United States: ITC Rolls Out Pilot Program For Early Termination Of Section 337 Investigations

Last Updated: July 15 2013
Article by G. Brian Busey and Jack R. Smith

On June 24, 2013, the United States International Trade Commission ("ITC" or "Commission") unveiled a new pilot program aimed at providing expedited Section 337 investigations without the burden and cost of a full-length investigation.1 In special cases identified by the Commission at institution of the investigation, the assigned Administrative Law Judge must issue an initial determination ("ID") within 100 days of institution that can lead to early termination. The first investigation to be subject to such an expedited evidentiary hearing, Certain Products Having Laminated Packaging, Laminated Packaging, and Components Thereof, Inv. No. 337-TA-874, examined the economic prong of domestic industry. However, the ITC Notice indicates that additional "potentially dispositive issue[s]," such as importation and standing might be appropriate for an expedited evidentiary hearing.2

BACKGROUND AND MOTIVATION

The pilot program appears to signal the Commission's desire to limit the ability of non-practicing entities (NPEs)3 to successfully use Section 337. The ITC Notice also coincides with the Obama administration's announcement of regulatory and legislative efforts to curb allegedly abusive patent litigation brought by NPEs.4 Some aspects of Section 337 investigations, including the broad injunctive type relief afforded by ITC exclusion orders and the speed of ITC investigations, have apparently made the ITC attractive to NPEs.5

The White House Task Force on High-Tech Patent Issues explicitly recognized this in June, and has now recommended legislative changes that, if implemented, could have a significant impact on Section 337 practice.6 However, the special requirements for relief under Section 337 compared with those of the federal district court likely have tempered the interest of NPEs in the ITC. For example, NPEs may have difficulty demonstrating the economic prong of domestic industry, particularly where they rely only on licensing activities that have received special scrutiny from the Commission.7 Many technology companies that are frequently named as respondents in ITC investigations have complained in the past that there was no realistic mechanism by which to dispose of Section 337 investigations before incurring the costs of a 337 investigation through the evidentiary hearing, often occurring 8-9 months into an investigation.

As reported in an earlier client alert,8 recently the Commission instituted a procedural modification apparently aimed at addressing similar problems in Certain Products Having Laminated Packaging, Laminated Packaging, and Components Thereof, Inv. No. 337-TA-874 (Laminated Packaging). In Laminated Packaging, the Commission ordered in its notice of investigation an expedited evidentiary hearing to determine whether or not the complaint satisfied the economic prong of domestic industry. The Commission action will result in a potentially dispositive ID by the ALJ within 100 days of the institution of the investigation, which is currently scheduled to be issued July 5. If the domestic industry requirement is not satisfied, the investigation will be suspended pending Commission review.9

THE PILOT PROGRAM

The recently announced pilot program essentially applies the modified procedural schedule tested in Laminated Packaging to other cases before the ITC. At least initially, the program will proceed as follows.10

  • At the institution of the investigation, the Commission identifies a potentially dispositive issue (e.g., the economic prong of domestic industry, standing, or importation) that should be subject to an early 100-day ID.
  • The ALJ issues a procedural schedule including expedited fact finding and an evidentiary hearing. Ordinarily, the hearing will result in an ID within 100 days of the institution of the investigation. However, the ALJ will have discretion to grant extensions for "good cause." The ALJ sets the time frame for the fact finding accompanying the modified schedule (e.g., the serving of exhibits, rebuttal exhibits, prehearing statements, etc.) so that the ID can be made in the 100-day time frame.
  • If the ALJ determines that the complainant has not satisfied the economic prong of domestic industry, then the ALJ will stay the proceeding pending Commission review of the ID.
  • Litigants may then petition for review of the ID within 5 days of service and reply to such petitions for review. If the Commission elects not to review the ID within 30 days and/or agrees with the ID, the ID becomes the final determination of the Commission.

