The recent Federal Circuit opinion in Laerdal Medical Corp. v. International Trade Commission may have an effect on the ITC’s pre-filing and pre-institution procedures in connection with section 337 complaints.

Laerdal’s initial section 337 complaint, filed on May 19, 2016, alleged section 337 violations based on several causes of action, including trade dress misappropriation.  The ITC, through its Office of Unfair Import Investigations, requested supplementation of the complaint on certain of Laerdal’s allegations related to one asserted patent and three asserted trademarks.  Eventually, the Commission voted to institute an investigation based on a subset of Laerdal’s original allegations, including the trade dress misappropriation count.  Certain Carbon Spine Board, Cervical Collar, CPR Masks and  Various Medical Training Manikin Devices, and Trademarks, Copyrights of Product Catalogues, Product Inserts and Components Thereof, Inv. No. 337-TA-1008 (“Spine Boards”), Notice of Institution (June 24, 2016).   

None of the respondents answered the complaint and notice of investigation, and ALJ Essex, at Laerdal’s request supported by OUII, found each of the respondents in default.  Presuming the facts alleged in the complaint to be true as required under § 1337(g)(1), Judge Essex issued an initial determination finding each respondent in violation with respect to the causes of action alleged against it.  Spine Boards, Order No. 6 (Nov. 21, 2016).  No petitions for review were filed.  The Commission determined not to review Order No. 6, and solicited input on the public interest, remedy, and bonding.  81 Fed. Reg. 95192 (December 27, 2016).  Laerdal and the OUII responded that the public interest factors did not preclude relief, and no other party provided comments.

On June 14, 2017, the Commission issued its opinion in Spine Boards, granting relief with respect to the patent and registered trademark at issue in the investigation, but denying relief with respect to Laerdal’s allegations of copyright infringement and trade dress misappropriation.  The Commission ruled that Laerdal’s complaint “failed to plead sufficient facts” to show violations with respect to its copyrights and alleged trade dress, and therefore did not issue remedial orders based on these allegations. With respect to the trade dress allegation, the Commission said that Laerdal’s complaint was insufficient because of the following:

• It failed to allege that the infringement had the effect or threat of substantially injuring or preventing the establishment of a domestic industry;
• It failed to specify the elements that constitute Laerdal’s trade dress, the description being rendered vague by the use of “without limitation” language; and
• It failed to plead sufficient facts to show that the asserted trade dresses were not functional.

Laerdal appealed to the Federal Circuit the Commission’s decision to deny relief with respect to its asserted trade dress.

On December 7, 2018, the Federal Circuit reversed the Commission’s decision to deny relief based on trade dress misappropriation.  The Court ruled that the time for the Commission to assess the adequacy of a complaint is during the pre-institution phase.  “Commission Rule 210.9, for example, requires that, prior to instituting an investigation, the Commission ‘shall examine the complaint for sufficiency and compliance with the applicable sections of this chapter.’” (emphasis added by court).  Laerdal Medical Corp. v. International Trade Commission, slip op. at 9.  The court noted that the Commission has the authority to decline to institute an investigation based on inadequate pleading.  Id.  However, according to the Federal Circuit, once the Commission decides to institute an investigation, the time for rejecting the complaint as inadequate has passed.  “[T]he Commission may not institute an investigation and then decide post-hoc that it is dissatisfied with an unchallenged complaint upon which the investigation was predicated.”  Slip op. at 10.  Specifically, the Federal Circuit held that § 1337(g)(1) does not give the Commission discretion to deny relief (other than for public interest factors) post-institution where no party has come forward to challenge the allegations in the complaint:

Having approved Laerdal’s trade dress claims without any additional questioning and instituted an investigation thereof, …the Commission cannot now, post-institution and without opposition or appearance from respondents, assert insufficient pleading as a basis for denying relief. After the respondents were found in default, the Commission was required to issue relief upon Laerdal’s request, unless precluded by public interest concerns.

Id. at 13.

The result of this opinion may be increased scrutiny of draft 337 complaints, as well as complaints that have already been filed.  At the draft review meeting, it is more likely that OUII will make sure that all the elements of an alleged violation are laid out with specificity in the complaint.  Prospective complainants can expect future vague or conclusory complaints to be the subject of a request for supplemental information or face rejection by the Commission from the outset.

Additionally, counsel for a proposed respondent should carefully scrutinize section 337 complaints filed against the respondent.  Bringing shortcomings in the complaint to the attention of the ITC during the pre-institution phase might well result in at least a delay in the institution of the investigation, if not outright rejection of the complaint.

[View source.]