On demand 1h 22s Basic

How and Why to File your Patent, Trademark, Copyright, or Trade Secret Complaint at the U.S. International Trade Commission

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How and Why to File your Patent, Trademark, Copyright, or Trade Secret Complaint at the U.S. International Trade Commission

Section 337 investigations at the U.S. International Trade Commission (ITC) provide a fast and efficient forum to assert your intellectual property against imported goods. A successful ITC complaint can quickly lead to the ITC blocking future imports of infringing products, protecting market share, and stopping unfair competition. Because Section 337 investigations differ substantially from federal district court actions, success requires a nuanced understanding of the ITC’s unique requirements and procedures. In this course, Mr. Riley explains how to file a complaint at the ITC and examines the wide array of possible causes of action, including patent infringement, trade secret misappropriation, unfair competition, and breach of contract. Mr. Riley also discusses how to best utilize the ITC’s procedure and discovery rules to strategic advantage.

Transcript

- Hello, thanks for joining me today to discuss the unique challenges of intellectual property litigation at the US International Trade Commission. Instead of saying that long name each time, most practitioners just use ITC or the Commission to refer to the US International Trade Commission. Now you might be wondering why is the ITC important? The ITC is a quasi-judicial federal agency in Washington DC. And one of the ITCs statutory mandates is to adjudicate trade disputes directed to imported products under 19 U.S.C., Section 1337, also simply known as Section 337. What this means in practice is that the ITC, through a speedy proceeding lasting around 16 months, can block goods that infringe US patents from being imported into the United States. My name is Andrew Riley, I'm the head of litigation at Mei and Mark, LLP, which is a private law practice in DC. My trial practice since 2003 has focused on patent and other intellectual property litigation before the US International Trade Commission in federal district court and at the Patent Office. In 2014, I started teaching a seminar on Intellectual Property Practice at the ITC as an adjunct professor at American University's Washington College of Law. The goal of this course is to introduce you to unique aspects of intellectual property, or I'll simply use the abbreviation IP, investigations at the ITC so that you can understand why ITC has such a large impact on IP litigation in the United States and around the world. Before we get too far, let me just give you an outline of the topics we will cover in the course today. First, we will discuss an overview of the ITC and it's structure. This will include a discussion of the Commissioners, the Administrative Law Judges, and the other key offices at the ITC that participate in ITC investigations. Second, we will broadly look at a typical timeline for litigation at the ITC and identify some of the milestones found only at the ITC. Now this timeline will naturally lead to a more detailed discussion of five significant topics. The required contents of an ITC complaint will be the first one. And then we'll talk about the ITCs importation requirement. Then we will talk about the statutory public interest factors, the ITCs domestic industry requirement, which has two parts, economic prong and the technical prong. And then lastly, we will talk about remedies available at the ITC. Now to illustrate these unique aspects of ITC practice, we will look at pleadings from recent ITC investigations, discuss some new developments to ITC practice, and I will provide some practical tips learned through my trial practice before the ITC. So first, let's just talk broadly about what is the International Trade Commission? Well, 19 USC Section 1337 governs what practitioners refer to as Section 337 investigations before the ITC. And the history of this statute goes back to 1930 when Congress wanted to protect US industries by making it unlawful to import goods using unfair methods of competition or unfair acts. Now, these unfair acts specifically include patent, copyright and trademark infringement, but it also includes other unfair methods of competition such as trade secret misappropriation. Please note in practice we refer to ITC proceedings as investigations, not as cases. For an IP owner, again, that's intellectual property owner to succeed in an ITC investigation or what practitioners refer to as proving a violation of Section 337, the IP rights holder must prove four things under the statute and governing precedent. Now, those four things are: importation, infringement or the other unfair act or method of competition. It must prove a domestic industry and that the public interest would not be harmed by any remedy that the ITC might issue. And we will discuss each of these below in more detail. But before we continue, it's worth noting upfront that an IP rights owner do not get damages as a remedy at the ITC, the only relief available at the ITC are exclusion orders and cease and desist orders, and we'll cover those a little bit later in the course. It's also worth noting that we will not cover infringement in this course because proving infringement of a patent or some other unfair act that the ITC is governed by federal precedent and is covered in other courses here on Quimbee. For example, I highly recommend the patent litigation course here on Quimbee. So who actually does all this work for Section 337 investigations? And let's start at the top with the six Commissioners. Today six Commissioners lead the ITC, the President appoints and the Senate confirms each Commissioner for a nine year term. Only three Commissioners, however, can be from the same party. So in practice that means that there are three Republicans and three Democrats and the chair position alternates every two years between the two parties and goes to the most senior member of that party. The ITC has other responsibilities such as Title VII investigations and Section 201 investigations. They also do independent analysis on tariffs, trade and competitiveness, and they maintain the Harmonized Tariff Schedule. But those other areas are beyond the scope