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When Viagra was introduced, it met with instant success. But success breeds patent infringers. Foreign competitors, seeking to take advantage of Viagra’s popularity, entered the market with knockoff sildenafil tablets manufactured using Pfizer’s patented formula. The vast majority of these tablets were imported into the United States. What did Pfizer do? It unleashed the patent holder’s best friend�a Section 337 complaint with the U.S. International Trade Commission. Within a little more than a year, the drug-maker had an ITC order barring any and all infringing foreign-made sildenafil tablets from being imported into the United States for the life of Pfizer’s patent. Such powerful results are not unusual at the ITC. Indeed, the commission offers a unique window into (quite literally) the world of patent infringement. Reading the ITC’s docket reveals which products are most attractive to pirate manufacturers seeking to profit in the world’s richest market and which countries currently harbor industries with more ambition than respect for IP laws. It also highlights the larger trade concerns of American business over the past 30 years. These days the attention in global trade and ITC litigation focuses on China. But it was not always so.
The ITC has become a center of intellectual property litigation, thanks to Section 337, which allows for fast and decisive resolutions to certain disputes over foreign competition. Section 337 focuses on unfair methods of competition and unfair acts when products are imported into the United States. The most commonly asserted type of unfair act is the infringement of a U.S. IP right, including patents, trademarks, and copyrights. But patents are the main concern. Of the 26 Section 337 investigations that were launched last year, approximately 90 percent raised allegations of patent infringement. A Section 337 investigation begins with a complaint being filed at the ITC. Once a complaint is filed, the ITC has 30 days to decide whether the claims merit an investigation. To prevail in a patent-based Section 337 dispute, the complainant must prove that (1) the accused product has been imported into the United States, (2) the accused product infringes the asserted patent, and (3) there is a domestic industry that practices the asserted patent. Section 337 investigations are famously fast. Cases are heard and decided more quickly at the ITC than even in the famed “rocket dockets” of the Eastern District of Virginia and the Western District of Texas. Most Section 337 investigations are completed in approximately 12 to 14 months. Because the ITC forum offers extremely strong remedies, it is also invaluable for companies seeking to enforce patents. Section 337 authorizes the ITC to exclude infringing products from entry into the United States and to prohibit the sale of those that have already entered. An infringer loses any future revenue it may have realized from U.S. sales of its products. (Monetary damages, however, are not recoverable under Section 337. For those, the patent holder must go to federal district court.) Under certain circumstances, the ITC�and only the ITC�is even empowered to grant a general exclusion of all infringing imports covered by the asserted patent or patents, not just the products of the specific infringers named in the investigation. But Section 337 has not always been the powerful magnet for patent holders that it is today.
Once, the ITC was a little-noticed federal administrative agency charged with updating the tariff schedule of the United States. Section 337 of the Tariff Act of 1930 was not particularly well-known, and it did not offer any useful or well-defined procedures. The first rumblings of change came in 1974, when the statute was amended in ways that made Section 337 much more appealing to litigants. All Section 337 investigations had to be completed within 12 months or, if deemed “more complicated,” 18 months. Investigations were also subjected to due process requirements under the Administrative Procedure Act. Nonetheless, the revamped Section 337 did not immediately attract a lot of litigants. Only five investigations were launched in 1975. And cases were slow in coming for the next decade. The trade volume of the infringing products in these earlier disputes was relatively low. Complainants tended to be either individual patent holders or small U.S.-based manufacturing companies, and the respondents were usually small to medium-size foreign manufacturers. Trial exhibits routinely consisted of no more than a few banker’s boxes filled with documents. And the products themselves, while technically cutting-edge (they were, after all, the subject of current patents), lacked a certain glamour. Indeed, during the late 1970s and early 1980s, the vast majority of the products subject to Section 337 investigations were decidedly low-tech consumer items and apparel. Disputes arose over plastic bags, automobile screw jacks, steel cookware, luggage, golf balls, skateboards, sneakers, and the Rubik’s Cube. In a Section 337 case in the early 1980s, our law firm successfully represented a Columbia, Md., inventor seeking a general exclusion order covering all imports of infringing caulking guns. By contrast, only 10 percent of the products subject to that first wave of Section 337 investigations could be classified as high-tech (which, for the purposes of this analysis, we have defined to exclude biological and chemical products). These investigations looked at such products as minutiae-based automated fingerprint identification systems and unitary electromagnetic flowmeters with sealed coils. A quarter-century ago, the trade bar that handled these kinds of cases consisted of about a dozen specialized firms (including ours). Many of the lawyers had begun their careers at the ITC and knew one another, the judges, and the ITC staff. Although we faced off in adversarial proceedings, the atmosphere tended to be quite collegial. Things began to speed up in the second decade of the new Section 337. Between 1985 and 1994 high-tech electronic products comprised 16 percent of the investigations, a 6 percent increase from the previous decade, perhaps reflecting the rise in the use of personal computers and computer-related products. The cutting-edge products at issue had evolved to include single in-line memory modules, anisotropically etched one-megabit dynamic random access memory, and memory devices with increased capacitance. But the ITC also continued to spend a lot of time on low-tech items such as miniature hacksaws, self-inflating air mattresses, and vacuum cleaners. These allegedly infringing products came in large part from the other highly developed, mainly Western economies with which the United States traded. From 1975 to 1984, Western Europe and Canada, plus Japan, were named as the sources of infringing products 62 percent of the time. The two East Asian countries that generated the most business angst and the most ITC complaints were Japan and Taiwan. Products from Japan were named 22 percent of the time; products from Taiwan, 18 percent. China was not yet a focus of Section 337 complaints.
