By Michael Doane,
IPPI Scholar & Assistant Professor of Law,
The University of Akron School of Law
Due to its effectiveness in enforcing intellectual property rights, Section 337 is frequently the subject of ill-considered proposals to limit its availability. On April 30, 2026, the U.S. International Trade Commission (USITC) published a Notice of Proposed Rulemaking setting forth proposed new rules requiring disclosure of “entities that have an ownership or a financial interest in the investigation.”[1] The purported purpose of these proposed new rules is to “address concerns that have arisen in Commission practice [regarding] real-party-in-interest and litigation-funding disclosure requirements to promote transparency and for conflicts.”[2] Such disclosure requirements, however, have little to do with transparency or exposing potential conflicts, which are adequately addressed by the current rules. Litigation funding disclosure rules are intended to discourage small innovators and startup companies from relying on litigation funders for litigation against large infringers with the resources to self-finance litigation. Although the USITC references federal court practice in this area, the adoption of such disclosure rules is far from universal and, in fact, some U.S. district courts have rejected disclosure requirements as providing no relevant information.[3]
The current proposed disclosure rules would have a negative and burdensome impact on small innovators, startup companies and other technology-based entities not capable of self-funding a Section 337 investigation with no cognizable corresponding benefit. For a small innovator or startup company, the prospect of entering into patent litigation, particularly against a large predatory infringer capable of self-financing extensive litigation, can be daunting. The American Intellectual Property Law Association (AIPLA) estimates that the median cost of Patent Litigation (All Varieties) for one patent is approximately $3.5 million with a median cost of $450,000 for cases in which less than $1 million is at risk.[4] The cost of a patent-based Section 337 investigation is generally the same or more while compressed into a shorter timeframe.[5]
Small technology-based startup companies may rightly doubt the value of obtaining patents when the companies do not have the resources to enforce those patents. Although patents provide many benefits, the ability to enforce them against infringers is paramount. This is of particular importance when faced with a predatory infringer, a large self-financed entity that chooses to infringe as it possesses the resources to engage in extended scorched-earth patent litigation. In other words, it infringes because it can. By providing effective relief in a relatively expedited timeframe, Section 337 investigations provide small innovators with the ability to protect their rights against predatory infringement.
Unfortunately, while cost is not a deterrent to large self-financed predatory infringers, prosecuting a Section 337 investigation can be prohibitively expensive for a small innovator. As damages are not available in Section 337 investigations, contingency fee arrangements, which can be helpful to small innovators, are generally not an option. Third-party litigation funders serve to level the playing field by providing the resources necessary to conduct a fair and full Section 337 investigation and grant small innovators and startup companies full access to the legal system to enforce their intellectual property rights.
The Commission thus far has largely resisted ongoing pressure to limit access to Section 337 via proposed limitations on the domestic industry, and it should do the same with the proposed disclosure rules. To its credit, the Commission has recognized that efforts to place such restrictions on potential complainants are unwarranted. As the Commission’s own statistics demonstrate, allegations of abuse of Section 337 by certain small entities known as patent assertion entities are a false narrative and at best overblown. Efforts to impose litigation funding disclosure requirements on Section 337 investigations is simply a further effort to burden small innovators who cannot self-fund litigation while providing little or no relevant information.
The proposed disclosure rules require disclosure of information wholly irrelevant to the prosecution or defense of a Section 337 investigation. To successfully litigate a Section 337 investigation, a complainant must establish an unfair act, importation of the accused product, a domestic industry and, in some cases, injury. The identity of a litigation funder, or even the disclosure of their existence, is irrelevant to any of the issues. Some U.S. district courts have found this information potentially relevant to the issue of damages, but damages are not available in Section 337 investigations. In short, the proposed disclosure rules add nothing relevant for resolving the ultimate issues in a Section 337 investigation.
The cited reason for these proposed disclosure rules is to provide transparency and facilitate evaluation of conflicts. These concerns are adequately addressed by the current Commission Rules that require identification of the ownership of any asserted intellectual property right and any licensees, thus providing clarity as to the entities whose rights are at issue.[6] A potential financial interest in the outcome of a Section 337 investigation does not equate to ownership of the asserted intellectual property right, nor does it provide standing to bring a Section 337 investigation independent from the intellectual property owner.[7] Moreover, to date, there do not appear to have been any reported instances of conflicts of interest at the Commission arising out of litigation funding agreements. So, the proposed disclosure requirements seem to be a solution in search of a problem.
To the extent such information allegedly will aid preparation for settlement negotiations, it should be noted that the Commission consistently rejects efforts to provide parties with information about settlement requirements. For example, when serving a motion to terminate an investigation as to certain respondents based on a settlement agreement, complainants are regularly permitted to serve only redacted versions of the settlement agreements on any remaining active respondents to avoid disclosure of settlement terms. The only information regarding settlement that potentially would be provided by litigation funding disclosure is how long a well-funded infringer must resist before the patent owner no longer has resources to litigate.
An alleged concern about litigation funding is that foreign-based litigation funders use litigation in the USITC or in district court to gain access to confidential business information regarding U.S. technology and innovation. This concern is unfounded. At the USITC, all confidential business information is protected by a protective order that limits access to any such information to attorneys and experts retained for the investigation. Any party or funder, foreign or domestic, is precluded from access to any confidential business information provided by the other side. Access to confidential information in district court litigation is similarly restricted by protective orders.
The proposed disclosure requirements unnecessarily burden small innovators and startup companies seeking to enforce their rights at the Commission with no corresponding benefits. Third party litigation funding is simply a necessary tool to give small innovators the benefit of the technology they create and the intellectual property they obtain by providing access to the legal system. Efforts to restrict access to litigation funding or to deter litigation funders from supporting intellectual property enforcement efforts, including Section 337 investigations, should be rejected. Accordingly, the proposed disclosure rules should not be adopted.
Further Reading: Michael L. Doane, “Comments on Notice of Proposed Rule Making, Docket No. MISC-051, 91 Fed. Reg. 23190 (April 30, 2026)” to the U.S. International Trade Commission (June 26, 2026)
[1] Notice of Proposed Rule Making, U.S. International Trade Commission, 19 CFR Part 210, Adjudication and Enforcement, Docket No. MISC-051, 91 Fed. Reg. 23190 (April 30, 2026).
[2] Id.
[3] See, e.g., Second Amended Standing Order on Motions in Limine in Cases Involving Allegations of Patent Infringement and/or Breach of FRAND Obligations, as well as Declaratory Judgment Actions which Relate to the Same (E.D. Tex. Dec. 23, 2025); Corrigent Corp. v. Cisco Systems Inc, Order on Motions in Limine, No. 6:22-CV-00396-ADA (W.D. Tex. Apr. 26, 2023).
[4] 2025 Report of the Economic Survey, American Intellectual Property Law Association.
[5] Id.
[6] 19 C.F.R. § 210.12(a)(9)(ii)-(iii).
[7] 19 C.F.R. § 210.12(a)(7)