United States: Federal Trade Commission Continues Its Criticism Of International Trade Commission

The U.S. Federal Trade Commission (FTC) recently issued its latest fusillade against the U.S. International Trade Commission (ITC) in a one-sided waging of public and political criticism. This continuing escalation by the FTC represents an unprecedented level of interference by one independent federal agency with the jurisdiction and operation of another.

In prepared remarks at an antitrust forum,¹ FTC Chairman Jon Leibowitz stated that the ITC had an "antique and binary remedial scheme. . . ." He implied that the ITC was mistaken in not applying the U.S. Supreme Court's eBay² test in evaluating whether or not to award an exclusion order. Chairman Leibowitz's suggestion appears to conflict with the ITC's statutory mandate. Section 337 requires consideration of public health and welfare, competitive conditions in the U.S. economy, the production of like or directly competitive articles in the United States and U.S. consumers (the so-called "public interest" factors)³ prior to the issuance of an exclusion order. In considering this question, the Federal Circuit held that eBay does not apply to ITC Section 337 exclusion orders.⁴ FTC Chairman Leibowitz concluded that the public interest factors under Section 337 should automatically "trump any finding of infringement" in a Section 337 investigation by the ITC.

Chairman Leibowitz's remarks are the latest in a series of efforts by the FTC to pressure the ITC to adopt the FTC's interpretations of the ITC's enabling statute and governing case law. In March 2011, the FTC issued a report⁵ advising the ITC to change its construction of its enabling statute to restrict companies relying on certain types of licensing activities as a basis for establishing a domestic industry.⁶ In the Motorola v. Apple litigation at the ITC, the FTC weighed in on behalf of Apple, advising the ITC that it should not issue exclusion orders for standard essential patents (SEP) committed to be licensed on reasonable and non-discriminatory (RAND) terms.⁷

In what may be viewed as its most aggressive move against its sister agency, the FTC provided congressional testimony in a hearing about the ITC to which the ITC was not even invited.⁸ In that testimony, the FTC reiterated its position that the ITC should not afford relief in cases involving SEPs.

The FTC's statutory role in ITC Section 337 cases is highly circumscribed: "During the course of each investigation under this section, the Commission shall consult with, and seek advice and information from, the Department of Health and Human Services, the Department of Justice, the Federal Trade Commission, and such other departments and agencies as [the ITC] considers appropriate."⁹ The FTC, thus, has greater statutory authority over telemarketing,¹⁰ or the misbranding of wool¹¹ and dolphin-safe products,¹² than it does over adjudication of international intellectual property disputes. In spite of its limited statutory authorization and institutional expertise, however, the FTC has continued to attempt to exert public and political pressure on the ITC.

The FTC's criticisms of the ITC demonstrate tacit recognition of the potency of the ITC as a forum for resolution of patent disputes. It may be worthwhile to monitor the actions taken by the FTC against the ITC as a barometer of potential legislative or judicial action in derogation of the ITC's mandate.

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

Footnotes

1. Remarks of FTC Chairman Jon Leibowitz as Prepared for Delivery at the Sixth Annual Georgetown Law Global Antitrust Enforcement Symposium, September 19, 2012.

2. eBay v. MercExchange LLC, 547 U.S. 388 (2006).

3. 19 U.S.C. § 1337(d)(1).

4. Spansion Inc. v. Int'l Trade Comm'n, 629 F.3d 1331, 1360 (Fed. Cir. 2010).

5. "The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition."

6. 19 U.S.C. § 1337(a)(3)(C).

7. Certain Wireless Communication Devices, Portable Music and Data Processing Devices, Computers and Components Thereof, Inv. No. 337-TA-745, Third Party United States Federal Trade Commission's Statement of Public Interest, June 6, 2012.

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

9. 19 U.S.C. § 1337(b)(2).

10. Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. §§ 6101-6108.

11. Wool Products Labeling Act, 15 U.S.C. §§ 68-68j.

12. Dolphin Protection Consumer Information Act, 16 U.S.C. § 1385.

This article is for general information and does not include full legal analysis of the matters presented. It should not be construed or relied upon as legal advice or legal opinion on any specific facts or circumstances. The description of the results of any specific case or transaction contained herein does not mean or suggest that similar results can or could be obtained in any other matter. Each legal matter should be considered to be unique and subject to varying results. The invitation to contact the authors or attorneys in our firm is not a solicitation to provide professional services and should not be construed as a statement as to any availability to perform legal services in any jurisdiction in which such attorney is not permitted to practice.

Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. The Duane Morris Institute provides training workshops for HR professionals, in-house counsel, benefits administrators and senior managers.