Life in the Fast Lane: Intellectual Property Litigation at the ITC July 11, 2017
Panel Daniel L. Girdwood Director & Senior Counsel for Samsung Electronics America Inc., Washington, DC Former ITC staff attorney with Office of Unfair Import Investigations and former attorney-advisor to former-commissioner Shara Aranoff Lauren Degnan Principal in Fish & Richardson s Washington, DC office Lead counsel in a variety of matters before the ITC, including utility patent, design patent, registered trademark, trade dress, and trade secret cases Noah C. Graubart Principal in Fish & Richardson s Atlanta office. Intellectual property litigator; with emphasis on patent disputes in district courts, ITC, and at the Federal Circuit. DISCLAIMER: The views and opinions expressed in this presentation are those of the speakers and do not represent official positions of the ITC, Samsung, Fish & Richardson, or its clients. 2
Agenda What is the ITC? Patent Litigation at the ITC Section 1337 The Domestic Industry Requirement Section 337 Remedies What do Section 337 Investigations Look Like? Trade Secret & Trademark Litigation at the ITC Trending Issues Non-Practicing Entities Pilot 100-Day Program 3
What is the ITC? 4
What is the ITC? A major administrative forum that investigates high-speed, highstakes allegations of unfair competition An Article I administrative agency Authorized by Congress to enter exclusion orders against the importation of goods found to be unlawful A frequent forum for competitorcompetitor cases Mission is to protect domestic industries from unfair trade practices Paste Patent/ Complaint snip here Dark Blue Boarder U.S. International Trade Commission 500 E St. SW Washington, DC 5
What Sets the ITC Apart? District Court Time to trial measured in years No requirement to practice asserted patents Trial by jury Monetary and equitable relief Can provide relief for wholly-domestic acts of infringement Full federal rules of evidence ITC Time to trial often <12 months Substantial domestic industry requirements Hearing before ALJ Equitable relief only (via exclusion and cease and desist orders) Only authorized to address infringement with an importation aspect Streamlined evidentiary rules Two party litigation (plaintiff v. defendant) Tri-party litigation (plaintiff v. defendant v. government investigator (OUII)) Generalist audience (juries and district judges) Personal jurisdiction over parties Specialized audience (ALJs) In rem jurisdiction over imported products 6
The International Trade Commission Rhonda K. Schmidtlein David S. Johanson Irving A. Williamson Meredith M. Broadbent Jason Kearns* Chairperson Vice Commissioner Commissioner *Pending Chairperson Confirmation Commissioners are appointed by the President and confirmed by the Senate A full term is nine years. No more than half the Commissioners come from a single party (i.e., half republican / half democrat). 7
General Counsel s Office First Level of Review Review Initial Determinations issued by ALJs and make recommended Final Determination for approval by Commissioners Represent the Commission on appeal at the Federal Circuit 8
Administrative Law Judges (ALJs) Charles E. Bullock Chief ALJ Theodore R. Essex ALJ Thomas B. Pender ALJ David P. Shaw ALJ Sandra (Dee) Lord ALJ MaryJoan McNamara ALJ Appointed 2002; Chief since 2011 Appointed 2007 Appointed 2011 Appointed 2011 Appointed 2013 Appointed 2015 ALJs are appointed per the Administrative Procedure Act Dischargeable only for good cause after a full APA hearing 9
OUII Staff Attorneys OUII represents the public interest. OUII is a full party (sometimes); takes positions on (some or all) merits and procedure Including petition for review of ALJ s decision OUII presents an independent evidence-based view of the case Convincing staff attorney of private party s position can be critical 10
IP Litigation at the ITC Section 337 11
Section 337 of the 1930 Tariff Act IP litigation at the ITC is called Section 337 Litigation Refers to the original 337 of the Tariff Act of 1930 (19 U.S.C. 1337) Paste Patent/ Complaint snip here Dark Blue Boarder 12
Section 337 of the Tariff Act Section 337 of the Tariff Act of 1930 19 U.S.C. 1337 (a)(1)) Authorizes the ITC to investigate and remedy: (1) Importation; (2) sale for importation; or (3) sale after importation of articles that Infringe a valid and enforceable patent; Are made, produced, processed, or mined using a patented process; Infringe a valid, enforceable, and registered United States copyright or trademark; Others acts of unfair competition. 13
The Domestic Industry Requirement 14
