed to be a strong defence for consumer products sold by importer-brands.

Remedies, CBP enforcement and redesigns

The USITC's remedies are designed to stop imports rather than to compensate. Understanding their scope is essential for planning, because the wording of an order determines which products, from which suppliers, are blocked.

• Limited exclusion order. Excludes infringing products made or imported by the named respondents. Downstream products containing infringing components can be covered.
• General exclusion order. Excludes all infringing products regardless of source. It is available where needed to prevent circumvention of a limited order, or where there is a pattern of violation and it is difficult to identify the source of infringing products. General orders are common in consumer product cases with many unidentified online sellers.
• Cease and desist order. Prohibits named respondents from selling infringing inventory already in the United States. Breach can attract civil penalties of up to the greater of USD 100,000 a day or twice the domestic value of the goods.
• Bond during Presidential review. Respondents may continue to import during the 60-day review period by posting a bond set by the Commission.

CBP enforces exclusion orders at the border. A respondent that redesigns its product can ask CBP for an administrative ruling, under a procedure in which the complainant also participates, confirming that the new design falls outside the order. A well-documented redesign is often the fastest way back into the US market. Disputes about compliance can also lead to enforcement or modification proceedings before the Commission.

Orders last for the life of the relevant right, which for patents usually means until expiry, unless modified or rescinded. Appeals go to the Federal Circuit, which reviews legal questions afresh and factual findings for substantial evidence, but an appeal does not suspend an exclusion order. Respondents therefore cannot count on appellate relief to protect US sales in the short term, and the business plan for the period after the final determination should assume the order applies. The bond during Presidential review is usually set by reference to price differentials or a reasonable royalty, and in some cases at 100% of the entered value, so its cost should be modelled in advance.

The Commission must consider public interest factors, such as public health, competitive conditions and US consumers, before issuing a remedy, and remedies have occasionally been narrowed or delayed on that basis. Presidential disapproval is very rare, so respondents should plan on the assumption that an exclusion order, once issued by the Commission, will take effect after the review period.

Settlement is frequent at every stage of Section 337 investigations. Typical terms include a royalty-bearing licence, a covenant not to sue covering past and future products, consent orders under which the respondent agrees not to import infringing goods, and sometimes cross-licences or supply arrangements. The value of a settlement depends heavily on timing: a respondent with a credible design-around or strong invalidity case has much more leverage before the evidentiary hearing than after an adverse initial determination.

Strategy for Chinese respondents in Section 337 investigations

A well-run defence begins in the first two weeks after a complaint is filed, often before institution. The respondent should decide whether to defend, settle or redesign, and should not let the deadline to answer pass by default. A default usually leads to an exclusion order against the defaulting party's products and can support a general exclusion order that also affects other suppliers.

1. Retain experienced US counsel quickly. USITC practice is specialised. Counsel must be admitted to practise in the US and familiar with the ALJ's ground rules.
2. Preserve documents. Issue a litigation hold across Chinese and overseas group companies, covering engineering files, emails, chat messages and sales data.
3. Plan the China data issues. Producing documents and testimony from China for a foreign proceeding raises questions under the Data Security Law, the Personal Information Protection Law and the International Criminal Judicial Assistance Law, and sometimes state secrets rules. Depositions are generally held outside the mainland, for example in Hong Kong. A clear plan, developed with PRC counsel, avoids both Chinese regulatory risk and US discovery sanctions; see cross-border data transfer.
4. Attack validity in parallel. Consider inter partes review before the US Patent Trial and Appeal Board, while recognising that the ITC does not usually stay its case for such proceedings.
5. Develop a design-around early. Engineers should work on alternative designs from the outset, so that a CBP ruling can be sought as soon as needed.
6. Coordinate customers. US importers, distributors and retailers may be co-respondents or have indemnity claims. Joint defence agreements and consistent messaging help.
7. Evaluate settlement. Licences, consent orders and cross-licences are common outcomes, especially where the respondent holds its own patents in the US or China.

China has also built a policy framework for companies facing overseas IP disputes. State Council regulations on handling foreign-related intellectual property disputes, effective from 1 May 2025, provide for government guidance and support for Chinese enterprises and allow countermeasures where foreign states use IP disputes as a pretext to suppress Chinese businesses. In practice, the outcome of Section 337 investigations still depends on the evidence and US law, but the regulations add a policy dimension to high-profile cases.

Reducing exposure before a complaint arrives

Most companies first think about Section 337 investigations when a complaint is served. By then, the most valuable choices, such as which features to include, which markets to launch in first and what contract terms to agree with US partners, have already been made. Exporters with meaningful US sales can reduce exposure substantially through a few routine steps.

• Freedom-to-operate reviews. Before launching a product in the US, review the main competitors' US patents and design registrations, focusing on features that are commercially important and easy to identify in imported goods.
• Monitoring. Watch new USITC complaints in your product category. Complaints often name a long list of respondents, and companies not yet named may be added later or caught by a general exclusion order.
• Records of independent development. Keep dated engineering records showing how designs were developed. They help rebut copying and trade secret allegations and support redesign arguments.
• Portfolio building. Chinese companies with their own US patents have more settlement leverage. Filing US applications on key innovations is a long-term defensive investment.
• Response playbook. Agree in advance who decides, which US counsel will be instructed, who collects documents in China and how customers will be informed.

Common mistakes in Section 337 investigations include waiting for institution before instructing counsel, collecting documents without considering Chinese data rules, allowing sales teams to send inconsistent messages to customers, and starting design-around work only after the final determination. Each can be avoided with a modest amount of preparation and a clear internal owner for US trade disputes.

Online sellers face a particular pattern. Complaints in consumer product categories frequently name dozens of marketplace sellers, many of them small Chinese businesses that never respond. The resulting general exclusion orders can then affect legitimate manufacturers with different designs, whose shipments may be detained until they prove that their products fall outside the order. Sellers on US marketplaces should therefore follow USITC activity in their category even when they are not named; see our page on cross-border e-commerce.

How the ITC compares with other forums

Patent owners can choose between the USITC, US district courts and, where the accused products are made in China, Chinese courts. Respondents may also have counter-attack options in each forum. The comparison helps both sides understand the pressure a case creates.

For a Chinese respondent holding its own patents, a counter-suit in China against the complainant's products made or sold there can rebalance negotiations. For a foreign complainant, a parallel Chinese action can stop manufacture at the source. Both options need PRC counsel; see our pages on IP litigation and patents.

Trade secret cases deserve a separate note. The Federal Circuit has confirmed that Section 337 can reach goods made abroad using trade secrets misappropriated outside the United States, so allegations of employee poaching or technology leakage in China can become US border cases. Information on the procedure is available from the USITC and border enforcement from CBP. Related issues are covered on trade secrets and China and the US.

How TRW & Co helps

We help Chinese manufacturers and their foreign partners prepare for and respond to Section 337 investigations. We assess exposure before products launch in the US, review distribution contracts and indemnities, coordinate US trade and patent counsel, and manage document collection and witness preparation in China in a way that respects Chinese data and judicial assistance rules. For foreign rights holders, we help plan multi-forum strategies. Where advice on PRC law, Chinese court actions or approvals for data transfers is needed, we work with licensed PRC law firms. Please contact us if you have received a complaint or expect one.