Category: Antitrust & Trade Regulation

No APA Review of Commission Refusal to Issue Sua Sponte Show Cause Order

The US Court of Appeals for the Federal Circuit dismissed an appeal challenging a US International Trade Commission decision that upheld an administrative law judge’s (ALJ) order, ruling that such an order was within the Commission’s discretion and unreviewable. Realtek Semiconductor Corp. v. International Trade Commission, Case No. 23-1095 (Fed. Cir. Mar. 18, 2025) (Moore, C.J.; Reyna, Taranto, JJ.)
DivX filed a complaint at the Commission against Realtek alleging a violation of § 1337 of the Tarriff Act. DivX later withdrew the complaint. Realtek subsequently filed a motion for sanctions against DivX, alleging certain misconduct. The ALJ denied the motion on procedural grounds. Realtek subsequently petitioned for Commission review, asking the Commission to exercise its authority to issue a sua sponte order requiring DivX to show cause explaining why it had not engaged in sanctionable conduct. The Commission decided not to review and adopted the ALJ’s order without comment.
Realtek appealed, contending that the Commission violated the Administrative Procedure Act (APA) by not issuing a sua sponte show cause order. The Commission argued that Realtek’s appeal should be dismissed, contending that the issue raised was unreviewable.
The Federal Circuit agreed with the Commission, stating that under § 701(a)(2) of the APA, decisions made by an agency are unreviewable by the Court when they are entrusted to the agency’s discretion by law. The Court explained that the sua sponte issuance of a show cause order is a decision that “may be, not must be,” entered by the ALJ or on the Commission’s initiative. Therefore, the decision not to act sua sponte is a decision that remains wholly within the agency’s discretion.
The Federal Circuit rejected Realtek’s argument that the Commission’s refusal to act was reviewable because the Commission failed to provide reasoning, and that Commission review would have allowed the Court to determine if there were “illegal shenanigans” in exercising discretion. However, the case cited by Realtek involved the review of “shenanigans” that fell within the Court’s reviewable categories, not one related to the Commission’s refusal to issue a show cause order sua sponte. The Court found no support for Realtek’s claim that discretionary agency actions under § 701(a)(2) become reviewable under the APA simply because the agency fails to provide its reasoning.

Massachusetts Court Denies Certification of Privacy Class Action for Failure to Meet Ascertainability Requirement

On February 14, 2025, in Therrien v. Hearst Television, Inc., the District of Massachusetts denied a motion for class certification due to the plaintiff’s failure to meet the implied ascertainability requirement of Rule 23. The court concluded that the named plaintiff’s claims for unlawful disclosure of personally identifiable information could not be maintained on a class-wide basis because the proposed method for identifying proposed class members was “administratively infeasible” and raised due process concerns.
Therrien’s Video Privacy Protection Act Claim Based on Geolocation Data
Charles Therrien brought this case on his own behalf and other similarly situated individuals against Hearst Television, Inc. (“HTV”) for allegedly unlawfully disclosing his personally identifiable information to third parties in violation of the Video Privacy Protection Act (VPPA), 18 U.S.C. § 2710. The VPPA prohibits a videotape service provider from knowingly disclosing personally identifiable information concerning any of its consumers.
HTV is a news and weather broadcaster that offers mobile phone apps on which users can read articles and watch associated videos. The apps collect users’ geolocation data. To send push and email updates, HTV utilizes Braze, a third-party software-as-a-service-provider. Although users have the option to enable or disable sharing geolocation data, when it is enabled, users’ geolocation data is shared with Braze.
In addition, HTV also uses Google Ad Manager to send targeted advertisements to its apps’ users. Like Braze, if a user has enabled geolocation services, the geolocation data is shared with Google.
Thus, Therrien claimed that, because his geolocation data was shared with third parties, HTV violated the VPPA.
Therrien’s Proposed Class Definition of Mobile App Users
Therrien sought certification for this class action claim, for which he was required to establish the four threshold requirements of Rule 23(a) — numerosity, commonality, typicality, and adequacy — as well as the two additional prerequisites of Rule 23(b)(3) – predominance and superiority.
Although not one of the four threshold requirements of Rule 23(a), ascertainability is an implicit requirement that a plaintiff also must meet for class certification. Ascertainability requires that the class is “currently and readily identifiable based on objective criteria.” Additionally, the plaintiff’s proposed mechanism for determining class members must be both administratively feasible and protective of the defendant’s Seventh Amendment and due process rights.
To assess whether Therrien met the Rule 23 requirements, the court scrutinized the proposed class definition. In the present case, Therrien’s proposed class was defined as,  “All persons in the United States that (i) downloaded one of the Class Apps onto their mobile phone, (ii) enabled location permissions for the Class App for at least 250 sessions over a period of at least one month, and (iii) watched at least ten (10) videos between May 5, 2021, and April 16, 2024 (the “Class Period”).”
Courts considering class definitions will often assess the way the definition has been drafted, but in this case, the court’s analysis did not turn on the drafting of the definition but on the validity of Therrien’s proposed mechanism for identifying class members.
Court’s Critique of Therrien’s Proposed Methodology and Denial of Certification
For purposes of identifying class members, Therrien aimed to rely on an expert witness’s methodology using geolocation data. This method would involve analyzing geolocation data points to generate names of mobile app users, followed by testimony from each user confirming that the information obtained belongs to them and is accurate.
The court highlighted that this method would be administratively infeasible and could potentially violate HTV’s due process rights, running afoul of In re Nexium Antitrust Litig. Expanding upon the infeasibility of this method, the court noted that, for addresses where there are multiunit apartment buildings with hundreds of occupants, geolocation points could not be used to identify specific unit numbers, and therefore specific users, of the HTV apps.
Thus, the generated user data could not be used to differentiate putative class members from other users, making it nearly impossible to provide notice of a pending class action. Applying the reasoning from In re Asacol Anitrust Litig., the court noted that the proposed process would likely result in thousands of class members waiting to provide testimony on individual issues, which would predominate over common ones.
Moreover, the court explained that, although affidavits may be sufficient for differentiating between individuals who were injured and who were not injured, testimony used as part of a party’s affirmative case cannot be used to certify a class, “without providing the defendant an opportunity to litigate its defenses.” Because the determination of whether HTV shared personally identifiable information with Braze and Google is an essential element of the VPPA claim, this information could not be used for the purpose of fulfilling the ascertainability requirement.
Based on the foregoing administrative hurdles and due process considerations, the court denied the motion for class certification.
The court’s analysis highlights the importance of a sound mechanism for identifying class members and the potency of an ascertainability challenge if defense counsel can effectively illustrate practical challenges for the court.
More than anything, this case makes clear that it would be imprudent for litigants to treat ascertainability as an afterthought in their Rule 23(a) analysis because, as the holding of this court illustrates, failing to meet ascertainability is fatal for class certification within the First Circuit.
Finally, the decision in Hearst Television highlights that venue can be outcome determinative in class action litigation, where there is a persistent circuit court split on whether a class representative must prove an administratively feasible method of identifying absent class members as a precondition for class certification under Rule 23, with the First Circuit aligned with the Third and Fourth Circuits and the Second, Sixth, Seventh, Eighth, Ninth, and Eleventh Circuits following a more permissive standard.
Until the Supreme Court speaks on this division that is ripe for review, litigants should continue to address ascertainability as a critical issue at the certification stage.

