United States: ITC Basics: What Makes The ITC A Unique And Desirable Forum

By some estimates, as much as $118 billion worth of foreign infringing products entered the United States in a single year.1 While the current news cycle focuses on tariffs, the International Trade Commission (ITC) offers patent-owners a powerful weapon to combat infringement: a Section 337 action to block the importation of infringing products at U.S. ports of entry. While this powerful remedy can make the ITC an ideal forum for certain cases, the ITC differs from standard district court litigation in important ways. This article provides a general overview of some of the unique aspects of an ITC investigation.

I. Filing a Complaint and the Burden of Proof

Like a district court action, a party must file a complaint seeking a remedy under Section 337.2 The ITC complaint must allege that products are being imported into the United States that "infringe a valid and enforceable United States patent" and that there is  "domestic industry"—i.e., "an industry in the United States, relating to the articles protected by the patent . . . [that] exists or is in the process of being established."3 

To satisfy the domestic industry requirement, a complainant must demonstrate significant domestic investments in, for example, labor, capital, facilities, or research and development that support "articles protected by the patent" (i.e., domestic industry products).4 Therefore, the complainant must show that patent claims cover both the respondent's product (accused product) and the complainant's own product (domestic industry product).

After the complainant files the complaint, the ITC decides whether to institute an investigation.5 The ITC typically decides institution within 30 days.6 The ITC will publish its decision to institute in the Federal Register.7 When this notice is published, the investigation is officially instituted.8 If there are pending district court proceedings involving the same issues between the same parties, those cases will be stayed (upon motion) after the ITC institutes its investigation.9

II. The Judge and Staff

An instituted investigation is assigned to an Administrative Law Judge (ALJ).10 The ALJ is the primary factfinder during the investigation, presiding over hearings and deciding motions.11 The Commission can review the ALJ's decisions.12 The "Staff" is another unique feature of the ITC. The Staff is an attorney, appointed from the Office of Unfair Import Investigations (OUII), who acts as an independent party during the investigation. OUII does not appoint an attorney for every investigation.13 When present, however, Staff may fully engage in the investigation, filing its own discovery requests, conducting its own depositions, and taking positions on motions.14

III. Schedules and Ground Rules

The ITC must complete an instituted investigation "at the earliest practicable time."15 Within 45 days after the ITC institutes an investigation, the ITC determines a "target date" for the final decision (i.e., the "final determination"). 16 The ALJ's initial target date can be within 16 months from the investigation's institution.17 The ALJ also issues an order establishing a procedural schedule with deadlines regarding, for example, discovery, claim construction, motion practice, and hearings.18 The ALJs follow certain statutory procedural rules but also have their own ground rules that govern the nuts and bolts of the investigation.19

IV. Fact Discovery and Protective Orders 

After an investigation's institution, the parties may begin the discovery process according to the procedural schedule. A party may obtain discovery regarding any nonprivileged matter that is relevant to: 

  •  the claim or defense of the party seeking discovery or to the claim or defense of any other party, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things;
  • the identity and location of persons having knowledge of any discoverable matter;
  • the appropriate remedy for a violation of section 337 of the Tariff Act of 1930; or
  • the appropriate bond for the respondents, under section 337(j)(3) of the Tariff Act. 20

At the ITC, parties may seek relevant, discoverable information using interrogatories, requests for production, requests for admissions, subpoenas, and depositions.21  One departure from district court procedure is that the ALJs' Ground Rules allow only 10 days to respond to discovery requests.22 Additionally, discovery in the ITC is often completed in a matter of months, rather than a year or more, as in district court.23 To protect information obtained during discovery, each ALJ will issue a protective order requiring attorneys to sign a protective order subscription.24 The protective order prevents disclosure of confidential business information (CBI).25 Typically, only the outside-counsel attorneys from each side, experts (and, of course, the Staff, ALJ, and Commission) may view information designated as CBI.26

V. Hearings

Hearings at the ITC differ from district court trials in several significant ways. First, because the ALJ serves as the factfinder, an ITC hearing is never held before a jury. A second major difference is that many ALJs require the parties to submit their direct testimony through written witness statements, rather than obtaining that testimony live in court.27 A witness statement consists of a series of questions and answers that simulate live testimony. The opposing party may then conduct live cross-examination of the witness at the hearing.28 

VI. Initial and Final Determinations and Remedies

After the hearing and any posthearing briefing, the ALJ will issue the initial determination (ID).29 While the ID may contain the ALJ's findings on certain evidentiary issues, the most important finding is whether the ALJ found that the complainant established a violation of Section 337 by proving importation of an infringing product and the existence of a domestic industry. The ALJ's findings on infringement include a claim-by-claim analysis, so the ID may find a violation with respect to some claims of the patent and no violation with respect to other claims. 

After the ITC's determination becomes final, the complainant may obtain the benefit of the remedy in the FD, assuming a violation was found. The ITC, generally, issues two sorts of remedies: (1) exclusion orders; and (2) cease and desist orders.30 

An exclusion order is a tool whereby the ITC directs U.S. Customs and Border Protection to block infringing products at the ports of entry.31 The ITC may issue one of the two types of exclusion order: (1) a general exclusion order or (2) a limited exclusion order.32 A general exclusion order blocks importation of all infringing products, regardless of the identity of the importer or manufacturer.33 The complainant must meet a higher

standard to obtain a general exclusion order.34 A limited exclusion order blocks importation of infringing products from the manufacturers or importers identified in the investigation.35 An exclusion order is typically directed to the claims of the relevant patent, rather than the specific names of products identified in the investigation.36 This may help prevent respondents from circumventing the order by renaming their products. 

