Tricks and Treats for Complainants & Respondents in Section 337 Litigation
Time to read: 4 minutes
Don’t wait until after institution to assemble the support for your domestic industry case- both technical and economic prong. The ALJs frequently make known that they expect a complainant to have the support for their domestic industry case in hand before the investigation institutes and are unlikely to be sympathetic if a motion to compel this information is filed. More importantly, don’t get tricked by assuming that a third party will be cooperative or helpful, only to find out later that is not the case! For example, in a recent licensee-based domestic industry case, Certain Integrated Circuits & Products Containing the Same (Inv. No. 337-TA-1148), ALJ Elliott found that complainant failed to establish either prong of the domestic industry requirement where it 1) failed to obtain sufficient technical discovery from the licensee to establish that the “representative domestic industry product” was truly representative for purposes of the technical prong, and 2) failed to show that the qualifying domestic expenditures of the licensee were substantial or significant.
Section 337 is meant to address:
Unfair methods of competition and unfair acts in the importation of articles… into the United States, or in the sale of such articles by the owner, importer, or consignee, the threat or effect of which is
i) to destroy or substantially injure an industry in the United States;
ii) to prevent the establishment of such an industry; or
iii) to restrain or monopolize trade or commerce in the United States.
19 U.S.C. § 1337 (a)(1)(A). This language has been interpreted to encompass a wide range of unfair methods of competition and unfair acts; as a complainant, you do not have to limit yourself to patent infringement claims. In recent years there has been an increase in, not only trade secret claims at the ITC, but also other “non-statutory” unfair acts, such as antitrust, false advertising, and false designation of origin. Furthermore, there could be other types of claims that have not yet been introduced or considered by the ITC, as “unfair methods of competition” does not have a defined scope but instead falls within the federal common law. See TianRui Group Co. Ltd. v. International Trade Com’n, 661 F.3d 1322, 1327 (2011).
Also remember to consider including the full range of claims that may relate to the accused products: respondents frequently co-opt product designs and may also copy a complainant’s website and promotional materials to promote their own infringing products! Consider including design patent, copyright, and trademark infringement claims in your complaint as appropriate (and within the boundaries of Rule 210.14(h), which allows ALJs to sever investigations as necessary for efficient adjudication). Keep in mind, however, that any non-statutory claims (i.e., relating to something other than registered intellectual property rights) in a complaint will require the complainant also to demonstrate that their domestic industry has been or is threatened to be injured by respondent’s unfair acts.
Don’t get tricked into taking a consent order if you think the patent is invalid. It is better to participate in the investigation and put forth a modest defense until the end. One notable example of this was the respondent DeLorme in Certain Two-Way Global Satellite Communication Devices, System & Components Thereof (Inv. No. 337-TA-854). Though DeLorme was successful in obtaining a ruling from the CAFC that the patent at issue was invalid in 2015, to this day DeLorme remains subject to the $6.2 million civil penalty it was assessed in an enforcement proceeding for violating a consent order it agreed to in 2013. If DeLorme had instead litigated the investigation until its conclusion, been found in violation of Section 337, and then presented the patent invalidity ruling to the Commission via a petition for modification, the Commission could have simply rescinded the remedial orders.
If you are a small player in the market or otherwise find that discontinuing your sales of the accused product(s) would be more favorable than incurring the costs of litigating through the end of the investigation, consider how you might settle the case without a monetary payment to complainant. For example, a complainant seeking a general exclusion order may consider agreeing to a non-monetary settlement in exchange for a deposition from a company representative. When there are a lot of entities involved with the accused products and numerous uncooperative respondents, the complainant may have a difficult time finding information on the manufacturing and distribution chains. In this situation, a complainant may consider a short, cooperative deposition regarding a company’s understanding of the market more valuable than the amount of money they could receive through a settlement with a small entity.
October 20, 2020