Exclusion Order Under Section 337: Scope, Proof, and Enforcement

A Section 337 exclusion order is a directive from the U.S. International Trade Commission (ITC) that tells U.S. Customs and Border Protection to stop infringing imported goods at every port of entry. It’s the ITC’s signature remedy under Section 337 of the Tariff Act of 1930, aimed at unfair trade practices tied to intellectual property such as patents, registered trademarks, copyrights, semiconductor mask works, and vessel hull designs.¹ The ITC cannot award money damages. It can shut the goods out of the country, which is why complainants who care more about the U.S. market than a damages check often go there instead of, or in addition to, federal district court.

What the Order Does

An exclusion order operates at the border. Once it becomes final, Customs uses the product descriptions and identifying information in the order to screen incoming shipments and deny entry to anything covered.² The complainant doesn’t have to file new lawsuits or chase individual shipments; enforcement is automatic once the order is in place.

The statute reaches two categories of conduct. Infringement of a valid U.S. patent (including process patents), a registered copyright, a registered trademark, a semiconductor mask work, or a protected vessel hull design is covered without any need to show economic harm to a domestic industry in the traditional sense. A broader catch-all also picks up unfair methods of competition and unfair acts in the importation or sale of imported articles, such as trade secret misappropriation. For those non-IP claims, the complainant has to show the conduct threatens to destroy or substantially injure a domestic industry, prevent one from being established, or restrain trade.¹

Limited Exclusion Orders

A Limited Exclusion Order (LEO) blocks imports only from the specific companies named as respondents in the investigation. If the ITC finds that Company X and Company Y are importing infringing widgets, Customs bars their widgets. Everyone else’s widgets keep flowing. This is the right tool when the complainant knows who the infringers are and doesn’t expect the source list to shift.

General Exclusion Orders

A General Exclusion Order (GEO) is broader. It bars all infringing goods from entering the country regardless of manufacturer or source. The ITC does not grant one lightly. A complainant must show either that a broad order is necessary to prevent circumvention of a limited order, or that there’s a widespread pattern of infringement and the sources are difficult to identify.² The classic GEO scenario involves industries flooded by small overseas manufacturers that change names or spin up new entities to dodge enforcement. A GEO closes those gaps because it doesn’t care who the importer is.

What About Goods Already Inside the U.S.

Exclusion orders stop products at the port. They do nothing about infringing inventory already sitting in a domestic warehouse. That gap is filled by a companion remedy: a cease and desist order, which directs a respondent to stop selling, marketing, distributing, or otherwise transferring infringing imported articles already in the country.²

The enforcement mechanism differs. Customs enforces exclusion orders. The ITC enforces cease and desist orders directly, with civil penalties that can reach $100,000 per day of violation, accruing per respondent.³ Complainants who want full protection typically ask for both: an exclusion order for future shipments and a cease and desist order for whatever is already here.

What a Complainant Has to Prove

Winning an exclusion order requires clearing two independent hurdles.

Infringement and Importation

The complainant must show that the IP right is valid and enforceable and that the imported articles infringe it. For patents, this involves the same claim construction and infringement analysis a federal district court would run. For trademarks and copyrights, it means valid registration and unauthorized use. The complainant also has to prove that an actual importation has occurred or is imminent, usually through shipping records, order confirmations, or purchase receipts.¹

Domestic Industry

This is where many complaints fall apart. The complainant must prove a domestic industry relating to the protected articles exists in the United States or is being established. The statute recognizes three ways to satisfy that requirement, and only one needs to be met:

Significant investment in plant and equipment in the U.S.
Significant employment of labor or capital tied to the protected product.
Substantial investment in exploitation of the IP, including engineering, research and development, or licensing.¹

The third prong matters for companies that don’t manufacture domestically but license the IP or run U.S.-based R&D. The ITC scrutinizes licensing-based claims closely, and the investments must be tied to the specific IP at issue rather than the company’s general business.

Public Interest as a Possible Off-Ramp

Even after a complainant proves infringement and domestic industry, the ITC still has to weigh four public interest factors before issuing any remedy:

Effect on public health and welfare.
Effect on competitive conditions in the U.S. economy.
Effect on U.S. production of like or directly competitive articles.
Effect on U.S. consumers.⁴

The Commission rarely denies relief on public interest grounds. When it happens, the products usually have no domestic substitute and an exclusion order would leave consumers or critical industries without supply. Medical devices and pharmaceuticals draw the most scrutiny. Government agencies and members of the public can submit comments during the investigation, and the Commission solicits input through Federal Register notices.⁵

Presidential Review and Bonding

An exclusion order does not take effect the day the Commission issues it. The order goes to the President for a 60-day review during which it can be disapproved for policy reasons.² Disapproval has happened only five times in the agency’s history, mostly in the 1970s and 1980s, on grounds involving damage to domestic industries, conflicts with trade obligations, or disagreements with the Commission’s legal reasoning.

During those 60 days, goods aren’t automatically blocked. Respondents may keep importing by posting a bond with Customs in an amount the Commission sets as sufficient to protect the complainant from injury.¹ Respondents subject to a cease and desist order can likewise keep selling from domestic inventory during the review period by posting a bond with the Commission.⁶ If the order becomes final, the bond may be forfeited to the complainant.

Enforcement at the Border

Once the review period passes without disapproval, the order is final and Customs starts screening.

Consequences escalate for repeat offenders. On the first attempted import of excluded goods, Customs denies entry and notifies the importer in writing that future attempts will result in seizure and forfeiture. If the same owner, importer, or consignee tries again after receiving that written notice, the ITC can issue a seizure and forfeiture order. The goods are seized and become property of the United States government.⁷ Importers get one warning. After that, the goods don’t come back.

Appeals to the Federal Circuit

Any party that loses before the ITC can appeal to the U.S. Court of Appeals for the Federal Circuit, which has exclusive jurisdiction over Section 337 appeals. The court reviews legal conclusions without deference and factual findings for substantial evidence. It won’t easily second-guess credibility determinations, but it will look hard at whether the ITC applied the right legal standards for infringement, domestic industry, and remedy.

An appeal does not automatically stay enforcement. Customs keeps excluding the goods unless the court grants a stay. For a complainant that wins at the ITC, border protection is working well before any appeal is decided. For a respondent that loses, products are blocked from the U.S. market almost immediately, and appellate relief may be months or years away.

1
Office of the Law Revision Counsel. 19 USC 1337 – Unfair Practices in Import Trade
2
U.S. International Trade Commission. 337 Investigations Frequently Asked Questions
3
Federal Register. Certain Chocolate Milk Powder and Packaging Thereof – Issuance of Civil Penalties and Termination of Enforcement Proceeding
4
United States International Trade Commission. Section 337 – Building the Record on the Public Interest
5
eCFR. 19 CFR 210.50 – Commission Action, the Public Interest, and Bonding by Respondents
6
eCFR. 19 CFR Part 210 Subpart G – Determinations and Actions Taken
7
GovInfo. 19 CFR 12.39 – Imported Articles Involving Unfair Methods of Competition or Practices