IP: A prescription for success in ITC Section 337 proceedings

Navigating ITC investigations requires a knowledge of various Washington D.C.-based administrative agencies

The U.S. International Trade Commission (ITC) is now among the most important patent enforcement venues in the world. However, the ITC’s patent infringement investigations under Section 337 are not “mere patent litigation.” Regardless of whether one is involved as a complainant or respondent, success in Section 337 proceedings begins with an appreciation of the role of the ITC as an administrative agency that is part of the Washington, D.C.-based federal bureaucracy.

The ITC has long been a go-to forum for enforcing patent rights in certain industry sectors, notably consumer electronics (about 50 percent of all ITC investigations involve products in the high-technology sector and about 70 percent of the investigations involved imports from East Asia). Section 337 proceedings before the ITC became more attractive for patent owners in other industry sectors in the wake of the Supreme Court’s 2006 ruling in eBay v. MercExchange, which held that district courts should not automatically grant injunctive relief in patent cases. Since eBay, the ITC has conducted more full patent adjudications than any district court. While the ITC may now be the best possible venue for blocking importation of infringing products into the U.S. market, treating an ITC Section 337 proceeding as mere patent litigation is a mistake.

Despite similarities between Section 337 investigations and patent litigation in district court, the ITC is not, as some suggest, a quasi-judicial agency. The federal judiciary is an independent branch of government that operates across the country and is intended to be free from political pressure. In contrast, the ITC is a Washington, D.C.-based administrative agency acting in concert with other D.C.-based administrative departments and agencies, including Customs and Border Protection (CBP), the Federal Trade Commission (FTC), the Department of Justice and, of course, the Patent and Trademark Office—to ensure protection of intellectual property consistent with public policy.

Effective advocacy before agency decision makers requires a skill set and approach that is quite different from that used in persuading a district court judge or jury. Success in a 337 investigations therefore requires both skilled IP litigation counsel and counsel that can advocate your position before key decision makers within the Washington D.C. bureaucracy. In addition to persuading the ITC, your counsel must be able to address public policy issues, competition issues and work with CBP.

Public policy advocacy is important because commissioners will always consider whether relief is in the public interest. Moreover, the President can disapprove an ITC exclusion order for policy reasons. Public policy is likely to become increasingly important to ITC decisions as IP becomes more important to the global economy.

The impact of ITC actions on competition has drawn the attention of antitrust regulators. For example, the FTC stepped into the smartphone wars underway at the ITC by submitting comments to the ITC opposing the issuance of ITC exclusion orders banning imports of products that infringe standard essential patents.

Advocacy before CBP can be outcome determinative because it, not the ITC, is tasked with enforcing exclusion orders. A CBP ruling regarding the applicability of an exclusion order to a redesigned product can be decisive for a respondent whose customers will abandon it if they cannot be assured of uninterrupted importation. In contrast, a respondent that loses the battle at the ITC can still win the war of gaining access to the U.S. market for products designed to avoid the exclusion order. Thus, effective advocacy before the decision makers at CBP can make the difference between products being excluded pending further proceedings at the ITC or continued importation pending further proceedings at the ITC.

As those outside the beltway are apt to learn the hard way, effective advocacy before agency decision makers requires a skill set quite different from the skill set needed for district court patent litigation. It follows that treating an ITC Section 337 proceeding as mere patent litigation is a significant mistake. Instead, those involved in Section 337 proceedings should implement a coherent and internally consistent approach that will be persuasive to the full range of decision makers involved.

Contributing Author

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Michael Bednarek

Michael Bednarek is a partner in the Washington, DC office of Axinn, Veltrop & Harkrider LLP and a member of the ITC Trial Lawyers Association....

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