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ITC Docket Returning to 'Normal'
The National Law Journal
Just two years ago, the U.S. International Trade Commission was ground zero for high-stakes patent fights, a place where some of the world's biggest smartphone and electronics companies met to duke it out.
But since fiscal year 2011, the agency's intellectual property caseload has been on a downward spiral, with the number of cases filed to date during 2013 tracking at around half the level of two years ago, when a record 70 patent suits were filed.
It's not just the number of cases that's changed it's also who's bringing them and why. An analysis of the ITC's docket shows that Fortune G lobal 500 companies have filed just four cases there thus far this year, compared with 22 during fiscal 2011 and another 22 in 2010. And some of the products at issue toy robots, bark-control collars for dogs and windshield wipers are decidedly more mundane than the bet-the-company items in earlier disputes.
It's hard not to wonder: Is the ITC losing its luster?
Lawyers who practice before the agency say no. "The docket has returned to what I consider to be a more historically normal level," Covington & Burling intellectual property partner Sturgis Sobin said. "The ITC remains very much on the radar screen of companies, but they're looking at it for a relatively specific set of matters."
No company seems to have soured on the ITC more than Apple Inc., which on June 4 lost a key patent infringement case there against Samsung Electronics Co. In 2010, Apple first began making use of the ITC as a forum, suing Nokia Corp., HTC Corp. and Eastman Kodak Co. for patent infringement. During fiscal year 2011, Apple was involved in 10 new ITC cases as a complainant or respondent more than any company in the world. But by 2012, Apple had put the brakes on filing new ITC cases, although it was named as a respondent in seven. During the first two-thirds of fiscal year 2013, the company has been named in just one suit which it settled and has brought none as a plaintiff.
Apple's outside counsel at Wilmer Cutler Pickering Hale and Dorr declined to comment on ITC litigation and Apple did not respond to a request for comment. Still, the trade commission's decision earlier this month to ban older Apple iPhones and iPads from the U.S. market for infringing one of Samsung's patents has drawn considerable and largely unfavorable attention to the ITC.
"There's significant concern on Capitol Hill over the ITC's approach to cases like this one, and legislative intervention is probably inevitable," said Florian Müller, a Germany-based patent analyst and consultant who writes the blog FOSS Patents, and whose clients include Microsoft Corp. and Oracle Corp. Lawmakers and antitrust authorities have questioned the way the ITC handles cases like the Apple-Samsung dispute that involve patents essential to industry standards.
"I think the thought that iPhones could be banned, even on patents that were part of a standard and promised to the world, surprises some people. But an injunction is the only remedy the ITC can give," said patent expert Colleen Chien, a professor at Santa Clara University School of Law. "I think the question for policymakers is, 'Should the ITC apply the same standard for injunctive relief as the district court?' "
Cases before the ITC are brought under Section 337 of the Tariff Act of 1930. The statute provides for no monetary penalties. Instead, the prize is an exclusion order directing the U.S. Customs and Border Protection to turn away infringing products at the border. Equivalent injunctive relief has been far more difficult to win in U.S. district courts since 2006, when the U.S. Supreme Court set a steep bar in e Bay Inc. v. MercExchange. That threshold, however, has not been applied to Section 337 cases.
Following the eBay ruling, Apple was one of more than a dozen large companies that flocked to the ITC to litigate patent cases. As Apple's late chief executive officer Steve Jobs put it in a press release, "We can sit by and watch competitors steal our patented inventions, or we can do something about it. We've decided to do something about it."
HIGH DROP-OUT RATES
But, according to Müller, the results were not always what the complainants had hoped.
"Large operating companies like Apple, Microsoft, Nokia and Google's Motorola have experienced very high drop-out rates with the patent infringement claims they brought at the ITC. Some companies had zero success, while others prevailed only on one out of nine or 10 patents," Müller said in an email message. "For example, the ITC considered a Microsoft file system patent invalid even though it had previously survived different challenges in the U.S. and Germany."
Indeed, Microsoft also may have lost its enthusiasm for the ITC, filing four cases in 2011 and none since.
One of the ITC's much-touted advantages is speed it aims to resolve cases within 15 months or less. But that doesn't always happen, and the agency's six administrative law judges at times struggled to meet deadlines after the glut of cases in 2011.
Consider yet another Apple/Samsung dispute, this one brought by Apple alleging that Samsung infringed a patent covering a text selection feature on smartphones and tablets. The commission gave the suit a green light to proceed in August 2011, but after a remand and series of extensions from February 5 to February 19 to March 13 to August 1 the final decision is now due two years after the case was brought.
ITC spokeswoman Margaret O'Laughlin said the agency "takes investigations as they're filed" and has no control over the volume of cases brought by private parties. She noted that the agency has seen an increase in ancillary proceedings stemming from earlier cases, with 10 this year to date compared with eight during fiscal year 2012.
Former ITC commissioner Deanna Tanner Okun, now a partner at Washington's Adduci, Mastriani & Schaumberg, said the ITC's caseload overall remains historically high, with 105 pending matters as compared with 129 active investigations during fiscal year 2012. "This is still an expert forum for domestic industries seeking expeditious relief from infringing imports," she said.
This article originally appeared in The National Law Journal.