ITC Section 337 Bonding During Presidential Review: Strategy and Calculation

TL;DR
During the 60-day Presidential review period after a USITC Section 337 remedy is issued, respondents may continue importing upon posting a bond. The bond amount is set by the USITC to protect the complainant if the remedy is ultimately approved. Bonding is typically calculated as a percentage of the entered value of the accused articles or a per-unit amount based on the complainant's lost profits or a reasonable royalty. Bonding strategy is a key source of leverage for both complainants (who seek high bonds to increase pressure) and respondents (who seek low bonds to minimize cost during review). See our ITC Section 337 remedies strategy guide by the PatentPaper research team for exclusion order and CDO mechanics and our USITC Section 337 patent cases guide by the PatentPaper research team for investigation process.

Presidential Review and Bonding Mechanics

Under 19 U.S.C. § 1337(j), the President has 60 days to review a USITC remedy and may disapprove it on policy grounds. During this period, respondents may continue importing the accused articles upon posting a bond in an amount determined by the USITC. The bond is intended to protect the complainant if the remedy is ultimately approved and the imported articles are later found to infringe. If the President approves the remedy (or takes no action), the bond is forfeited to the complainant for any infringing imports during the review period. If the President disapproves the remedy, the bond is returned to the respondent.

Bond Calculation: Percentage of Entered Value or Per-Unit Amount

The USITC typically sets the bond as a percentage of the entered value of the accused articles (e.g., 100% or more of the value) or a per-unit amount based on the complainant's estimated lost profits or a reasonable royalty for each infringing unit. The complainant submits evidence (e.g., pricing data, cost information, royalty rates from comparable licenses) to support the requested bond amount. The respondent may submit rebuttal evidence. The ALJ and Commission consider the evidence and set a bond that is sufficient to protect the complainant without being punitive or disproportionate.

Example: In a 2024 smartphone component investigation, the USITC set a bond of 15% of the entered value of the accused modules, based on the complainant's evidence that its lost profit margin on the accused products was approximately 12-18% and that a reasonable royalty for the patented technology would be in the 3-5% range. The respondent argued for a lower bond (5%) based on its own pricing and cost data; the Commission rejected the argument and set the bond at 15%.

Strategic Implications for Complainants

Complainants generally seek high bonds to increase the cost and risk of continued importation during the review period, thereby increasing settlement pressure. A high bond can make it economically unattractive for the respondent to continue importing, effectively giving the complainant immediate relief even before the Presidential review period ends. Complainants should submit strong evidence of lost profits or reasonable royalty rates and argue for a bond that fully compensates for any harm during the review period. In some cases, complainants may seek a bond that exceeds 100% of entered value if the evidence supports a higher amount (e.g., to account for price erosion or other harms).

Strategic Implications for Respondents

Respondents generally seek low bonds to minimize the cost of continued importation during the review period. A low bond allows the respondent to continue selling while the Presidential review proceeds, preserving revenue and market position. Respondents should submit evidence of their own pricing, costs, and margins, and argue that the complainant's requested bond is excessive or punitive. In some cases, respondents may agree to a higher bond in exchange for other concessions (e.g., a longer transition period or carve-outs in the remedy).

Bond Enforcement and Forfeiture

If the President approves the remedy (or takes no action within 60 days), the bond is forfeited to the complainant for any infringing imports during the review period. The complainant may seek to enforce the bond through a bond forfeiture proceeding at the USITC or through other legal mechanisms. If the President disapproves the remedy, the bond is returned to the respondent. Bond forfeiture proceedings can be contentious and may involve disputes over the number of infringing units imported, the value of those units, and the appropriate bond amount.

FAQ

How is the bond amount calculated in USITC Section 337 cases?

The USITC typically sets the bond as a percentage of the entered value of the accused articles or a per-unit amount based on the complainant's estimated lost profits or a reasonable royalty. The complainant submits evidence to support the requested bond; the respondent may submit rebuttal evidence. The Commission sets a bond that is sufficient to protect the complainant without being punitive.

Can the bond exceed 100% of the entered value?

Yes. The USITC has set bonds exceeding 100% of entered value in cases where the evidence supports a higher amount (e.g., to account for price erosion, lost market share, or other harms beyond the profit margin on the accused articles).

What happens to the bond if the President disapproves the remedy?

The bond is returned to the respondent. The respondent may continue importing without posting a bond (unless the USITC issues a new remedy after further proceedings).

What happens to the bond if the President approves the remedy?

The bond is forfeited to the complainant for any infringing imports during the review period. The complainant may seek to enforce the bond through a bond forfeiture proceeding at the USITC or through other legal mechanisms.

Can the bond be used as leverage in settlement negotiations?

Yes. The threat of a high bond (or the cost of posting a high bond) can increase settlement pressure on the respondent. Conversely, the respondent may agree to a higher bond in exchange for other concessions (e.g., a longer transition period or carve-outs in the remedy).

Does the bond apply to all accused articles or only those found to infringe?

The bond applies to accused articles imported during the review period. If the articles are later found to infringe (and the remedy is approved), the bond is forfeited for those infringing imports. If the articles are found not to infringe, the bond is not forfeited for those imports.

Which PatentPaper resources cover USITC remedies and investigation process?

Our ITC Section 337 remedies strategy guide and USITC Section 337 patent cases guide by the PatentPaper research team provide remedy mechanics and investigation process context that interact with bonding strategy.