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Lawyers filing patent cases at the U.S. International Trade Commission say new litigation rules for patent infringement cases create additional burdens and worries about case delays in the commission’s popular forum for intellectual property disputes involving imported goods. The commission’s amendments to its rules of practices and procedure, which were published on July 7 and will take effect on Aug. 6, are designed to help the agency cope with a rapidly burgeoning docket of investigations under Section 337 of the Tariff Act of 1930. Patent holders can use the Section 337 investigation process to stop items that infringe a U.S. patent, trademark or copyright from being imported into the United States. Although the commission doesn’t award money damages, patent holders are drawn to the possibility of a speedy exclusion order, which is akin to an injunction that bars the infringing goods from entering the United States. Lawyers say the changes have added up-front hurdles for filing so-called “337 cases” and lengthened the target date an administrative law judge can set for the commission’s decision on a case. Yet some lawyers are cautiously optimistic that the agency’s July addition of an administrative law judge and the appointment of a chief administrative law judge, for a total of five judges now working on cases, will eventually speed case resolution. Lawyers say 337 cases were routinely resolved within a year up until a few years ago, but now 15 months is more typical. SHARP RISE IN FILINGS Amid the changes, the commission is coping with a sharp rise in complaint filings, up from 15 in fiscal year 2002 to 31 in fiscal 2007 and 37 as of June 2 in the current fiscal year, which ends on Sept. 30, according to commission data. The commission’s 337 proceeding has become “very much a mainstream” venue for hearing cases related to the infringement by imported goods, because it’s possible to get an exclusion order barring the goods more quickly than to get an injunction from a U.S. district court, said international trade litigator Tom Schaumberg of Washington-based Adduci, Mastriani & Schaumberg, whose firm submitted comments about the changes during the proposal stage. Schaumberg was also involved in the committee that wrote the comments for the American Intellectual Property Lawyers Association. Corporations seeking to remove infringing products from the U.S. market view the commission as an important forum for protecting their intellectual property rights against unfair import competition, he said. “Companies and attorneys would like to see the commission get back to its more traditional time frame of 12 months,” Schaumberg said. FRONT-END WORK A new rule requiring a chart documenting infringement allegations for every independent patent claim asserted, rather than just for one claim, will make it more difficult for patentees to bring the 337 cases, said Bas de Blank, a Menlo Park, Calif.-based intellectual property lawyer who also co-heads Orrick, Herrington & Sutcliffe’s International Trade Commission practice. “By requiring it at the beginning of the case, it puts an additional burden on patentees,” de Blank said. Although some of the other changes streamline paperwork, the claim-infringement chart requirement will create more work and costs at the start of a case, said Jeff Telep, a Washington-based partner in the international trade group at Atlanta’s King & Spalding. “You have to spend more time on the front end of your case identifying what the infringing acts are for each claim of the patent,” Telep said. Adding claims later in a case is procedurally more difficult at the commission than in U.S. district court, so filers will be motivated to meet that up-front requirement or to cut the number of claims involved in the case, de Blank said. “It could reduce, if not the number of investigations filed, . . . at least . . . the number of claims filed in each investigation,” de Blank said. Jonathan Darcy, a Philadelphia-based intellectual property lawyer and director at Newark, N.J.’s Gibbons, agreed that the requirement could be considered burdensome, but noted that “that type of homework is done in every well-pled [commission] complaint. “It’s an effort [by the commission] to get that out in the open to bring these cases to early resolution,” Darcy said. The commission declined to answer questions and pointed to comments in the published rules for statements about its positions. In the rules, the commission stated that the patent infringement claim chart would encourage early settlement or resolution of disputes and wouldn’t increase the burden a complainant already has “to file a non-frivolous complaint.” Companies with a valuable product that has a potentially short lifespan rely on the commission for quick resolution of intellectual property disputes, but the commission’s growing caseload, the temporary shortage of judges and the proliferation of motions filed in cases has lengthened average case resolution times in recent years, Schaumberg said. “Until a few years ago, 12 months was the [usual] length of time, except in complex cases,” Schaumberg said. Even foreign-based companies are flocking to the proceedings, with about 30% of cases filed by foreign-headquartered companies with U.S. operations, up from almost none six or seven years ago, said Schaumberg, whose firm tracks the commission’s caseload. Legal groups, including the ITC Trial Lawyers Association and the Intellectual Property Owners Association (IPO) submitted comments to the commission protesting a change that allows the judges to set a 16-month target date for resolving cases instead of a 15-month target. Although IPO would not comment for this story, its March comments submitted by its president, Steven W. Miller, stated that the organization has “serious concerns” about the time frame expansion. “[It] will also open the door to further expansions of the time limits in the future — essentially, proceeding down a slippery slope on which it will be difficult, if not impossible, to reverse direction.” The option to set a 16-month target, coupled with another change requiring the judges to issue an initial determination four months before the target to give the commission time to act, creates incentives for the judges to opt for that 16-month target, Telep said. “As a result of the rule changes, you’re now going to see longer investigations,” Telep said. The commission’s comments disputed that 16 months is the new, longer default length for every case. The commission also said the change gives its judges more options and blamed recent lengthy case resolutions on its caseload, the retirement of an administrative law judge and stays in other proceedings. The commission also said it would revisit the target after hiring more judges and staff and obtaining additional resources. “With the additional of new judges, one can only hope, even though the rules provide for 16 months, that the judges and the commission can start to bring that down,” Schaumberg said.

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