The Domestic Industry Requirement Unlike a district court, access to the ITC s trade remedies is limited to those who can prove a domestic industry in the patent(s) being asserted Paste Patent/ Complaint snip here Dark Blue Boarder The domestic industry requirement consists of two prongs: technical prong and economic prong Only those patent owners who can prove significant technical investments in the U.S. may get relief from the ITC Sales alone do not satisfy the requirement 15
Domestic Industry Technical Prong In some ways, a mirror image of the infringement case The Complainant must show some domestic product or activity practicing at least one valid and enforceable claim per asserted patent. Paste Patent/ Complaint snip here Dark Blue Boarder Need not be the same as the claim for which infringement is proved. Proof follows the same basic approach as an infringement analysis. 16
Domestic Industry Economic Prong The Complainant must establish that its domestic investments relating to patented product/activity are economically significant. Significant investment in plant and equipment Paste Patent/ Complaint snip here Dark Blue Boarder Significant employment of labor and capital Substantial investment in Research & Development or Licensing 17
Section 337 Remedies 18
Section 337 Remedies No Monetary Relief Exclusion Orders Enforced by Customs Two Kinds of Exclusion Orders Limited Exclusion Order (More Common) General Exclusion Order (Less Common) Cease and Desist Orders Consent Orders Duration Life of the IP Right 19
Exclusion Orders Limited Exclusion Orders ( LEOs ) Detail ITC Remedy; bars the entry of products of persons determined by the Commission to be violating Section 337 (i.e. the named Respondents) General Exclusion Orders ( GEOs ) Available only if certain statutory criteria are met; bars the entry of all infringing products, regardless of the producer or importer. Necessary to prevent circumvention of an exclusion order limited to products of named persons ; and There is a pattern of statutory violation... [Section 337] and it is difficult to identify the source of infringing products. Temporary Exclusion Orders ( TEOs ) Similar to preliminary injunctions; these are rare. 20
What do Section 337 Investigations Look Like? 21
Speed Key Time Periods for 16-Month Investigation Initial Determination Complaint filed ITC institutes Hearing Decision on Petition for Review Target Date & Final Determination Discovery & Pre-Hearing Period 60 days -1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Presidential Review Period 60 days Appeal to Fed Cir 22
Discovery Fast turn-around typically ten days on all discovery requests A short calendar the entire discovery and pre-hearing period may be 9 months or less Not much time to build an entire case Hit the ground running Much or all of fact discovery may take place without a claim construction order ALJs may decline to issue a Markman order pre-trial 23
Pre-Hearing Statement & Brief Prehearing Statement: Witness list, exhibit list, stipulations, agenda for pre-trial conference, estimated date and length of appearance for each witness; certification of good faith efforts to settle Prehearing Brief: This must address all issues and present in each party s contentions: jurisdiction (importation), claim construction, infringement, validity, domestic industry, remedy & bonding. Avoid waiver OUII will file its own Pre-Hearing Brief This is the first formal indication of OUII s view issue-by-issue. Witness statements ALJs may have witnesses provide written direct testimony. 24
Typical Hearing Sequence Opening statements and technology tutorials Complainant s case in chief Direct, cross by respondent(s) and OUII, and redirect examination Respondents case in chief Staff attorney s case in chief Closing statements or arguments are rarely permitted 25
Opening and Rebuttal Post-Hearing Briefs There s no decision at the hearing. The parties have to muster their cases in one, final volley. The time to persuade is here. The post hearing briefs must cover all the issues raised at the hearing, citing evidence and applicable law. 26
The ALJ Decides Final Initial Determination (Final ID) on Violation Issues The ALJ is required to make detailed findings of fact and conclusions of law on all contested issues. Final ID contains a detailed legal analysis, the ALJ s findings of facts, and conclusions of law. Recommended Determination (RD) on Remedy Issues Concurrently or within 14 days RD contains proposed remedial orders Issues regardless of whether ALJ finds violation, and addresses 27
