II

103D CONGRESS

1ST SESSION S. 148

To amend section 337 of the Tariff Act of 1930 and title 28 of the United

States Code to provide effective procedures to deal with unfair practices

in import trade and to conform section 337 and title 28 to the General

Agreement on Tariffs and Trade, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 21 (LEGISLATIVE DAY, JANUARY 5), 1993

Mr. ROCKFELLER (for himself, Mr. HATCH, and Mr. WOFFORD) introduced

the following bill; which was read twice and referred to the Committee

on Finance

A BILL

To amend section 337 of the Tariff Act of 1930 and title

28 of the United States Code to provide effective procedures to deal with unfair practices in import trade and

to conform section 337 and title 28 to the General Agreement on Tariffs and Trade, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Intellectual Property

5 Protection Act of 1993’’.

6 SEC. 2. FINDINGS AND PURPOSE.

7 (a) FINDINGS.—The Congress finds the following:
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1 (1) Section 337 of the Tariff Act of 1930 (19

2 U.S.C. 1337) is one of the most important laws

3 available to United States businesses to deal with

4 unfair practices in import trade and to enforce intel5 lectual property rights against infringing imports.

6 (2) On November 23, 1988, a panel of the Gen7 eral Agreement on Tariffs and Trade (hereafter in

8 this Act referred to as ‘‘GATT’’) found section 337

9 to be in violation of United States obligations under

10 the GATT, because certain procedures under section

11 337 did not provide national treatment for imported

12 goods and because some aspects of the procedures

13 were unnecessary for effective compliance with

14 United States patent law.

15 (3) On November 7, 1989, the United States

16 allowed adoption of the GATT panel report on sec17 tion 337, thereby assuming an obligation to reform

18 section 337 to comply with its obligations under the

19 GATT.

20 (4) Because of the special difficulties in enforc21 ing intellectual property rights against unfairly trad22 ed imports, special enforcement procedures that

23 apply only to imports are necessary to effectively en24 force intellectual property rights against infringing

25 imports.
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1 (5) The GATT allows special enforcement pro2 cedures when such procedures are not less favorable

3 than the procedures used against domestic products

4 or such procedures are necessary to secure compli5 ance with copyright, patent, trademark, and mask

6 work registration protection laws or regulations.

7 (6) To be effective, such enforcement proce8 dures must establish administrative proceedings

9 which can reach multiple parties in one forum, allow

10 efficient foreign discovery, provide expeditious dis11 pute resolution, and provide border enforcement by

12 the United States Customs Service.

13 (b) PURPOSE.—The purpose of this Act is to conform

14 section 337 of the Tariff Act of 1930 and title 28 of the

15 United States Code to the provisions of the GATT to en16 sure that section 337 procedures can reach multiple par17 ties in one forum, allow efficient foreign discovery, provide

18 expeditious dispute resolution even in the absence of a

19 deadline for final determinations, and provide border en20 forcement of determinations.

21 SEC. 3. AMENDMENT OF SECTION 337 OF THE TARIFF ACT

22 OF 1930.

23 (a) INVESTIGATION.—Section 337(b) of the Tariff

24 Act of 1930 (19 U.S.C. 1337(b)) is amended—

25 (1) by striking ‘‘; TIME LIMITS’’ in the heading;
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1 (2) in paragraph (1), by striking ‘‘The Commis2 sion shall conclude any such investigation’’ and all

3 that follows through the end period and inserting

4 the following: ‘‘The Commission shall conclude any

5 such investigation and make its determination under

6 this section at the earliest practicable time after the

7 date of publication of notice of such investigation.

8 To promote expeditious adjudication, the Commis9 sion shall, within 30 days of the initiation of an in10 vestigation, establish a target date for its final deter11 mination.’’; and

12 (3) by striking the fifth sentence in paragraph

13 (3).

14 (b) DETERMINATION; REVIEW.—Section 337(c) of

15 such Act is amended—

16 (1) by striking ‘‘a settlement agreement’’ in the

17 first sentence and inserting ‘‘an agreement between

18 the parties’’;

19 (2) by striking ‘‘subsection (d) or (e)’’ in the

20 second sentence and inserting ‘‘subsection (d), (e),

21 or (f) (and each declaration under subsection (o))’’;

22 and

23 (3) by striking ‘‘(f), or (g)’’ in the fourth sen24 tence and inserting ‘‘(f), (g), or (o)’’.
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1 (c) EXCLUSION OF ARTICLES FROM ENTRY.—Sec2 tion 337(d) of such Act is amended by inserting after the

3 first sentence the following new sentence: ‘‘No article shall

4 be excluded from entry where the Commission determines

5 that the owner, importer, or consignee of the article has

6 established a sufficient counterclaim directly related to the

7 unfair methods or acts determined by the Commission to

8 exist.’’.

9 (d) ENTRY UNDER BOND.—Section 337(e) of such

10 Act is amended—

11 (1) in the last sentence of paragraph (1), by

12 striking ‘‘determined by the Commission’’ and all

13 that follows through the end period and inserting:

14 ‘‘prescribed by the Secretary in an amount deter15 mined by the Commission to be sufficient to protect

16 the complainant from any injury. If the Commission

17 later determines that the respondent has violated the

18 provisions of this section, the bond may be forfeited

19 to the complainant.’’;

20 (2) by adding at the end of paragraph (2), the

21 following new sentence: ‘‘If the Commission later de22 termines that the respondent has not violated the

23 provisions of this section, the bond may be forfeited

24 to the respondent.’’; and
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1 (3) by adding at the end thereof the following

2 new paragraph:

3 ‘‘(4) The Commission may prescribe the terms

4 and conditions under which bonds may be forfeited

5 under paragraphs (1) and (2).’’.