of this course today, which again focuses on Section 337 investigations. And I do want to highlight three other offices after we talked about the Commissioners, the other offices at the ITC that are critical to Section 337 investigations. First are the six Administrative Law Judges. There usually are six right now we are at five as of this taping, there's one vacant position due to a retirement. These judges oversee discovery, They preside over any evidentiary hearings and they decide initially whether an IP owner has proven a violation of Section 337. In other words, one of these Administrative Law Judges, or I'll just refer to them as ALJs, is the trier of fact for a Section 337 investigation. The ITC ALJs determine whether there is infringement, whether there's a domestic industry and they decide any other issue that must be decided because it was put in front of them by the parties. Significantly, four of the current five Administrative Law Judges are patent attorneys with significant experience in patent litigation and this includes Chief Judge Cheney and ALJs Bhattacharyya, Elliot, and Moore. Now Chief Judge Cheney was appointed in March of 2018. He previously served as an Administrative Law Judge with FERC and with Social Security Administration. He also worked in the ITC's General Counsel's Office for several years where he argued appeals at the Federal Circuit on behalf of the ITC. He also was an attorney advisor to one of the ITC's Administrative Law Judges and he was also detailed out from the ITC to the Office of the US Trade Representative. He's also formerly a patent examiner and a patent attorney as I mentioned earlier, he also clerked for Judge Bryson on the Federal Circuit. He has his degree from Georgetown University and he has an electrical engineering degree from the University of Utah. What you can see here with Judge Cheney is that he has a tremendous amount of experience at the ITC, both in a variety of offices cuz he worked both in the Administrative Law Judge's Office as an advisor. And he also worked in the General Counsel's Office before he became an at an Administrative Law Judge himself. And we have Administrative Law Judge McNamara. She was appointed in August of 2015. She was previously an Administrative Law Judge also with the Social Security Administration. That's what the SSA stands for here on the slide. And before she became an Administrative Law Judge, she worked in private practice. She also worked as a consultant at the US Department of State as an EEO specialist in the US Department of Agriculture. In private practice, she was also a Special Assistant Attorney General in Massachusetts and the Court Conciliatory in Lowell Superior Court. She has her JD from Northeastern University, an MD from the University of Chicago, and a BA from Cornell. Judge Elliot was appointed in April of 2019 and he also previously served as an Administrative Law Judge except he served with the US Securities and Exchange Commission and with Social Security Administration. He was an attorney in private practice at an IP boutique and he was also an assistant US attorney in the Eastern District of New York and in the Southern District of Florida. He was also a trial attorney on the IP Staff in the Commercial Litigation Branch of the US Department of Justice's Civil Division. And he also served in the US Navy as an engineering officer on two different submarines. He has his law degree from Harvard and a BS in physics and applied physics from Yale. ALJ Bhattacharyya was appointed in September of 2021. She previously served as an investigative attorney with the ITCs Office of Unfair, excuse me, Unfair Import Investigations. And we'll talk about that office here in a minute. Before joining, what we refer to as OUII or the Staff, Judge Bhattacharyya worked in private practice for 12 years. She also served as a law clerk to Judge Pollack in the US District Court for the Eastern District of Pennsylvania. She has her law degree from Yale, an MA from Princeton, and a BS in biochemistry. And then we have Judge Moore, the most recent appointee in May of this year, 2022. Previously he served as an Administrative Patent Judge or known as an APJ with the US Patent and Trademark Office. Before he became an APJ, he worked as a staff attorney at the ITCs Office of Unfair Import Investigations. He also worked in private practice. He has his law degree from George Washington University and an electrical engineering degree from Stanford. So those are the five current Administrative Law Judges and having patent attorneys as judges stands in stark contrast to district court practice. As of this recording, there is only one district court judge who is also a patent attorney and that is Judge Albright in the Western District of Texas. You should also note from the background I just provided on the judges that many of them have prior work experience at the ITC before they became Administrative Law Judges, which means that they're very familiar with the ITCs unique requirements and procedures and are very familiar with the fast-paced nature of ITC litigation. The next office I wanted to highlight, which came up during the background of the judges is the Office of Unfair Import Investigations. As I mentioned, it's also known as OUII or just the Staff. The Staff represents the public as part of the ITC in many section 337 investigations. This means the Staff acts as an active third party and takes positions on all the issues including infringement, invalidity and domestic industry among other issues that are raised. As a full participating party the ITC Staff can present and cross examine witnesses at the hearings. They can submit briefing to the Administrative Law Judges and the Commissioners on any issue presented. So on this slide what you see here is sort of a block chart of where all these different groups come together. So you'll see there in the center the ITC Commissioners and there's a little circle arrow next to them where you have the ITCs general counsel's office. Again, they advise the Commissioners and we'll talk about them in a second in more detail. Below the Commissioners you have the Administrative Law Judges and then that black horizontal line at the bottom there is to show you where the different parties come into play. So in red you have, and the example we'll talk about