One of the fastest ways for a patent owner to stop infringing activity is to file a complaint with the International Trade Commission. An ITC investigation offers several advantages over district court litigation. One of the advantages is the speed of the proceeding. In one of my recent ITC cases, the trial was scheduled for less than eight months after the complaint was filed with the ITC. In comparison, a case in district court may take three or more years to have a trial after the filing of the complaint. The short time period works to the advantage of the complainant. The complainant has an opportunity to prepare a case before the complaint has been filed, including gathering documents, electronic records, hiring experts, preparing discovery requests and so forth. On the other hand, the respondents may need to produce documents and respond to interrogatories within 8 weeks, identify their experts within 16 weeks, respond to contention interrogatories within 20 weeks, complete fact discovery within 21 weeks, provide expert reports within 22 weeks and file motions for summary determination within 26 weeks. All of these dates are from the filing date of the complaint.
Another advantage is the ability to include several respondents in one proceeding. In district court litigation, it may be necessary to file lawsuits in several different districts to obtain personal jurisdiction over each defendant. Each of those courts will have different schedules and procedures for handling the case. The cost to the patent owner will be greater than a single proceeding.
An additional advantage of an ITC investigation is the experience of the decision maker. In an ITC investigation, the decision maker is an administrative law judge who presides over several patent infringement cases each year. Many of the ALJ’s have been on the bench for several years. Most of the ALJ’s do not have technical degrees, but they do have some understanding of various technologies. In addition, the ALJ’s are well versed in patent law. On the other hand, the decision makers in district court litigation are the judge and a jury of ordinary citizens. In most cases, the judge does not have a technical degree and may have limited experience with patent cases. Most of the jurors will not have a technical degree and will not have any experience with patents or patent law.
A further advantage of an ITC investigation is the remedy of an exclusion order. There are two types of exclusion orders, limited and generalr. The limited exclusion order prevents the importation of any products by a respondent that may infringe the patent. The general exclusion order prevents the importation of any products that may infringe the patent, even if the products are imported by an entity that was not a respondent in the ITC investigation. There are certain criteria that must be satisfied to obtain a general exclusion order. U.S. Customs and Border Patrol will enforce the exclusion order (limited or general) and will detain any goods at the port that may violate the exclusion order.
One disadvantage of an ITC investigation is the requirement to show a domestic industry in the United States. Proving a domestic industry generally consist of two prongs: economic and technical. The “economic prong” requires the complainant to have significant domestic investments in plant, equipment, labor or capital that relates to the asserted patents, or that it has made a substantial investment in exploiting the patent (i.e., through licensing). The economic prong may include domestic activities in research and development and engineering activities. The “technical prong” requires the complainant to show that the domestic industry actually practices at least one claim of each asserted patent.
Another disadvantage to an ITC investigation is that the complainant is not able to obtain damages from the respondents. However, most patent owners file a district court action at the same time as the ITC investigation. There are several benefits to filing both. First, the patent owner is able to select the district court most favorable to the patent owner. If the patent owner does not file district court litigation, then the accused infringer may file a declaratory judgment action with a district court in a location that may be favorable to the accused infringer. Second, district court litigation provides an opportunity to collect damages for the past infringement and for while the district court litigation is pending. Also, the threat of damages may facilitate settlement by the accused infringer. Third, if the accused infringer decides to move manufacturing to the United States, the district court litigation can prevent those activities. The accused infringer can obtain automatic stay of the district court litigation if the request for the stay is filed within 30 days.
The speed, the concentration of costs in a short period of time, and the potential exclusion of imports into the United States tend to force certain accused infringers to settle with the patent owner early in the process, while others may allow a default judgment to be entered against them.