REMAINING QUESTIONS

The program demonstrates the Commission's commitment to early disposition on appropriate grounds of potentially costly 337 proceedings. But there are a number of issues surrounding the program that likely will only be resolved via its implementation and application in specific cases:

1. Impact on ITC's Overall Schedule. The ITC Notice acknowledges that "resolving issues in pilot program investigations may be challenging for the ALJs."11 Given the substantial caseload of ITC ALJs, a series of expedited 100-day evidentiary hearings may adversely affect target dates in other 337 investigations. In particular, ALJs may be forced to delay IDs or other aspects of the fact finding when schedules conflict. If

such problems become evident during the pilot program, the Commission may need to adjust the program's time frames.

2. Challenge for Litigants. The 100-day expedited proceedings impose additional challenges on respondents and complainants alike. The Commission expects complainants to "have a well-developed plan for obtaining any necessary discovery immediately upon institution."12 Although complainants have the luxury of taking substantial time to prepare their cases before filing, respondents will not have similar time to prepare for expedited proceedings. In some cases, respondents may not be even be represented by counsel on the institution of the investigation. They may face other logistical hurdles that substantially limit their ability to raise issues concerning a complainant's case in the extremely short period provided for expedited proceedings.

3. Mechanism for Identifying Expedited Cases. Although the ITC Notice indicates that the Commission will identify issues suitable for an expedited proceeding, it does not indicate the mechanism for identifying the cases. Laminated Packaging seems to indicate that the Commission's role in this process need not be exclusive. Specifically, two respondents' public-interest statements filed before the institution of the investigation13 appear to have raised the domestic industry issue with the Commission. It appears that respondents that are represented by counsel can and should approach the Commission Staff to raise defenses that may be suitable for expedited consideration.

4. Issues Suitable for Expedited Proceedings. Another question concerns exactly which kinds of issues can be reliably and fairly addressed in the 100-day time frame. The Commission clearly expects that issues of domestic industry, standing, and importation can reasonably be addressed.14 But other issues that may be equally dispositive, such as licensing or patent exhaustion defenses, may or may not be addressed in expedited proceedings. It remains to be seen how broadly the Commission will select issues for inclusion in the pilot program.

Footnotes

1 "Pilot Program Will Test Early Disposition of Certain Section 337 Investigations," News Release 13-059, USITC, Released June 24, 2013 (hereinafter "the ITC Notice").

2 The ITC Notice at ¶¶ 4-5.

3 Alternatively referred to as Patent Assertion Entities (PAEs) and "patent monetization entities."

4 "Fact Sheet: White House Task Force on High-Tech Patent Issues Legislative Priorities and Executive Actions," Office of the Press Secretary of the White House, Released June 4, 2013 (hereinafter "the Task Force Fact Sheet"), at 1.

5 "ITC Requires Early Evidentiary Hearing in Investigation Initiated by NPE," Morrison & Forester Client Alert, March 29, 2013 (hereinafter "March 29, 2013 Morrison & Forester Client Alert") at 1.

6 The Task Force Fact Sheet at 2 under "Legislative Regulations."

7 78 Fed Reg. 19, 007 (Mar. 28, 2013). In order to obtain relief for a violation of Section 337, a complainant must establish that a "domestic industry" with respect to the asserted intellectual property exists or is in the process of being established. See 19 U.S.C. § 1337(a)(2). To satisfy the domestic industry requirement, the complainant must show that it has made significant investments in plants and equipment or labor or capital in connection with products protected by the intellectual property right or substantial investments in exploiting the intellectual property right, such as through engineering, research and development or licensing. See 19 U.S.C. § 1337(a)(3).

8 March 29, 2013 Morrison & Forester Client Alert.

9 Laminated Packaging, Inv. No. 337-TA-874, Order No. 8 - Attachment A (May 1, 2013).

10 The ITC Notice explicitly indicates that the following described procedure may be modified "in light of [the Commission's] experience with the [pilot] program," at ¶ 14.

11 The ITC Notice at ¶ 12.

12 Id.

13 March 29, 2013 Morrison & Forester Client Alert at 2.

14 The ITC Notice at ¶ 12.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
G. Brian Busey
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.