now, the patent owner would be the complainant and you might have one to three or even more respondents. And often that's somebody who sells for importation or is the importer or another possibility is someone who sells after importation. And then all the way on the right, in the lighter blue you have the OUII that represents the public interest. Now at the top you'll see there's some other boxes here you have the President, the US Trade Representative, the Court of Appeals for the Federal Circuit and the US Supreme Court. And we'll talk a little bit how they fit the whole procedure when we get to that part of the program today. So the other office I mentioned was the office of General Counsel at the ITC. They provide legal counsel to the Commissioners and they defend any ITTC decisions on appeal before the US Court Appeals for the Federal Circuit. And so what that means is that when you see a case caption or an appeal from the ITC, it is typically the private party that is appealing versus the ITC. It is not the, let's say the patent owner lost, it would not be the patent owner versus the accused infringer as the case caption because the ITCs decision is being defended on appeal by the ITC. And what often happens in practice is that the other party to the ITC investigation will join the appeal to be able to put in their story and their briefs. So those are the highlights I wanted to mention from the office or the ITC structure. So let's now turn to timing and significant milestones. So let's talk now about timing and significant milestones for an ITC investigation. Now a typical ITC investigation is going to start at the very beginning and it actually starts, in most circumstances with outside counsel for the owner of the intellectual property right. They will contact the staff to request what's called a pre-filing consultation. And this is where the staff reviews a draft complaint and the exhibits to the complaint to make sure that the complaint satisfies all of the ITCs filing requirements. Now this process is completely confidential and the comments from the ITC staff are directed towards ensuring compliance with the ITCs rules. They are not necessarily providing feedback on the merits of the complaint. And then after that consultation is concluded, the ITC Staff's notes are destroyed. And to my knowledge, the attorney at the ITC that does the pre-filing consultation will not be involved at all in any investigation that may result from the filing of the complaint where the consultation took place. Now here on this timeline or on this line, you see the timeline for a typical IDC complaint and we'll walk through these steps, but typically it's about 16 months from when the complaint is filed until a commission decision. And some of the highlights are that you have that, obviously it starts when the complaint is filed and then within 30 days the commission decides to what's called institute or start the investigation. And then you have approximately eight to 10 months maybe of fact and expert discovery. And then that hearing will typically take place in front of the Administrative Law Judge at about the 10 month mark. And then the judge will give themselves around two months or so to make their decision, which is called an ID. And then after that, if there's a review by the commission, there's a period of time where that happens roughly four months as you see on this timeline. And then that final decision by the commission would come out at the 16 month mark. So that's a really fast procedure. And what happens immediately after the ITC decides to institute a new investigation is that the Chief Administrative Law Judge will assign that new investigation to one of the Administrative Law Judges or to him or herself to oversee the discovery and then the hearing, the judge will then propose a schedule and issue his or her ground rules, which local rules in district court. And the judge will also also issue a protect, I should note that the ITC takes protective orders very, very seriously. I think unlike district court practice where often most of the proceedings are on the public record, the ITC does give the parties the opportunity to close a hearing and exclude the public and parties that are not subscribed to a protective order from hearing testimony or evidence that they consider to be confidential under the protective order. And what's unique about this is that often parties are required as we'll get into in a little bit to put in financial information about their domestic industry, at least the patent owner or the IP rights owner would. And the detailed financial information in particular can be, you know, from a private company potentially, and they don't want that to be out there in the public domain. And so they want and they utilize the ITC in part because it does have these strict protective order proceedings in place. And that I think is an attractive reason why a lot of IP rights owners do go to the ITC because they know they can present some of this information and it can be kept confidential. There have been instances where parties have violated a protective order and the judges and the commission have come down very harshly to sanction those instances where confidential material was used improperly. And I can just give you an example of where this sometimes happens is that often the rights owner will file an ITC complaint on the same day that they file a district court complaint. And typically the district court case will be stayed put on pause during the ITC investigation. But if it ever is restarted after the ITC investigation ends, sometimes attorneys will reuse the material from the ITC investigation without having gotten permission first from the opposing side. And that would be a violation of the protective order because the materials that are exchanged during an ITC discovery process or during an investigation are only to be used during that investigation and in no other instance. And so sometimes you will see outside counsel and parties making that mistake as a a second case continues down the road. And now discovery at the ITC can start the day after the federal register publishes notice that the ITC instituted the investigation. Unlike district court practice, discovery at the ITC is due 10 days after receipt. This is how we can get through an ITC investigation