Overview
Section 337 investigations before the US International Trade Commission (ITC) can be intense on many levels. These include the disruption of discovery, awkward questions from customers, and costs for attorney fees and experts who must address the many issues involved in such investigations simultaneously under strict, unforgiving deadlines. Sometimes, however, a single issue can resolve an investigation. The ITC has implemented a pilot program so that such dispositive issues can be addressed up front. Where such issues can resolve the investigation, the parties reach certainty more quickly and save the distraction and expenses of a full investigation. Under this program, when the ITC starts an investigation, it identifies whether there is a dispositive issue suitable for early determination, such as importation, standing, or the economic prong of the domestic industry requirement. The Commission then directs the ITC Judge to focus on this issue and issue an early decision on the issue. Although several parties sued at the ITC have requested such a proceeding, the ITC has only done so in two investigations, including a recent investigation where the ITC has directed the ALJ to look at the complainant’s standing to sue on the patents at issue.
In March 2015, the ITC instituted Certain Audio Processing Hardware and Software and Products Containing Same. The investigation is based on a complaint filed by Andrea Electronics Corp., which alleges that thirteen respondents1 infringe five patents. Before institution, certain of the respondents submitted letters to the ITC contending that Andrea lacked the necessary standing in the asserted patents and requested that the issue be resolved through the early disposition program. The ITC instructed the ALJ to conduct expedited fact-finding, hold an early evidentiary hearing, and issue a decision within 100 days from institution as to whether Andrea has standing to assert each of the asserted patents.
The ITC implemented a similar procedure in Certain Products Having Laminated Packaging, Laminated Packaging, and Components Thereof. In that investigation, the ITC ordered the ALJ to issue an early decision regarding whether the complainant satisfied the economic prong of the domestic industry requirement. The ALJ found that the domestic industry requirement was not satisfied, a decision that was subsequently affirmed by the ITC.2
One of the ITC’s stated purposes in identifying and resolving potentially case-dispositive issues early in an investigation is to eliminate unnecessary litigation, thus saving the parties’ and the ITC’s resources. But such savings are not guaranteed. In the Laminated Packaging investigation, for example, the parties continued to conduct discovery on all other issues while at the same time preparing for the early hearing on domestic industry. By contrast, in the recent Audio Processing Hardware investigation, the ALJ has scheduled a hearing on the standing issue approximately seven weeks after institution. In his order setting the procedural schedule, the ALJ ordered that “the sole issue to be decided within the Commission’s 100 day timeline is standing. No matter will be entertained unless it relates directly to a substantive determination concerning Complainant’s standing in this investigation.” Order No. 3 at 3 (Mar. 18, 2015).
Parties to an investigation should be aware of the early disposition procedure now being implemented by the ITC. A party bringing a complaint to the ITC should be prepared for any potentially dispositive issue that may be assigned for early disposition. For their part, named respondents should evaluate whether there are issues suitable for early disposition and consider bringing those issues to the ITC’s attention prior to institution of an investigation.
We will periodically provide you updates on developments relating to Section 337 litigation. If you have any questions or for further information, please feel free to contact Steve Adkins at 202.429.8018; Charles Schill at 202.429.8162; or Matthew Bathon at 202.429.8090. (Special thanks to Stanley Kuo for his assistance in preparing this newsletter.)
1 Steptoe & Johnson LLP represents Realtek Semiconductor Corp. in the investigation.
2 Additional information regarding the Laminated Packaging investigation is available here.
