“Used effectively, this new interim ID pilot program could prove to be a lethal weapon in a respondent’s arsenal.”
Since the Supreme Court restricted access to permanent injunctions in eBay v. MercExchange, LLC, more and more patent owners have flocked to the International Trade Commission (ITC) to pursue a Section 337 investigation in hopes of obtaining a coveted and comparable exclusion order. These investigations address unfair practices in import trade—many of which involve allegations of patent infringement—and often lead to exclusion orders preventing infringers from importing their goods into the United States.
The ITC’s statutory duty compels prompt completion of these investigations, with matters often proceeding to a full evidentiary hearing less than a year after the complaint is filed. However, with the rapid rise of disputes in the ITC, the agency is under relentless pressure to develop new approaches to facilitate efficient resolution of its investigations.
The ID Pilot
To that end, on May 12, 2021, the ITC announced its latest effort to accelerate resolution of Section 337 investigations: the interim Initial Determination (ID) pilot program. This pilot program provides Administrative Law Judges (“ALJs”) a new mechanism to bring investigations to a swift conclusion by expressly permitting the ALJs to initiate expedited proceedings leading to interim IDs on fewer than all issues in an investigation, thereby focusing the investigation on a potentially dispositive issue right from the outset.
If such a procedure sounds familiar, that’s because it is similar to a pilot program the ITC announced several years ago and subsequently codified at 19 C.F.R. § 210.10(b)(3). The Commission’s the “100-day” program, authorizes the Commission to identify potentially dispositive issues at institution, and direct the ALJ to rule on them within 100 days. The 100-day program, however, has not been often used perhaps because of the challenges with identifying potentially case-dispositive issues for speedy resolution on a slim record and prior to institution.
The new pilot program improves and expands upon the previous program in three critical ways:
- The presiding ALJ has discretion to designate an issue for accelerated determination after institution;
- The parties, at the ALJ’s discretion, may be able to move to have an issue receive an interim Initial Determination; and
- The Commission accelerates its petition for review and review procedures.
How it Works
Under the pilot program, the presiding ALJ may put dispositive issues into the program either on motion by a party or at the ALJ’s discretion. The Commission expects the interim ID will address potentially case-dispositive issues, or at least dispose of significant issues, prior to the full evidentiary hearing. Likely issues for interim IDs include, but are not limited to satisfaction of the domestic industry requirement, patent eligibility, standing, infringement, and/or patent invalidity.
After determining an issue is appropriate for an interim ID, the ALJ may receive briefing on the issue and hold an evidentiary hearing limited to the issue to develop the factual record. As for timing of issuance of an interim ID, the ALJ must issue an interim ID no later than 45 days before the scheduled start of the main evidentiary hearing. The decision will be based on a full evidentiary record and all applicable legal standards and burdens of proof, including the requirements of the Administrative Procedure Act (APA).
During the interim ID process, the ALJ may stay discovery on other issues or the entire procedural schedule, while taking into account the Commission’s obligation to complete investigations expeditiously and avoiding an extension of the target date.
Following the issuance of an interim ID, petitions for review must be filed within eight calendar days, with responses due five business days thereafter (faster than the twelve days and eight days provided for petitions for review and responses of traditional IDs). If an interim ID is petitioned, the Commission will determine whether to review the interim ID within 45 days of issuance, and resolve any review within another 45 days (again, faster than the 60 days and 60 days provided for consideration and review of traditional IDs). The Commission, of course, may set a different time frame for good cause.
The pilot program is effective immediately and applies to all investigations instituted after May 12, 2021, and to earlier instituted investigations at the presiding ALJ’s discretion.
What the Pilot Program Means for Parties to the Investigation
For complainants, it means gathering evidence and being prepared to defend potentially dispositive issues, such as satisfaction of the domestic industry requirement, even earlier than in an ordinary investigation. While complainants should have been preparing for this possibility since the announcement of the original 100-day program, this new pilot program shows the ITC’s interest in expanding expedited resolution by broadening access to identify issues ripe for accelerated resolution.
Respondents, on the other hand, should be prepared to petition for an interim ID on dispositive issues early in the investigation. Although identification and analysis of potentially case-dispositive issues has always been fundamental to pre-institution preparation, along with preparing discovery and engaging experts, this analysis now may lead to briefing and a hearing much earlier in the investigation. Used effectively, this new interim ID pilot program could prove to be a lethal weapon in a respondent’s arsenal.
The program may be a double-edged sword, as complainants may use the program offensively, opting to petition for an interim ID on a critical issue that, following resolution, may facilitate a speedier—and larger—monetary settlement as respondents see available defenses evaporate.
Time Will Tell
The ITC’s new pilot program is ultimately intended to be a resource-savings tool, both for the Commission and for the parties. It is worth noting that accelerated discovery and hearings are not without risk for both sides. For example, the presiding ALJ could stay discovery on other issues during the interim ID process, resulting in significant scheduling delays in the event of an unfavorable interim ID. Further, where the issue subject to the interim ID has significant factual overlap with issues to be decided later, an unfavorable interim ID could result in increased expenses down the road.
Only time will tell if the new pilot program gains more traction than its predecessor. In the meantime, litigants who stay apprised of current trends and new procedures at the ITC will, predictably, have an edge over their adversaries.