Authored by Elizabeth A. Niemeyer
As the number of complaints filed with the U.S. International Trade Commission (ITC) continues to rise, the number of companies becoming familiar with the intricacies of “Section 337” proceedings and being required to produce sensitive and confidential information is also continuing to rise. Many companies previously unfamiliar with Section 337 proceedings (or U.S. litigation in general) are surprised at the breadth of information that a party must produce to opposing counsel simply to be able to defend itself.
Fortunately, the handling of confidential information produced in a Section 337 proceeding is governed by an administrative protective order (APO), which protects information designated as confidential business information (CBI). The presiding Administrative Law Judge (ALJ) will issue the APO almost immediately upon institution of a case, providing parties with a confidence to quickly and efficiently begin producing confidential information.
II. Production of Confidential Information
Section 337 proceedings require parties to produce non-privileged information regarding any matter relevant to (1) the claim or defense of any party, (2) the identity of any person having relevant knowledge, (3) the appropriate remedy, and (4) the appropriate bond. 19 C.F.R. § 210.27(b). Information deemed “relevant” to any of those issues is often broadly construed. Frequently, there are no physical limits on the amount of discovery a party can seek or that a party can be required to produce. Rather, parties are limited by the amount of discovery they can seek and produce in the short time leading up to trial. Because of the compressed timeframe of a Section 337 case, it is important that parties begin receiving responsive information as quickly as possible once a case begins.
A party will be likely be expected to produce at least technical documents regarding the development, manufacture, assembly, and operation of the accused products; commercial documents regarding distribution channels such as the names of customers, the destination of shipments, and the identity of other companies used for manufacture or development; and financial and technical documents related to the asserted domestic industry. A party will also likely be required to produce one or more witnesses to testify regarding that information. Non-parties may also be required to produce certain information in response to a subpoena. Companies normally protect this information very carefully and certainly do not provide this information to other companies, especially competitors.
The APO allows parties to designate certain information as “confidential.” Parties and the Commission generally broadly construe what constitutes CBI. In general, it includes any information the disclosure of which is likely to impair the Commission’s ability to obtain information to perform its function or that may cause substantial competitive harm to the entity from which the information was obtained. 19 C.F.R. § 201.6(a). A party who wishes to avail itself of the APO merely must stamp its documents or information it produces as “confidential.” There are provisions for challenging a “confidential” designation, and disputes do occasionally arise. More often, however, parties do not challenge confidentiality designations except in egregious circumstances.
If a party fails to produce relevant, responsive information, it could be subject to significant sanctions, including an “adverse inference.” An adverse inference is a serious sanction for failing to produce responsive information and includes finding that the withheld information would have been harmful. For example, a Judge could issue an adverse inference against a respondent who refuses to produce technical documents that such documents would have shown infringement. Such a finding would obviously be very damaging to a respondent’s defense. Consequently, parties are strongly motivated to comply with their discovery obligations.
III. Protection of Confidential Information
The APO provides broad restrictions against who may have access to information designated as confidential and how that information must be handled. Significantly, only specific individuals who have subscribed to the APO may have access to confidential information and may only be shared with others who have subscribed. Although outside counsel and experts may subscribe, in-house counsel are prohibited from having access to any information designated confidential. Those who subscribe to the APO must agree to use the confidential information solely for purposes of the investigation, and all confidential information produced during investigation will be destroyed after its conclusion.
Obviously, if information is improperly shared, it cannot be retrieved. Counsel and the ITC, however, are deeply motivated to ensure confidential information is properly protected. Counsel found to violate the APO face significant sanctions and can lose credibility before the ITC making it difficult to appear in future cases. The ITC would be unable to investigate alleged violations of Section 337 if parties refuse to produce because they have no confidence it will be protected. Consequently, it is import that parties are comfortable producing relevant, responsive information regardless of whether it is public or confidential.
IV. Violations of the Protective Order
To ensure compliance with the APO, the Commission may sanction individuals who violate its terms. 19 C.F.R. § 210.34(c). The severity of the sanction is generally designed to match the severity of the violation. Sanctions may include:
- An official reprimand by the Commission;
- Disqualification from or limitation of further participation in a pending investigation;
- Temporary or permanent disqualification from practicing in any capacity before the Commission under 19 C.F.R. § 201.15(a); and
- Referral of the facts underlying the violation to the appropriate licensing authority in the jurisdiction in which the individual is licensed to practice.
19 C.F.R. § 210.34(c). Commission Rules also permit “such other action as may be appropriate.” Id. Other sanctions that the Commission has issued include:
- An order barring the attorneys who subscribed to the APO from receiving any confidential information under a Commission APO for a period of one year. See Certain Plasma Display Panels and Products Containing Same, USITC Inv. No. 337-TA-445, Order No. 15 (June 14, 2002); and
- An order precluding an attorney from prosecuting any applications or reexaminations for a certain period of time. See Certain Apparatus for the Continuous Production of Copper Rod, USITC Inv. No. 337-TA-52, Order No. 70 (January 17, 1979).
If a party believes that its confidential business information has been improperly handled, the Commission Rules provide specific rules for raising such issues. A party may file a motion for sanctions or the Commission may impose sanctions on its own initiative. A party, however, should use care when seeking sanctions. For example, a recent amendment to the Commission Rules treats the identity of an alleged breacher as confidential business information. 19 C.F.R. § 210.34(c) Note. That is, disclosing the identity of the alleged breacher to someone who has not subscribed to the APO could, in itself, constitute a violation of the APO.
In short, Section 337 cases require companies to produce very sensitive documents under very short time frames. Balancing the sensitivity of that information and the reluctance of companies to produce it against the need to develop a full record, the Commission has a very powerful APO to help ensure the information is protected.