ADDRESSING UNFAIR IMPORTS IN THE SPORTS AND FITNESS INDUSTRY
By Michael L. Doane, Miles & Stockbridge
Many in the sports and fitness industry face unfair competition from imported products, particularly from China. This unfair competition may come in many forms such as patent or trademark infringement, theft of trade secrets or false advertising. Legal mechanisms exist to address this unfair importation including trademark registration with U.S. Customs and Border Protection (“CBP”) and litigation. Members of the sports and fitness industry have found, however, that perhaps the most effective means for combatting unfair imports is a Section 337 Investigation before the U.S. International Trade Commission (“USITC”). Section 337 Investigations avoid many of the procedural difficulties of litigation while providing an effective and enforceable remedy, an exclusion order. An exclusion order, enforced by CBP, bars the importation of the accused product from importation into the United States. In recent years, the USITC has conducted investigations concerning sports and fitness-related products ranging from exercise machines to activity tracking or monitoring devices to shoes to arrowheads.
A Section 337 investigation is a trade remedy designed specifically to halt unfair imports. To establish a violation, there must be (1) an importation; (2) an unfair act (usually intellectual property infringement); (3) a domestic industry related to the product at issue; and, in some cases, (4) injury to the domestic industry. Section 337 investigations proceed in a manner similar to litigation, but at a much faster pace. On average, an investigation that reaches to a final determination on the merits by the USITC takes about 16 months as compared to potentially several years in U.S. District Court. Many investigations are shorter as approximately 50 percent of all investigations result in a settlement in which respondents usually agree to cease importing or take a license. In addition to the speed, an attractive feature of a Section 337 investigation is the nature of the remedy, which is enforceable even if the respondent is located in a remote region of China. Whether it is a limited exclusion order directed against the named respondents or a general exclusion order directed against all infringing products regardless of source, the remedy barring importation of the subject articles is enforced at the U.S. border by CBP preventing their entry into the U.S. marketplace.
The sports and fitness industry covers a broad range of products, including footwear and apparel, exercise and sports equipment, dietary supplements and electronic devices. All these products categories have been subject to Section 337 investigations. For example, Reebok filed a Section 337 complaint to enforce their intellectual property rights in their footwear. Reebok obtained consent orders in Certain Athletic Footwear, Inv. №337-TA-1018, in which respondents agreed to cease importation of shoes accused of infringing Reebok’s patents. Three investigations involving wearable activity tracking or monitoring devices, including two naming Fitbit, Inc., have been filed, with Certain Monitoring Devices, Systems, and Components Thereof, Docket №3423, currently pending institution.
Since 2016, at least three Section 337 complaints have been filed relating to sports equipment and exercise equipment. In Certain Basketball Backboard Components, Inv. №337-TA-1040, Lifetime Products, Inc. sought to enforce its patents covering adjustable basketball backboards against Russell Brands, LLC d/b/a Spalding and a Chinese manufacturer. The parties ultimately reached a settlement. ICON Health & Fitness, Inc. filed a complaint entitled Certain Cardio-Strength Training Magnetic-Resistance Cable Exercise Machines and Components Thereof, Docket №3380 naming Nautilus, Inc. and a Chinese manufacturer as respondents, but withdrew the complaint prior to institution after reaching a settlement. The complainant in Certain Strength-Training Systems and Components Thereof, Inv. №1135, was able to obtain consent orders in which respondents agreed to cease importation of the accused products.
In the current marketplace, it is not uncommon for a U.S. company to face unfair imports from multiple, difficult to identify sources, particularly from China. Section 337 has been used quite effectively and successfully by U.S. companies, including many smaller companies, to police the marketplace for such infringing products and to enforce their intellectual property rights. For example, in both Certain Arrowheads With Deploying Blade, Inv. №337-TA-977, filed by FeraDyne Outdoors, LLC and OutRAGE, LLC, and Certain Arrowheads With Arcuate Blades, Inv. №337-TA-1033, filed by Arrow Archery, LLC, complainants sought relief against multiple small Chinese respondents. In both cases virtually all the respondents defaulted and complainants were able to obtain general exclusion orders clearing infringing products from the U.S. marketplace. Similarly, Jump Rope Systems LLC obtained a limited exclusion order in Certain Jump Rope Systems Products, Inv. №337-TA-1108 after the one named respondent defaulted. Certain Pool and Spa Enclosures, Inv. №337-TA-1069, filed by Aqua Shield, Inc., resulted in a settlement. In each of these investigations, a small company was able to enforce its intellectual property rights in an efficient and cost-effective manner and obtain relief from unfairly imported products.
The U.S. marketplace for sports and fitness-related products is large, diverse and competitive. Competitors in this marketplace face a variety of challenges, not the least of which is unfair competition from knock-off products or otherwise unfairly imported products. Section 337 investigations before the U.S. International Trade Commission provide an effective and enforceable remedy against unfair competition, which is being increasingly utilized by participants in the sports and fitness industry to police the marketplace and enforce their intellectual property rights.
Disclaimer: This is for general information and is not intended to be and should not be taken as legal advice for any particular matter. It is not intended to and does not create any attorney-client relationship. The opinions expressed and any legal positions asserted in the article are those of the author and do not necessarily reflect the opinions or positions of Miles & Stockbridge, its other lawyers or the Sports and Fitness Industry Association Newsletter and Blog.
Michael L. Doane is a principal in Miles & Stockbridge’s Intellectual Property & Technology Practice Group in Tysons Corner, Virginia. He litigates unfair trade cases before the U.S. International Trade Commission (ITC) under Section 337 of the Tariff Act of 1930. He has represented parties in more than sixty Section 337 investigations, addressing such unfair acts as patent infringement, design patent infringement, and trade dress infringement. He is a contributing author to all three editions of the American Bar Association’s “A Lawyer’s Guide to Section 337 Investigations Before the U.S. International Trade Commission.” He also is a past president and executive committee member of the ITC Trial Lawyers Association and the chair of the American Intellectual Property Law Association’s ITC Committee.