It s Not Over Yet Appeal, Round 1 Petition for Review of the Final ID Full Commission decides whether to review any or all of Final ID If review denied, ALJ s ID becomes ITC s final determination Appeal, Round 2 Presidential Review Period If Commission finds violation, President has 60 days to review and approve/disapprove of remedy for policy reasons. Extremely Rare Appeal, Round 3 Judicial Review Any person adversely affected by a final determination of the Commission may appeal such determination, within 60 days after the determination becomes final, to the United States Court of Appeals for the Federal Circuit 28
Trade Secret & Trademark Litigation at the ITC 29
Trade Secret Litigation at the ITC Where can challenged activity occur? As long as elements of Section 337 violation are proven, no requirement that underlying theft or use of trade secret occur in the U.S. Who can ITC Reach? Respondents need not be amenable to personal jurisdiction in district court Example: Certain Cast Steel Railway Wheels, Inv. No. 337-TA-655 Complainant no longer used the trade secrets to manufacture its wheels Misappropriation occurred entirely in China ITC imposed ten-year ban on importation of respondent s wheels 30
Trade Secrets at the ITC Substantive law? TianRui Group Co Ltd v US Int l Trade Comm n, 661 F.3d 1322 (Fed. Cir. 2011) Domestic industry requirement for non-statutory IP rights does not require that DI practices the IP rights at issue. But, complainant must show "substantial injury" due to the imports Previously held federal common law, not state law, applies... Effect of Defend Trade Secrets Act (DTSA)? Some predict ITC will adopt DTSA Both ITC common law and DTSA are based on UTSA; so differences are likely trivial 31
Trade Secret Litigation at the ITC Certain Electric Fireplaces, Inv. No. 337-TA-791/826 Breach of employment or other agreements cognizable? Effect of respondent(s) defaulting in middle of investigation 32
Trademark Litigation at the ITC What Trademark Cases Can the ITC Hear? Registered marks? Unregistered marks? Trade dress? Why Choose ITC over District Court? What about going directly to customs? Injury to domestic industry? With unregistered marks or trade dress, must show substantial injury to an industry not necessarily one using the IP right at issue TianRuiGroup v. USITC, 661 F.3d 1322 (Fed. Cir. 2011) With registered mark, industry must be with respect to article protected by IP right. 19 U.S.C. 1337(a)(2) 33
Trademark Litigation at the ITC Certain Handbags, Luggage, Accessories And Packaging Thereof, Inv. No. 337-TA-754 Alleged infringement of toile (entwined LV monogram) logo by 15 respondents alleged to import counterfeit products Granted general exclusion order, prohibiting all infringing goods, regardless of source 34
Trademark Litigation at the ITC Certain Footwear Products, Inv. No. 337-TA-936 Alleged infringement of Converse Chuck Taylor trade dress by more than 30 companies ITC issued exclusion order regarding certain marks, but held Converse s trade dress invalid as lacking secondary meaning; on appeal 35
Trending Issues in IP Litigation at the ITC 36
Non-Practicing Entities (NPEs)? Landscape continues to shift As of 2012, ITC was becoming hot NPE forum no ebay, fast schedule, and broad discovery By 2014, the enthusiasm was dampened: veto of exclusion order on a standardessential-patent (SEP); enhanced scrutiny of domestic industry allegations involving nonpracticing entities (NPEs); Motiva: revenue-driven licensing Now, hot again? Reluctance to Stay Pending IPR (Certain Laser-Driven Light Sources, Inv. No. 337-TA- 983) Tightened District Court Venue Rules (TC Heartland) 37
Pilot 100-Day Program History & Purpose Obtain initial determination on a dispositive issue within 100 days, e.g., on domestic industry, importation and standing Debuted in 2013 and designed to address criticism that Commission s reluctance to grant summary relief made it a haven for IPR holders seeking cost-of-litigation settlements for weak / low quality IPR assertions Requested 20 times on various grounds, including section 101, public interest, & infringement 100-Day Program is discretionary with the Commission and if the challenge is denied, the investigation resumes on all other issues 38
Pilot 100-Day Program Track-Record Certain Audio Processing Hardware and Software and Products Containing same, Inv. No. 337-TA-949 Standing challenged; ALJ Pender rejected challenge Certain Portable Electronic Devices and Components Thereof, Inv. No. 337-TA-994 Invalidated all asserted claims for lack of patentable subject matter Certain Silicon-On-Insulator Wafers, Inv. No. 337-TA-1025 ALJ McNamara rejected challenge to economic DI 39
Questions? 40