New Office of Financial Sanctions Implementation Financial Services Threat Assessment

On 13 February 2025, the Office of Financial Sanctions Implementation (OFSI) published its assessment of suspected sanctions breaches involving financial services firms since February 2022 (the Assessment). The Assessment forms part of a series of sector-specific assessments by OFSI that address threats to UK financial sanctions compliance by UK financial or credit institutions.
The Assessment highlights three areas of main concern: 

Compliance;
Russian-Designated Persons (DPs) and enablers; and 
Intermediary Countries.

This alert provides a summary of these concerns and suggests action financial services firms can take to combat these threats when developing their risk-based approach to compliance. 
Compliance 
OFSI has identified several compliance issues and advised steps that firms can take to improve and strengthen their compliance. These include: 
Improper Maintenance of Frozen Assets
All DPs accounts and associated cards, including those held by entities owned or controlled by DPs, must be operated in accordance with asset freeze prohibitions and OFSI licence permissions. Financial institutions should review existing policies or contracts as these can often automatically renew, resulting in debits from DP accounts. 
Breaches of Specific and General OFSI Licence Conditions
Firms need to carefully review permissions when assisting with transactions they believe are permitted under OFSI licences. Firms must ensure that OFSI licenses are in date, bank accounts are specified in OFSI licences and licence reporting requirements are adhered to.
Inaccurate Ownership Assessments
Firms must be able to identify entities that are directly owned by Russian DPs, and subsidiaries owned by Russian conglomerates that are themselves designated or majority owned by a Russian DP. Firms should conduct increased due diligence where necessary and regularly update due diligence software. 
Inaccurate UK Nexus Assessments
Firms should take extra care to understand the involvement of UK nationals or entities in transaction chains when assessing the application of a UK nexus. They must also ensure they understand the difference between United Kingdom, European Union and United States sanctions regimes to make correct assessments of how UK sanctions might be engaged. 
Russian DPs and Enablers
OFSI defines an enabler as “any individual or entity providing services or assistance on behalf of or for the benefit of DPs to breach UK financial sanctions prohibitions.” Broadly, there are two types of enablers: 

professional enablers that provide professional services “that enable criminality. Their behaviour is deliberate, reckless, improper, dishonest and/or negligent through a failure to meet their professional and regulatory obligations”; and 
non-professional enablers, such as family members, ex-spouses or associates. 

Maintaining Lifestyles and Assets
Most identified enabler activity has been in relation to maintaining the lifestyles of Russian DPs and assets as they face growing liquidity pressures from UK sanctions. 
OFSI urges firms to scrutinise the following red flags: 

New individuals or entities making payments to satisfy obligations formerly met by a DP; 
Individuals connected to Russian DPs receiving funds of substantial value;
Regular payments between companies owned or controlled by a DP; 
Crypto-asset to fiat transactions involving close associates of a Russian DP; 
Family member of a DP that is an additional cardholder on a purchasing card that uses the card for personal expenses and overseas travel; and
Deposits of large sums of cash without sufficient explanation; 

Fronting 
With a significant value of the assets of DPs having been frozen in the United Kingdom, an increasing amount of enablers are attempting to front on behalf of DPs and claim ownership of frozen assets. The links between enablers fronting on behalf of DPs are not always clear, and so OFSI has outlined several red flags for firms to be aware of: 

Individuals with limited profiles in the public domain, for instance, those with limited related professional experience;
Inconsistent name spellings or transliterations;
Recently obtained non-Russian citizenships; and 
Repeated or unexplained name changes or declared location of operation. 