so quickly. We don't have the longer deadlines that you have under the federal rules in district court. And as I mentioned on the timeline, fact and expert discovery typically last around six to eight months. One thing I didn't mention that I wanna mention now is that because you have this pre-filing consultation before the intellectual property owner files a complaint, almost every complaint that is filed at the ITC is instituted or started. That means that sometimes there is a little bit of back and forth between the ITC staff and the party that's proposing to file a complaint so that they can get the complaint into the appropriate shape and meet all the requirements that the reviewing attorney at the ITC believes needs to be done in order to file the complaint. Let's also talk a little bit more about what happens after discovery ends at the ITC. As I mentioned, the Administrative Law Judge will hold an evidentiary hearing on all issues at around the 10 month mark. And the hearings are held in person at the International Trade Commission in Washington DC and often include live fact and expert witness testimony. And during the pandemic we did use virtual proceedings, but the ITTC as of this recording, is back in person for all hearings like one that might take place in a typical investigation. Now about two months after the hearing, the judge will issue as I mentioned, the ID or initial determination and the judge also issues a recommended determination or RD where he or she proposes the remedy and the bond amount if the ITTC does find a violation at the end of the investigation. And we'll talk a bit more about the remedies and the bonds in a little bit. Now, 10 days after the Administrative Law Judge's initial determination issues, any party can petition the ITC Commissioners to review any portion of the judge's ID that they find to be an error of fact or law or that goes against ITC policy. In other words, the ITCs, sorry, the parties can appeal to the Commissioners, those portions of the Judge's ID that didn't go their way. This is a very, very important step because any issue not petitioned for review cannot be appealed later to the Federal Circuit. You can't stress that enough. You have to take this critical step of asking the Commissioners to review any portion of the judge's decision that you don't like. Now once the petitions for review are filed, the Commissioners have 30 days to determine whether to review the Judge's initial determination and in practice some portion of an initial determination will likely be reviewed. They may not review every issue that's raised, but they will likely review at least some issues that are raised. Now when the Commissioners do review a judge's ID, they often issue specific questions they want addressed through further briefing from the parties and the Staff attorney if they're participating in the investigation. The ITC also solicits comments from anyone on the public interest and remedy around the same time. And we're gonna talk about the public interest and the remedy again a little bit later. Now after this briefing concludes when the Commissioners ask for the specific questions to be addressed, they will issue a final decision around the 16th month mark from when the investigation was first started and that speed with trial in about 10 months and a final decision in about 16 months. The speed is what entices many IP owners to file their complaints at the ITC because they can get the relief they want as quickly as possible. Unlike many district courts where it might take 18 months, it would be on the really fast side. Typically it's two to three years before you would get to a hearing or a trial. And let me give you an example that I know about. There was a toy maker that first brought a trade secret misappropriation case in federal district court to stop a foreign company from importing and selling toys made with trade secrets stolen outside the United States. The district court denied the toy makers request for a preliminary injunction as did the appellate court. In fact, the district court dismissed the case because it found courts in the country where the misappropriation occurred would be the better forum to hear the trade secret misappropriation case. At the ITC the toy maker not only named the foreign toy manufacturer in the complaint but the importer and the retailer in the US. Now once that complaint was filed at the ITC, the retailer quickly settled out and the importer and the foreign toy maker settled quickly after that. Now this example did not go the full 16 months to a final decision by the ITC, but the ITC offered a way to get a quick reaction from the accused infringers that the General Counsel for the toy maker was looking for. And if you wanna look into this example, you can look up the Certain Robotic Toys ITC investigation and that was number 869. So let's talk now about the requirements for an ITC complaint. In my practice, we spend significant time educating clients who are unfamiliar with the ITC and we work with them to prepare an ITC complaint. We take this time to work with clients because the ITCs complaint requirements differ greatly from district court practice. As we discussed earlier, to convince the ITC that there is a violation of section 337, an IP owner must prove four elements: importation of a product by the Respondents, which would be called the defendants in district court practice, infringement or some other unfair act or unfair method of competition has to be proven, also that there is a domestic industry and that any remedy would not harm the public interest. The ITCs rules require that the IP owner provide detailed pleadings for all of these categories. And in your course materials you should find the complaint for investigation 1325. If you look at the table of contents for that complaint, you will see these elements right in the headings. For example, the importation requirement is Roman numeral five, the unlawful acts, which in this example is infringement, is Roman numeral six. And then the domestic industry is discussed starting at Roman numeral nine, and then the requested remedies are at Roman numeral 11. Now the ITC requires a separate submission with the complaint that addresses the public interest factor. So there's a whole separate five page paper that's submitted with the