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Program Submission Form
International Trade Commission ("ITC")
Program Title _______________________________________________________________________________________________________________
Date Presented February 19, 2015
Inn Year 14-15
Colorado Intellectual Property America Inn of Court
30437
Presenting Inn____________________________________________________________________________
Inn Number_________________________
Denver
Inn City________________________________________________________________
Inn State__CO
___________________________________________
Bruce Dahl
(303) 291-3205
Contact Person__________________________________________________________
Phone_______________________________________________
[email protected]
E-mail Address______________________________________________________________________________________________________________
Please consider this program for the Program Awards: Yes
No
This program is being submitted for Achieving Excellence:
Yes
No
Program Summary:
Indicate the legal focus and be concise and detailed in summarizing the content and setup of your program. Please attach additional sheets if necessary.
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The program explained how the ITC can be used in the context of patent infringement, induced infringement, non-practicing entities,
and trademark infringement through a series of skits. In each skit, one or two attorneys counseled a client on the possibility of
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litigating in the ITC, explaining the law, procedure, drawbacks, and advantages. The first skit included an overview of litigating in
the ITC during a conversation between an attorney and a client contemplating filing suit in the ITC. The second skit addressed the
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current law regarding induced infringement and whether it would or would not apply to the client (a foreign manufacturer) should
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the client be sued in the ITC. The third skit addressed the requirements to file an action in the ITC during a conversation between an
attorney and a non-practicing entity who wanted to assert patents in the ITC. The fourth skit highlighted the pros and cons of filing
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an ITC action from a brand owners perspective to halt incoming products with infringing marks. The fifth skit returned to the
storyline and actors in the first skit and explained what happens after an exclusion order is granted in the ITC. The program
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concluded with an interactive discussion between the audience and two experienced ITC litigators.
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Program Materials:
The following materials checklist is intended to insure that all the materials that are required to restage the program are included in the materials submitted
to the Foundation office. Please check all that apply and include a copy of any of the existing materials with your program submission:
Script Articles
PowerPoint Presentation
Citations of Law
Legal Documents
Fact Pattern
List of Questions
Handouts
CD
DVD
Other Media (Please specify)____________________________
Specific Information Regarding the Program:
14 (could use less)
Number of participants required for the program Which state’s CLE? Colorado
Has this program been approved for CLE?
How many hours? Yes
No
1
Recommended Physical Setup and Special Equipment:
i.e., VCR and TV, black board with chalk, easel for diagrams, etc. When submitting video, please indicate the length of all videos. i.e., 30 or 60 min.
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Projector, projector screen, computer to run power point presentation
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Comments:
Clarify the procedure, suggest additional ways of performing the same demonstration, or comment on Inn members’ response regarding the demonstration.
__________________________________________________________________________________________________________________________
A modified slide deck was provided to the audience as handouts.
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THIS FORM IS AVAILABLE FOR DOWNLOAD ON OUR WEBSITE: WWW.INNSOFCOURT.ORG
Program Submission Form
Roles:
List the exact roles used in the demonstration and indicate their membership category; i.e., Pupil, Associate, Barrister or Master of the Bench.
Role
Membership Category
Introduction
1 Master
2 Attorneys providing overview of litigating in ITC case to 1 Client
2 Associates, 1 Pupil
1 Attorney counseling 1 Client (Induced Infringement actions in the ITC)
2 Associates
2 Attorneys counseling 1 client (NPEs in the ITC)
3 Associates
1 Attorney counseling 1 Client (Trademark Infringement in the ITC)
1 Associates, 1 Pupil
Policy behind actions in the ITC
2 Associates, 1 Pupil
Two Panelists with experience litigating in ITC
2 Masters
Agenda of Program:
List the segments and scenes of the demonstration and the approximate time each step took; i.e., “Introduction by judge (10 minutes).”
Item
Time
Introduction
~3 min
Skit 1: Attny-Client Interview and Overview of Litigating in ITC
~12 min
Skit 2: Attny-Client Discussion about Induced Infringement Actions in ITC
~10 min
Skit 3: Attny-Client Discussion about NPE actions in ITC
~10 min
Skit 4: Attny-Client Discussion about Trademark Infringement actions in ITC
~10 min
Skit 5: Skit regarding policy; Panelist discussion
~10 min
Program Awards: Please complete this section only if the program is being submitted for consideration in the Program Awards.
Describe how your program fits the Program Awards Criteria:
Relevance: How did the program promote or incorporate elements of our mission? (Fostering Excellence in Professionalism, Ethics, Civility, and Legal Skills)
Please see attached sheet.
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Entertaining: How was the program captivating or fun? Please see attached sheet.
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Creative and Innovative: How did the program present legal issues in a new way? Please see attached sheet.
