The International Trade Commission ("ITC") is an increasingly popular forum for patent and trademark litigation, with a record number of 70 unfair competition cases filed in 2011 alone. There are currently 73 cases pending in the ITC, and the statutory vehicle for this growing litigation is 19 U.S.C. § 1337, which prohibits "unfair methods of competition and unfair acts in the importation of articles. . . in the United States." (U.S. ITC, FY 2011 Press Release: Highlights: USITC Sees Record Number of Intellectual Property Infringement Cases Filed at http://1.usa.gov/Jicc9z U.S. ITC, Pending 337 Investigations, at http://1.usa.gov/Jicc9z OpenView (both visited Feb. 28, 2012).
Given the forum's growing popularity, attorneys representing commercial clients should have a basic understanding of this forum, its procedural particularities and its advantages. For patent and trademark holders faced with unfair competition from abroad, it may be a desirable alternative to federal district court. On the other side, businesses who import their products may find themselves brought before the ITC in a section 337 case, and they may turn to their general commercial litigators for advice about litigating in this forum.
Basic Overview of the ITC
After a complaint is filed with the ITC, the Commission decides whether to institute an investigation. The notice of the investigation is published in the Federal Register, which starts the clock ticking for the named respondents to file their response. The case will be assigned to one of six Administrative Law Judges ("ALJ") who will set his procedural schedule for case milestones.
Each ALJ also has his own Ground Rules, which supplement the procedural regulations set forth in 19 C.F.R. § 210. These regulations are similar, although by no means identical, to the Federal Rules of Civil Procedure. The ALJ also will issue a standard protective order governing confidential information. Attorneys for parties entering an appearance in an ITC case must agree to abide by the protective order, and confidential business information designations are treated very seriously.
The ITC's jurisdiction is directed at the imported goods at issue in the case, and is, therefore, in rem rather than in personam. Limited remedies are available in the ITC. Its primary mechanism of enforcement is the issuance of exclusion orders, either general or specific in nature. A general exclusion order bars any infringing products from entry into the United States, regardless of its source. A limited exclusion order bars importation of infringing products by a named respondent to the investigation. Exclusion orders are enforced by the U.S. Customs & Border Patrol. The ITC also can issue cease and desist orders enjoining the distribution or sale of imported, infringing products already in U.S. warehouses of an infringing party. Cease and desist orders are enforced by the ITC.
After trial, the ALJ issues an Initial Determination, which is then presented to the Commission. If the Commission declines to rule on the Initial Determination, it becomes final. The Commission also can issue its own ruling or can remand the case for further consideration. Appeal from the Commission is directly to the Federal Circuit.
Litigation in the ITC is governed by ITC regulation and specific rules set forth by the ALJ. Because these regulations differ from the federal rules, they should be carefully reviewed. The ALJ's Ground Rules also can be very specific, and litigants should adhere closely to them. Beyond this different procedural framework, several other key differences from typical federal court IP cases are worth understanding at the outset.
- The Office of Unfair Import Investigations: The United States is a party to active ITC investigations, and its interests are represented by the Office of Unfair Import Investigations ("OUII"). Until mid-2011, each case brought before the ITC was automatically staffed with an OUII attorney. This is no longer true with new cases. Instead, the OUII staffs cases in which its specific expertise is required. Whether representing a complainant or a respondent in an ITC action, if your case is staffed with an OUII attorney, consider yourself lucky. The OUII brings a wealth of experience with the forum and can help you navigate its particularities.
- The Domestic Industry Requirement: To bring a case in the ITC, a complainant must demonstrate that "an industry in the United States, relating to the articles protected by the patent . . . exists or is in the process of being established." (19 U.S.C. § 1337(a)(2)). There are two prongs of the domestic industry requirement: the technical prong and the economic prong. (In the Matter of Certain Display Controllers and Products Containing Same, Inv. No. 337-TA-491/481, 2005 WL 996252, Commission Op. (Feb. 4, 2005)). To establish the technical prong (in a patent case), the complainant must demonstrate that at least one of its products practice the patent in suit. Id. To establish the economic prong, the complainant must show that it has made a significant investment in plant or equipment in the United States, a significant employment of U.S. labor or capital, or a substantial investment in exploitation of the patent, such as by engineering, research and development or licensing. (19 U.S.C. § 1337(a)(3)). The domestic industry requirement is in constant refinement as ALJs and the Commission issue new interpretative rulings that provide further guidance about the interplay of the factors and the level of proof necessary to show a domestic industry.
- Parallel Federal Court Proceedings: Where parallel proceedings exist before the ITC and a federal district court, a respondent in the ITC proceeding may seek a stay of the federal district court action until the determination of the ITC becomes final. (28 U.S.C. § 1659(a)). A stay under this statutory provision is mandatory. A final decision by the ITC may be persuasive authority to a federal district court; however, it is not binding. Thus, parties to parallel ITC and federal court litigation may potentially litigate the same intellectual property dispute twice. Practically, however, even if a federal court judge does not defer to the ITC's findings, the ITC proceeding likely will simplify or narrow the federal case. The parties already will have conducted relevant discovery, honed their positions, and filed expert reports.