complaint that addresses those right at the beginning of the investigation. Now we could spend more than the hour we have today discussing the detailed requirements for filing an ITC complaint, but this overview today should give you a good idea of what to expect when preparing an ITC complaint. However, I strongly advise working with experienced ITC council to prepare an ITC complaint or to respond to a complaint if one is filed against you. And as a final point here, let me direct you to the ITC's rule that lists the specific requirements for an ITC complaint. Those requirements are listed in 19 C.F.R. part 210.12. Let's turn now to the importation requirement and we can discuss some of the filing requirements related to that issue. The ITC is a trade forum first and a forum for resolving IP disputes second. This means that the IP owner must prove that the accused products are imported into the United States to show a violation of section 337. This is unlike district court practice where importation is not a requirement. In an ITC complaint, the patent owner should include evidence of importation of the accused product. And it could be a copyright case or it could be a trademark case or a trade secret misappropriation case but either way, in any of those examples, you have to have satisfied the importation requirement. So what does that mean in practice? Well, if you look in your course materials again at the complaint for investigation 1325, you can see an example. If you turn to page 13, this section outlines the evidence the patent owner has on importation in this complaint. And in practice, many products include a quote, "made in some country" end quote, on the product itself, on the products packaging and or on the products manual. And if you look on page 15 of the complaint from investigation 1325, you can see pictures showing these types of labels and that's shown here on the next slide. You can see there's two pictures here on this page. And in both pictures there is a rectangular red box that was put around the text that says in the top, made in China. And on the bottom it says, Assembled in China. So this is part of the evidence that was submitted with the complaint in the 1325 investigation as evidence that a particular product was imported into the United States. Now some products purchased online are shipped directly from foreign countries to consumers in the United States. The shipping documentation can support an importation allegation in an ITC complaint, so you might wanna look for that kind of paperwork. In addition, you can often obtain documentation from the US Customs Service or third party services that will obtain it from the Customs Service for you that lists the product, the importer, and the destination in the United States. Any of these examples I've given you, product packaging, shipping materials or documentation from custom service, those alone or in combination can support the detailed importation evidence necessary to file with an ITC complaint. In practice, once the complaint is filed and the accused infringers show up, they will often stipulate to importation because they do not contest that their products were imported into the United States. And it's not worth litigating that issue when, for example, the product packaging says directly that it was manufactured or made outside the United States. So let's now turn to the other unique requirement, the domestic industry requirement. And because again, the ITC is a trade forum, the domestic industry requirement operates to prevent IP owners that do not have a domestic industry in the United States from using the ITC as an alternative to district court practice. For statutory IP, that's patents, copyrights, and trademarks, the domestic industry requirement has two prongs, the technical prong and the economic prong. And let's start with the technical prong first. That's part of what the patent owner or copyright owner or trademark owner would have to prove in order to convince the ITC that there is a violation of section 337. And what the Commission and Federal Circuit precedent make clear is that an IP rights owner can satisfy the technical prong by practicing or infringing their own intellectual property. And in fact, we've got a quote here from Crocs, Inc versus International Trade Commission, which was a federal circuit decision in 2010 that says quote, "the test for the technical prong of the industry requirement is essentially the same as that for infringement i.e., a comparison of domestic products to the asserted claims." End quote. What this means in practice again is that the IP right's owner must just prove that they infringe their own patent. The claims that the patent owner infringes, however, do not have to match the claims asserted against the accused infringer, but they must be from the same patent. Now if there are multiple patents asserted, which is not uncommon at the ITC, when there are multiple patents asserted, the IP owner must show it practices or infringes at least one claim from each of the asserted patents. What I would add here is that an ITC complainant can rely on the activities of a licensee to satisfy the technical and or the economic prong. So if there is a licensee that is making a product in the United States or has invested in, we'll get into the economic prong here in minute, has economic activities in the United States, the the patent owner or the IP rights holder can rely on those activities of the licensee to prove that there is an investment in domestic industry in the United States. If you look at the complaint again from the example in your materials, the investigation 1325 complaint, you can see how the IP owner in that example pled the technical prong in paragraph 109. There's a nice subheading that says technical prong. And then there's an example there of where they're pointing to some confidential material that would detail how their products are practicing the asserted patents. So let's turn now to the economic prong and talk about that in a little bit more detail. If we look back at the statute 19 USC, Section 1337 , an IP rights owner can establish a domestic industry through, this is the first one, significant investment in plant and equipment. The second one is, significant investment in labor or capital or substantial investment in the