Utilising Alternative Payment Methods to Breach Prohibitions 
Financial services firms need to remain diligent when assessing the threat posed by the increasingly sophisticated methods employed by DPs and enablers to evade UK financial sanctions prohibitions. Particular attention should be paid to attempts at money laundering on behalf of Russian DPs, including any indications of high value crypto-asset to cash transfers.
Intermediary Countries
Emphasis is placed on the use of intermediary jurisdictions in suspected breaches of UK financial sanctions prohibitions. The following jurisdictions are utilised most often: British Virgin Islands, Guernsey, Cyprus, Switzerland, Austria, Luxembourg, United Arab Emirates and Turkey. These jurisdictions offer secrecy or particular commercial interests. 
There has also been a change in the third countries referenced in suspected breach reports, with increased activity in the Isle of Man, Guernsey, United Arab Emirates and Turkey. Indeed, the United Arab Emirates accounted for the largest section of suspected breaches reported to OFSI in the first quarter of 2024. This shift has likely been caused by various factors, including capital flight by Russians to jurisdictions that do not have sanctions on Russia. 
The Assessment helpfully outlines a non-exhaustive list of specific activities in various countries that could be indicative of UK financial sanctions breaches. Financial institutions are encouraged to review and familiarise themselves with this list so that they can identify potential threats to sanctions compliance. Businesses should then consider the involvement of these jurisdictions when conducting due diligence, and evaluate the risks associated with various transactions.
Conclusion 
The recent expansion of the United Kingdom’s financial sanctions regime, particularly in relation to Russia’s invasion of Ukraine, has resulted in sanctions evasion becoming increasingly sophisticated and widespread. Considering the scale of evasion being conducted, financial institutions need to remain proactive and vigilant in identifying transaction activity that may be indicative of attempts to circumvent UK sanctions regimes. 
When designing sanctions compliance programmes, financial institutions should refer to the Assessment to account for methodologies of evasion and recognise specific behaviours that might present warning signs. By taking a proactive approach to prevent their services from being exploited as instruments of circumvention, financial institutions will contribute to efforts to combat sanctions evasion, whilst avoiding the financial and reputational repercussions of non-compliance.
If you have any questions on the Assessment or want further advice on developing your policies for UK sanctions compliance, please do not hesitate to contact our Policy and Regulatory practice.

The Digital Chamber Publishes US Blockchain Roadmap

The Digital Chamber (TDC), a trade association focused on advancing blockchain adoption and regulatory clarity, has unveiled its U.S. Blockchain Roadmap, a plan aimed at enhancing America’s leadership in blockchain technology. The roadmap emphasizes blockchain’s potential in reshaping financial systems, global trade, and digital infrastructure. It argues that blockchain development could impact the United States’ economic growth, financial sovereignty, and technological competitiveness.
The roadmap outlines several priority areas and policy recommendations. These include integrating digital assets into the nation’s financial infrastructure, protecting decentralized networks, and establishing clear regulatory frameworks. It also examines Bitcoin mining’s potential role in strengthening U.S. energy security and recommends modernizing the banking system to adapt to the evolving digital economy. Additionally, the roadmap explores blockchain’s potential applications in government operations and fiscal oversight.

How Should a Licensing Commitment Affect the Availability of Injunctions at the ITC?

We may be about to find out, as the Commission seeks comments on exclusion orders for infringement of standard essential patents.

Governed by 19 U.S.C. § 337, the U.S. International Trade Commission (“ITC”) is empowered to investigate unfair acts in the importation of articles into the United States. The ITC can be a powerful forum for owners of U.S. patents as it may issue exclusion orders barring infringing articles from entering the United States. Although the ITC is an independent federal agency, it is natural to wonder whether the Trump administration’s policies – including, in particular its “America First Trade Policy” issued on January 20 – could affect litigation before the Commission.
While the day-to-day handling of investigations before the ITC is unlikely to be affected by the specific trade policies of a particular administration, § 337 provides for a presidential review period, during which the president can review and potentially veto an exclusion order entered by the Commission in an investigation. This power has rarely been exercised, but the history of presidential review in investigations involving standard essential patents (“SEPs”) provides an example where the policies of an administration can directly impact ITC practice.
It started in 2013 when the Obama administration overturned an ITC order that would have excluded various Apple iPhone and iPad products from the United States market. In that investigation, Samsung alleged that Apple infringed patents that had been declared essential to certain telecommunications standards, and, in overturning the import ban, the U.S. Trade Representative acting on behalf of the Obama administration cited a “Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments” jointly issued by the Department of Justice and the U.S. Patent and Trademark Office on January 8, 2013. https://www.justice.gov/d9/pages/attachments/2018/12/10/290994.pdf
The Obama-era Policy Statement cautioned that granting exclusion orders for infringement of standard essential patents – which are typically accompanied by commitments to license on terms that are fair, reasonable and non-discriminatory (“FRAND” or “F/RAND”) – may result in the patent owner engaging in “patent hold up” by demanding a higher royalty for the use of its patent than would have been possible before the standard was set, and that such behavior may harm consumers. Accordingly, the 2013 Policy Statement concluded that “[a]lthough [] an exclusion order for infringement of F/RAND-encumbered patents essential to a standard may be appropriate in some circumstances, we believe that, depending on the facts of individual cases, the public interest may preclude the issuance of an exclusion order in cases where the infringer is acting within the scope of the patent holder’s F/RAND commitment and is able, and has not refused, to license on F/RAND terms.”
During President Trump’s first term, the administration issued its own “Policy Statement on Remedies for Standard-Essential Patents Subject to Voluntary F/RAND Commitments” on December 19, 2019. https://www.justice.gov/atr/page/file/1228016/dl This 2019 Policy Statement identified “concerns that the 2013 policy statement has been misinterpreted to suggest that a unique set of legal rules should be applied in disputes concerning patents subject to a F/RAND commitment,” such that “injunctions and other exclusionary remedies should not be available in actions for infringement of standards-essential patents.” The 2019 Policy Statement warned that “such an approach would be detrimental to the carefully balanced patent system.” Accordingly, the USPTO and DOJ withdrew the 2013 Policy Statement in favor of a policy where “the existence of F/RAND or similar commitments [] may be relevant and may inform the determination of appropriate remedies,” but “the general framework for deciding these issues remain[ed] the same as in other patent cases.”
This back-and-forth continued with the Biden administration, but to a lesser extent. After soliciting written submissions and hearing a variety of views on both sides of the issues, on June 8, 2022, the Biden administration issued a “Withdrawal of 2019 Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments,” which stated in a footnote that it was also not reinstating the Obama-era 2013 Policy Statement. https://www.uspto.gov/sites/default/files/documents/SEP2019-Withdrawal.pdf. Accordingly, the 2022 Withdrawal concluded that conduct by SEP holders and standards implementers should be reviewed “on a case-by-case basis to determine if either party is engaging in practices that result in the anticompetitive use of market power or other abusive processes that harm competition.”
It remains to be seen whether the USPTO, DOJ and NIST will reinstate the 2019 Policy Statement in President Trump’s second term. The policy statement put into effect during President Trump’s first term was withdrawn by President Biden, but in a way that did not reinstate the earlier Obama-era policy, and the 2022 Withdrawal does not on its face articulate any view of available remedies for infringement of standard essential patents that is inconsistent with the 2019 Policy Statement. Nevertheless, one would reasonably expect that the second Trump administration would be inclined to favor a policy where available remedies for infringement of standard essential patents would not materially differ from the remedies available for infringement of other patents.
However, earlier this month the International Trade Commission issued a notification suggesting that the Commission’s thoughts on this issue may not be so predictable. On March 4, 2025, the ITC published a Notice in the Federal Register relating to Investigation No. 337-TA-1380, which involved an allegation by Nokia that Amazon infringes certain patents declared essential to video compression standards which carry with them a commitment to license on RAND terms. The Notice indicates that the Commission has determined to review the Initial Determination of the Administrative Law Judge in its entirety, and it solicits written submissions from the parties on various issues, including the following SEP-specific questions:

