The ITC: Reviewing 2016 and Looking Ahead

By Lisa Kattan
February 8, 2017

U.S. International Trade Commission ITC in Washington DC.

U.S. International Trade Commission ITC in Washington DC.

The U.S. International Trade Commission (“ITC” or “Commission”) is a popular venue for resolving unfair trade practices, including patent disputes. Section 337 of the Tariff Act of 1930 provides for the investigation of any unfair act in the importation of articles into the United States, including the enforcement of intellectual property rights. While the majority of §337 investigations involve the alleged infringement of U.S. patent rights, the statute authorizes investigations to enforce other intellectual property rights such as trademarks, trade secrets and copyrights, as well as address other unfair methods of competition.

If the Commission finds a violation of §337, it may issue an exclusion order banning imports of the infringing goods. It may also issue a cease-and-desist order requiring a party to stop all commercial activity relating to the infringing products subject to substantial civil penalties for violation.  Thereafter, the Commission’s final determinations are appealable to the U.S. Court of Appeals for the Federal Circuit.  While extremely rare, remedial orders can be vetoed by the President for policy reasons.

Many high profile intellectual property disputes now include investigations before the ITC. Because ITC cases go to trial faster than cases tried in other forums worldwide, they can be the first to be resolved in multi-forum disputes and often spearhead resolution of other related cases.

2016

In 2016, the ITC had its busiest year since 2011–which was the peak of the “smartphone wars”–in terms of new investigations instituted. In 2016, 55 complaints were filed, notably, 16 of these complaints were filed by foreign companies.  The ITC had an above average settlement rate of 60%; normally the settlement rate is approximately 50%.

Last year also had a slight growth in nonpatent investigations which includes antitrust, trade secret, copyright and Lanham Act violations.  Despite the increased workload, the average target date was 15.8 months from institution date to final Commission opinion.

Notable 2016 highlights

Increase in Usage of 100-Day Early Disposition Program

The ITC’s 100-day early disposition program, , saw increased usage in 2016. In the program, the Commission fast tracks the matter, allowing 100 days for discovery, trial and Administrative Law Judge (ALJ) opinion on a case-dispositive issue (to date issues such as standing, domestic industry or § 101 have been raised).

So far, the Commission has ordered 100-day decisions in  five investigations, including the three in 2016. Specifically, the Commission twice affirmed an early decision from an administrative trial judge  disposing of the investigations— due to an absence of economic domestic industry and because of § 101 invalidity. In another case, the administrative law judge found that the complainant had standing and the case proceeded to a full adjudication on the merits. A fourth 100-day decision was ordered on economic domestic industry and is pending while a fifth settled before an early decision on domestic industry could issue.

Importantly, the Commission has clarified that the program will only be used to settle issues that can potentially fully dispose of the case and denied several requests on only partially dispositive issues, or when the issues presented appeared to be too complex to resolve within 100 days.

Decisions on § 101 patentability defenses

35 U.S.C. § 101 defines a patentable invention as “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” The doctrine of unpatentable subject matter has been a focus of several recent ITC investigations, some of which are still pending. Section 101 decisions were issued in six investigations last year, including four cases in which patent claims were found invalid under § 101 and two cases where the validity of patent claims was upheld.

Stay Pending Appeal

To obtain a stay of a Commission remedial order pending appeal, respondents must show that the Commission’s decision dealt with an “admittedly difficult question,” a standard articulated in the 2014 Digital Models  decision, in which  the Commission held that the question of whether digitally transmitted information could constitute an imported “article” was difficult enough that a stay of the remedial order was warranted pending the appeal.

Since Digital Models, the ITC again granted a partial stay of a remedial order.. In 3D Cinema Systems, some asserted patent claims were found invalid by the Patent Trial and Appeal Board (PTAB) in an inter partes review (IPR), which was completed after the administrative law judge’s decision had issued, but before the Commission’s review.. After briefing from the parties, the Commission agreed to suspend enforcement of its remedial orders as to the claims the PTAB had found invalid, pending appellate resolution of the PTAB’s decision. Notwithstanding these two examples, the ITC rarely stays its proceedings.  To date, it has not stayed an active investigation because of a simultaneously pendingPTAB proceeding.

Open Hearing

On November 17, 2016, the Commission held its first  public hearing in a § 337 matter since 2007. The Commission heard from the parties in Lithium Metal Oxide Cathode Materials on issues relating to laches, indirect infringement and public interest. The Commission then issued a notice of final determination finding a § 337 violation and issued a limited exclusion order.

The Commission is considering whether to hold a live hearing in 2017 regarding antitrust claims in Carbon and Alloy Steel Products (see discussion, infra), which could be signal the Commission’s willingness to hold additional public hearings in § 337 investigations. 

What We Anticipate In 2017

Overall, we expect the ITC will continue to be a popular venue in 2017 for companies to enforce their intellectual property in the most expedient fashion.

According to the ITC website, in the past three months twelve new § 337 have been instituted, and three more are pending institution. This is an historically elevated level of new complaints, which we expect to remain consistent throughout 2017 and beyond.

Looking ahead, it appears that the ITC will slot more cases for early disposition under the 100-day program, as it has received increasing attention. We also may see more open Commission hearings. and  Finally, we expect to see continued use of the ITC’s pilot program for expedited review of new and redesigned products that are covered by existing remedial orders.  Under this pilot program, proceedings involving pure questions of law are conducted by the ITC’s General Counsel’s office, while proceedings involving minimal fact finding are conducted by the ITC’s Office of Unfair Import Investigations.

The Author

Lisa Kattan

Lisa Kattan is the International Trade Commission Litigation Practice Chair at Baker Botts and a partner in the firm's Intellectual Property practice in its Washington, D.C., office. She recently joined Baker Botts after serving as Senior Investigative Attorney at the International Trade Commission Office of Unfair Import Investigations.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

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