United States: Understanding The International Trade Commission In 2012

Last Updated: August 28 2012
Article by Shailendra K. Maheshwari and Mark Hogge

Why the ITC is the Popular Choice for Patent Enforcement

Last year, 2011, was a blockbuster year for intellectual property (IP) disputes at the United States International Trade Commission (ITC). There were approximately 70 patent cases in 2011. So far, 2012 shows no signs of slowing with just over 30 investigations being instituted by the ITC. The current crop of investigations focus mainly on patent infringement actions, but have regularly involved trademark, copyright and trade secret disputes. Further, the technology at issue covers numerous areas, including smartphones, semiconductors, software, mechanical components, and medical and dental devices.

The ITC's 337 Action

The ITC is a governmental agency based in Washington, DC which enforces Section 337(a)(1)(B) of the Tariff Act of 1930 (19 U.S.C. §1337(a)(1)(B)(1994)). Often, the investigation is referred to as a "337 action". The ITC is further concerned with protecting a complainant's domestic industry in the US. This domestic industry relates to the monetary expenditure by the complainant related to the products it sells and can consist of numerous factors including, employee salaries, research and development costs, warehouse space, training and troubleshooting, distribution channels, litigation costs, etc. However, it is important to note that the expenditures must be tied to the specific patents (or other IP) identified in the complaint in order to support the domestic industry requirement. The complainant must also show that it "practices" the patent (or other IP) that it is asserting against the respondent(s).

So why is the ITC so popular lately, and what is unique about it that patent owners should be aware of?

Speed and Patent Savvy

A 337 action is also ordinarily a significantly quicker process than the traditional district court route, in many cases almost 50% faster. A typical 337 action averages between 14-17 months from initiation to a final determination from the ITC. Further, the ITC tends to be a patent (and IP) savvy venue with no jury, allowing for directed legal and expert arguments. The Administrative Law Judges ("ALJs") see numerous patent cases each year and are comfortable with technical matters. Further, a 337 action enjoys the ability of appeal to the United States Court of Appeals for the Federal Circuit, the overall patent appeals court. The ITC action does not deal with damages or willful infringement, thus streamlining the issues to be tried.


Another reason that patent owners enter the ITC is due to the remedy available - the exclusion order. The exclusion order, if it issues after a finding of a violation, stops the accused products from entering the country at the borders. Additionally, US Customs agents have the ability to seize the products before entry should the exclusion order be violated. Complainants can also obtain cease and desist orders against any inventory that has already been imported into the US, with fines approaching $100,000/day or 2x the value of the articles/day (whichever is greater) if the articles are not destroyed.

In Rem Jurisdiction

Another attractive feature of the ITC is that there is In Rem jurisdiction at the ITC, thus respondents do not necessarily need to be known, so long as the accused products are identified. This is particularly helpful when the market is being flooded with numerous infringing products, and also in obtaining a general exclusion order. Further, given the difficulty of joining numerous defendants into one case in District Court with the passage of the America Invents Act, the ITC may be more attractive as no such barrier exists in grouping multiple respondents.

Leverage for District Court

In the majority of 337 actions, a companion district court action is also filed. The respondents have a statutory right to stay the District Court action and proceed at the ITC, which occurs in about 99% of the cases. The district court action allows the complainant to maintain its leverage for damages purposes, and is often the catalyst for a global settlement. 

Participation By the Office of Unfair Import Investigations (OUII)

A unique feature of the ITC is the participation of the government's attorneys who are seeking to "protect the public interest." Prior to a complaint being filed, the OUII attorneys are consulted and lobbied to obtain their support in having the ITC institute the case, i.e., the OUII attorneys will support the patent holders request to have the investigation proceed. After institution, the OUII attorneys actively participate in the majority of ITC cases. Similar to the pre-institution phase of the case, the OUII attorneys can be consulted and lobbied during the case itself and can prove to be a strong ally to the complainant or respondent. Further, the OUII attorneys have shown that they are often proficient in resolving discovery disputes between the parties without the need of the ALJ, thus keeping the case on track and reducing unnecessary motion practice and the expenses associated therewith.

Non-Practicing Entities (NPE)

Recently there have been more NPEs appearing at the ITC. At first glance, many observers were surprised to see these parties filing investigations as they seemingly had no domestic industry to protect. However, the ITC allows parties to show domestic industry that is based on the licensing of the patents being asserted. This has allowed NPEs to maintain their domestic industry based on research and development to create the invention and licensing of the specific patents related to that invention. The NPEs then rely further on the licensee's practice of the patents to support the domestic industry requirement. 

The America Invents Act and Potential Relevance to the ITC

With the new provisions of the America Invents Act (AIA) that will go into effect on September 16, 2012 specifically introducing new reexamination procedures, the ITC might become a favored venue for patent holders due to the uncertainty (length of pendency, potential stay by statute) of the new reexamination process at the USPTO. The speed and rapidity of the ITC, and the ITC's general practice of not staying cases pending reexamination will aid the patent holder in reaching resolution of its action in a more expedition manner rather than facing the dilemma of the case being derailed due to reexamination.

Recent SNR Denton Activity in the ITC

SNR Denton's ITC Practice, based in Washington, DC, but drawing from members located in several offices across the Firm has been consistently active in the ITC for nearly 15 years, participating in over 30 investigations. We assist parties on both sides of the investigation, whether it be complainants who are enforcing their IP rights, or respondents who are accused of infringement. When working with respondents we actively counsel and assist the client with redesigns that will escape infringement so that the clients supply chain will not be disrupted. Some recent representations include:

  • Represented large automotive parts manufacturer of starter motors and alternators in asserting seven (7) patents against numerous infringers, both domestic and foreign, and obtained favorable settlement agreements and licenses from all respondents. This action was completed in 2012.
  • Co-counsel in investigation related to polyimide films which are used in coating items to increase their strength and resistance to breakage, for example in printed circuit boards. The infringer changed its formulation during the course of the investigation in order to escape infringement. This action was completed in 2012.
  • Co-counsel in investigation related to neutraceutical compound that is the primary ingredient in several health and dietary supplements against multiple respondents. This action is currently ongoing.
  • Represented large smartphone maker accused of infringing camera technology patents by an NPE. Favorable settlement with complainant, allowing for continued importation and sales of smartphones in US. This case concluded in 2011.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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