When the complainant alleges that an asserted patent is a standard essential patent, subject to reasonable, and nondiscriminatory (RAND) licensing terms, is the complainant precluded from seeking an exclusion order and/or cease and desist order based on infringement of that patent? Should the Commission consider RAND licensing obligations as a legal or equitable defense (i.e., as part of its violation determination) under section 337(c), 19 U.S.C. 1337(c)) or as part of its consideration of the public interest factors under section 337(d)(1) and (f)(1)? Please discuss theories in law, equity, and the public interest, and identify which (if any) of the public interest factors of 337(d)(1) and (f)(1) preclude issuance of such an order.
In the event a violation is found, does the information regarding the parties’ RAND obligations and licensing attempts inform any particular public interest factor that the Commission should consider under section 337(d)(1) and (f)(1)? If so, please identify which factor it informs and explain why, including the relevant evidence of record. As part of its public interest analysis, should the Commission determine whether any prior license offer made by the patent holder covering the accused products is reasonable and non-discriminatory? If so, what evidence should the Commission consider in determining whether offers are reasonable and non-discriminatory based on the record of this investigation?

In addition, the March 4 Notice solicited written submissions from not just the parties, but also any interested government agencies or other interested parties on the issues of remedy and the public interest, which would seemingly include addressing the above two questions and, in general, Amazon’s argument in the case that an exclusion order would be against the public interest because it would exclude articles that practice SEPs. Such submissions were due on March 13, though approved late submissions continue to be filed, and the target date for completion of the Investigation is currently May 14, 2025.
The questions are interesting, particularly in view of the Obama administration’s directive in 2013 that “in any future cases involving SEPs that are subject to voluntary FRAND commitments, the Commission should be certain to (1) to examine thoroughly and carefully on its own initiative the public interest issues presented both at the outset of its proceeding and when determining whether a particular remedy is in the public interest and (2) seek proactively to have the parties develop a comprehensive factual record related to these issues in the proceedings before the Administrative Law Judge and during the formal remedy phase of the investigation before the Commission, including information on the standards-essential nature of the patent at issue if contested by the patent holder and the presence or absence of patent hold-up or reverse hold-up.”
Following that directive, the Commission has considered the issue in the past, and although it typically followed the 2013 Obama administration’s directive to consider the issues, it virtually always found that SEPs should not receive any type of “special treatment” at the ITC. However, based upon the Commission’s recent Notice, it appears that the Commission may be thinking more critically about the issue of defenses and exclusionary remedies for infringement of SEPs, with the history of these various Policy Statements showing that there is not a singular policy view, both from administrations with different perspectives and from parties with divergent interests. And with the target date for completion of the Nokia/Amazon Investigation just two months away and with comments having just recently been submitted, we may soon learn how the ITC intends to treat the Obama-era directive in the context of current trade policy.