__________________________________________________________________________________________________________________________
Educational: How was the program interesting and challenging to all members? Please see attached sheet.
__________________________________________________________________________________________________________________________
Easily Replicated: Can the program be replicated easily by another Inn? Yes
No
This program is: Original Replicated
Questions:
Please contact Christina Hartle at (703) 684-3590 ext 105 or by e-mail at [email protected].
Please include ALL program materials. The committee will not evaluate incomplete program submissions.
Program_Submission_Form.indd [Rev. 10/2012]
Describe how your program fits the Program Award Criteria:
1. Relevance: How did the program promote or incorporate elements of our mission? (Fostering
Excellence in Professionalism, Ethics, Civility, and Legal Skills)
Answer: From an overview to induced infringement to non-practicing entities to trademark
infringement, the program provided the audience with insight into litigating in the ITC. The
program also included a discussion of policy behind certain ITC rules.
2. Entertaining: How was the program captivating or fun?
Answer: The presenters entertained and captivated the audience with five different skits, all
with different themes and humor cleverly woven throughout each skit.
3. Creative and Innovative: How did the program present legal issues in a unique way?
Answer: By using five short skits to convey substantive information, the program allowed the
audience to learn about the basics of litigating in the ITC as well as the current issues in a
digestible, entertaining manner. The skits were in the format of an attorney counseling a client,
allowing the audience to see how a patent litigator may counsel his or her client on litigating in
the ITC.
4. Educational: How was the program interesting and challenging to all members?
Answer: This program challenged and engaged members of all experience levels. Members
less experienced with the ITC or litigating in the ITC were provided with a concise overview.
Members experienced with the ITC were treated to the policy discussion. All members could
appreciate the current events highlighted in the program (e.g., the vetoed exclusion order against
Apple) demonstrating the relevance of the ITC.
CLIENT INTERVIEW 1
CLIENT: Hello, I’m Chris, as you may recall, I’m the CEO of LSRUSA.
ATTORNEY 1: Yes, I’m Lane, nice to see you again.
ATTORNEY 2: And I’m Karin. What brings you into our office today?
CLIENT: Well, I saw the news last night about Apple v. Samsung and what happened in the
ITC. Our company has a patent on an artificial liver. Here in the US we make and sell this
amazing product, which nanoparticles with organic tissue to act as a liver. The good news is that
sales are at an all-time high and we are poised to break international sales records for a medical
device. The bad news is that a company in Germany called German Electric Livers is making a
total knock-off of our artificial livers and selling them in the US. Is the ITC available to us?
ATTORNEY 1: It might very well be. I’m glad you asked.
CLIENT: What is the ITC anyway?
ATTORNEY 1: As you probably understood from the news report, the ITC offers an alternative
forum for US IP owners who want to block infringing products from entering the US market.
The ITC is a federal agency with quasi-judicial authority. It has broad investigative
responsibilities on matters of trade.
CLIENT: Last night was the first I’d heard of the ITC, is it very commonly used in patent
cases?
ATTORNEY 2: In 2014 there were about 40 new patent-related ITC investigations. Compare
that with over 5,000 patent infringement cases filed in the district courts around the country
during the same year.
CLIENT: Wow, that 40 doesn’t seem like a lot of cases.
ATTORNEY 2: Actually, this number represents a drastic increase in the number in recent
years. Between 1990-2000, there were only an average of 13 investigations instituted annually,
and in the next 10 years (between 2000 and 2010) the average was 30 per year. This increase is
probably due to an uptick in imports into the US, and also the high number of district court cases
make the ITC an enticing alternative forum. It also helps that more companies, like yours, are
becoming educated about it.
CLIENT: We make a medical device, an artificial liver, what types of products can an ITC
judgment exclude?
ATTORNEY 1: Anything that is being imported into the US. The ITC is powerful because it
can issue an exclusion order against any item that it finds is infringing a valid patent. In the past
year, these actions involved electronics, medical devices, clothing, chemicals, sporting goods,
and car parts.
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CLIENT INTERVIEW 1
CLIENT: What about the infringing artificial livers that are already here?
ATTORNEY 2: The ITC can also issue a cease and desist order that prohibits the sale of
already-imported domestic inventories.
CLIENT: I really feel like German Electric Livers is infringing our patent, and in addition to
wanting to stop them from importing their products into the US, I think our company deserves
some money for patent infringement. How does an ITC case affect my ability to do this?
ATTORNEY 1: There are no monetary remedies available in the ITC. An ITC action, however,
does not preclude you from filing a district court case against German Electric Livers to recover
damages.
CLIENT: Last year we finally resolved a six year patent-infringement suit in the court here in
Colorado. I’m not sure we have the patience to go through that again right now. How would an
ITC proceeding be different?
