American innovation, national security, and trade success are key areas of focus for President Trump. His second term will likely continue the progress he made in his first administration, where he took strong steps to protect and support American innovation, including by identifying and acting against national security threats to our leading industries from Chinese state-supported competitors such as Huawei and ZTE. President Trump’s trade agenda also broke trade barriers to US goods and services in China and rebalanced high-level deals with key partners. In his new administration, perhaps surprisingly, a little-known federal agency called the International Trade Commission (ITC) can help him continue to prioritize American innovation and national security and to optimize the benefits of trade. Reforming the ITC will also help reduce US government costs and improve the ITC’s efficiency.
Tariff Administration
Founded in 1916, the ITC plays a critical role in the administration of tariffs when US industries are harmed, for example by price dumping and unfair foreign government support. The role of the anti-dumping tariff is to restore a fair price on a good that may be priced unfairly or below cost (making the foreign good artificially more attractive relative to the US one). For example, Chinese-made solar panels are commonly dumped on US markets, sold at below-market rates, and even made by forced labor. The anti-subsidy tariff (or countervailing duty) compensates for unfair benefits to foreign industries when their exports to US are facilitated by injurious foreign government subsidies. These tariffs have protected US steel, agriculture, solar energy, aluminum, textiles, furniture, paper products, tires, shipbuilding, and chemicals from destructive foreign dumping and subsidies. Ideally, the threat of tariffs is sufficient to deter foreign actors from dumping and unfairly subsidizing their industries. When the threat does not work, US legal machinery, including proceedings at the ITC, can kick in to restore a level playing field.
Unfair Import Trade Created by Intellectual Property (IP) Theft
The ITC also protects against other kinds of unfair import competition, including IP infringement by imports. Intellectual property drives a large part of the US economy. Section 337 investigations at the ITC allow companies to request that the agency block imports of goods that infringe US patents or violate trademarks or other IP rights. This ITC power was designed to protect US technology and innovation from foreign goods circumventing patent or other IP protections without needing to get the importers into court. But given the draconian remedy, the statute governing these cases also requires the ITC to be sure a domestic US industry exists that warrants the import protection, and, as importantly, requires the ITC to make a special additional decision beyond finding infringement—the ITC cannot take any action against imports if this would go against the public interest, including the interests of US consumers.
Major Problems Have Developed at the ITC
In recent years, the ITC has strayed far from its critical statutory role. It is supposed to be an international trade venue focused on combatting unfair import competition in very particular circumstances, in furtherance of the broader public interest. But it has instead become a de facto patent court, focused increasingly on private parties’ technical IP conflicts.
Worse, the ITC has become a domain for patent trolls (also known as patent assertion entities or PAEs). These are entities that buy patents not to produce or commercialize products but rather to exploit the patents for litigation. They often target companies with lawsuits, demanding settlement payments or licensing fees, even if the patents are not being used by their owners or licensed by anyone else to develop new products. In recent years, patent trolls have increasingly targeted the ITC as a forum for their litigation strategies, exploiting its procedures and rigidities to gain extra leverage in patent disputes.
A common strategy of a patent troll is to assert that a popular electronic product such as a laptop, TV, or phone—devices that typically practice tens of thousands of patents—is infringing one of the troll’s patents. The troll may allege that its patent covers a minor component or feature of the product that is rarely if ever used, but the troll can nonetheless threaten total import bans of the product through an ITC investigation. The troll could also bring its infringement claims in district court and seek damages, but this is not nearly as attractive leverage as a ban. Generally, the threat of an apocalyptic total ban forces the producer to pay off the patent troll, because closure of the US market is an unacceptable risk, even if it is not merited. Such tactics are regularly weaponized against leading US electronics manufacturers like Apple, Microsoft, Amazon, and Google. Trolls capitalize on companies with deep pockets, complex technology portfolios, and large market shares, knowing their claims can cause maximum damage and collect rich returns.
The ITC's fast-tracked process makes it even more appealing to trolls. Trolls can file complaints based on minor or weak patents and with the looming threat to block products from entering the US market, create maximum leverage to quickly extract large financial settlements far larger than any damages a court would award if the patent turned out to be valid and infringed.
This is a terrible loophole, made worse by the growing influence of China and Russia in the US intellectual property ecosystem. Not only can Chinese- or Russian-backed trolls put stresses and costs on our major innovators with this weapon, it seems both Russian and Chinese litigation finance entities are intrigued by these IP-based cases. The ITC’s lax approach is creating the potential for a flood of these perverse and counterproductive ITC-mediated attacks on productive innovators in America.
Ensuring the ITC Works for Americans
Many have called for reform of the ITC’s procedures to make them less susceptible to patent troll abuse, litigation financiers’ greed, and national security risks to America’s innovative forces. The proposed reforms include requirements that patent holders show a legitimate US industry is actually using the patent to make something and actually wants ITC relief before they can file a complaint, not to mention requiring the ITC to seriously examine the broader public interest beyond IP in weighing whether the ITC’s draconian remedies must be enforced—or whether the courts are the better option. Each of these reforms is designed to try to stop weaponizing this agency into a troll’s revenue-generating tool. They also will keep Russia and China from using the ITC to weaken and distract key innovative companies working for America’s future.
A key piece of bipartisan legislation necessary to curb misuse of the ITC is the Advancing Americas Interests Act (AAIA). The AAIA would bring much needed reforms to the ITC. It would eliminate the troubling practice by which PAEs with no domestic industry of their own force other companies to take part in an ITC investigation—known as “domestic industry by subpoena”—where the troll can force an unwilling US business into the investigation as the required domestic industry the ITC is to protect. The business then must provide its sensitive technical and financial information to the ITC when the business has no interest in participating in the ITC action. It would also ensure that the ITC gives meaningful consideration to the potential negative impacts on the public interest before it institutes an exclusion order.
The Trump Administration also can make a real difference here. A key theme of the Department of Government Efficiency (DOGE) is to eliminate abuses and waste in the federal system. Patent trolls and litigation funders commonly double down with duplicate cases in US courts and at the ITC. If US courts are available, DOGE should make sure the ITC’s resources are not wasted with a redundant case. Tightening up the ITC process under Section 337 in this and the other ways discussed would weed out the cases that should not be there, reducing the burden on ITC resources and allowing it to play its intended specialized international trade role, rather than serving like just another court deciding patent cases between private parties.
The ITC was founded with the “America First” ethos, putting Americans’ interests and the US economy first. The Trump administration and Congress can restore this agency to its intended purpose, pushing back on foreign exploitation of the current loopholes and helping American consumers, workers, and products thrive.