What Every Multinational Company Needs to Know About … Criminal Enforcement of Trade, Import, and Tariff Rules: A Growing Risk for Businesses

In less than 100 days, the Trump administration has implemented a dizzying array of new tariffs, significantly increasing costs and complexity for U.S. importers. The administration is keenly aware that companies operating in this high-tariff environment may attempt creative, or even fraudulent, strategies to minimize tariff payments. Consequently, enforcement agencies have been directed to closely monitor and vigorously prosecute efforts at improper tariff engineering and duty evasion.
Historically, U.S. Customs and Border Protection (CBP) has relied heavily on its administrative remedies to enforce the customs and tariff laws. The Department of Justice (DOJ), however, has been steadily escalating enforcement intensity, notably through the False Claims Act (FCA), leveraging its treble damages and civil penalties to pursue false statements about imports. For a more detailed explanation of how the FCA has been used in this area, please see our recent blog post, “What Every Multinational Company Should Know About … The Rising Risk of Customs False Claims Act Actions in the Trump Administration.”
DOJ also has demonstrated a growing willingness to pursue criminal charges against companies and individuals involved in customs fraud schemes such as the purposeful misclassification of goods, falsifying country-of-origin declarations, and intentionally shipping goods through low-tariff countries. Importers of goods into the U.S. should expect criminal enforcement to accelerate in the coming months and years.
Potential Criminal Charges for Violating Customs Rules
DOJ has several available charging options in pursuing criminal cases against companies and individuals who violate customs rules by making false statements about customs requirements such as classification, country of origin, valuation, assists, and free trade preferences. Commonly used federal criminal statutes that could apply to tariff underpayments include:

Smuggling (18 U.S.C. § 545), which criminalizes knowingly and willfully importing merchandise into the U.S., contrary to law (e.g., misclassification or mislabeling to evade duties), and is typically used when importers intentionally misrepresent goods’ classification or origin to avoid or lower tariffs, often proven through seized documents or intercepted communications. This provision already has been applied in United States v. Esquijerosa, where an importer was charged with routing Chinese-origin goods through third countries to avoid tariffs, resulting in a December 6, 2024, guilty plea under the general conspiracy statute.
False Claims (18 U.S.C. § 287), which criminalizes knowingly making false, fictitious, or fraudulent claims to federal authorities and is used where importers knowingly provide false documentation or declarations to CBP concerning country-of-origin, valuation, related parties, or classification while paying improperly low customs or anti-dumping duties.
False Statements (18 U.S.C. § 1001), which criminalizes knowingly making materially false, fictitious, or fraudulent statements or representations to federal authorities and is frequently applied where importers intentionally provide false documentation or declarations to CBP concerning country-of-origin, valuation, related parties, or classification.
Wire Fraud (18 U.S.C. §§ 1343 & 1349), which criminalizes schemes to defraud involving interstate or foreign wire communications (such as emails or wire transfers) and can be applied to customs violations due to the prevalent use of electronic communications and financial transfers in import transactions, providing prosecutors leverage in complex schemes.
International Emergency Economic Powers Act (IEEPA) (50 U.S.C. § 1701), which criminalizes the willful evasion or violation of regulations issued under national emergency declarations concerning international commerce and could apply where importers deliberately evade tariffs or restrictions enacted under presidential authority during declared emergencies, such as recent trade actions involving China.
Conspiracy (18 U.S.C. § 371), which criminalizes any agreement between two or more persons to commit any of the above crimes.

Examples of Past Customs-Related Criminal Cases Brought by DOJ
Criminal prosecutions based on violations of customs rules do not require DOJ to break new ground. Here are a few significant criminal trade cases:

Plywood Tariff Evasion Case (2024): A Florida couple was charged under the Lacey Act and received 57-month prison sentences for evading approximately $42.4 million in customs duties. They fraudulently declared Chinese plywood as originating from Malaysia or Sri Lanka, avoiding anti-dumping duties exceeding 200%.[1]
Stargate Apparel (2019): DOJ filed criminal and civil charges against the CEO of a children’s apparel company, Stargate Apparel, Inc. The CEO was charged with participating in a years-long scheme to defraud CBP by submitting invoices that falsely understated the true value of the goods imported by his company into the United States.[2]
Food Importation Fraud (2013): Several individuals and two food processing companies were criminally charged for illegally importing a Chinese-origin food product by intentionally mis-declaring its origin and classification as Vietnamese. Through complex transshipment methods, the defendants sought to evade over $180 million in anti-dumping duties.
Fentanyl Precursors (2025): Indian chemical firms Raxuter Chemicals and Athos Chemicals faced criminal charges for smuggling precursor chemicals used in fentanyl production into the U.S. and Mexico, employing extensive false declarations to evade detection.[3]

How Customs Violations or Underpayments Come to DOJ’s Attention
Customs violations can come to DOJ’s attention through several channels:

CBP Referrals: CBP’s Automated Commercial Environment (ACE) uses sophisticated algorithms capable of identifying anomalies, suspicious patterns, or misrepresentations in import data. Fraudulent conduct will result in a referral by CBP to DOJ — similar to Health and Human Services’ very successful data mining tools, which have led to numerous civil and criminal fraud cases.
Voluntary Disclosures: Although CBP encourages self-reporting, prior voluntary disclosures can expose intentional misconduct, triggering criminal investigations.
Whistleblower Reports: Claims filed by employees or competitors under the FCA or reports submitted via CBP’s e-Allegations Program or the Enforce and Protect Act (EAPA) portal often reveal duty evasion schemes, prompting DOJ intervention. Several plaintiff-side FCA law firms are touting their experience in customs and trade cases, and we anticipate referral activity in this space to increase.