exploitation of the IP through licensing, research and development or engineering. We will discuss each of these categories in a moment, but there are three high level points we should discuss first. To successfully have a domestic industry, an IP rights owner need only prove one of the three because the statute says or so it's A or B or C. To be clear, an IP rights owner does not have to prove all three categories of investments. In practice, most IP rights owners attempt to prove all three. For example, if you look back at the complaint in your course materials from the 1325 investigation on page 46, starting in paragraph 110, the patent owner asserts it has investments in all three categories or sometimes we refer to them as prongs. So prong A is plants and equipment, prong B is labor and capital. And then prong C would be engineering, research and development and licensing. So that leads to the second high level point we should address, is that investments can fall into more than one category. And let me give you an example. If a company is paying salaries to employees who do research and development, you could put that into as an investment under the labor prong. But you could also put it as an investment under research and development, which was prong C. Now this is not double counting towards the economic prong because again, each prong or each category is evaluated individually. In other words, plant and equipment is evaluated for significance without looking at the other prongs. And the same holds true for the other prongs. You would look at them in isolation, you wouldn't look at them in total. And that brings us to the third point which I identified at the beginning of this section, which is that the statute does not define the terms significant or substantial. The ITC examines the domestic industry economic prong on a case by case basis because those terms are not defined. This means that there is no minimum amount of investment necessary to prove the economic prong. What this means is that the investment, a company like Apple or Microsoft might need to show maybe much larger than the investments a small startup company might have to present to the ITC because what is significant and what is substantial depends on the context. Now in practice, this means that the accused infringers will challenge whether the IP owner has a domestic industry cuz the context varies from each investigation to the next. So let's look at each of these categories of the economic prong in more detail now starting with plant and equipment, which is prong A. Investments in plant and equipment typically include investments in physical space. And this is often broken down into dollars per square foot, per square feet, used for activities related to products that use the patented invention. And the easiest way to satisfy the economic prong is where the IP owner manufactures products that practice the intellectual property right here in the United States. In that example, the IP rights owner would identify the amount of manufacturing square footage devoted to making the products that practice the IP or that are related to the IP and then would calculate an amount of money spent to own or lease that particular space. If the product is not manufactured in the United States, an IP rights owner might include the square footage devoted to research and development in the US under the plant prong. Often patent owners keep this detailed financial information confidential. If you look back at the sample complaint in your course materials at paragraphs 110 to 114, you can see that the public version, which is what we're looking at, has much of the confidential information redacted out. That confidential information is only available to people that participate in the investigation and have subscribed to the protective order that is in place in that investigation. The next prong or category is labor or capital, and that's also relatively straightforward. Investment in salaries and benefits for employees engaged in activities related to products that practice the IP rights are the most common of expenses identified for labor. Be careful, however, to include only those employees that actually do work related to the products that practice the IP at issue. If as the complainant you include other employees who don't do any work related to the product, the respondents will likely identify this issue to cast out on the IP orders, other investments as well. In other words, the respondents will argue that by including employees that don't do work on products practicing the intellectual property that the IP owner is inflating its investments with investments not related to the intellectual property at issue. Investments in capital, which is the other part of this prong B, are typically investments in domestic real estate such as offices or manufacturing facilities. And by domestic, I mean the United States. Let's turn now to the final prong of the domestic industry requirement. Substantial investment in the exploitation of IP through licensing, research and development or engineering. And you will notice from a close reading of the statute that the words changed here in at least two significant ways. First, this clause uses the word substantial instead of significant. However, like significant, the statute does not define substantial. So again, the ITC looks at any investment here on a case by case basis. Second, the phrase quote, "in its exploitation" end quote, is not found in the first two prongs. According to the Federal Circuit and ITC precedent, this phrase means that the investments in licensing, research and development and engineering must be related to the patent claims of the IP at issue. This is considered more strict than the requirements for prongs A and B, which only have to be investments in products that practice the patent. And we could spend more than the hour we have today talking just about prong C, if not the entire economic prong. It tends to be a hotly contested issue. But I think for today's purposes, we've covered most of it today. Now we've finished up with the domestic industry requirement for statutory IP. Let's turn briefly to trade secret investigations or investigations based on other unfair acts or unfair methods of competition. And the the requirements are slightly different. If we go back