Protecting Domestic Industries at the ITC

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CONTENTS  Introduction    I. The ITC'S Remedies Are Reserved For Domestic         Industries  II. The Technical Prong Should Be Applied Consistently         To Practicing And Non-Practicing Entities      A. The Application of the Technical Prong to Practicing         Entities      B. The Non-Application of the Technical Prong to Non-Practicing         Entities      C. Recommendation: Apply the Technical Prong         Consistently, Based on the State of the Technology,         Not of the Patentee III. Activity That Supports the Commercial Development         Of The Patent Should Be Given Greater Weight In         Evaluation of the Economic Prong      A. The Coaxial Cable Decision      B. Recommendation: Give Greater Weight to Activities         that Promote Commercialization or Operation of a         Domestic Industry, and Less Weight to Those that Do         Not Conclusion 

INTRODUCTION

The International Trade Commission ("ITC") provides injunctive relief against imports that infringe intellectual property. (1) One of the most pressing issues is who should have standing to initiate an ITC investigation. The statute specifies that only patent owners that can prove a "domestic industry" are eligible. (2) Differences in opinion regarding what this term means have divided practicing and non-practicing patent owners. Should they both have access to the ITC?

This question is important because of two trends: the increasing popularity of the ITC (3) (Figure 1) and the increasing divergence in patent law at the ITC and United States district courts. Once a specialized venue with limited jurisdiction, the ITC has come to hear many of the important patent law cases and increased its caseload five-fold over the past 15 years. (4) Though only one of about 90 venues in which a United States patent infringement lawsuit can be initiated, (5) the ITC heard nearly 15% of all patent trials in 2010. (6) Around two-thirds of ITC cases have a district court counterpart. (7) In an ITC proceeding, there are no juries, no counterclaims, few stays for reexamination, (8) and no damages. (9) Complaints are likely to be resolved within eighteen months. (10) This level of efficiency makes the ITC one of the world's premier venues for resolving patent disputes.

Yet the increasing popularity of the ITC highlights the divergence between the ITC and the district court, most notably in the standard for issuing injunctions. (12) If the ITC "determines ... that there is a violation..., it shall direct that the articles concerned ... be excluded from entry into the United States" unless public interest factors dictate otherwise. (13) In contrast, district courts "may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent." (14) In eBay v. MercExchange, the Supreme Court enumerated the factors a court must consider in deciding whether or not to award an injunction. (15)

As a result, patent holders can get injunctions from the ITC even when they may not be entitled to them under eBay. The ITC awards injunctions more readily than do district courts; the FTC reports that district courts have awarded injunctions in 72-77% of cases where the patentee wins, (16) versus the ITC's nearly automatic grant. This difference is greater among entities that do not practice their patents: post eBay, district courts have granted about half (54-58%) of the requests for injunctions they received from non-practicing entities. (17) When universities and research and development organizations are excluded, (18) the injunction grant rate drops even further, (19) in contrast with the ITC's more favorable odds.

The differences in standards have drawn the intense scrutiny of amici, (20) academics, (21) practitioners, (22) and the Federal Trade Commission. (23) Yet they are poised to grow. The ITC borrows from intellectual property law to determine whether or not there has been an unlawful importation, (24) but relies on its own prerequisites and procedures, and metes out its own remedies. …