After a steady, but typical number of Section 337 complaints filed in the first half of 2020, the U.S. International Trade Commission (ITC) saw a dramatic increase in July. Twelve new complaints were filed, representing the second largest number of complaints ever filed in one month. Despite issues surrounding the COVID-19 crisis and uncertain economic times, the ITC continues to be a forum of choice for patent owners and the increased activity in July demonstrates that patent owners continue to have confidence in the ITC as an effective forum in which to assert their patent rights.
Section 337 Investigations at the ITC
The ITC is a federal administrative agency in Washington, DC with broad powers under 19 U.S.C. § 1337 (“Section 337”) to investigate and address unfair acts and unfair competition in the importation of articles into the United States. Most Section 337 investigations address issues of patent infringement, but Section 337 investigations can also address infringement of other statutory Intellectual Property (trademarks, copyrights, etc.) and other unfair acts such as misappropriation of trade secrets, false advertising, breach of contract, and antitrust violations. In comparison to litigating in U.S. District Court, pursuing a patent infringement claim at the ITC provides several advantages for patent owners including faster resolution on the merits due to statutory requirements, the ability to include unrelated infringers in one matter, the limited availability of counterclaims, results that are less likely to be reversed on appeal, and the powerful remedy of an Exclusion Order prohibiting the entry into the United States of infringing articles. There are, however, certain jurisdictional limitations on the ability of a patent owner to pursue patent infringement claims at the ITC. For example, in addition to proving infringement, a patent owner also must show (a) importation of an article associated with the infringement and (b) the existence of a “domestic industry” relating to articles that practice the patent.
The ITC’s Response to the COVID-19 Crisis
From its initial COVID-19 Action Plan in March, the ITC has proactively undertaken measures to conduct Section 337 investigations with as little interruption as possible. Although all in-person hearings were postponed and some Procedural Schedules had to be extended, many investigations stayed on track through the use of modified administrative and procedural rules for discovery. In July, the ITC selected WebEx Meeting as its secure FedRAMP-certified video teleconferencing solution so that hearings and conferences involving Confidential Business Information could proceed remotely. As a result, most investigations can now be concluded within the allotted statutory time frame.
Increase in the Number of Complaints filed at the ITC
Despite its effectiveness as a forum for patent owners, the ITC receives a limited number of complaints compared to the U.S. District Courts, mostly due to its jurisdictional requirements. Since 2000, the ITC has averaged 37 new complaints per year (about 3 per month). Even considering the increase in ITC investigations in over the past 10 years, the ITC has averaged only 49 new complaints per year (about 4 per month) since 2010.
The year 2020 started out normal, or perhaps down a little due to the COVID-19 crisis, in terms of the number of complaints filed: January (2), February (3), March (2), April (4), May (1), and June (4). But, July saw a dramatic increase to 12 complaints, bringing the average for 2020 up to almost 5.5 complaints per month and putting 2020 on pace for the second highest total number of complaints filed in one year – the most since 70 complaints were filed in 2011 at the height of the so-called “Cell Phone Wars.” For reference, the following chart shows the number of ITC Section 337 complaints filed each month since 2000.
Two issues are likely behind the dramatic increase in July. First, patent owners might have been waiting to see how the ITC handled the COVID-19 crisis. The ITC is demonstrating that it can adapt to the current crisis, giving patent owners continued confidence in the ITC’s reputation for fast and accurate resolution of patent disputes. Second, the current economic situation has required patent owners to reassess their position in the market. As the economy slows, and patent owners face more competition from infringing imported products, they often look for other ways to maintain and grow their position in the market, including asserting their patents.
The Future of Section 337 Investigations at the ITC
While August, so far, has been slower than July and the annual pace of new complaints could fall back in line with historical numbers, there is no doubt that ITC Section 337 investigations are alive and well during the COVID-19 crisis. The above data shows that the ITC will continue to be an important tool, perhaps even more important than in the past, in helping patent owners enforce and protect their rights.