United States: Intellectual Property Tailwinds Continue To Favor Section 337 Enforcement Actions Before The International Trade Commission

Last Updated: February 14 2018
Article by H. Jonathan Redway

Section 337 intellectual property enforcement actions before the International Trade Commission ("ITC") continue to gain in popularity.

The ITC has long been a popular forum for private parties seeking to enforce their intellectual property rights and stop the importation of infringing goods into the United States.  It is easy to see why.  The ITC is particularly well-known for fast proceedings. Most investigations are concluded within a year while a good many are completed in even less time.  The ITC is also utilized because of its powerful exclusion order relief.  Products found to infringe intellectual property rights are excluded from entry into the United States.  The ITC also permits broad discovery of accused infringers and is quick to level sanctions on any party that refuses to cooperate.

Recent legal developments are raising the popularity of ITC actions further.

In a case of first impression, the United States District Court for the Eastern District of Wisconsin recently ruled that findings by the ITC in trade secret misappropriation claims enjoy preclusive effect in parallel District Court litigation.  See generally Manitowoc Cranes LLC v. Sany America Inc., 2017 WL 6327551 (E.D. Wisc. 2017). While this has long been known for other types of enforcement actions, such as trademark infringement, clear legal authority now exists for the first time in the area of trade secret misappropriation.  The broad scope of discovery available to Complainants through ITC proceedings, coupled with the enhanced sophistication of the Administrative Law Judges, cannot help but increase the chances of success, and, if desired, such success can now be carried forward efficiently in a subsequent District Court action.

In addition, the United States Supreme Court in combination with recent Federal Circuit authority have severely limited the geographic locations where a patent holder may file to enforce its patent rights.  See generally TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct. 1514 (2017); see also In re Cray Inc., 871 F.3d 1355 (Fed. Cir.  2017).  Today, a patent holder may bring an enforcement action in the geographic locations where the defendant is either (1) incorporated or (2) infringes the patent and maintains a brick and mortar business.  Unfortunately, this means a good number of patent holders can no longer enforce their patents in a home or "patent friendly" forum.  The ITC remains available as a "patent friendly" and home forum to any party who has a domestic industry within the United States, regardless of whether such party is a U.S. or foreign entity.

Third, many District Court actions are stalling in the early stages as the Patent Trial and Appeal Board, under the America Invents Act, reviews petitions for patent review and, in the majority of cases, conducts a separate trial.  See generally Lex Machina, 1/23/18.  Unlike District Courts, the ITC thus far has been unwilling to put its investigations on hold when an accused infringer challenges an asserted patent at the Patent Trial and Appeal Board.  See generally In re Certain Network Devices, Related Software and Components Thereof (337-TA-945) (August 16, 2017).

Finally, a successful patent holder before the ITC can be confident that accused product will be banned from importation into the United States.  In contrast, a successful patent holder in District Court may or may not obtain an injunction depending on whether or not the equities — as evaluated by the District Court – demonstrate that money damages are not adequate to compensate the patent holder.  See generally EBay Inc. v. MercExchange, 547 U.S. 388 (2006).

Now, more than ever, intellectual property holders harmed by the importation of infringing goods should look to the ITC to protect their rights and businesses against the harm of infringement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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