United States: ITC's Section 337 Proceedings Pique Congressional Interest

ITC's Section 337 Proceedings Pique Congressional Interest

The U.S. House, Senate and even a lone congressman are investigating changes to the U.S. International Trade Commission's (ITC) Section 337¹ proceedings.

The U.S. House Judiciary Committee held a hearing on July 18, 2012, titled "The International Trade Commission and Patent Disputes." General counsels from leading U.S. companies and an academic provided testimony on what impact, if any, non-practicing entities (NPEs) were having on the ITC's docket and the cost to U.S. companies of defending against NPE suits at the ITC. While the statistics on NPE suits at the ITC vary based on the definition of an NPE and the time period employed,² NPE filings have significantly increased since the eBay³ decision requiring district courts to employ a four-part balancing test before imposing an injunction on a defendant found liable for infringement.⁴ Statements by the committee members were universally sympathetic to the concerns of cost and complexity of NPE ITC cases.

The House Judiciary Committee hearing on NPEs at the ITC came on the heels of a July 11 Senate Judiciary Committee hearing on the ITC. The subject of the Senate hearing was "Oversight of the Impact on Competition of Exclusion Orders to Enforce Standard-Essential Patents." This is the issue of whether and to what extent members of Standards Setting Organizations (SSOs) who make commitments to license standards-essential patents on reasonable and non-discriminatory terms (RAND) may seek exclusion orders at the ITC.

FTC Commissioner Ramirez⁵ and Acting Assistant Attorney General for the Antitrust Division Wayland⁶ provided Senate testimony that, absent exceptional circumstances such as where no district court jurisdiction over a completely foreign respondent exists, an ITC exclusion order should be unavailable for standards-essential patents. The basis for their conclusion was that an exclusion order on a standards-essential patent would represent unfair competition and anticompetitive behavior, resulting in potential harm to consumers. The question of the effect, if any, of a RAND obligation on an exclusion order is currently pending at the ITC in a case of first impression, with a decision due on August 24.⁷

A representative of the ITC was not present at either the House or Senate hearings.

Congressional interest of this degree of granularity in a comparatively small federal agency appears to telegraph incipient legislative action. Indeed, U.S. Rep. Devin Nunes (R-Calif.), not even a member of the House Judiciary Committee, circulated a draft bill to amend Section 337 months prior to the July 18 hearing. Congressman Nunes' bill would circumscribe the ability of a complainant to rely on licensing to establish a domestic industry and force the ITC to consider the four-part eBay test for injunctions before issuing an exclusion order. Interested stakeholders may want to weigh into the policy debate to maximize the likelihood that their positions will be reflected in any final legislation.

If you have any questions about this Alert, please contact Rodney R. Sweetland III, any member of the ITC Section 337 Litigation Practice Group or any attorney in the firm with whom you are in regular

Footnotes

^{1.Section 337 of the Tariff Act, codified at 19 U.S.C. § 1337.}

^{2.See, e.g., " Calling a Truce over ITC Patent Data," Colleen Chien, IP Watchdog, July 20, 2012.}

^{3.eBay v. MercExchange LLC, 547 U.S. 388 (2006).}

^{4.Facts and Trends Regarding USITC Section 337 Investigations, U.S. International Trade Commission (June 18, 2012).}

^{5.See Prepared Statement of the Federal Trade Commission Before the United States Senate Committee on the Judiciary, presented on July 11, 2012.}

^{6.See Statement of Joseph F. Wayland, Acting Assistant Attorney General, Antitrust Division, Department of Justice Before the Committee on the Judiciary, United States Senate, presented on July 11, 2012.}

^{7.Certain Wireless Communication Devices, Portable Music and Data Processing Devices, Computers and Components Thereof, Inv. No. 337-TA-745.}

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