In addition to exclusion orders, the ITC may issue a cease and desist order.37 These orders can help prevent a respondent from stockpiling infringing goods in the United States before an exclusion order goes into effect and then selling those goods. The cease and desist order will prevent the respondent from selling their inventory of infringing products in the United States.38 

The parties may petition the Commission to review all or part of the ID.39 The Commission will then determine whether to review the ID in whole, in part, or not at all. If the Commission takes review, it will issue a notice indicating which issues it intends to review.40 The Commission will then issue a written opinion—a final determination (FD)—affirming or altering the ID.41 Any issue that the Commission chooses not to review becomes part of the FD.42

VII. Presidential Review and Appeals

Because the ITC is a government agency deriving power from the executive branch of the U.S. Constitution,43 if a violation is found, the exclusion order is subject to final review by the President of the United States.44 This means that for 60 days after the ITC issues its FD, the current president may indicate disapproval of the exclusion order.45 If a 60-day period elapses without presidential action, the ITC's determination becomes final.46 After the presidential review period expires, either party may appeal the ITC's decision to the United States Court of Appeals for the Federal Circuit.47 The General Counsel's office may participate in the appeals.

VIII. Conclusion

The ITC differs from district court litigation in many procedures and requirements and understanding those differences can make the difference between winning and losing. But for the right cases, the ITC offers patent-owners strong remedies to combat infringement.

Footnotes

1 The Commission on the Theft of American Intellectual Property, Update to the IP Commission Report at 9 (2017) (available at http://ipcommission.org/report/IP_Commission_Report_Update_2017.pdf).

2 19 U.S.C. § 1337(b)(1).

3 19 U.S.C. § 1337(a)(1)(B) and (a)(2).

4 19 U.S.C. § 1337(a)(3).

5 19 C.F.R. § 210.10(a).

6 Id.

7 19 C.F.R. § 210.10(a).

8 19 C.F.R. § 210.10(b).

9 28 U.S.C. § 1659(a).

10 19 C.F.R. § 210.3.

11 Id.

12 See 19 C.F.R. § 210.42.

13 See 19 C.F.R. § 210.3; ITCTLA, FAQs: What Is the Role of the Commission Investigative Attorney in a Section 337 Investigation?, http://www.itctla.org/resources/faqs#role.

14 Id.

15 19 U.S.C. § 1337(b)(1).

16 Id.

17 See USITC, "Answers to Frequently Asked Questions," at 20 n.16 (available at https://www.usitc.gov/intellectual_property/documents/337_faqs.pdf).

18 See, e.g., Certain Intraoral Scanners and Related Hardware and Software, USITC Inv. No. 337-TA-1090, Order No. 6 (an example of ALJ Lord's procedural schedule); Certain Hybrid Electric Vehicles and Components Thereof, USITC Inv. No. 337-TA-998, Order No. 3 (an example of ALJ Pender's procedural schedule).

19 See 19 C.F.R. § 210.5(e).

20 19 C.F.R. § 210.27(b)(1).

21 19 C.F.R. §§ 210.28-32.

22 See, e.g., Certain Protective Cases for Elec. Devices and Components Thereof, USITC Inv. No. 337-TA-955, Order No. 2, 8 (Apr. 30, 2015) (an example of Chief ALJ Bullock's Ground Rules); Certain Elec. Devices, Including Wireless Communication Devices, Computers, Tablet Computers, Digital Media Players, and Cameras, USITC Inv. No. 337-TA-952 Order No. 2, 1 (Apr. 1, 2015) (an example of ALJ Shaw's Ground Rules).

23 See, e.g., Certain Intraoral Scanners and Related Hardware and Software, USITC Inv. No. 337-TA-1090, Order No. 6 (setting the close of fact discovery to less than five months from the issuance of the procedural schedule); Certain Hybrid Electric Vehicles and Components Thereof, USITC Inv. No. 337-TA-998, Order No. 3 (same).

24 See 19 C.F.R. § 210.5.

25 Id.

26 Id.

27 See, e.g., Certain Elec. Devices, Including Wireless Communication Devices, Computers, Tablet Computers, Digital Media Players, and Cameras, USITC Inv. No. 337-TA-952 Order No. 2, 9 ("Unless ordered otherwise, all direct witness testimony . . . shall be made by witness statements in lieu of live testimony.").

28 Id. ("Witnesses shall be available for cross-examination on the witness stand unless waived.").

29 See 19 C.F.R. § 210.42.

30 See 19 C.F.R. § 210.75.

31 Id.

32 See 19 C.F.R. § 210.12(a)(11).

33 See 19 U.S.C. § 1337(d); VastFame Camera, Ltd. v. ITC, 386 F.3d 1108, 1114 (Fed. Cir. 2004).

34 Id.

35 Id.

36 See 19 U.S.C. § 1337(d)(2).

39 19 U.S.C. § 1337(f).

40 Id.

41 19 C.F.R. § 210.43.

42 19 C.F.R. § 210.43(d).

43 19 C.F.R. § 210.44(c).

44 19 C.F.R. § 210.42(h)(6).

45 USITC, About the USITC, https://www.usitc.gov/press_room/about_usitc.htm ("We provide high-quality, leading-edge analysis of international trade issues to the President and the Congress.").

46 19 U.S.C. § 1337(j).

47 Id.

48 Id.

48 28 U.S.C. § 1295(a)(6).

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