Navigating Increased Enforcement and Mitigating Risk
Criminal enforcement of CBP regulations presents significant risk for companies that serve as importers of record, who are responsible under CBP regulations for ensuring the complete and accurate submission of import data. In this new trade environment, there will be an increasing emphasis by CBP to detect importers attempting to make end-runs around higher tariffs, particularly from China.
Risk mitigation involves a thorough review of the company’s ACE data to assess the company’s importing patterns, focusing particularly on imports targeted for increased tariffs by the Trump administration. Companies also should evaluate the current state of their customs compliance to confirm consistent and robust procedures for classification, origin determination, valuation, and recordkeeping, to ensure that reasonable care in being used in import operations, and should consider preparing “reasonable care” memoranda to memorialize their treatment of how they are handling tariff-related obligations. Finally, importers should establish post-entry checks and reviews to ensure that they can correct any entry-related information submitted to Customs before it becomes final at liquidation. This is especially important in the context of a high-tariff environment, where potential penalties for underpayment of tariffs are vastly greater. Foley’s international trade team has developed a six-step tariff risk management plan, accessible here: “Managing Import and Tariff Risks During a Trade War.”

[1] U.S. Department of Justice (DOJ), Florida Conspirators Sentenced to Nearly Five Years in Prison Each for Evading Over $42 million in Duties when Illegally Importing and Selling Plywood, (Feb. 15, 2024), https://www.justice.gov/usao-sdfl/pr/florida-conspirators-sentenced-nearly-five-years-prison-each-evading-over-42-million
[2] U.S. Department of Justice (DOJ), Manhattan U.S. Attorney Announces Criminal And Civil Charges Against CEO Of Clothing Company For Million-Dollar Customs Fraud (June 6, 2019), https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-criminal-and-civil-charges-against-ceo-clothing-company.
[3] U.S. Department of Justice (DOJ), Two Indian Chemical Companies and a Senior Executive Indicted for Distributing Fentanyl Precursor Chemicals (Jan. 6, 2025), https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-criminal-and-civil-charges-against-ceo-clothing-company; see also Associated Press, 2 Indian Companies Charged with Smuggling Chemicals Used in Making Fentanyl (Jan. 6, 2025), https://apnews.com/article/indian-chemical-companies-charged-fentanyl-opioid-smuggling-d2cfbc05f0742953e35a05cd0c889dc3

New York AG Settles with School App

The New York Attorney General recently entered into an assurance of discontinuance with Saturn Technologies, operator of an app used by high school and college students. The app was designed to be a social media platform that assists students with tracking their calendars and events. It also includes connection and social networking features and displayed students’ information to others. This included students’ location and club participation, among other things. According to the NYAG, the company had engaged in a series of acts that violated the state’s unfair and deceptive trade practice laws.
In particular, according to the attorney general, although the app said that it verified users before allowing them into these school communities, in fact anyone could join them. Based on the investigation done by the AG, the majority of users appeared not to have been verified or screened to block fraudulent accounts. In other words, accounts that were not those of students at the school. This was a concern, stressed the AG, as the unverified users had access to personal information of students. The AG argued that these actions constituted unfair and deceptive trade practices.
Finally, the AG alleged that the company did not make it clear that “student ambassadors” (who promoted the program) received rewards for marketing the program. As part of the settlement, the app maker has agreed to create and train employees and ambassadors on how to comply with the FTC’s Endorsements Guides by, among other things, disclosing their connection to the app maker when discussing their use of the app.
Putting It Into Practice: This case is a reminder to review apps directed to older minors not only from a COPPA perspective (which applies to those under 13). Here, the NYAG has alleged violations stemming from representations that the company made about the steps it would take to verify users. It also signals expectations in New York for protecting minors if offering a social media platform intended only for that market. 
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Regulations on the Implementation of the Anti-Foreign Sanctions Law of the People’s Republic of China – Foreign-Owned Intellectual Property Can Be Seized

On March 23, 2025, the State Council of the People’s Republic of China promulgated the Regulations on the Implementation of the Anti-Foreign Sanctions Law of the People’s Republic of China (实施〈中华人民共和国反外国制裁法〉的规定). Article 7 of the Regulations specifically allows for the seizure of intellectual property of those that “directly or indirectly participate in the drafting, decision-making, or implementation of the discriminatory restrictive measures in Article 3 of Anti-Foreign Sanctions Law.”  Paragraph 2, Article 3 of the Law reads, “Where foreign nations violate international law and basic norms of international relations to contain or suppress our nation under any kind of pretext or based on the laws of those nations to employ discriminatory restrictive measures against our nation’s citizens or interfere with our nation’s internal affairs, our nation has the right to employ corresponding countermeasures.”

Article 7 of the Regulations reads:
The seizure, detention, and freezing referred to in Paragraph 2 of Article 6 of the Anti-Foreign Sanctions Law shall be implemented by the public security, finance, natural resources, transportation, customs, market supervision, financial management, intellectual property and other relevant departments of the State Council in accordance with their duties and powers.
Other types of property in Article 6, Paragraph 2 of the Anti-Foreign Sanctions Act include cash, bills, bank deposits, securities, fund shares, equity, intellectual property rights, accounts receivable and other property and property rights.

