ITC Section 337 Update - May 1, 2013

by King & Spalding
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Congress Holds Hearings On Section 337 Litigation – On April 16, 2013, the House Committee on the Judiciary, Subcommittee on Courts, Intellectual Property, and the Internet, held a hearing on “Abusive Patent Litigation: The Issues Impacting American Competitiveness and Job Creation at the International Trade Commission and Beyond.”  The purpose of this hearing was to discuss alleged abusive litigation practices at the International Trade Commission (“Commission”).  The hearing featured six private sector witnesses. Although the Commission was not represented at the hearing, former Commission Chairwoman Deanna Okun appeared as a witness.  On the same day, the Senate Judiciary Antitrust Subcommittee hearing on Oversight of the Enforcement of the Antitrust Laws convened a hearing that featured witness testimony from Assistant Attorney General Lanny Breuer and Federal Trade Commission Chairwoman Edith Ramirez.  During the hearing, Ms. Ramirez testified about the potential negative effects Commission exclusion orders issued with respect to standard essential patents might have on competition and consumer welfare.  Click here for a summary of these hearings, and to find the websites, webcasts, and written testimony from the hearings.

Commission Releases Updated Fact Sheet On NPEs In Section 337 Litigation – On April 15, 2013, the Commission published an Update titled “Facts And Trends Regarding USITC Section 337 Litigations” of its June 18, 2012 report.  Both reports contain information on Section 337 litigation by non-practicing entities (“NPEs”), which the Commission analyzes using two categories: (i) Category 2 NPEs:  entities that do not manufacture products that practice the asserted patents and whose business model primarily focuses on purchasing and asserting patents; and (ii) Category 1 NPEs:  all other entities that do not manufacture products that practice the asserted patents, including inventors, research institutions, and startups.  According to the Update, data does not support the claim that NPE litigation accounts for increased Section 337 litigation as a result of the decision in eBay v. MercExchange.  Since the eBay decision (May 15, 2006) through Q1 2013the Commission instituted 301 investigations – Category 1 NPEs accounted for 33 (11%) and Category 2 NPEs accounted for 27 (9%); and only four NPEs obtained exclusion orders – two Category 1 NPEs and two Category 2 NPEs.  However, of the 43 investigations instituted between Q1 2012 and Q1 2013, Category 1 NPEs filed seven (16%) and Category 2 NPEs filed six (14%).  Thus, NPE filings over the past 12 months represent a higher percentage of total filings than the percentage for the previous seven years.  The Update also concludes that NPE investigations do not settle more frequently and do not result in a greater number of respondents per investigation.

Commission Publishes New Rules On Pleading And Discovery Limitations – On April 19, 2013, the Commission published Final Rules of General Application and Adjudication and Enforcement, which become effective on May 20, 2013.  The final rules include, inter alia, amendments to pleading requirements, including requiring complainants to plead domestic industry allegations in the complaint with more particularity, the process for institution and consolidation of investigations and limitations on discovery, including on the number of depositions and interrogatories permitted to be served.  The final rules amend the Commission’s Rules of Practice and Procedure, 19 C.F.R. Part 201 - Rules of General Application and 19 C.F.R. Part 210 - Adjudication and Enforcement.  Many of the final rules are identical to the correspondingly numbered proposed rules published by the Commission on July 12, 2012 (77 Fed. Reg. 41120-32).  However, the final rules differ from the proposed rules for nine of the rules (for a total of 16 changes from the proposed rules) after the Commission considered the public comments on the proposed rules amendments.  Click here for a more detailed summary of the amendments to 19 C.F.R. Parts 201 and 210.

Commission Requests To Survey Complainants On The Efficacy Of Exclusion Orders – On April 9, 2013, the Commission issued a Notice that it intends to seek approval from the Office of Management and Budget to collect information on the effectiveness of its exclusion orders by surveying complainants who have obtained exclusion orders that are currently in effect.  The two proposed surveys – one directed to general exclusion orders and one directed to limited exclusion orders – will ask each complainant to: (1) evaluate whether the exclusion order has prevented the importation of items covered by the order; (2) if not, estimate the absolute value and effect in the U.S. market of such imports; and (3) indicate what experience it has had in policing the exclusion order, particularly with respect to any investigatory efforts and any interactions with U.S. Customs and Border Protection.  According to the Notice, which indicates that responses to the surveys will be voluntary, public comments regarding the two proposed surveys are due no later than June 10, 2013.

Call For Articles – The ITCTLA Re-Launches The 337 Reporter – The International Trade Commission Trial Lawyers Association (“ITCTLA”) is re-launching its historic and informative 337 Reporter, a quarterly publication devoted to Section 337, including coverage of recent Commission notices and opinions, Administrative Law Judge orders, and related Federal Circuit decisions, in addition to topical feature articles and commentaries, upcoming Commission and ITCTLA events, and compilations of pending Section 337 investigation target dates, pending Commission hearings, and recent institutions of Section 337 investigations.  Suggestions for upcoming feature articles or commentaries, or requests to author a feature article or commentary, can be sent to Jeffrey Telep, newly appointed co-editor of the 337 Reporter.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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