Friend or Foe: Section 337 IP Infringement
Investigations at the United States
International Trade Commission.
Steven E. Adkins
“A Section 337 investigation is not mere litigation
among private parties.”
– Order No. 10, Certain Gel-Filled Wrist
Rests and Products Containing Same, Inv.
No. 337-TA-456
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Overview
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Section 337
The Regulatory Framework
The Parties
The Process
Remedies
Enforcing ITC Orders
Statistics, Unique Characteristics & Tips for Practice
Before the ITC
• Strategic Considerations
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Section 337
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Section 337
Products Excluded from U.S. if ITC finds that:
1. There is a U.S. industry using valid IP right, and
2. Product is imported/to be imported into U.S., and
3. Goods infringe valid U.S. IP right.
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The Regulatory Framework
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The Regulatory Framework
The ITC
• Administrative agency
• Office of Unfair Import Investigations
• Four administrative law judges
• General Counsel’s Office
• Six Commissioners
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The Regulatory Framework
Investigation Requirements
• Importation
• Sale for importation
• Sale after importation
• Domestic industry
• Economic prong
• Technical prong
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The Regulatory Framework
Section 337 - Bases
1. Infringement of Statutory Intellectual Property
Rights
– Patents (over 90% of Section 337 cases)
– Trademarks, Copyrights, Mask works
2. Other Unfair Methods of Competition or Acts
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The Parties
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The Parties
Who Can File a Complaint?
• Owner or exclusive licensee of U.S. IP rights
• U.S. presence not required, but IP rights must be
used in U.S.
• Certain production in U.S.
• IP licensing business in U.S.
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The Parties
Who Can Be Sued?
• Manufacturers of products sold to be imported into U.S.
• Sales using foreign distributors
• Manufacturer need not know of importation
• Importers of products into U.S.
• U.S. distributors/retailers of imported products
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The Parties
Office of Unfair Import
Investigations
• ITC Investigative Staff Attorneys
– Before Filing a Complaint: Available to discuss
prospective complaints
– Upon Filing the Complaint: Advise
Commission on sufficiency of complaint
– Upon Institution of an Investigation:
Participates as an independent party to
represent public interest
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The Parties
Non U.S. Complainants
• Europe
• SGS-Thomson, SRAMs (No. 341)
• Siemens, Sortation Systems (No. 460)
• Philips, Recordable CDs (No. 474)
• OSRAM GmBH, Light-emitting Diodes (No. 512)
• Unilin, Laminated Flooring Panels (No. 545)
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The Parties
Non U.S. Complainants
• Japan
• Ricoh, Facsimile Machines (No. 367)
• Kubota,Tractors (No. 380)
• Fujistsu, Integrated Circuits (No. 402)
• Fuji, Lens-Fitted Film Packages (No. 406)
• Sumitomo, Magnets (No. 413)
• Funai, VCRs (No. 464)
• Rohm, LEDs (No. 444)
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The Parties
Non U.S. Complainants
• Korea
• Samsung, SDRAMs (No. 404)
• Hong Kong
• Tal Apparel Limited, Pucker-free Shirts (No. 517)
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The Parties
Non U.S. Complainants
• Taiwan
• UMC, Integrated Circuits (No. 450)
• Mosel Vitelic, Memory Devices (No. 470)
• MediaTek, Optical Disks (No. 523)
• TSMC, Semiconductors (No. 525)
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The Process
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The Process
• Part 1: Complaint filed
• 30 days later: Investigation Starts
– Detailed Response to Complaint Filed
• Part 2: Fact Discovery
• (4-5 months)
– Produce documents
– Produce witnesses
– Obtain documents
– Examine witnesses
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The Process
• Part 3: Experts
• 5-7 Months After Service of Complaint (1 month)
– Produce expert reports
– Produce expert for deposition
• Part 4: Trial
• 6-9 Months After Service of Complaint (1-2
weeks)
– Witnesses examined
– Experts examined
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The Process
• Part 5: Post-Trial Submissions
• (1 month)
– Submit Briefs Addressing Issues Raised
– Legal Arguments
– Evidence
– Submit Proposed Findings of Fact
– Submit Proposed Conclusions of Law
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The Process
• Part 6: Judge’s Initial Determination
• Approximately 45 Days from hearing conclusion
(usually 3 months before decision by ITC)
• Typically 125-400 pages
– Detailed legal analysis
– Findings of Fact
– Conclusions of Law
• Recommended determination on remedy & bond
(if violation found)
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The Process
• Part 7: Petitions to ITC To Review Judge’s ID
• Within 10 days from ID
– Losing party petitions
– Winning party may petition
• Part 8: ITC Decision to Review
• Within 45 days from ID
– ITC affirms decision/asks for briefs
regarding remedy and bond during
Presidential Review Period
– ITC reviews Judge’s ID and Enters
Final Determination
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The Process
• Part 9: Presidential Review Period
• 60 Days After Determination by ITC
– President (U.S. Trade Representative)
Considers Impact of Remedy
– Can Deny Remedy
– Very Rarely Does
– Public interest considered
– ITC Determination Becomes Final if No
Action or Early Approval by President
– Respondent/importer can post bond to
keep importing
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The Process
• Part 10: Appeal to Federal Circuit
• Notice of Appeal Due 60 Days After Final
Determination
– No Violation--60-day period starts
– Violation-60-day period starts after
Presidential Review period
– Mixed violation and no violation--different
appeal periods
• ITC becomes party to appeal
• Winner at ITC intervenes in appeal
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Remedies
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Remedies
• Exclusion Orders
• Limited:
– bar imports from an identified source
– most common
• General:
– bar all imports from any source
– maker need not be a respondent in investigation
– less common--only available if source of
goods difficult to identify or if necessary
to give effective remedy
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Remedies
• Cease and Desist Orders
• Bar entity from engaging in infringing activity
related to imported article within U.S.
