It’s almost become a lawyer meme that the International Trade Commission, a once-obscure quasi-judicial body, is a hot forum for patent disputes because it handles cases quickly and offers powerful injunctive remedies. A less known fact is that intellectual property boutiques, once rumored to be going extinct, are faring well at the ITC. That, like everything at the ITC, could change in years to come, however. The agency is in flux, experts say. Its newfound popularity could become a liability, and some on Capitol Hill want to weaken its powers.
Before we get to all that, here’s the results of Corporate Counsel ‘s annual ITC survey, which ranks law firms on the number of ITC cases filed last year that they were named in. The ITC, which is based in Washington, D.C., heard 69 cases in 2011, up from 56 the year before. The firm whose name came up the most times is Adduci, Mastriani & Schaumberg, with 21 cases. Adduci Mastriani is an ITC boutique. While it sometimes handles cases on its own, it more often works alongside larger firms and handles ITC–specific substantive and procedural arguments. Kenyon & Kenyon, a 130-year-old firm that only does IP, nabbed second place with 16 cases. Another IP–only firm, Finnegan, Henderson, Farabow, Garrett & Dunner, took third place for a second year in a row, with 14. Fish & Richardson, also IP–only, remained in fourth place. Foster, Murphy, Altman & Nickel, a new ITC boutique modeled after Adduci Mastriani, debuted at fifth place. Our rankings may understate Foster Murphy’s rapid growth. In addition to the 11 cases from 2011 that it appeared in, the firm also worked on seven cases initiated by other firms in 2010, says name partner Barbara Murphy.
ITC Survey 2012:
The best-placed general practice firms are Quinn Emanuel Urquhart & Sullivan and Steptoe & Johnson, which tied for sixth place. Steptoe, a Washington, D.C.–based firm, has been handling ITC cases since the 1970s, before it was cool. Quinn Emanuel, on the other hand, broke into the ITC in the mid-2000s and quickly climbed up our rankings, thanks in part to its work for Motorola Mobility Holdings Inc. in smartphone patent cases. The firm may climb even higher next year. In September 2011 it hired away three former Alston & Bird partners and convinced them to anchor a new Washington, D.C., office dedicated just to the ITC.
Several general practice firms took on fewer cases in 2011 than the year before. Alston & Bird, last year’s runner-up, slipped to eighth place. Kirkland & Ellis and Weil, Gotshal & Manges fell in the rankings as well. We suspect the firms were too busy with pending high-profile cases to take on new ones. Alston & Bird is Nokia’s go-to firm for smartphone cases at the ITC, including three against Apple that culminated in a settlement in June 2011. Kirkland helped guide Apple to that same settlement and also finished up a case it brought in 2010 for Apple against HTC Corporation. Weil, meanwhile, finalized several big 2010 cases this year, including one it brought for Apple against Eastman Kodak Company.
Our survey doesn’t reflect which firms are most sought after, or which win the most high-profile cases. But it nonetheless suggests that IP–only firms are faring particularly well at the ITC. Technical expertise is a big reason for that, says Kenyon’s Marcia Sundeen. Kenyon, like other IP–only shops, tries to distinguish itself by mainly recruiting lawyers with advanced degrees. That makes Kenyon well suited for ITC cases, she says, which are heard exclusively by judges used to sophisticated technology.
IP–only shops also benefited from a head start. Finnegan expanded its ITC group back in the 1990s, when most of the cases involved “little plastic knock-off junk from Asia,” says Finnegan partner Christine Lehman. The early start “has really helped us,” she says. “When the uptick in cases hit, we were able to leverage our experience across multiple cases simultaneously, whereas other firms only had one or two lawyers that knew the ins and outs.”
A looming question among patent experts is whether the ITC will fall victim to its own appeal. Another venue popular with patent holders, the U.S. District Court for the Eastern District of Texas, has shrunk a bit from the spotlight. Like the ITC, Eastern Texas is known for its “rocket docket.” But as more patentees have brought suit there, the court’s turnaround time has slowed. Meanwhile, a plaintiff-friendly procedural device popular with Eastern Texas judges came under attack. Congress stuffed a provision into the America Invents Act of 2011 that makes it more difficult for plaintiffs to name a long list of diverse defendants in one complaint. Eastern Texas’s tendency to allow multidefendant cases was one reason for its popularity. While Eastern Texas still remains synonymous with patent litigation, more patent holders are now bringing suit in other patent-friendly district courts, like the U.S. District Court for the District of Delaware.
Similarly, a perk of the ITC—its ability to hand down injunction relief in the form of import bans—may soon come under legislative attack. According to the Web site Politico, Devin Nunes, a congressman in tech-heavy California, is shopping around legislation that requires the ITC to follow the stricter standard for issuing injunctions handed down by the U.S. Supreme Court in a 2006 case, eBay Inc. v. MercExchange, LLC . The fact that the ITC isn’t bound to follow eBay is a major reason that patent holders are filing there instead of federal court.
