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Patent Litigation in the U.S. International Trade Commission
August 1, 2007
Litigation Counsel Series
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• Approximately 30 new cases are filed each year by companies alleging import of infringing products into the U.S.
• With the accelerated globalization of business, the ITC is an increasingly popular forum for litigation of intellectual property disputes, for both U.S. and foreign companies with a U.S. presence
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Using the ITC as a Strategic Weapon
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• It is fast– Trial-like hearing before an ALJ held within 6-9
months of filing, and Final Determination issued within 12-18 months
• There are no counterclaims– Respondents cannot file counterclaims or
countersuits; a separate Investigation would have to be initiated
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Using the ITC as a Strategic Weapon
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• It offers a powerful remedy– Exclusion orders stopping infringing products at
the border– Cease and desist orders stopping the sale of
infringing products already in the U.S.– No monetary damages in the ITC
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Using the ITC as a Strategic Weapon
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• It is an extremely aggressive approach– Puts a strain on Respondent businesses– Is a more immediate and significant threat than
District Court litigation– Frequently combined with District Court litigation
seeking monetary relief
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Using the ITC as a Strategic Weapon
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• Jurisdiction– In Rem Action (i.e., action pertains to the accused
product not the accused party)– Importation (i.e., infringing product or component
must be imported into the U.S.)
What is Required to File a Complaint with the ITC?
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• Unfair Practice– The law of patent infringement is essentially the
same as in a District Court case– Cases may also be filed alleging violations of
copyrights, trademarks, trade dress, or unfair competition
What is Required to File a Complaint with the ITC?
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• Complainant must show significant activity based in the U.S. that is related to the asserted patent(s)– Activities may include production or manufacture,
research and development, or licensing– There must be a significant nexus between the
U.S.-based activity and the patented element– Activities can be related to any claim of asserted
patent(s), not just the claim(s) asserted for infringement
Domestic Industry
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1. Complaint filed2. Investigation instituted and case assigned to ALJ3. Respondent answers Complaint4. Discovery and expert analysis completed5. Trial-like hearing before ALJ6. ALJ issues Initial Determination
What is the Process for a Section 337 Investigation?
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7. Initial Determination may be reviewed by the ITC8. If exclusion orders are issued, presidential review
period runs, after which Final Determination can be appealed to the Federal Circuit
9. If exclusion orders are not issued, Final Determination can be immediately appealed to the Federal Circuit
What is the Process for a Section 337 Investigation?
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ITC v. District Court LitigationLitigation Element ITC District Court
Remedy Exclusion Order enforced by US Customs Service and/or Cease and Desist Order enforced by ITC; No monetary damages
Monetary damages and/or injunctive relief
Decision-Maker Administrative Law Judge with significant patent litigation experience makes Initial Determination; Commissioners appointed by President make Final Determination
Jury and/or District Court Judge appointed by the President
Commencement of Action
Detailed Complaint filed with ITC; Investigation instituted 30 days later by Commission
Complaint filed with Court commences infringement action
Parties Complainant(s) must have domestic industry; Respondent(s) must import accused products; Staff attorney participates on behalf of the public interest;Pro-Complainant forum.
