The ITC is an independent federal agency responsible for stopping injury to US industries caused by the importation of goods relying on “unfair methods of competition and unfair acts (1).” The commission makes determinations, which if allowed by the President, will require US Customs and Border Protection (Customs) to block importation of goods found to be unfair (2). Among those unfair methods of competition is patent infringement (3).
In passing the Tariff Act of 1930, Congress created section 337, giving the ITC power to block importation of goods found to be violating a US patent (4). Various modifications to the statute over time now allow the blocking not only of goods which infringe upon a patent, but also goods produced by method patents outside of the country (5). The law granting this power to the ITC is codified at 19 U.S.C. § 1337; however the infringement actions are still referred to as 337 filings or 337 investigations.
For the first forty years after the passage of section 337 patent infringement was rarely brought before the ITC (6). While the number of cases increased for a bit during the 1980s, by the early 2000s the number of 337 cases being investigated each year were approximately 20 (7). However since 2006 the number of cases filed has been increasing quite rapidly. In 2008 the number of new 337 investigations grew to approximately 50. (8) For 2010, 22 new investigations have been started (9).
Various theories attempt to explain why the number 337 filings are increasing. Three are summarized below:
1) Speed - The times for a 337 investigation are extremely short compared to a normal patent infringement case filed in District Court. In 2007, the average investigation was 16.6 months (10). The speed of the investigative findings derives from regulations giving (comparatively) short time limits for task completion. For example, from filing the complaint, the ITC has 30 days to decide if it wishes to begin an investigation (11). Upon receiving notice, respondents have 20 days to file a written response to the complaint and notice of investigation (12). If the complaint has a request for temporary relief, the time is cut down to 10 days (13). Cases default to a target completion date of 15 months, whereas in federal district court one would be lucky to have any hearing within 15 months of filing (14).
2) Test the waters - Because a patent holder can file in both federal district court and the ITC, there exists the temptation to ‘test the waters’ in the ITC, and base district court filings off the ITC decision (15). If the patent owner wins at the ITC, importation of the goods will be stopped. If they lose, they can try again at the district court, presenting the same (or slightly different) arguments (16). Because of the high costs associated with patent litigation, this quick resolution may be considered a prudent business tool.
3) Lack of manufacturing within the US - Another reason for the increase in ITC filings is the outsourcing of manufactured products. While much innovation continues to take place within the US, manufacturing jobs have shifted to other locations. The ITC provides a way to block these products from entering the country. While this protection would not stop a domestic manufacturer from selling and distributing a potentially infringing product (district court litigation is required for that), the shift in manufacturing of goods to outside the US requires importation, and thus provides incentive for increased 337 actions.
Two results are immediately apparent from increased ITC filings: 1) Likely increase in time for the ITC to make its final decisions and 2) Possibility of becoming a safe haven for Non-Practicing Entities (NPEs) or ‘patent trolls’. As previously mentioned, the average time from filing to decision in 2007 was 16.6 months (17). Prior to 2006 the average length was under 15 months (18). As the workload increases it will be difficult for the ITC to maintain the short decision timeframe. Also, statistical evidence points to a patent holder advantage at the ITC (19). This then opens the door to NPEs, who may threaten a 337 action in addition to a normal district court filing. This will add to societal costs for both patents and the goods they protect (20).
For the most part the filing of complaints and responses remains identical to filing in district court. If filing a 337 action claiming an infringement of intellectual property, the complaint must have detailed information about the intellectual property asserted and evidence of infringement (21). The difference in 337 actions is that much more information is required to be in the original complaint. The regulations require the following be present when the filing is based on patent infringement:
(i) The identification of each US patent and a certified copy thereof (a legible copy of each such patent will suffice for each required copy of the complaint);
(ii) The identification of the ownership of each involved US patent and a certified copy of each assignment of each such patent (a legible copy thereof will suffice for each required copy of the complaint);
(iii) The identification of each licensee under each involved US patent;
(iv) A copy of each license agreement (if any) for each involved US patent that complainant relies upon to establish its standing to bring the complaint or to support its contention that a domestic industry as defined in section 337(a)(3) exists or is in the process of being established as a result of the domestic activities of one or more licensees;
(v) When known, a list of each foreign patent, each foreign patent application (not already issued as a patent) and each foreign patent application that has been denied, abandoned or withdrawn corresponding to each involved US patent, with an indication of the prosecution status of each such patent application;
(vi) A nontechnical description of the invention of each involved US patent;
(vii) A reference to the specific claims in each involved US patent that allegedly cover the article imported or sold by each person named as violating section 337 of the Tariff Act of 1930, or the process under which such article was produced;
(viii) A showing that each person named as violating section 337 of the Tariff Act of 1930 is importing or selling the article covered by, or produced under the involved process covered by, the above specific claims of each involved US patent. The complainant shall make such showing by appropriate allegations, and when practicable, by a chart that applies each asserted independent claim of each involved US patent to a representative involved article of each person named as violating section 337 of the Tariff Act or to the process under which such article was produced;
(ix) A showing that an industry in the United States, relating to the articles protected by the patent exists or is in the process of being established. The complainant shall make such showing by appropriate allegations, and when practicable, by a chart that applies an exemplary claim of each involved US patent to a representative involved domestic article or to the process under which such article was produced; and
(x) Drawings, photographs, or other visual representations of both the involved domestic article or process and the involved article of each person named as violating section 337 of the Tariff Act of 1930, or of the process utilized in producing the imported article, and, when a chart is furnished under paragraphs (a)(9)(viii) and (a)(9)(ix) of this section, the parts of such drawings, photographs, or other visual representations should be labeled so that they can be read in conjunction with such chart (22). (Italics added for emphasis)
In preparing this information, the complainant has an advantage over the respondent in terms of time. While the complainant must compile all of the information listed, the respondent must respond to each allegation in the complaint and present an argument supporting their position. This response must be submitted within 20 days of receiving notice of the investigation, but if the complaint included a request for temporary relief, it must be submitted within 10 days from notice (23).
If the respondent asserts that that patent is invalid or unenforceable, that prior art must be included in the response (24). Thus the need for prior art delivered to a claimant quickly enough for incorporation into the response arguments is critical to ITC defense. As a leader in patent research, Express Search can aid clients and attorneys in preparing for and responding to ITC litigation.
The complaint must contain specific elements in order for a submission to be accepted. 17 C.F.R. 210(a)(9)(v) requires all foreign patents and applications, whether they were granted, withdrawn, or denied. Because the complainant also owns the patent, they should have the information about where an application for foreign patent protection was made.
However, in the instance where a company has purchased a patent, perhaps from a bankrupt corporation, such data might be lacking. At this point it might be worthwhile to employ a patent research company to discover what applications were made and obtain copies of those foreign patents/applications. Likewise, if an international corporation were to declare bankruptcy and sell the patents piecemeal, a buyer may be unaware of who owns the foreign patent rights or in what countries those rights exist.
While preparing the complaint may not require services other than searching for foreign applications, the complainant may wish to conduct yet another prior art search to anticipate de fenses the respondent will produce. Given that a patent has already been granted, this prior art search would need a focus on non-patent literature.
Because of the time granted to respond—as little as 10 days—the respondent may wish to conduct an expedited prior art search with the intent of proving the invalidity of the patent they are accused of infringing. Again, because a patent has already been granted, the focus will probably need to shift to non-patent literature. The key here is that if prior art is found, the client must rapidly be made aware of it in order to submit the information with the response on time.
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