Relevant Articles of Law follow:
Article 3: The People’s Republic of China opposes hegemony and power politics and opposes any country’s interference in China’s internal affairs by any means and under any pretext.
Where foreign nations violate international law and basic norms of international relations to contain or suppress our nation under any kind of pretext or based on the laws of those nations to employ discriminatory restrictive measures against our nation’s citizens or interfere with our nation’s internal affairs, our nation has the right to employ corresponding countermeasures.
Article 4: The relevant departments of the State Council may decide to enter persons or organizations that directly or indirectly participate in the drafting, decision-making, or implementation of the discriminatory restrictive measures provided for in article 3 of this Law in a countermeasure list.
Article 5: In addition to the individuals and organizations listed on the countermeasure list in accordance with Article 4 of this Law, the relevant departments of the State Council may also decide to employ countermeasures against the following individuals and organizations:
(1) The spouses and immediate relatives of individuals listed on the countermeasure list;
(2) Senior managers or actual controllers of organizations included in the countermeasures list;
(3) Organizations in which individuals included in the countermeasure list serve as senior management;
(4) Organizations in which persons included in the countermeasure list are the actual controllers or participate in establishment and operations;
Article 6: In accordance with their respective duties and division of labor, the relevant departments of the State Council may decide to employ one or more of the following measures against the individuals and organizations provided for in Articles 4 and 5 of this Law, based on the actual situation:
(1) Not issuing visas, denying entry, canceling visas, or deportation;
(2) Sealing, seizing, or freezing movable property, real estate, and all other types of property within the [mainland] territory of our country;
(3) Prohibiting or restricting relevant transactions, cooperation, and other activities with organizations and individuals within the [mainland] territory of our country;
(4) Other necessary measures.

The full text of the Regulations is available here (Chinese only). A translation of the Anti-Foreign Sanctions Law is available from NPC Observer here.

FTC’s Consumer Protection Agenda Thus Far Under President Trump

As contemplated by FTC defense lawyer in December 2024, the Federal Trade Commission’s operations during the first two months under the second Trump Administration have been chaotic. Unsurprisingly, the policy focus appears to be de-regulation and an enforcement focus on bread-and-butter fraud and deception (for example and without limitation, bogus business opportunity offers, unsubstantiated earnings claims and unlaw debt collection), privacy, telemarketing, big technology moderation and the protection of competition in labor markets.
Last week, President Trump fired the remaining two Democratic commissioners. Both have stated that they believe their termination is unlawful and may challenge the dismissals judicially. Two Republican commissioners remain to make regulatory, investigation and enforcement-related decisions.
The Federal Trade Commission has traditionally been considered an independent agency. However, President Trump recent issued an Executive Order seeking to vest control of various federal agencies and financial regulator within his control, including the FTC. In doing so, the Trump administration seemingly seeks to exert some degree of control over the strategic priorities of the agencies and regulators.
Historically, an FTC commissioner may only be removed by the President for “inefficiency, neglect of duty or malfeasance in office.” In fact, in Humphrey’s Executor v. United States (1935), the Supreme Court ruled that FTC commissioners cannot be removed over policy differences.
Importantly, however, in Selia Law v. CFPB (2019), the Supreme Court held that restricting removal of the Consumer Financial Protection Bureau director to “for cause” only is unconstitutional. Justices Thomas and Gorsuch concurred and criticized the Humphrey’s Executor decision. It is anticipated that, if challenged, the Trump Administration will rely upon the Selia Law decision in support of its position that the removal of the FTC commissioners is constitutional.
Many have noticed a considerable shift in consumer protection investigation and enforcement-related activities. A few new enforcement matters have been initiated in 2025 whilst one or more investigations and lawsuits have been paused. Whether the current slowdown is temporary while the agency aligns its priorities with the new administration’s policies, or is an indication of a more significant long term shift remains to be seen.
Also noteworthy is a brief recently filed in the Eighth Circuit by the FTC defending the “Click to Cancel” Negative Option Rule. Numerous business groups have filed challenges to the rule in federal court. Many have speculated the “Click to Cancel” Rule would face significant challenges by the Trump administration. The “Click to Cancel” Rule’s misrepresentation restrictions are already effective and the remainder of the rule is supposed to become effective in May 2025.

FTC Signals Strong Stance on Civil Investigation Demands

In a March 10 blog post, the new Director of the FTC’s Bureau of Consumer Protection (BCP) reaffirmed the agency’s commitment to enforcing consumer protection laws through Civil Investigation Demands (CIDs). 
A CID is a legally enforceable demand requiring recipients to provide requested documents, testimony, reports, or other information. The FTC issues CIDs to entities and individuals it believes may have violated the law, as well as to third parties who may possess relevant information.
The FTC expects full and timely compliance with CIDs, and failure to respond can lead to legal action, including judicial enforcement. While BCP may work with recipients to tailor requests or adjust response deadlines, recipients must initiate such discussions well in advance. Additionally, recipients are generally required to meet with FTC staff soon after receiving a CID. Although this requirement can be waived, the meeting provides a crucial opportunity to raise and address any compliance challenges.
Putting It Into Practice: The new BCP Director’s first blog post since his appointment highlights the FTC’s continued focus on financial institutions and fintech companies that engage with consumers. Businesses and individuals that receive a CID should

Act Promptly: Track all deadlines and contact the FTC staff identified in the CID to discuss compliance.
Seek Legal Counsel: Consult with experienced legal counsel to ensure appropriate and timely responses.
Engage Cooperatively: Proactively communicate with the FTC, as the agency may consider adjustments to requests or deadlines.

