Patent Litigation at the International Trade Commission. Episode 118

Introduction to the ITC

In the last episode, I gave a little teaser. I said it would be my last episode about patent litigation except for maybe an episode about patent litigation at the International Trade Commission. Well, here it is, and here we go. In the last several episodes, I talked about litigation at trial courts, and before that, I talked about litigation that can happen at the patent office using the Patent Trial and Appeal Board to try and invalidate someone else’s patent. But guess what? There’s another place to litigate your patent, and that’s using the International Trade Commission, which is called the ITC. Technically, it’s not a court—it’s where administrative law judges conduct administrative hearings—but it acts like a court.

Why Use the ITC Instead of a Regular Court?

Why would you want to use the ITC instead of a regular court to litigate? And when I say “regular court” in this episode, I’m talking about federal district courts. There are several reasons, but one reason is that the ITC is usually quicker than a regular court, and it’s meant for stopping the importation of infringing goods from getting into the United States at ports by Customs and Border Protection. Typically, the length of the matter at the ITC is about 12–18 months, compared to about 2–4 years in a regular court.

Another advantage is that the ITC has broad jurisdiction. In regular courts, it can be a pain to try to subpoena someone from out of state or have anything to do with properties outside of the jurisdiction. The ITC has subpoena power nationwide and has jurisdiction over all goods imported into the U.S., which is called in rem jurisdiction, if you want to get legal and fancy about it.

Relief Through the ITC

Another reason people like to use the ITC is that the default position in regular courts is that you usually don’t get injunctive relief. Injunctive relief is getting an order that someone has to stop selling the goods, and lots of times that’s exactly what you want. But nowadays, courts are more likely not to issue that kind of injunctive relief but instead issue monetary damages. But here’s the thing—the International Trade Commission can’t issue monetary damages. All they can do is issue orders that stop infringing goods from entering the country, and that effectively stops all sales. So if you really want to stop someone cold from selling goods, the ITC is useful.

Why Not Use the ITC?

So why doesn’t everyone use the ITC? A couple of reasons. First, you don’t get any monetary damages as I mentioned. If you win, you don’t get any money, but you do get an order so that Customs and Border Protection will stop infringing goods from entering the country. You can also get a cease and desist order for goods already in the country.

Another reason is that maybe your goods are made in the U.S., and there’s really nothing about your product that has anything to do with importation, so the ITC isn’t very useful.

And another reason is that, in theory, the patent has to be relevant to a domestic industry, like it’s a big piece of technology in research and development. Most of the time, this is in a high-tech field. So your regular consumer good patent for your new swingset or a patent you got for your new hand puppet probably isn’t going to be enough for the ITC to take up the case because it’s just not relevant to a domestic industry. The hand puppet industry, I’m sorry to say, just isn’t important enough for the ITC to get involved. You’ll have to go to a regular federal district court.

Criticism and Potential Abuse

Now, there’s been a lot of criticism about the ITC, and that people are abusing the system—using it instead of the regular federal district court system for infringement issues that are just between two U.S. companies, and the case really has little to do with importing infringing goods. Some patent owners—often called patent trolls—are still able to get their case into the ITC on technical grounds. I’m not going into the details here, but many believe it’s a big issue that Congress needs to address.

What Happens at an ITC Trial?

Let’s say you want to get your case into the ITC and you successfully get it allowed to be tried there. The trial at the ITC is going to have a lot of similarities to a regular court but some differences too. It’s not conducted in front of a jury, but in front of an administrative law judge.

Also, remember how I said that maybe about 2% of patent cases filed in district court actually go to trial? For ITC cases, it’s about 45%. Many of these cases relate to electrical, IT technology, and semiconductors and usually involve big companies with lots of resources—they’re just not as likely to settle.

How the Trial Proceeds

The process is a little different from a district court case. One difference is that there might be an independent investigation done by someone from the court. That doesn’t happen in a regular district court, where you have to conduct your own investigation. But a lot of things are similar—motions, discovery, hearings, and so on.

In the end, the judge issues an initial determination about whether the infringing product violates Section 337 of the Tariff Act of 1930 and whether there’s a domestic industry. If the judge finds patent infringement and domestic industry, there are two kinds of remedies: an exclusion order and a cease and desist order.

Types of Remedies

An exclusion order is sent to U.S. Customs and Border Protection and says to block all the infringing products at the port of entry. A general exclusion order blocks every product that infringes from entering, regardless of the importer or manufacturer. A limited exclusion order only blocks products from a specific manufacturer or importer.

A cease and desist order prevents a company from stockpiling all the infringing goods in the U.S. and selling their inventory after the exclusion order. This is helpful if the company imported a massive amount of infringing goods just before the order.

Final Determination and Presidential Review

The first thing a judge issues is an initial determination. If you see that you lost, you can petition the Commission to review it. If you lose again, the initial determination becomes a final determination.

“Final” doesn’t really mean final—it just means you have to move to a new stage. You can appeal the decision to the Federal Circuit Court of Appeals. But before that, the decision goes to the President of the United States for review. Yes, the President. This is because the ITC isn’t a judicial court—it’s an administrative agency.

If the President doesn’t act within 60 days to overrule the decision, then the determination stands. But again, “final” doesn’t really mean final. You can still appeal to the Federal Circuit, and from there, potentially to the Supreme Court—though that’s very rare.

Should You Use the ITC?

If you’re just a solo inventor and not part of a big high-tech firm, your odds of using the ITC are probably low. But let’s say you have a patent and you’re discussing litigation strategy with your attorney—it doesn’t hurt to ask whether your case should also be filed with the ITC or the Patent Trial and Appeal Board. A single patent can be litigated in all three: the PTAB (for invalidation only), district court (for damages and possible injunctions), and the ITC (for exclusion and cease and desist orders).

Conclusion

That’s the basics of how the International Trade Commission works and how it can be beneficial to patent owners because of its speed, its power to stop infringing products at the border, and the ability to issue cease and desist orders for products already in the U.S.

I’m Adam Diament, and until next time, keep on inventing.