Is the International Trade Commission the Next Big Arrow in the Quiver for Patent Enforcement?

Looking for a method, backed by the US government, to completely block your competition from entering the US market? A Section 337 Investigation before the US International Trade Commission might just be your silver bullet. At least that's the thinking of a growing number of US businesses that own potentially blocking patents.

What is this Section 337 of which You Speak?
19 U.S.C. §1337 - aka ITC Section 337 - permits the ITC to investigate alleged unfair competition resulting from the importation of goods into the United States where those goods would, among other possible harms - infringe a valid and enforceable US patent. (See 19 USC 1337(a)(1)(B)) Complaints before the ITC are adjudicated by an administrative law judge who issues an initial determination ("ID") on the merits. The full six-member committee of the ITC then reviews the ID and accepts or modifies it in order to issue a final determination ("FD"). The outcome of the FD is then enforceable through US Customs and Border Patrol.

Why Choose The ITC Forum?
Companies that are faced with immediate competition from the importation of allegedly infringing products certainly will view proceedings before the ITC as a much faster and cheaper way to stop those products from coming into the country.

First, the typical time to a hearing is about a year and time to a decision is about 18 months, whereas getting to a decision in a federal district court patent infringement suit will take closer to three years. The times to respond to discovery and to motions in the 337 proceeding is shorter as well. If you're in a multi-billion dollar market where every sale counts and maintaining market share is key, time is of the essence. Provided the complainant (the patent owner) prevails before the ITC, an exclusion order (preventing importation) or a cease and desist order (preventing the further sale or marketing of already imported goods) from the ITC may be had in approximately half the time it takes to get an injunction from a district court.

Next, it's likely to be far less expensive to proceed before the ITC rather than fully litigating the matter. Claim construction hearings - where a judge interprets what the language of a patent means - are almost always held in district court cases, but often are not held in ITC cases. While the parties will have to pay experts to figure out damages and technical issues in a typical lawsuit, the remedy before the ITC is limited to an exclusion order or a cease and desist order, so there's a large dollar savings there by not including economic experts and their fees. Showing proper jurisdiction is easier and therefore less expensive because the goods themselves confer in rem jurisdiction. There are numerous other ways (such as a vastly streamlined discovery process) that the costs are reduced versus a typical district court patent case. And we shouldn't forget that the parties will likely use the ITC ruling as a bargaining chip in settlement negotiations related to the district court patent infringement case that is likely operating in parallel with the 337 proceedings.

The ITC 337 investigation is an aggressive "offensive defense" to a market position. It puts the respondent (the alleged infringer) in an immediate position of having to quickly justify its position and fight for its right to even proceed with importing these goods into the country let alone focusing on marketing and selling them to grab any market share.

Read Part 2 - Apple v. Motorola Mobility in ITC Section 337 Proceedings for a real world view of this strategy.