Stopped at the border


Investigations at the US International Trade Commission are quickly gaining momentum. Barney Dixon reports

Back in February, Morrison Foerster noted a surge in new US International Trade Commission (USITC) investigations in 2016, with 54 new investigations instituted, marking the highest peak since its all-time high of 69 in 2011.

Last year significantly surpassed the 2012 to 2015 average of 39 investigations per year, suggesting a general upswing in the amount of new filings to follow the trough of the last few years.

Now, with the first six months of 2017 out of the way and a number of new USITC investigations already instituted, there is the possibility for an even greater uptick in cases.

New partner at Morrison Foerster, Stefani Shanberg, is an expert in USITC investigations and, last year, become the first West Coast president of the ITC Trial Lawyers Association. At Morrison Foerster, Shanberg joined a close-knit team of six-attorneys, all with extensive experience at taking matters to trial at the USITC.

As to the USITC’s increasing relevance in patent enforcement in the US, Shanberg says that “many factors” go into deciding whether to file an investigation at the commission.

“The USITC is an attractive forum for patent holders because it provides a powerful remedy in the form of a customs exclusion order and cease and desist orders,” she says.

“It is also a forum where cases progress quickly, will never be transferred, and are very unlikely to be stayed. Each of these factors contributes to the recent uptick in filings when considered in contrast to trends in the district courts.”

Of course, district courts were the subject of a significant Supreme Court ruling recently that threatens to change enforcement strategies. TC Heartland v Kraft Foods saw the Supreme Court limit patent owners to filing litigation in their states of incorporation. This will effectively remove the ability for many patent owners to choose the US District Court for the Eastern District of Texas for patent enforcement, a favourite of many litigators.

Nearly half of the 5,819 patent infringement actions seen in 2015 were filed in the Eastern District of Texas, including 95 percent of the 2,541 cases filed by non-practicing entities. Detractors have accused the judges of ‘forum selling’ and of deliberately adopting procedural rules that attract patent plaintiffs. They argue that early discovery deadlines and drawn out transfer decisions don’t allow the accused infringers to avoid discovery costs, allowing patent owners to force favourable settlements from defendants who want to avoid litigation costs.

Comparatively, 67 percent of patents adjudicated at the USITC were found to be infringed, and investigations lend themselves to a 100 percent violation in cases where an administrative law judge’s decisions were considered.

Could the USITC become a more attractive venue for patent owners as a result of TC Heartland? Given that the USITC cannot award monetary relief to either party, district courts will continue to feature in enforcement strategies, but the commission is working on making its investigations even faster in a bid to enhance the venue for patent owners.

Respondents are now able to request designation of an investigation for the USITC’s 100-Day Program, which is intended to resolve certain cases of dispositive issues early-on. Shanberg says this has been “successfully used to challenge issues including patent eligibility under Section 101 and the economic domestic industry”.

The commission has also begun delegating public interest issues in select investigations to administrative law judges for the “development of an evidentiary record”, according to Shanberg.

“Put simply, the USITC should only be an attractive option for a patent owner which believes it has a strong case. I do believe we will continue to see parallel district court and USITC proceedings, as they each afford unique relief.”

Shanberg says respondents in USITC investigations should use these rules to their advantage and identify public interest issues and submit comments requesting delegation quickly.

“Respondents should also carefully consider whether there are issues appropriate for the 100-Day Program, and they should think creatively about this, as the commission has indicated that it is amenable to use of the programme for any issue that could dispose of an entire investigation.”

She adds: “As for cases with parallel district court proceedings, respondents typically exercise their right to stay congruous with district court proceedings. But there is occasionally a strategic reason to proceed (for example, to resolve a key issue of claim construction earlier than it may be resolved in the USITC).”

