The U.S. International Trade Commission (ITC) launched a pilot program to identify patent cases it deems eligible for "fast tracking" – that is, for early resolution of a dispositive issue. Managing Principal
Carla Mulhern testified at the evidentiary hearing on the first such case, In the Matter of Certain Products Having Laminated Packaging, Laminated Packaging, and Components Thereof ("Lamina"). Here, she and Vice President
Robin Heider discuss the potential effects of expedited investigations.
Ms. Mulhern: Some have voiced concerns that the ITC has become an attractive venue for patent litigation filed by patent holders that do not practice their patents. That’s because the default remedy at the ITC is an exclusion order barring infringing goods from being imported. For companies in industries like consumer electronics, in which manufacturing typically happens overseas, this remedy is tantamount to an injunction. Meanwhile, the 2006 decision in eBay v. MercExchange has made it much less likely that nonpracticing entities (NPEs) and patent assertion entities (PAEs) would get injunctive relief in district courts, so the ITC has become a relatively more attractive venue for these patent holders.
In some cases, however, these types of complainants may not have sufficient activity in the United States to satisfy the domestic industry requirement, a prerequisite for standing to sue in the ITC. The pilot program provides a mechanism by which a dispositive issue, such as domestic industry, can be ruled on quickly, thereby reducing the time and costs involved for all parties. An administrative law judge oversees a discovery period and an evidentiary hearing on the dispositive issue, and then is required to issue a ruling within 100 days from the start of the investigation. A dispositive ruling such as a finding of no domestic industry will result in termination of the investigation.
Lamina Packaging Innovations LLC files a patent infringement complaint with the ITC, which hears the case under an expedited process.
An administrative law judge rules that Lamina failed to satisfy the economic prong of the domestic industry requirement. The ITC upholds that finding, thereby disposing of the case.
Ms. Heider: Some observers believe this new process could be effective in discouraging NPEs or PAEs with questionable domestic industry claims from filing patent infringement suits at the ITC, which would limit their ability to extract favorable settlements based on the leverage they could gain from an exclusion order.
The limited scope of the initial investigation and the compressed time frame likely will save both complainants and respondents substantial sums of money. The fees associated with an expedited 100-day investigation into just one issue would be much lower than those associated with conducting a full investigation that could last a year or two. Some have estimated potential savings in the millions of dollars.
Ms. Mulhern: The commission directed the administrative law judge to expedite a decision on whether the complainant, Lamina, an NPE, could demonstrate that it had met the economic prong of the domestic industry requirement. To analyze the extent of a complainant’s domestic industry activities in exploitation of the asserted patents, we often look at its U.S. investments in the manufacturing, design, or development of products that practice the patents in suit. Lamina did not conduct these types of activities; its claims were based instead on its investments in licensing the patents in suit, as well as on certain domestic activities of its licensees. We were asked to respond to Lamina’s claims regarding its domestic investments and analyze the sufficiency of the evidence on this point. I submitted an expert report and testified at the evidentiary hearing on economic issues relating to domestic industry. After 100 days, Judge Theodore Essex handed down a ruling that was favorable to our clients, finding that Lamina had not satisfied the economic prong of the domestic industry requirement, thereby disposing of the case. ■
From Analysis Group Forum: Fall/Winter 2013