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Federal Circuit Opens the Door to Additional Domestic Industry Investment: “Ordinary Importer” No Longer

In its recent decision in Lashify, Inc. v. International Trade Commission, the Federal Circuit opened the door for patent owners to include expanded categories of domestic investment to satisfy the economic prong of the domestic industry requirement under Section 337(a)(3)(B). App. No. 2023-1245, Opinion (Mar. 5, 2025). Post-manufacture activities that previously were not considered—like sales, marketing, warehousing, quality control, and distribution—are now likely includable as domestic industry investments for purposes of establishing a domestic industry under Section 337(a)(3)(B). This is a significant departure from International Trade Commission (ITC) precedent and will likely open the door to a greater number of ITC investigations involving foreign-manufactured articles.
One of the unique aspects of ITC practice is its requirement that the complainant prove the existence of a domestic industry in order to obtain the coveted exclusion order. This requirement involves two prongs—the technical prong, which requires the complainant prove that it practices the patent at issue; and the economic prong, which requires the complainant prove with respect to the articles protected by the patent: (A) significant investment in plant and equipment; (B) significant employment of labor or capital; or (C) substantial investment in exploitation, including engineering, research and development, or licensing. 19 U.S.C. § 1337(a)(3). The Federal Circuit’s decision in Lashify addressed the economic prong.
Since its enactment in 1988, the ITC’s interpretation of Section 337(a)(3)(B) has effectively barred domestic investments directed solely to post-manufacture activities such as sales, marketing, warehousing, quality control, and distribution from establishing the existence of a domestic industry. The ITC often referred to these activities as those of an “ordinary importer,” failing to alone meet the economic prong of the domestic industry requirement because such activities contribute nothing to the actual manufacture of the article. Where manufacture of the article occurs outside of the United States, no additional steps occur in the United States to make the article salable, and thus no cognizable domestic industry activities remain for purposes of establishing the economic prong. Over the years, this interpretation of Section 337(a)(3) has effectively required some form of domestic manufacture or assembly activity to satisfy the economic prong of the domestic industry requirement. This is likely not the case anymore.
Lashify sells artificial eyelash extensions, applicator tools and products, and lash-extension storage containers. While Lashify conducts research and development in the United States, it manufactures its products overseas and ships them to U.S. customers who purchase the products via Lashify’s website. Customers are then able to use a variety of Lashify-provided resources to apply them, such as educational videos on social media, online chats, and video-call sessions. Lashify owns patents directed to these products, including a least one utility patent directed to, for example, certain lash-fusion technology; and design patents directed to, for example, a certain storage cartridge for eyelash extensions. Lashify filed a complaint before the ITC, in which it alleged that importers of similar products were violating Section 337 by infringing these patents.
The Administrative Law Judge (“ALJ”) at the ITC denied Lashify relief under the statute, determining, inter alia, that Lashify did not satisfy the economic prong of the domestic industry requirement. In reaching this determination, the ALJ excluded expenses relating to sales, marketing, warehousing, quality control, and distribution, following decades of ITC precedent considering these investments alone insufficient to meet the economic prong of the domestic industry requirement. The ALJ reasoned that because there were “no additional steps required to make these products saleable” upon arrival into the United States, and because the quality control measures were “no more than what a normal importer would perform upon receipt,” no domestic industry existed under Section 337(a)(3)(B).
The Commission agreed to review the ALJ’s decision and affirmed. The majority agreed with the ALJ that Lashify had not satisfied the economic prong of the domestic industry requirement, reasoning that “it is well settled that sales and marketing activities alone cannot satisfy the domestic industry requirement.” The majority reached the same conclusion with respect to warehousing, quality control, and distribution.
Lashify appealed to the Federal Circuit. The Federal Circuit vacated the ITC’s determination and remanded the investigation to the ITC for redetermination of satisfaction of the economic prong of the domestic industry requirement. The Federal Circuit concluded that the ITC’s determination relied upon an incorrect interpretation of Section 337(a)(3)(B). The Federal Circuit rejected the ITC’s conclusion that Lashify’s analysis was “overinclusive and not supported” because it “included expenses related to warehousing, distribution, and quality control” as well as “sales and marketing expenses.” The Federal Circuit found no support for these categorical exclusions in the text of the statute, relying heavily on its plain text and a thorough review of the legislative history surrounding the 1988 enactment.
The Federal Circuit observed that the provision “straightforwardly states that domestic industry ‘shall be considered to exist if there is in the United States, with respect to the articles protected by the patent . . . concerned, . . . significant employment of labor and capital.’” 19 U.S.C. § 1337(a)(3)(B). Absent some limitation, the Federal Circuit concluded:
[T]he provision covers significant use of “labor” and “capital” without any limitation on the use within an enterprise to which those items are put, i.e., the enterprise function they serve. In particular, there is no carveout of employment of labor or capital for sales, marketing, warehousing, quality control, or distribution. Nor is there a suggestion that such uses, to count, must be accompanied by significant employment for other functions, such as manufacturing. The Commission’s holdings attribute limitations to clause (B) not found there.

The Federal Circuit went on to conclude that there was no other rationale for imparting a categorical limitation to Section 337(a)(3)(B), precluding reliance on these types of investments from the context of the statute or its legislative history. The Federal Circuit thus directed the ITC, on remand, to “count Lashify’s employment of labor and capital even when they are used in sales, marketing, warehousing, quality control, or distribution, and the Commission must make a factual finding of whether those qualifying expenses are significant or substantial based on ‘a holistic review of all relevant considerations.’”
The Federal Circuit’s decision in Lashify is likely to have a significant impact on ITC practice. Foremost, it is likely to make the ITC available to businesses and industries previously excluded from the venue on the basis of the foreign manufacture of the imported article. Now, foreign manufacture of the article is not likely to be a bar to a patent owner’s ability to claim significant or substantial domestic investment in labor and capital under Section 337(a)(3)(B), even when such labor and capital is devoted to activities that do not make the product saleable or amount to anything more than those post-manufacture activities performed by an ordinary importer. Companies who perform such purely post-manufacture activities—as long as such investments are significant—will have the ability to claim such activities constitute domestic investment for purposes of meeting the economic prong of the domestic industry under Section 337(a)(3)(B).