ITC: a year in review 2012
In 2011, the US International Trade Commission (ITC) reported a record number of Section 337 complaint filings. 70 investigations were launched, and tech giants from Apple to Samsung sued, countersued and sought exclusion orders against their rivals. This year, the battle of the brands continued and at the ITC, business is booming.
Digital disputes
In May, the commission launched an investigation into a complaint made by Texan company Longview against 45 respondents, including Olympus, Panasonic and Toshiba, concerning devices with a retractable USB connector.
In January, it investigated infringement claims made against 21 mobile phone and tablet manufacturers—among them Nokia, Sony and Research in Motion—and in April, issued a limited exclusion order against HTC after ruling that its Android smartphones were in violation of patents held by Apple.
But not all of the commission’s pending investigations concern high profile technology brands. The USITC is also investigating disputes relating to construction components, medical devices and kitchenware. And in January, US and Canada based Standard Innovation Corporation filed a complaint against 21 companies over patents relating to its bestselling product, the ‘We-Vibe’ vibrator.
Streamlining procedures
To keep up with its increasing caseload, the ITC appointed a further two administrative judges this year and a second courtroom, built to accommodate Section 337 hearings, will be ready for use in the autumn.
The commission has also been working to streamline Section 337 procedures through both minor rule changes (details of which can be found on the ITC’s website) and research into e-discovery and the handling of electronic documents during proceedings.
"After two years of record filings, the commission is predicting a decline in the number of new complaints for 2012, but this has not led to a lighter workload."
After two years of record filings, the commission is predicting a decline in the number of new complaints for 2012, but this has not led to a lighter workload. “We anticipate filings will still be above historical averages, but because of heavy filings in 2011, we’ll see a record number of pending matters,” said spokesperson Margaret O’Laughlin. “The new courtroom will contribute to the more timely resolution of investigations,” said O’Laughlin “but like all federal government agencies, the commission’s biggest challenge in 2013 will be finding ways to continue to perform its mission in an environment of declining federal budgets.”
Trolling concerns
With a rise in headline cases, the USITC has been placed under increasing scrutiny and in July, both IP lawyers and national corporations expressed their concern that the commission’s Section 337 complaint process is subject to abuse from so-called patent trolls— licensing firms that buy patents, but don’t make products. Under the amended Tariff Act, non-practising entities (NPEs) have been allowed to file complaints with the ITC since 1988.
The commission divides NPEs into two categories: category one includes those who hold patents but do not produce related products, including laboratories, universities and start-ups, and category two covers those who don’t make products and are primarily concerned with purchasing and asserting patents.
While the Section 337 process and its domestic industry requirement are designed to protect domestic companies against foreign businesses selling infringing products in the US, according to Colleen Chien, a law professor at Silicon Valley’s Santa Clara University, it’s being used by trolls to bar the sale of products made by US companies.
Speaking at a House of Representatives subcommittee hearing, Chien said that since 2010, patent trolls had made complaints against more than 300 defendants at the USITC, more than 60 percent of which were domestic companies. Both Ford Motors and IT firm Cisco, which spent more than $13 million defending a claim brought against it by a Canadian company, concurred.
In response, the ITC released a statement arguing that only eight percent of Section 337 complaints were filed by category two NPEs, and only one was successful in obtaining an exclusion order.
The commission added that the 61.5 percent settlement rate in category two NPE investigations was inconclusive due to the limited number of completed investigations, and cited the US Court of Appeal’s 2008 decision to reject the practice of including third party downstream products in remedial orders to explain the increasing number of respondents in complaint filings.
Trade reports
As well as investigating patent infringement claims, the commission also publishes reports on trade issues such as the economic impact of IP infringement abroad. In 2011, the ITC surveyed more than 5000 US companies to determine the damage to the US economy caused by IP infringement in China.
There have been no similar studies conducted into the effects of IP infringement this year, but research has been done into trade facilitation in Africa and in July, the commission published The Year in Trade 2011—the 63rd annual roundup of operations under the Trade Agreement programme. It will continue to conduct research into IP and trade relations as requested by congress.
New appointments
Next year, the ITC will be chaired by Irving Williamson, who was sworn in by President George W Bush in 2007. After serving two years as vice chairman from 2010 until June this year, Williamson was designated chair by President Obama and will now serve the term ending June 2014.
The commission will also be welcoming a new member: in November 2011, Obama announced his intent to nominate Meredith Broadbent, a senior adviser at the Center for Strategic and International Studies, to succeed commissioner Deanna Okun. Okun has been with the ITC since 2000 and while her commission expired in June 2008, she may continue to serve as commissioner until Broadbent is sworn in—the date has not yet been confirmed.