Today, we’re in a different world. Section 337 practice at the beginning of the 21st century reflects the greater investment in, the higher stakes of, and the broader reach of, global commerce in intellectual property. A whole new breed of practitioner now brings Section 337 complaints. Most of the boutique firms that once dominated the practice have disappeared, acquired by larger national law firms eager to develop their own trade practices. More firms are handling Section 337 cases, and the lawyers are located throughout the United States. The attorneys no longer argue these disputes in a historic 19th-century building in Northwest Washington. In 1988, the ITC moved into sleek new offices in Southwest Washington. (The old building has become a hotel.) More important, the majority of Section 337 investigations today revolve around technologically sophisticated, high-dollar-volume electronic and pharmaceutical products. Between 1995 and 2004, 46 percent of the complaints that the ITC investigated addressed electronic, chip-based, or computer-related high-tech products�a 30 percent increase from the previous period. Companies were alleging infringement of their patents on global positioning receivers, EPROM flash memory and flash microcontroller semiconductor devices, and digital image storage and retrieval devices, among other very complex products. Of the cases filed in the past 18 months alone, a full 69 percent have involved high-tech products. For instance, we are representing Carsem (M) Sdn Bhd, Carsem Semiconductor Sdn Bhd, and Carsem Inc. in a Section 337 investigation brought on behalf of Amkor Technology Inc. over encapsulated integrated circuit devices. The technology at issue involves the “package” that seals and protects semiconductors used in everyday consumer products such as cell phones. (The matter is now pending before the administrative law judge.) As the products become more and more sophisticated, the geographic focus of the latest Section 337 investigations has also been shifting�to the East. The shift started in the second decade (1985 to 1994), when 52 percent of countries named as sources of infringing products were located in Western Europe, Canada, and Japan; 38 percent were located in East Asia, excluding Japan. Products coming from Taiwan overtook those from Japan as the focus of complainants’ interest, with items from South Korea and Hong Kong also appearing more frequently on the Section 337 docket. Now look at the ITC’s recently completed third decade: For the first time since the commission began administering Section 337, the frequency with which products from the countries of East Asia (other than Japan) were named in Section 337 investigations surpassed that of Western Europe, Canada, and Japan combined (52 percent vs. 41 percent). What is even more striking is that, among Asian countries, China has become the leading target of Section 337 complaints. China’s role in the manufacture of products that have aroused the interest of U.S. intellectual property owners is even more evident if only those cases instituted since the start of 2004 are considered: Since January 2004, Chinese products and companies have been involved in more than 40 percent of the Section 337 cases instituted at the ITC. That’s an astounding increase for one country, and yet one that should come as no surprise to anyone who has been following the past several years of economic activity in China. The level of technology associated with Chinese products has also increased as that country’s economy has matured. Instead of investigating fur coats and pelts from China (as the ITC did in 1986), the commission is now expending its resources on Chinese semiconductor devices, disc drives, optical disc controller chips, and audio-processing integrated circuits. High-tech products represent more than 50 percent of the items from China alleged to infringe U.S. intellectual property.
As the infringing products, source countries, and lawyers before the ITC have evolved since 1974, so too have the typical complainants. Just as success bred numerous infringers of Viagra, the success of Section 337 in enforcing IP rights has led to a major increase in the volume of large companies seeking its protection. Today, Section 337 litigation is big business, and the Fortune 500 dominates both sides of the docket. The Microsoft Corp., Hewlett Packard Co., 3M Co., Chiron Corp., Siemens, Gateway Inc., Energizer Holdings Inc., Genentech Inc., and, of course, Pfizer Inc. have all turned to Section 337. In addition, foreign owners of U.S. IP rights, such as the Fuji Photo Film Co., Samsung Electronics Co., and Toshiba Corp., are now invoking Section 337 to their advantage. The vast expansion of and technological evolution in Section 337 disputes have been reflected in the proceedings themselves, which have grown bigger and more technologically sophisticated. In the 2001 set-top-boxes investigation, for example, more than 2 million pages were produced by the complainants alone, and both sides employed technical and graphics specialists to prepare exhibits and assist at trial. In the 2003 zero-mercury-added alkaline batteries investigation, when the complainant and the 20-plus respondents agreed to conduct discovery electronically, approximately 100 CD-ROMs were exchanged. Exhibits subject to testimony now can be displayed on monitors throughout the courtroom where Section 337 disputes are heard. And the ITC has begun to accept electronic filing of certain public documents�and soon will begin accepting e-filing of confidential documents. Today, Section 337 cases sit at the center of changes in the global marketplace. More money, bigger litigants, and greater international concerns have turned up the volume on ITC work. Still, the old ways are not gone yet: Even for e-filing, the ITC will stick to its 5:15 p.m. deadline, which is closing time at the agency.
V. James Adduci II is the managing partner and William C. Sjoberg is counsel for D.C.’s Adduci, Mastriani & Schaumberg. The firm specializes in international trade, IP litigation, and customs law.

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