United States: ITC Issues Revised Rules For Section 337 Investigations

On May 8, 2018, the ITC published in the Federal Register (83 F.R. 21140) long-awaited revisions to its Rules governing Section 337 investigations. The ITC made several amendments to its Rules including (1) codifying the pilot program for early resolution of 337 investigations within 100 days of institution based on potentially dispositive issues; (2) authorizing the Commission or assigned ALJ to sever a single complaint into multiple investigations to promote more efficient adjudication; (3) requiring the notice of investigation to specify in "plain language" the scope of the accused products or category of accused products subject to investigation; (4) making the ITC's subpoena practice more consistent with practice under the Federal Rules of Civil Procedure (such as allowing the service of written objections to a subpoena rather than a motion to quash or limit); and (5) removing the mandatory requirement to allow the parties to make written submissions regarding violation of a protective order. The amended Rules are effective for and apply to investigations instituted after June 7, 2018.

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On September 24, 2015, the ITC published a Notice of Proposed Rulemaking announcing a number of important proposed amendments to its Rules governing Section 337 investigations (mofo.atitc.mofo.com/wp-content/uploads/2016/05/ITC Proposed-Rules.pdf). Following receipt of comments from six companies and non-profit organizations including the ITC Trial Lawyers Association (ITCTLA), the Intellectual Property Owners Association (IPO) and the ITC Working Group, the ITC on May 8, 2018 issued the final amended Rules in the Federal Register. (See our earlier blog post dated April 8, 2016 https://mofoatitc.mofo.com/itc-procedures/comments-on-itcs-proposed-amendments-to-rules). The more significant amendments are summarized below.

100-Day Program for Adjudication of Case-Dispositive Issues

In its final Rules amendments, the ITC codified the 100-day program for expedited adjudication of potentially dispositive issues that it has implemented on a pilot basis since 2013. A number of commenters urged the ITC to make greater use of the 100-day process, while others such as the ITCTLA suggested that the ITC should limit its use to instances where the proceeding is likely to dispose of the investigation. A number of commenters also proposed that the ITC should impose a mandatory stay of discovery during the 100-day proceeding on issues unrelated to the issue being adjudicated in the expedited proceeding. The Commission declined to endorse expanded use of the 100-day proceeding noting the "types of issues appropriate for the 100-day proceeding are limited." 83 Fed. Reg. at 21147. The ITC also declined to impose a mandatory stay of discovery on unrelated issues during a 100-day proceeding, "leav[ing] any stays within the discretion of the administrative law judges." Id.

The ITC did make one significant change from its proposed Rules amendments governing 100-day proceedings. The original proposed amendments would have allowed the assigned ALJ to designate an investigation for a 100-day proceeding within 30 days of institution either upon motion or sua sponte. Based on the concerns of several commentators that this would burden the ALJs at the outset of an investigation and promote satellite litigation, the ITC declined to adopt this part of its proposed amendments.

Severing Investigations Based on a Single ITC Complaint

The ITC included in its final Rules amendments authority for the Commission or the assigned ALJ to sever a single complaint into multiple Section 337 investigations. Although numerous commentators raised concern that the criteria for severing were not detailed in the proposed amendments, the ITC concluded that providing "specific criteria for applying the rule would be unduly restrictive and hamper the Commission's flexibility...." 83 Fed. Reg. at 21144. However, the ITC did partially adopt the suggestion of the ITCTLA that severing a complaint into multiple investigations be based upon "efficient adjudication." Id. The ITC also provided some additional guidance on the circumstances that might justify splitting an investigation:

The Commission ... notes that instituting multiple investigations based on a single complaint would likely occur where the complaint alleges a significant number of unrelated technologies, diverse products, unrelated patents, and/or unfair methods of competition or unfair acts such that the resulting investigation, if implemented as one case, may be unwieldy or lengthy.

Id.

Some commentators raised concern that the ITC might not give complainants sufficient notice of possible split investigations and others suggested that a decision to split investigations should be immediately appealable. With respect to the former, the ITC suggested that it expects OUII "will raise the issue of multiple investigations with complainants" during the pre-filing complaint review process. Id. With respect to any appeal, the ITC noted that a decision to sever a complaint would be a non-final determination and as such, not subject to immediate appeal.

With respect to the ALJ exercising authority to sever an investigation, the ITC concluded that the ALJ can sever an investigation by order (not by a reviewable initial determination) within 30 days after institution of the investigation. 83 Fed. Reg. at 21149.

Identifying Accused Products in the Notice of Investigation

The proposed Rules included a requirement that the notice of institution specify in "plain language" the "accused products" that will be within the scope of the investigation. In the final Rule, the ITC revised the amendment to require the notice to "define the scope of the investigation in such plain language as to make explicit what accused products or category of accused products ... will be the subject of the investigation...." Part 210.10(b)(1), 83 Fed. Reg. 21160. At the same time, the ITC rejected requests by the same commentators to require that the notice of investigation indicate "specific types of software" or "specific product codes." 83 Fed. Reg. ag 21145. The Commission noted that "requiring the notice of investigation to indicate accused products by specific names or model numbers does not comport with Commission practice," and is inconsistent with the ITC's remedy orders applying to "any infringing product, not simply the products specifically adjudicated...." Id.

Aligning ITC Subpoena Practice with the Federal Rules of Civil Procedure

The proposed amendment to Rule 210.32 was intended to make the ITC subpoena Rule consistent with the practice under Rule 45 of the Fed. R. Civ. P. Thus, it allows a third party that is subject to an ITC administrative subpoena to file written objections (similar to Rule 45) within 10 days of service. In the past, the ITC Rule officially only permitted the filing of a motion to quash or limit and not simply written objections. The commentary on the amended Rule clarifies that:

When a subpoenaed entity files an objection, the burden shifts to the requesting party, requiring the requester to file a motion to compel after notifying the subpoenaed entity. 83 Fed. Reg. at 21154.

The commentary also clarifies that "[o]bjections and motions to quash are generally intended to be mutually exclusive procedures...." Id.

Finally, the amended Rule adopts language proposed by the ITCTLA indicating the requesting party may also move for judicial enforcement upon reasonable notice or as provided by the ALJ. Id.

Written Submissions regarding Violation of Protective Order

In its final Rules amendments, the ITC removed the mandatory requirement that the Commission or the assigned ALJ allow the parties to make written submissions or present oral arguments bearing on the issue of violation of a protective order and the appropriate sanctions therefor. The commenters did not disagree with this particular amendment, and one commenter praised the modification, remarking that "the proposed rule provides the Commission with the flexibility to accommodate the interest other parties may have in a protective order violation dispute and permit participation to an appropriate extent." 83 Fed. Reg. ag 21155. The ITC noted that "The proposed amendment . . . does not affect the ability of administrative law judges, or the Commission when deemed appropriate, to request such briefing." Id.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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