Private Plaintiff(s) and Defendant(s)
Procedure Discovery (10 days to respond; extensive); Trial-like hearing before ALJ
Discovery (30 days to respond; extensiveness depends on Court); Trial before Judge and possibly jury
Counterclaims Not available Available
Decision 15 month maximum (absent exception from statutory deadline granted by Commission)
Depends on Court
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Action ITC District Court
Active Investigation / Active Litigation
30 days after Complaint is filed Investigation is instituted by ITC
Upon service of Complaint
Answer by Respondent (ITC) / Answer by Defendant and Parties Exchange Initial Documents (DC )
20 days after Institution of Investigation 1-3 months after filing of Complaint
Preliminary Conference 1-2 months after Institution of Investigation 1-3 months after filing of Complaint
Exchange Initial Documents 1-2 months after Institution of Investi gation 3-12 months after filing of Complaint
Claim Construction Initial Determination contains claim construction
Markman Hearing and Markman Ruling 12 -14 months after filing of Complaint (extensive Markman briefing)
Formal Discovery, including fact witness depositions
2-5 months after Institution of Investigation 12-18 months after filing of Complaint
Expert Reports and Discovery 4-6 months after Institution of Investigation 14-18 months after filing of Complaint
Pre-Trial 7-8 months after Institution of Investigation 18-22 months after filing of Complaint
Trial 8-9 months after Institution of Investigation (unlikely to slip beyond 9 months)
24-36 months after filing of Complaint depending on Court and Judge
Initial Determination (ITC) 12 months afte r Institution of Investigation n/a
Final Determination (ITC) / Final Judgment (DC)
15 months after Institution of Investigation 28-40 months after filing of Complaint depending on whether trial is bench or jury trial and depending on Court and Judge
ITC v. District Court Schedule
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Concurrent ITC and District Court Cases
• Effect of ITC Section 337 Investigation on District Court proceedings:– Counterclaims filed in ITC may be removed to
District Court– There is a mandatory stay of District Court litigation
if requested by Respondent in an ITC Section 337 Investigation involving the same claim
– Discovery taken in one proceeding can be used in both
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• Parties are allowed extensive discovery of each other
• Broad third party discovery is also permitted• Discovery is expedited (e.g. 10 days to respond)• Discovery often runs on multiple simultaneous
tracks• Discovery is affected by ALJ to whom the case is
assigned
Discovery in the ITC
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• ITC hearing is similar to a District Court trial, except:– There is no jury– Federal Rules of Evidence are more liberally
applied– Time limits are more extreme (e.g. for some
judges, it is not unusual for hearings to run more than 10 hours per day and on weekends)
– There is enormous pressure to limit issues taken to trial, and for each issue tried, much detail must be presented in a very short period of time
ITC Hearing
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• ALJ must file ID no later than: – 3 months prior to the target date if the target date
is less than 15 monthsOR
– 4 months prior to the target date if the target date is greater than 15 months
• ALJ is required to make detailed findings of law and fact on all contested issues and elements of a violation of Section 337
Post-Hearing Process - Initial Determination
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• A petition for review must be filed within 10 days of the issuance of the ID
• Any issue not raised in the petition for review that was decided adversely to a party will be deemed to have been abandoned
Post-Hearing Process -Full Commission Review of Initial Determination
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• Commissioners have the following options on review:– Do nothing in which case the ID becomes the Final
Determination– Review the ID, in which case they may either
adopt the ID (in whole or in part) or reverse the ID
• Presidential review period must run prior to remedy taking effect
Full Commission Review of Initial Determination
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• Parties have the opportunity to make written submissions on exact form of remedy if violation is found, including the terms of the customs exclusion order and the terms of any cease and desist order
• Remedy strategy must be carefully crafted at very early stages of discovery
• ITC has no authority to award monetary damages
Remedy
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• Customs exclusion order can either be limited to specific named Respondents, or general as to all infringing products– Limited exclusion order (LEO) is the typical
remedy– In order to obtain a general exclusion order
(GEO), Complainant must show a widespread pattern of unauthorized imports from many sources
Exclusion Order
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• Typical LEO is drafted in very broad terms (e.g. Customs is directed to exclude all products of a company that infringe a named claim of a patent)
• Customs then has broad discretion to interpret the order to determine how it should be enforced
Section 337 Enforcement
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• Instructions are considered law enforcement, so actual terms of the instructions are not provided to Respondents or importers
• There is no formal process for interested party input, and the instructions to customs can be modified at any time
Customs Instructions to Ports
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• Most LEOs that cover product categories in which the ITC knows that there are non-infringing imports allow customs to accept a certification that goods to be imported do not infringe
• Importer must provide certification and assume liability
• Customs has the right to inspect, verify, and demand additional information even if certification is provided
• Customs exclusion order can be extremely disruptive to the importation process
Certification
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• Once the instructions go out, key activity occurs at the ports
• Complainants identify the ports with most significant import volume and educate the port officials
• If there is any indication of problems, Respondents can also seek to educate port officials to avoid or resolve problems
In the Field/At the Ports
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• Clients should establish a dedicated in-house team to coordinate and assist in responding to discovery requests because serious sanctions (including the dismissal of the Investigation) are possible if a party improperly withholds discovery
• Law firm resource planning and staffing needs to account for multi-tracking and peak demand
Suggestions for Case Preparations