The ITC's 337 Action

The International Trade Commission (ITC) is a governmental agency based in Washington, DC which enforces acts of unfair competition, including patent, trademark, or copyright infringement; trade secret misappropriation; or antitrust pursuant to Section 337(a) of the Tariff Act of 1930 (19 U.S.C. §1337(a)). Often, the investigation is referred to as a “337 action.” The ITC is concerned with protecting a complainant's domestic industry in the US. This domestic industry relates to the monetary expenditure by the complainant related to the products it sells and can consist of numerous factors including, employee salaries, research and development costs, warehouse space, training and troubleshooting, distribution channels, litigation costs, etc. However, it is important to note that the expenditures must be tied to the specific patents (or other statutory IP) identified in the complaint in order to support the domestic industry requirement. The complainant must also show that it practices the patent (or other statutory IP) that it is asserting against the respondent(s).

So why is the ITC so popular, and what is unique about it that patent owners should be aware of?

Speed and Patent Savvy

A 337 action is also ordinarily a significantly quicker process than the traditional district court route, in many cases almost 50% faster. A typical 337 action averages between 14-17 months from initiation to a final determination from the ITC. Further, the ITC tends to be a patent (and IP) savvy venue with no jury, allowing for directed legal and expert arguments. The Administrative Law Judges (ALJs) see numerous patent cases each year and are comfortable with technical matters. Further, a 337 action enjoys the ability of appeal to the United States Court of Appeals for the Federal Circuit, the overall patent appeals court. The ITC action does not deal with damages or willful infringement, thus streamlining the issues to be tried.

Remedy

Another reason that patent owners choose the ITC is due to the remedy available - the exclusion order. The exclusion order, if it issues after a finding of a violation, stops the accused products from entering the country at the borders. Additionally, US Customs agents have the ability to seize the products before entry should the exclusion order be violated. Complainants can also obtain cease and desist orders against any inventory that has already been imported into the US, with fines approaching $100,000/day or 2x the value of the articles/day (whichever is greater) if the articles are not destroyed.

In Rem Jurisdiction

Another attractive feature of the ITC is that there is in rem jurisdiction at the ITC, thus respondents do not necessarily need to be known, so long as the accused products are identified. This is particularly helpful when the market is being flooded with numerous infringing products, and also in obtaining a general exclusion order, which prohibits importation of accused articles, regardless as to whether the importers are named respondents. Further, given the difficulty of joining numerous defendants into one case in District Court after the passage of the America Invents Act, the ITC permits respondents who are importers of similar accused articles to be joined in one investigation.

Leverage for District Court

In the majority of 337 actions, a complainant may also file a companion district court action. The respondents have a statutory right to stay the District Court action and proceed at the ITC, which occurs in nearly all cases. The district court action allows the complainant to maintain its leverage for damages purposes and also provides notice in indirect infringement actions, and is often the catalyst for a global settlement. 

Participation by the Office of Unfair Import Investigations (OUII)

A unique feature of the ITC is the participation of the government's attorneys who are seeking to "protect the public interest." Prior to a complaint being filed, the OUII attorneys are consulted and lobbied to obtain their support in having the ITC institute the case, i.e., the OUII attorneys will support the patent holder's request to have the investigation proceed. After institution, an OUII attorney may be assigned to actively participate in the investigation. Similar to the pre-institution phase of the case, the OUII attorneys can be consulted and lobbied during the case itself and can prove to be a strong ally. Further, the OUII attorneys have shown that they are often proficient in resolving discovery disputes between the parties without the need of the ALJ, thus keeping the case on track and reducing unnecessary motion practice and the expenses associated therewith.

Non-Practicing Entities (NPE)

Recently there have been more NPEs appearing at the ITC. At first glance, many observers were surprised to see these parties filing investigations as they seemingly had no domestic industry to protect. However, the ITC allows parties to show domestic industry that is based on the licensing of the patents being asserted. This has allowed NPEs to maintain their domestic industry based on research and development to create the invention and licensing of the specific patents related to that invention. The NPEs then rely further on the licensee's practice of the patents to support the domestic industry requirement. 

Dentons Activity in the ITC

Dentons’ ITC practice, based in Washington, DC, but drawing from members located across the Firm has been consistently active in the ITC for nearly 25 years, participating in approximately 40 investigations. We assist parties on both sides of the investigation, whether it be complainants who are enforcing their IP rights, or respondents who are accused of unfair trade practices. When working with respondents we actively counsel and assist the client with redesigns that will escape infringement so that the clients supply chain will not be disrupted.