(inventory)
• Penalty for violation of up to $100,000 per day
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Enforcement of ITC Orders
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Enforcement
Customs
• Meet with Customs informally to discuss scope
of Exclusion Orders
• Prepare submission to IPR Branch of Customs
• Provide industry intelligence to Customs
• Who is importing
• Which ports
• Meet with Customs Port Directors and Import
Specialists to explain Exclusion Order and assist
in tracking imports
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Statistics, Unique Characteristics &
Tips
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Statistics
• At least 90% based on patent infringement
• Approximately 50% involve electronics devices
(including semiconductor chips)
• Approximately 40% of cases settle
• 40-45% of all investigations are tried before ALJ
• Of the cases tried before the ALJ,
patentee/complainant wins approximately 45%
• Approximately 40% involve China/Taiwan-based
respondents
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Unique Characteristics
• Speed
• The statute directs the ITC to conclude each
investigation “at the earliest practicable time.”
• The ITC strives for 12-to-15 month target dates to
resolve each investigation.
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Unique Characteristics
• Jurisdiction – nationwide
• In rem--- jurisdiction over products, no matter
where made, to bar infringing products
• Nationwide jurisdiction in discovery and for
trial purposes
• No venue fights
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Unique Characteristics
• Broad discovery
• No limits on depositions
• Few limits on interrogatories
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Unique Characteristics
• Effective Protective Orders
• High degree of protection for
confidential information
• Strictly enforced; significant penalties
for violations
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Unique Characteristics
• Experienced, Specialized Judges
– Judge Harris
– Appointed in 1984
– Former antitrust litigator
– Presided over more than 100 Section 337 investigations
– Judge Luckern
– Appointed in 1984
– Former patent examiner at U.S. Patent Office
– Former patent litigator
– Presided over more than 100 Section
337 investigations
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Unique Characteristics
• Experienced, Specialized Judges
• Judge Bullock
– Appointed in 2002
– Experienced administrative judge
– Presided over approximately
15 IP infringement cases
• Judge Barton
– Appointed in 2005
– Experienced administrative law judge
since 1988
– Presiding over several patent
infringement cases
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Unique Characteristics
Patent Claim Interpretations
• ITC determinations appealable directly to the
Federal Circuit Court of Appeals
• 56 cases decided on the merits (FY 1995 to
10/15/2004)
• 24 appeals to the Federal Circuit
– 16 affirmed in total
– 4 affirmed in major part
– 2 reversed in part
– 1 vacated in part
– 1 vacated and remanded
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Unique Characteristics
Fewer Defenses to Infringement
Safe harbor defenses to infringement of process patents by
offshore production "do not apply to infringement actions
before the International Trade Commission."
Kinik Co. v. Int'l Trade Comm'n, 362 F.3d 1359,
1361 (Fed. Cir. 2004).
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Tips
Experts
1. Find/retain before Complaint is filed
2. Eye-to-eye
3. Inform up front of time commitment
4. Retainer in writing
5. Working with the expert; no emails
6. Will methods survive gatekeeper?
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Tips
Ground Rules
1. Particular to the Administrative Law Judge
2. Read them
3. Study them
4. Know them
5. Use them
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Tips
ITC Staff
• ITC Investigative Staff Attorneys
– Before Filing a Complaint: Available to
discuss prospective complaints
– Upon Filing the Complaint: Advise
Commission on sufficiency of complaint
– Upon Institution of an Investigation:
Participates as an independent party to
represent public interest
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Tips
Discovery
1. Prepare before Complaint is filed
2. Serve immediately when investigation instituted
3. Set internal dates to move to compel
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Tips
Initiating an Investigation
• Due diligence
• Working with USITC Staff lawyers
• Prepare client files for discovery
• Prepare discovery requests to be served
• Prepare federal district court complaint
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Tips
Responding to an Investigation
• Assess cost of license versus cost of litigating
• Complainants always have head start
• Respondents must catch up immediately
• Begin preparing defense as soon as possible
• Focus on avoiding one part of each patent claim
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Tips
Responding to an Investigation
• Locate an expert
• Gather documents
• Locate witnesses
• Meet with ITC Investigative Staff Lawyers
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Tips
Responding to an Investigation
• Stay parallel district court action (or not)
• Consider design around options
• Prepare for remedy
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Strategic Considerations
Section 337 and Hong Kong
Company
• Hong Kong companies must consider Section 337 in
developing new products to be sold in the United
States
• Understand competitors and IP rights in the area
before new products developed
• Establish a U.S. patent portfolio to cover your
products and/or to exclude others
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Strategic Considerations
Section 337 and the Hong Kong
Company
• To use Section 337 offensively, Hong Kong
companies need to establish a U.S. industry:
• Manufacturing in U.S.
• Develop a licensing business in U.S.
• Activity in U.S. of licensee can be U.S. industry
under Section 337
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Strategic Considerations
Section 337 and the Hong Kong
Company
• Avoiding a Section 337 Investigation:
• Establish a patent portfolio to prevent ITC actions
• Obtain opinions from U.S. patent counsel before
developing new products or investing in new
products of others
• Maintain strict control over data sheets and
customer documents; screening by inside or
outside counsel to avoid incorrect statements
that support infringement finding
• Monitor ITC filings (new cases)
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– Section 337 resources website
http://www.usitc.gov/trade_remedy/int_pro
p/index.htm
– View public filings in other investigations
http://edis.usitc.gov/hvwebex
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Questions?
• For additional information, please contact:
Steven E. Adkins
Jones Day
51 Louisiana Avenue, NW
Washington, D.C. 20001
202.879.3432
seadkins@jonesday.com
www.jonesday.com
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