Key Advantages of Litigating in the ITC
Should you counsel your client to file a complaint in the ITC rather than in federal court? There are a few commonly cited advantages to the ITC.
- Speed: For better or worse, your client will have an answer from the ITC in well under two years. Once a complaint is filed and an investigation initiated by the Commission, the ALJ will set a procedural schedule for the case. The typical target date for completion of the investigation is approximately 16-18 months. Last year, the average time from institution to a finding of violation or no violation was 13.7 months. (U.S. ITC, FY 2011 Press Release: Highlights: USITC Sees Record Number of Intellectual Property Infringement Cases Filed, at http://www.usitc.gov/press_room/documents/featured_news/337_timeframes_article.htm (visited Feb. 28, 2012)). Trial is typically scheduled within the same calendar year that the case is filed. The discovery period is usually around six months. By regulation, the time period for responding to discovery requests is 10 days, as is the time for answering most motions. (See, e.g., 19 C.F.R. §§ 210.15(c), 210.30(b)(2)).
- Experience: From the Commission members to the ALJs to the OUII staff, the ITC personnel have a wealth of experience with intellectual property matters. While the federal courts are certainly accustomed to intellectual property disputes, these legal challenges are the ITC's focus and specialty. For very complicated technology, complex patents, or multi-party disputes, this sophistication may be extremely beneficial. The ITC also offers free mediation sessions, staffed by experienced intellectual property mediators. If the parties choose to engage in mediation, dispute resolution also will be enhanced by the level of experience of the forum.
- Streamlining: The ITC has eliminated some of the inconveniences or uncertainties associated with litigation in the federal court system. For example, the ITC has nationwide service authority, facilitating service of subpoenas for testimony at depositions and trial. The evidence for trial is presented largely by written testimony submitted in advance, significantly streamlining the actual in-court hearing. The hearing itself is before an ALJ, eliminating the uncertainties associated with a jury trial. Especially for foreign litigants unaccustomed to U.S. trial procedure, this can be an advantage.
Practical Tips for Surviving an ITC Investigation
How should you advise a client considering an ITC complaint or finding itself brought before the ITC as a respondent? How should you prepare yourself? Below are some basic tips for surviving in this forum.
- Staff the case early, and stay organized. Depending on the amount of early discovery, an ITC case may begin deceptively slowly. Trust that it will speed up very soon. When it does, you will need an informed team staffed at all levels of experience. Assemble that team early and begin taking the organizational steps necessary to ensure that the team is communicating well and often.
- Make sure the client goes into ITC litigation with eyes wide open. It is not enough to simply tell the client that an ITC investigation will be finished in just over a year. For many clients, especially if your primary point of contact is a business person (rather than general counsel), this still will seem like a long time. Unless educated early, the client will not be able to anticipate and fully understand the rigors of litigation at this pace. Make sure you have the full commitment of all leadership who will be necessary for you to do your job. Make sure that any employees with relevant information are briefed about the tight deadlines for production of discovery. Give your client realistic estimates of costs. As the case gets moving, you will have some large bills, and you will thank yourself for preparing the client in advance.
- Take a proactive approach. A common pitfall for any busy litigator is to allow the procedural schedule to drive your case strategy, e.g., taking depositions the week before the discovery period ends, or thinking about summary judgment once the deadline begins approaching. This is simply not an option in the ITC. Treat the procedural schedule like it is sacrosanct, and try to stay several steps ahead of its deadlines. You also need to strategize early with your client about the desired result, keeping that in sharp focus as you tend to the details of litigation.
- Don't pay short shrift to the domestic industry requirement. Because the domestic industry is a threshold issue the complainant has to prove, it is a natural area for attack by respondents. As the complainant, make sure you support your complaint with robust evidence of your domestic industry and that you have gathered the supportive evidence on the front end. You will be asked to support your client's domestic industry in discovery, and early preparation will avoid scrambling for documentation on a tight timeframe. As a respondent, make sure you are asking for detailed support of the domestic industry. Look behind the company representative's statements to identify any potential vulnerabilities and weaknesses in documentation.
- Spend the time to find a strong expert. Expert witnesses are crucial to most intellectual property cases, and the ITC is no exception. However, Markman hearings are not automatic in the ITC, so you may find yourself making your expert arguments largely through reports and other paper filings. A strong expert will only make that process easier on you.
- Try to enjoy it. ITC investigations are rigorous and, at their busiest time, will take center stage in your life. But for intellectual property litigators, they can be a very rewarding and enriching career experience.
Eileen Hintz Rumfelt is an associate at Miller & Martin PLLC in the firm's Atlanta, Georgia, office. She focuses her practice on business litigation, including intellectual property litigation, and white collar crime. She is a member of the DRI Young laywers Steering Committee and currently serves as the Chair of the Young Lawyers Publication Subcommittee.