The Most (Potentially) Consequential ITC Decisions of 2021

This has been a year full of ups and downs, including at the International Trade Commission (ITC). The ITC has stayed open for business, instituting a near-record number of investigations and holding hearings, albeit virtually. There have been a number of ITC decisions with interesting holdings, all of which have been covered well here and in other blogs. However, there have been a number of ITC-related happenings in 2021 which, though they received less coverage, may, like the proverbial butterfly, have important ramifications for years to come.

1) ALJ Bhattacharyya Replaces ALJ Lord

Administrative Law Judge (ALJ) Sandra “Dee” Lord, who had served at the ITC since 2013 and was responsible for a number of notable decisions particularly on the standing of parties to file ITC investigations and on domestic industry, stepped down in early April. The search for a replacement was notable, as the ITC opened the application process to attorneys who had extensive IP litigation experience, and, unlike in previous searches, did not limit the applicants only to those with previous administrative law judge experience. This decision emphasized the ITC’s desire to find a candidate with deep knowledge of intellectual property law and particularly Section 337 investigations, and the agency found that in spades in Judge Lord’s replacement, ALJ Monica Bhattacharyya. Judge Bhattacharyya holds a juris doctor degree from Yale Law School, a Master of Arts Degree in Politics from Princeton University, and a Bachelor of Arts Degree in Biochemistry, magna cum laude, from Harvard-Radcliffe College. Since 2012, she served as an investigative attorney in the ITC’s Office of Unfair Import Investigations. Before joining the ITC, Bhattacharyya worked for more than 12 years in private practice, including as an intellectual property litigation partner at Kasowitz Benson Torres LLP, and also served as a law clerk for the Honorable Louis H. Pollak in the U.S. District Court for the Eastern District of Pennsylvania. Judge Bhattacharyya’s deep knowledge of Section 337 investigations from a participant’s perspective, along with the absence of ALJ Lord’s rulings on standing and domestic industry, may have significant impact on ITC procedures and jurisprudence.

2) Increased Congressional Interest

In the past year, there were a number of proposed new laws directed at the ITC. While laws addressing the ITC are not uncommon, the number of bills proposed this year was unusual and indicates increased Congressional attention to the ITC and intellectual property generally. It does not currently seem likely that any of the bills will pass. However, it is possible that the ITC will, as it has sometimes done in the past, take note of the desired reforms and make corresponding changes on its own initiative. In total, over 20 bills mentioning the ITC were introduced during the last year, though many of them did not relate to intellectual property issues. Of the ones relating to intellectual property, three seem to have the most potential impact. S. 1245, the “Combating Chinese Purloining of Trade Secrets Act,” introduced in April, would allow additional penalties to be imposed on parties found by the ITC to have committed trade secret misappropriation. S. 2067, the “Stopping and Excluding Chinese Rip-offs and Exports with United States Trade Secrets Act of 2021,” introduced in June, would create a new expedited ITC proceeding to investigate allegations of trade secret violations, even though existing ITC procedures allow for such proceedings. H.R. 5184, the “Advancing America’s Interests Act,” introduced in September, has the stated goal of ensuring that “the resources of the United States International Trade Commission are focused on protecting genuine domestic industries and to safeguard the public health and welfare and the United States economy (including competitive conditions).” Though the bill seems to be intended to limit ITC filings by non-practicing entities, its proposal that complainants relying on licensing to satisfy the domestic industry requirement be required to show that the activities they rely on led to the adoption and development of articles that incorporate the IP in the United States could significantly impact or hinder the ability of even practicing entities to satisfy the domestic industry requirement. The bill’s additional proposal that only the domestic industries of named complainants be considered, and that all complainants join the complaint voluntarily, would end the practice of “domestic industry by subpoena,” a tactic often used by non-practicing entities. Taken together, these two proposed changes would significantly curtail the number of entities which could initiate ITC investigations.

3) Fintiv Rollback?

In recent years, one of the factors increasing the ITC’s popularity was the potential to have the Patent Trial and Appeal Board (PTAB) deny institution of an inter partes review (IPR) based on a co-pending ITC investigation under the PTAB’s Fintiv decision (IPR2020-00019). In Google LLC v. Ecofactor Inc., a PTAB panel vacated a Fintiv IPR denial due to a pending ITC investigation after the petitioners let the PTAB know the patent had been dropped from the ITC case, and the circumstances justifying the denial had changed. The ITC has historically encouraged patentees to streamline the issues for hearing however they can, including by dropping patents. However, if this case is followed, complainants who do so may be opening themselves up to additional IPRs. It will be interesting to see what effect this decision has on parties streamlining their complaints, if they will be less willing to do so for fear of having a previously denied IPR institute.

4) Interim Initial Determination Pilot

While the ITC is already extremely speedy, a new pilot will allow initial decisions to be made even more quickly than the current 12-month timeframe. This year, the ITC announced the interim Initial Determination (ID) pilot program. This pilot program provides ALJs with a new mechanism expressly allowing them to initiate expedited proceedings leading to interim IDs on case-dispositive issues to quickly bring investigations to a conclusion. Under the pilot program, the presiding ALJ may put case-dispositive issues into the program either on motion by a party or at the ALJ’s discretion. Once the ALJ determines that an issue is appropriate for an interim ID, the ALJ may receive briefing on the issue, hold an evidentiary hearing limited to the issue, and issue an interim ID no later than 45 days before the scheduled start of the main evidentiary hearing. While this new procedure is in many ways similar to the ITC’s recent pilot program for 100-day proceedings, there are a few important differences that should make the new pilot easier to use and more popular than the earlier one as well as summary motion practice. First, unlike the 100-day program, a case may be entered into the interim Initial ID pilot after it has instituted and begun, and the ability of a slightly longer timeline allows more issues to be addressed. Second, the availability of a hearing means that the pilot may address issues where there are factual disputes, unlike a summary determination motion. This new pilot could be very beneficial to respondents, who can have a case terminated by winning on a single issue. If the new pilot is successful and utilized more widely than the current 100 day proceeding, the impact on complainants—who will have to scrutinize their allegations more carefully before bringing them—and respondents—who will have a way to exit meritless cases earlier—could be significant.

5) Submissions by Defaulting Parties Allowed

In Certain Balanced Armature Devices, Products Containing Same, and Components Thereof, Inv. No. 337-TA-1186, Knowles Corporation and Knowles Electronics, LLC (“Knowles”) alleged misappropriation of 10 trade secrets by 12 respondents, including four Bellsing entities. Bellsing was found in default after the close of discovery, due in part to discovery misconduct, and was eventually found to have violated Section 337. Even though it had been found in default, Bellsing continued to submit briefing on certain issues, such as remedy and proposed bond. The ALJ held that the default prevented Bellsing from contesting any issues relating to the finding of violation after default and did not consider Bellsing’s briefing. The full Commission affirmed the decision to disregard Bellsing’s briefs—but did so on the basis of their lateness. On the issue of them being a defaulting party, the Commission stated that “there may be situations where it is prudent for the Commission and/or the ALJ to accept remedy and bonding briefing from parties who have defaulted, and the Commission retains discretion to do so. The Commission also retains the discretion to determine what weight, if any, to give the briefing.” Defaulting parties are not uncommon in the ITC, particularly in General Exclusion Order cases, and this holding, allowing them to still submit briefing on certain issues, decreases the disadvantages of defaulting. It will be interesting to see if the number of defaulters increases, or if more parties will choose to default to reduce litigation expenses knowing they can wait until a finding of violation is made, and if so, then submit briefing.