“It is crucial to be as proactive and efficient as possible – the ITC will not slow its punishing discovery schedule for a party that cannot show it has promptly and diligently sought the information it needs.”
Editor’s Note: Hongzhou (Allen) Lai is General Counsel and Steven Wu is Lead Patent Counsel for Leedarson; and Stanley Kuo and Matthew Bathon acted as outside counsel to Leedarson in the ITC investigations discussed below.
Global concern regarding climate change is forcing all industries to evaluate energy consumption and seek out ways to do more using less energy. For example, LED lighting fixtures achieve significant energy savings compared with older lighting methods. At the same time, technological advances now make it possible to communicate with and control electronic devices from anywhere at any time. Often referred to as the Internet of Things, or IoT, consumers now have the ability to control virtually any device in the home using a computer or smartphone, including lighting, appliances, and climate systems. Among the numerous benefits provided by IoT, enhanced control can reduce unnecessary use, thus conserving energy. As IoT and LED use becomes more widespread, intellectual property protecting these technologies has become increasingly valuable. This has led to a dramatic increase in litigation asserting such IP in district courts across the country, as well as another popular forum for IP litigation, the U.S. International Trade Commission (ITC).
IoT at the ITC
As just one example, in 2019, Lighting Science Group Corporation (LSG) filed a complaint asserting six patents at the ITC against a number of LED lighting and IoT developers and certain suppliers of LEDs. One of the companies named in LSG’s complaints was Leedarson Lighting Co., Ltd. Leedarson is a global leader in the LED lighting and IoT space that designs and manufactures devices and controls that can be used to implement IoT systems in homes.
Based on LSG’s six-patent complaint, the ITC divided the allegations into two separate investigations and assigned them to two different ITC judges. While related complaints had been filed in various district courts, those actions were put on hold until the ITC proceedings were completed. The judge assigned to one of the ITC investigations subsequently divided it again into two investigations. Leedarson was thus faced with defending itself in three separate investigations all at the same time – Investigation Numbers 337-TA-1163 (IoT technology), 337-TA-1164 (LED downlights), and 337-TA-1168 (LEDs).
ITC investigations are complex and fast; an accused infringer typically has only a few months to identify, collect, review, and produce its relevant information. At the same time, it must carefully plan its defenses against the infringement claims. Unlike a district court, the ITC cannot award monetary damages for patent infringement. Instead, the ITC can issue remedial orders that prevent products that have been found to infringe from being imported into the United States. This is a powerful remedy, as it can effectively shut a party found to infringe out of the U.S. market.
Identify Key Info Early
Are there things a company can do to increase its chances for success at the ITC? An accused infringer needs to act quickly and efficiently. One step toward this goal is to designate an internal team to work closely with outside counsel and to minimize any unnecessary distraction to the rest of the business. Relevant information needs to be identified and incorporated into a company’s defenses and overall case strategy. The company must efficiently manage the large volume of relevant documents and identify information relevant to the key issues. This takes time, so it is crucial to be as proactive and efficient as possible – the ITC will not slow its punishing discovery schedule for a party that cannot show it has promptly and diligently sought the information it needs.
To the extent that source code is at issue in the case, that should be given prompt attention because it is often very burdensome, and waiting too long to access and make use of it can put a company at a real disadvantage. Because third-party source code for its IoT products was going to be an important aspect of the 1163 ITC investigation into IoT products, Leedarson took steps to obtain this key evidence as early as possible. Moreover, the value of creative thinking should never be underestimated. For example, in the 1164 Investigation, Leedarson faced limits on its ability to argue that certain of LSG’s LED downlight patent claims were invalid in view of other patents and publications. So, the team searched for and located LED fixtures that pre-dated the patents and was able to use those products to argue that the claimed inventions had been known long before the asserted patents. As with source code, locating and obtaining discovery on such prior art can be very time-consuming, so the search should be undertaken as soon as possible.
LSG ultimately withdrew its allegations in the 1163 and 1164 Investigations, before the cases were even presented to the ITC judge. In the 1168 Investigation, the ITC found that LSG had failed to prove infringement and was not entitled to any remedy. LSG appealed the ITC’s decision to the U.S. Court of Appeals for the Federal Circuit, but it subsequently dropped its appeal and also terminated all parallel district court cases with prejudice against Leedarson.
To Win in This Forum, Act Fast
Facing patent infringement allegations at the ITC can be very daunting. And the stakes are high, including potentially having your products excluded from the U.S. market. Acting promptly and efficiently increases a company’s ability to obtain the discovery it needs to present its case and to develop potential defenses. This can include information from third parties, including component suppliers, downstream customers, as well as other entities that may have useful information relevant to the case.