The first installment of this series examined strategic considerations in filing an intellectual property action in the United States district courts, the most traditional forum for such actions. In this installment we discuss the United States International Trade Commission (“ITC”), an agency that over the past decade became one of the preeminent forums for patent litigation. The ITC can be a tremendous tool for those whose rights are infringed, especially for parties dealing with knockoffs, infringement by many unrelated parties, or those in industries where market realities require speedy judgments. However, navigating ITC rules and practices can be tricky for the inexperienced or unprepared.
The ITC is an independent federal agency which performs a number of functions, such as investigating the effects of subsidized imports on domestic industries, but also performs “Intellectual Property-Based Import Investigations.” The ITC has the unique ability to direct U.S. Customs to block infringing products from entering the United States. If a party is found to have violated intellectual property rights, the ITC has three main forms of relief it can provide: a “Limited Exclusion Order” directing Customs to block the importation of all products of the named parties found to be infringing; a “General Exclusion Order,” where Customs stops all infringing products, regardless of their origin; and a “cease and desist order” barring infringers located inside of the United States from selling infringing products.
However, there are some limitations to the ITC. Only certain rights holders may institute ITC proceedings as those seeking ITC relief must demonstrate that they, or their licensees, have a “domestic industry” and perform some manufacturing, research, technical support, repair, or licensing work inside the United States. Second, because the ITC’s main remedies are exclusion orders enforced by U.S. Customs at the border and ports, the ITC does not effectively address infringement by products manufactured inside the United States. Also, though the ITC has the ability to block digital imports, exclusion orders are better suited to the exclusion of physical products than of electronic transmissions. In addition, the ITC cannot provide monetary damages and all relief is prospective and bars future behavior.
ITC litigation can be difficult for those whose counsel is not experienced in ITC practice. The ITC’s unique and stringent procedural rules, with many opportunities for the inadvertent waiver of arguments often trap those who are new to the forum.
Unlike the district courts, the ITC is mainly for offensive action, for parties wishing to enforce their intellectual property. However, there is one method of defensive use of the ITC—often parties subject to an ITC exclusion order redesign their products in a way that they believe is no longer infringing and would like their redesigned products to be able to enter the United States without being stopped by Customs. In these cases, the party may seek an Advisory Opinion from the ITC, where the ITC examines the redesigned product and issues an opinion on whether or not it infringes.
ITC actions can be difficult for those unused to the forum or its speed, and the ITC offers little relief for those who seeking damages or whose rights are infringed by products produced in the United States. However, the ITC’s speed, knowledgeable judges, and joinder rules offer distinct advantages to those in high tech areas, where markets and products change rapidly, and the technology may be hard to grasp. The ITC is also particularly useful to those whose rights are infringed by multiple unrelated parties, and its general exclusion order remedy is an extremely efficient way to fight counterfeits and knockoffs.