6 (e) CEASE AND DESIST ORDERS.—Section 337(f)(1)

7 of such Act is amended—

8 (1) by inserting after the first sentence the fol9 lowing new sentence: ‘‘A permanent cease and desist

10 order shall not be issued if the Commission deter11 mines that the owner, importer, or consignee of the

12 article has established a sufficient counterclaim di13 rectly related to the unfair methods or acts deter14 mined by the Commission to exist.’’; and

15 (2) by adding at the end thereof the following:

16 ‘‘If a temporary cease and desist order is issued in

17 addition to, or, in lieu of, an exclusion order under

18 subsection (e), the Commission may require the com19 plainant to post a bond as a prerequisite to the issu20 ance of an order under this subsection. If the Com21 mission later determines that the respondent has not

22 violated the provisions of this section, the bond may

23 be forfeited to the respondent. The Commission may

24 prescribe the terms and conditions under which

25 bonds may be forfeited under this paragraph.’’.
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1 (f) CONDITIONS APPLICABLE FOR GENERAL EXCLU2 SION ORDERS.—Section 337(g) of such Act is amended

3 by adding at the end thereof the following new paragraph:

4 ‘‘(3) The authority of the Commission to issue

5 an exclusion from entry of articles shall be limited

6 to persons determined by the Commission to be vio7 lating this section unless the Commission determines

8 that—

9 ‘‘(A) a general exclusion from entry of ar10 ticles is necessary to prevent circumvention of

11 an exclusion from entry limited to such persons;

12 or

13 ‘‘(B) there is a pattern of violation of this

14 section and it is difficult to identify the persons

15 responsible.’’.

16 (g) ENTRY UNDER BOND AFTER REFERRAL TO

17 PRESIDENT.—Section 337(j)(3) of such Act is amended

18 by striking ‘‘shall be entitled to entry under bond’’ and

19 all that follows through the end period and inserting

20 ‘‘shall, until such determination becomes final, be entitled

21 to entry under bond prescribed by the Secretary in an

22 amount determined by the Commission to be sufficient to

23 protect the complainant from injury. If the determination

24 becomes final, the bond may be forfeited to the complain25 ant. The Commission may prescribe the terms and condi-
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1 tions under which bonds may be forfeited under this para2 graph.’’.

3 (h) DECLARATORY RELIEF.—Section 337 of such

4 Act is amended by adding at the end thereof the following

5 new subsection:

6 ‘‘(o) COMPLAINT FOR DECLARATORY RELIEF BY

7 OWNER, IMPORTER, OR CONSIGNEE.—In a case of actual

8 controversy as to the existence of unfair methods of com9 petition and unfair acts described in subsection (a), upon

10 the filing of a complaint for declaratory relief under oath

11 by the owner, importer, or consignee of an imported article

12 (or part thereof), the Commission may declare the rights

13 and other legal relations of the parties, whether or not

14 further relief is or could be sought. A declaration made

15 under this subsection shall have the force and effect of

16 a final determination of the Commission and shall be

17 reviewable as such. In the case of unfair acts involving

18 the validity of patents as described in subsection

19 (a)(1)(B), such a declaration shall be only for the purpose

20 of determining whether there is a violation of this section

21 and shall not have the effect of claim or issue preclusion.’’.

22 SEC. 4. AMENDMENT OF TITLE 28, UNITED STATES CODE.

23 (a) IN GENERAL.—Chapter 111 of title 28, United

24 States Code, is amended by adding at the end thereof the

25 following new section:
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1 ‘‘§ 1659. Stay of certain actions pending disposition of

2 related proceedings before the United

3 States International Trade Commission

4 ‘‘(a) STAY.—In a civil action involving parties that

5 are also parties to a proceeding before the United States

6 International Trade Commission pursuant to section 337

7 of the Tariff Act of 1930 (19 U.S.C. 1337), at the request

8 of a party that is a respondent in the proceeding before

9 the Commission (other than a respondent to a counter10 claim in a proceeding for declaratory relief), a district

11 court shall stay, until the determination of the Commis12 sion becomes final, proceedings in the civil action with re13 spect to any claim that involves the same issues involved

14 in the proceeding before the Commission.

15 ‘‘(b) USE OF COMMISSION RECORD.—After dissolu16 tion of a stay under subsection (a), portions of the record

17 of the proceeding before the United States International

18 Trade Commission that bear on issues in a civil action

19 shall be admissible in the civil action, subject to such pro20 tective order as the district court determines necessary

21 and to the extent permitted under the Federal Rules of

22 Evidence and the Federal Rules of Civil Procedure.’’.

23 (b) CLERICAL AMENDMENT.—The chapter analysis

24 for chapter 111 of title 28, United States Code, is amend25 ed by adding at the end the following new item:
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‘‘1659. Stay of certain actions pending disposition of related proceedings before

the United States International Trade Commission.’’.

1 SEC. 5. EFFECTIVE DATE.

2 The amendments made by this Act apply to com3 plaints filed and investigations initiated under section 337

4 of the Tariff Act of 1930 (19 U.S.C. 1337) after the date

5 of the enactment of this Act.

Æ