Over the past number of years, Section 337 proceedings have been on the rise. More than 70 proceedings were filed in 2011. Approximately 90% of ITC proceedings involve violations of Section 337 of the Tariff Act of 1930, for importation of infringing products into the United States. One goal of the Act of 1930 is to protect domestic industry from unfair trade practices, such as patent infringement, trademark infringement, and copyright infringement.
There are many advantages to ITC proceedings as opposed to federal litigation for the US domestic industry. First of all, the speed at which a party can obtain an injunction in ITC proceedings is much faster than in most federal courts. Additionally, a Temporary Exclusion Order may be available which provides an injunction stopping the potentially infringing activities, if granted. A Temporary Exclusion Order may be granted based on the same standards for obtaining a Preliminary Injunction in Federal District Court (i.e., irreparable harm, substantial likelihood of success on the merits, inter alia).
Further, not only can relief be granted more quickly, but the types of injunctive relief have advantages as well. The three types of remedies that are available include the following:
A Limited Exclusion Order will prevent only the named respondent from importing the infringing products into the United States;
A General Exclusion Order will prevent all imports by anyone of the infringing product, regardless of whether the party is named to the proceeding; and
A Cease and Desist Order will prevent all products from being sold in the United States, including already existing inventories.
The advantages of the above injunctive remedies over a Federal District Court injunction are that Complainants do not need to enforce the Order themselves. The ITC enforces the Cease and Desist Orders and the Customs and Border Protection enforces Limited and General Exclusion Orders. Thus, obtaining an Order from an Administrative Law Judge (ALJ) can mean more, in some cases, than a District Court Order that may be practically impossible to enforce.
Section 337 proceedings start with the filing of a Complaint. Within 30 days of the filing of the Complaint, the ITC will decide if they want to initiate an investigation. If an investigation is commenced, the case will be assigned to an ALJ and the ITC will serve the Complaint on the party or parties (Respondent(s)) to the action. Then the Respondent will have 20 days to file a response.
A Complaint must contain certain averments when submitted to the ITC so as to meet statutory requirements. A valid and enforceable patent must exist; the patent prosecution history must accompany the complaint; claim charts if practicable must be filed; evidence of at least one infringing product needs to be submitted; proof of a domestic industry that is practicing a claim protected by the subject patent must be shown; and sufficient evidence of a domestic industry must be shown through evidence of investment in labor, capital, plant and equipment expenditures, for example.
Many of the discovery rules parallel those of the Federal Rules of Civil Procedure, including FRCP 26 through 37 with regard to interrogatories, requests for production of documents, and requests for admissions. However, discovery is not limited in Section 337 cases as it is under the FRCP. For example, interrogatories are not limited before the ITC nor are the number of depositions, although an ALJ can always exercise his discretion in this regard.
Overall, Section 337 proceedings have many advantages over actions in federal court and they do not have the res judicata preclusive effect that an Order from a Federal Judge has. Appeals from Section 337 decisions from the Administrative Patent Judge are available to the ITC Commission and then can be appealed to the Court of Appeals for the Federal Circuit. The Final Determinations by the ITC can be used as evidence in a concurrent or subsequent District Court proceeding.
A disadvantage of the ITC proceeding over a Federal District Court infringement litigation is that no damages can be awarded by the ITC. A severe disadvantage for Respondents is that the Respondent would have but 20 days to respond to the ITC complaint. Hence, exporters of goods into the US should be well advised to have a service to monitor the filed ITC complaints so as to have sufficient time to react to the complaint.
Contact H&A Intellectual Property Law for representation in your matter or to inquire as to the benefits of a watching service to prevent surprise complaints being served upon an unsuspecting company.
Article by Jared D. Barsky