and look at the statute again, we can see the specific requirements for these types of investigations found in 19 USC Section 1337 . And what it says there is that there's a violation if the ITC finds unfair methods of competition and unfair acts in the importation of articles other than the statutory IP into the United States or in the sale of such articles by the owner importer or cosignee, the threat or effect of which is, to destroy or substantially injure an industry in the United States, to prevent the establishment of such an industry or to restrain or monopolize trade and commerce in the United States. Here, not only does the trade secret owner have to show a domestic industry, but also that there is an injury to that domestic industry or the threat of injury. For example, in your course materials is the complaint for ITC investigation number 1313. If you look at page 14 of that complaint starting in paragraph 47, you have a description of the IP rights holder's trade secrets for a particular strain of C botulinum, also kind of known as Botox I believe. And if you look further in that complaint to page 18, paragraph 59, that paragraph contains the beginning of the trade secret misappropriation allegations. And then further in the complaint, the alleged injury to the domestic industry is detailed, starting in paragraph 168 on page 44. Some examples of an injury might be lost sales, for example, because of the products that were sold from the misappropriated trade secrets. Let's turn now to ITC remedies. As I mentioned at the beginning of the course today, there are no damages awarded for a violation of section 337. When an IP rights holder files a complaint at the ITC, they must specify in the complaint the type of remedy they seek. Those remedies include a limited exclusion order that is the most common type of remedy, a general exclusion order, which are much less common, and then cease and desist orders, which can be relatively frequent. Let's talk about each of these in turn now. An ITC limited exclusion order is directed to infringing goods imported by any named respondent found in violation of section 337. Limited exclusion orders cannot target third parties unless that party was named in the complaint and was found in default for not participating in the ITC investigation. A general exclusion order, on the other hand, broadly targets the types of goods at issue in the ITC investigation, but it could be manufactured or imported by anyone. In other words, it could stop non-party products from entering the United States. This is a pretty harsh remedy, particularly if you did not participate in an ITC investigation. And so there are heightened requirements in order to get one of these. So if we look specifically at 19 USC Section 1337 , some of the elements you have to show is that a general exclusion order would prevent circumvention of an exclusion order limited to products of name respondents. It's a fancy way of saying that if you had just a limited exclusion order, products would still come in because people are going around it basically. Or there is a pattern of violation of this section and it is difficult to identify the source of infringing products. So those are the two ways that an IP rights holder would have to include additional evidence and additional argument to try to convince the commission to issue a general exclusion order. Now let's talk about cease and desist orders. An ITC cease and desist order typically prevents a respondent from selling existing inventory in the United States. It does allow the respondent to export that inventory outside the United States if there is an exclusion order put in place in a cease and desist order. Now, the cease and desist order is to prevent a respondent from importing products to stockpile inventory during an ITC investigation and then selling it after the ITC finds a violation. All of these remedies, whether it's general exclusion order, limited exclusion order, or a cease synthesis order, typically they end when the IP rights end. So for a patent, a limited exclusion order would be in effect for the life of the patent. In trade secret misappropriation cases trade secrets typically don't have, well they don't have a lifespan, but the ITC generally puts in place a 10 year exclusion order, although that can change depending on the facts of a particular investigation. So let's now talk about the public interest factors at the ITC. I mentioned those at the beginning. Before the ITC issues any remedy, ones we just talked about, the statute requires that they consider four public interest factors. And those factors are found right in the statute in 19 USC Section 1337 . The first one is the public health and welfare. Second is competitive conditions in the United States economy. The third is the production of like or directly competitive articles in the United States and the United States consumers. Now as I mentioned upfront, when you file an ITC complaint, the IP rights owner has to file a public interest statement at that time and the commission determines whether to delegate fact finding on the public interest to the Administrative Law Judge. That is not typically done, but if there is a persuasive argument presented typically by the public or by a proposed respondent in response to the complaint being filed, the ITC may issue an order that requires the judge to collect those facts during the regular evidentiary part of an ITC investigation. In normal course, the ITC does not have the judges collect facts on the public interest, but the parties and the public can provide commentary on the public interest factors when the commission reviews the judge's decision and is considering what remedy to issue. Now in practice the ITC does not find that these factors weigh against issuing a remedy. In the past 50 years, less than 10 remedies have been modified or canceled because of public interest factors. In fact, the ITC completely canceled a remedy in only three investigations and the last one was in 1984. And those three examples are quite unique to their political environment and the economic environment at the time. Some of the reasons you might argue that the public interest factors weigh against a remedy. You know, looking back at those factors, things like public health, you know, if there's medical equipment