Bert Reiser, an ITC lawyer at Latham & Watkins, says Nunes’s response is unnecessary because the ITC can police itself. “Why not empower the commission, which has been carrying out a statutory scheme for decades, with determining what’s in the public interest? I sense that the commission is fully capable of doing that,” he says.
Another problem with such legislation, says Charles Schill, a veteran ITC lawyer at Steptoe & Johnson, is that it would take a Supreme Court case about patent law and impose it on a trade law agency. “Yes, the ITC is about patents, but it’s not patent law. It’s trade law,” he says. “I don’t think applying eBay per se would solve anything, and might create more problems. The commission is already tailoring its own orders to take into account the public interest, while still providing effective remedies to patent owners.”
According to Politico, Nunes’s proposed legislation would also clarify the statutory requirement that only a “domestic industry” can bring a case at the ITC. We don’t know what tweaks Nunes has in mind, but it’s safe to bet his goal is to clamp down on “patent trolls,” entities that acquire patents for purposes of winning licensing deals through litigation. California’s tech companies have long urged the ITC to modify its domestic industry analysis to block trolls, sometimes called “patent assertion entities” (PAEs). Paul Roeder, vice president and assistant general counsel of Hewlett-Packard Company, has written several op-eds in recent months advocating such reforms. “Despite having contributed nothing to the development of the accused products . . . and despite having no domestic industry to protect, [PAEs] want to tax tech products,” he wrote in a recent post on the blog IPWatchdog. “They have invaded the ITC because Congress and the U.S. district courts, recognizing the harm caused by hold-up patent litigation, now prohibit mass joinder, require real evidence of the value of the patented invention, and do not grant injunctions to PAEs.”
Reiser, for his part, is wary of legislative efforts to keep certain patent-holders out of the ITC. The commission itself is better equipped to make case-by-case determinations of whether the public would be served by letting a particular entity plead its case, he says. “If you ask 10 people, ‘What is a patent troll?’ you might get 10 different answers,” he says. “There are so many different business models. I don’t know where on the continuum you will find consensus of what is good and bad.”
Another issue facing the ITC is its own popularity. As has happened in Eastern Texas, the ITC’s pace has slowed. ITC investigations used to be resolved within a year. Now they typically take 15–16 months. “I’ve always been concerned that the increased number of cases is putting a strain on the ability of the commission to decide cases in a short enough time frame,” says Steptoe’s Schill. “But the commission is responding well,” he adds. Indeed, ITC motion practice is more efficient than ever, and ITC staff attorneys are also helping negotiate agreements between opposing counsel to narrow their claims. “We’re seeing judges . . . reduce the size of the case and make the trial more focused,” Schill says.
ITC judges are also increasingly asking parties to mediate their cases. “It’s fair to say the mediation program has gained strength,” says Tom Schaumberg, of Adduci Mastriani. “It wouldn’t surprise me if the commission, in an effort to streamline the settlement process, made mediation mandatory.”
The ITC’s responses are working, experts say. “Compared to other courts, it remains very fast,” says Reiser. “And you know that even if the case doesn’t go your way, your argument will get a good listen.”
“I don’t think we will see any rapid decrease, unless something serious happens,” agrees Lehman, of Finnegan.
in fact, the ITC’s caseload may even get higher. While the agency is best known for patent cases, its enabling statute grants it broad investigative responsibilities in matters of trade, so it can also hear claims of false advertising, trade secrets theft, copyright infringement, and trademark infringement. Now that the ITC is getting so much mainstream attention, experts say we could see more of those cases.
Trade secrets theft, in particular, may be a new hot area for the ITC. The U.S. Court of Appeals for the Federal Circuit ruled in the 2011 case TianRui Group Co. v. ITC that the ITC has authority to apply U.S. trade secrets law to overseas conduct as long as the conduct causes a domestic injury. That ruling could result in more U.S. companies bringing ITC trade secrets cases against foreign competitors.
SI Group Inc., an international chemical company based in upstate New York, brought exactly such an ITC complaint in May against a Chinese rival called Sino Legend (Zhangjiagang) Chemical Co. Ltd. The complaint alleges that Sino Legend hired away an SI Group’s plant manager in China, pumped him for trade secrets relating to rubber resins used in car tires, and then began importing a competing product into the United States. Because the underlying conduct occurred mostly in China, “you would not have expected to be able to bring this case in the ITC prior to the TianRui decision,” said Jake Holdreith, an IP litigator at Robins, Kaplan, Miller & Ciresi not involved in the case.
Because the ITC can’t award money damages, it won’t be an attractive venue for all litigants. But in today’s fast-paced global economy, more and more companies are flocking to the agency for quick results and powerful remedies. And there is a long list of lawyers hoping it stays that way.