Patent owners and defendants alike will have to adapt their strategies under the threat of USITC investigations. With import blocks as an alternative to injunctions and damages, patent owners will continue to avail themselves of the unique rewards that a successful case at the USITC will reap. IPProBack in February, Morrison Foerster noted a surge in new US International Trade Commission (USITC) investigations in 2016, with 54 new investigations instituted, marking the highest peak since its all-time high of 69 in 2011.

Last year significantly surpassed the 2012 to 2015 average of 39 investigations per year, suggesting a general upswing in the amount of new filings to follow the trough of the last few years.

Now, with the first six months of 2017 out of the way and a number of new USITC investigations already instituted, there is the possibility for an even greater uptick in cases.

New partner at Morrison Foerster, Stefani Shanberg, is an expert in USITC investigations and, last year, become the first West Coast president of the ITC Trial Lawyers Association. At Morrison Foerster, Shanberg joined a close-knit team of six-attorneys, all with extensive experience at taking matters to trial at the USITC.

As to the USITC’s increasing relevance in patent enforcement in the US, Shanberg says that “many factors” go into deciding whether to file an investigation at the commission.

“The USITC is an attractive forum for patent holders because it provides a powerful remedy in the form of a customs exclusion order and cease and desist orders,” she says.

“It is also a forum where cases progress quickly, will never be transferred, and are very unlikely to be stayed. Each of these factors contributes to the recent uptick in filings when considered in contrast to trends in the district courts.”

Of course, district courts were the subject of a significant Supreme Court ruling recently that threatens to change enforcement strategies. TC Heartland v Kraft Foods saw the Supreme Court limit patent owners to filing litigation in their states of incorporation. This will effectively remove the ability for many patent owners to choose the US District Court for the Eastern District of Texas for patent enforcement, a favourite of many litigators.

Nearly half of the 5,819 patent infringement actions seen in 2015 were filed in the Eastern District of Texas, including 95 percent of the 2,541 cases filed by non-practicing entities. Detractors have accused the judges of ‘forum selling’ and of deliberately adopting procedural rules that attract patent plaintiffs. They argue that early discovery deadlines and drawn out transfer decisions don’t allow the accused infringers to avoid discovery costs, allowing patent owners to force favourable settlements from defendants who want to avoid litigation costs.

Comparatively, 67 percent of patents adjudicated at the USITC were found to be infringed, and investigations lend themselves to a 100 percent violation in cases where an administrative law judge’s decisions were considered.

Could the USITC become a more attractive venue for patent owners as a result of TC Heartland? Given that the USITC cannot award monetary relief to either party, district courts will continue to feature in enforcement strategies, but the commission is working on making its investigations even faster in a bid to enhance the venue for patent owners.

Respondents are now able to request designation of an investigation for the USITC’s 100-Day Program, which is intended to resolve certain cases of dispositive issues early-on. Shanberg says this has been “successfully used to challenge issues including patent eligibility under Section 101 and the economic domestic industry”.

The commission has also begun delegating public interest issues in select investigations to administrative law judges for the “development of an evidentiary record”, according to Shanberg.

“Put simply, the USITC should only be an attractive option for a patent owner which believes it has a strong case. I do believe we will continue to see parallel district court and USITC proceedings, as they each afford unique relief.”

Shanberg says respondents in USITC investigations should use these rules to their advantage and identify public interest issues and submit comments requesting delegation quickly.

“Respondents should also carefully consider whether there are issues appropriate for the 100-Day Program, and they should think creatively about this, as the commission has indicated that it is amenable to use of the programme for any issue that could dispose of an entire investigation.”

She adds: “As for cases with parallel district court proceedings, respondents typically exercise their right to stay congruous with district court proceedings. But there is occasionally a strategic reason to proceed (for example, to resolve a key issue of claim construction earlier than it may be resolved in the USITC).”

Patent owners and defendants alike will have to adapt their strategies under the threat of USITC investigations. With import blocks as an alternative to injunctions and damages, patent owners will continue to avail themselves of the unique rewards that a successful case at the USITC will reap.

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