that's necessary and supply cannot be met by the patent owner, then there might be a persuasive argument you could present. And in fact, that's one of the three examples that happened where the patent related to a medical bed for burn victims that I believe it alleviated their suffering by the way it was constructed and they could not meet demand in the United States. And the ITC ultimately concluded that despite the patents that issued and were valid for those burn beds, the ITC decided that it would allow infringement to continue because the demand for these important medical devices was not satisfied by the patent owner. Now if you want a more recent example where the public interest factors mattered, please review the commission's decision in Investigation 1159, which was the Certain Lithium Ion Batteries. In that investigation, the ITC tailored the remedy to allow third party manufacturers Ford and Volkswagen time to transition away from the infringing batteries to a new supplier. So again, the public interest factors only come into play when there is a violation found. And so in this example from investigation 1159, the commission concluded that the batteries were infringing, but rather than cutoff supply to Ford and Volkswagen who were making vehicles in the United States with these batteries, the commission modified the normal exclusion order to basically put in a window of time for those two manufacturers to transition away from the infringing supplier batteries to some new supplier. Again, you know, these batteries probably were argued to be, you know, better for the environment rather than having internal combustion engines in the automobiles. The manufacturers argued that they were transitioning to electric vehicles and these batteries were a critical component to that. And so that argument helped persuade the commission to modify the remedy slightly. Ultimately, the exclusion order would've gone into place, but it would've just been a sort of a delayed start to that exclusion order. So let's now talk about what happens after the commission issues, a final decision. And we're also gonna talk about some other ITC proceedings that relate to section 337 investigations. So the first is that at the end of an ITC investigation, the ITC either issues an exclusion order because it found a violation of section 337 or if it not issue an exclusion order cuz it did not find a violation. That those are basically the two options at the end. Now it goes without saying that the parties can reach a settlement to also end an ITC investigation. But if there's no settlement and you get to this sort of go or no go decision by the commission at the end, either losing party can appeal the decision to the US Court of Appeals for the Federal Circuit. So if the IP rights owner loses and no exclusion order issues, the IP rights owner can immediately appeal the commission's decision. On the other hand, if an exclusion order does issue, then any respondent that wants to appeal must wait 60 days for the Presidential review period before appealing to the Federal Circuit. And I mentioned this, we would get into the President and the US Trade Representative a little earlier in the course today when we were looking at that block chart of all the parties involved. So during this 60 day review period, the US Trade Representative as the representative for the President in this process will review the exclusion order and in theory, the President can effectively cancel the ITC exclusion order for policy reasons. And this is right in the statute for 19 USC, Section 337 1337. It's right there, President can basically void an exclusion order for policy reasons and that has happened, but again, it's extremely rare. After the review period ends, usually no action at all happens during that review period. Then the respondent that wants to appeal can appeal to the Federal Circuit. Now during that 60 days, we mentioned bond at one point during the course today, the commission does determine a bond amount that the respondent can pay during the the review period. And at that point, if the respondent posts the bond, they can continue to import the product during the Presidential review period. Now the other proceedings that I wanted to make you aware of are after an initial investigation occurs, and there are three of them, the highlight modification proceedings is where one party seeks to modify an exclusion order. There might be some sort of change in circumstances that requires one party or makes one party want to approach the commission to modify an exclusion order. Advisory proceedings are where a respondent seeks an opinion regarding a redesign. That's the most typical example. So if their old product was found to infringe and was excluded and now they have a new design that they believe doesn't infringe before importing that product and potentially violating the older exclusion order, they would seek an advisory opinion from the commission. And then we have enforcement proceedings and that's where the IP rights owner goes back to the commission and says that the respondents are violating the ITC exclusion order and the the commission would then look into whether or not those allegations are true. I didn't put it here on the slide, but there are civil penalties that can occur if you violate an ITC exclusion order and they are quite stiff. So it is not in your interest to violate an ITC exclusion order. Now these proceedings are obviously a lot more to them, more detailed to them, but it's beyond the scope of the course today. Possibly we'll get a course together in the future to explain these different proceedings and when you might use them. So check back with Quimbee in the near future. So with that, I'd like to try to wrap up the course for today. I hope you enjoyed a broad overview of ITC investigations that we went over today. I hope you now have a better understanding of the unique requirements for pursuing an ITC investigation requirements that you do not have when you pursue IP litigation in district court. Should you have any further questions, feel free to reach out to me through Quimbee or at my law firm, Mei and Mark. Thanks for your time today and for your interest in this course.

Presenter(s)

PAR
P. Andrew Riley
Head of Litigation
Mei & Mark

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