ATTORNEY 1: There are both procedural and substantive differences to a patent infringement
case in the ITC as opposed to the district court.
ATTORNEY 1: To begin with, an ITC proceeding is likely to happen much faster. The ITC
rules of practice state that all investigations and related proceedings shall be conducted
“expeditiously.” This means you could get to trial in as little as 7 months. Most ITC
proceedings take about 1.5 years start to finish.
CLIENT: Is it a problem that German Electric Livers is located outside the US? Can we still sue
them?
ATTORNEY 2: That should not pose a problem, because the ITC exercises what is called in
rem jurisdiction over the accused imports. That allows the court to easily establish personal
jurisdiction over the accused company.
CLIENT: If getting jurisdiction over a foreign company is easier in the ITC, that reminds me
that there are actually a couple of foreign companies that we think might be importing infringing
products. They are located throughout Europe. Do I have to sue each one individually?
ATTORNEY 2: No, you can actually bring a single action against multiple companies even if
they are located in different countries.
ATTORNEY: As a side note, if there are many companies that are importing infringing goods,
another potential outcome of an ITC proceeding is for the ALJ to issue a general exclusion order.
This happens in instances where there is a pattern of infringing products being imported from
several different sources. This is a unique remedy to the ITC, a district court cannot issue such
an order, only against a specific party that you have sued. This is designed to bar the importation
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CLIENT INTERVIEW 1
of infringing products from any source, so that you can avoid repeated litigation against
numerous infringers who might vanish after being sued and then reappear using a different name.
The ALJ might order this if you were to show a pattern of patent infringement and business
conditions that suggest that foreign manufacturers other than German Electric Livers may
attempt or actually are importing infringing products.
CLIENT: You mentioned there are some differences in the law in the ITC versus the district
court?
ATTORNEY 1: It is a good thing you came to our firm, because we are experts in ITC
litigation. This is important because in an ITC action, there is an increased amount of law for us
to understand and follow as compared to a federal district court case. This includes international
trade law, the Administrative Procedure Act, the ITC’s Rules of Practice and Procedure, each
judge’s set of rules, Customs procedures, and the prior decisions of the ITC and the Federal
Circuit that related to these kinds of disputes. There is also a different legal standard that the
ITC uses in determining whether to grant an exclusion order.
CLIENT: Oh no, does this hurt my case?
ATTORNEY 2: Probably not. The legal standard requires that you need to show that your
company has an industry in the United States related to the artificial livers. This is call the
Domestic Industry Requirement. Would you say that you have made significant investments in
the US in plant and equipment or labor and capital with respect to your patented product, the
artificial livers?
CLIENT: Oh, yes we do all of our manufacturing in the US, we make 300,000 livers every year.
ATTORNEY 1: Ok, great. It sounds like you should have no problem meeting this standard. If
you weren’t manufacturing in the US, you could satisfy this by showing research and
development, licensing of the patents, or other similar activities.
CLIENT: I know you said ITC cases can be faster, but what if we can’t afford to wait until the
end of the case to stop their product from being imported? It’s really hurting our bottom line
now.
ATTORNEY 2: Like in a district court case, in the ITC you can request a preliminary
injunction. If you are able to meet these requirements, their importation will stop
IMMEDIATELY.
CLIENT: What is the worst case scenario of what could happen at the ITC?
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CLIENT INTERVIEW 1
ATTORNEY 1: Well, you could lose your case against German Electric Livers, meaning there
would be no exclusion order. This could be through the ALJ finding that German Electric Livers
does not infringe, finding that your patent is unenforceable, or even that you patent is invalid.
The beauty of an ITC case for a patent-holder, such as yourself, is, however, that ITC final
decisions are not binding on a US district court and have no res judicata or collateral estoppel
effect. So if you were to not prevail, you could reassert the patents in district court. This is true
even if the ALJ finds your patent invalid.
CLIENT: I could get a second try, clean slate? That sounds fantastic!
ATTORNEY 1: Yes, but keep in mind, the ITC’s final decision would be admissible evidence
that the district court judge could consider.
CLIENT: You’ve made litigation in the ITC sound very appealing. There must be some
downsides?
ATTORNEY 2: Yes, of course. First and foremost, there are more up-front costs for you. This
is because the initial filings and requirements are more rigorous than in the district court. At the
beginning of the case, you will need to show specific evidence of importation, and provide a
claim-by-claim analysis of the patent infringement. This means working with experts and
complying with very tight deadlines. You must remember, that even if you prevail in the ITC,
you will not be awarded any money.
CLIENT: At this point, my top priority is to stop the infringing artificial livers from entering the
US market in the first place. We put so much money into developing our product and want to be
the only artificial livers sold in the US, isn’t that why we went through the trouble of patenting
this? What do you think I should do?
ATTORNEY 1: It sounds like the ITC might be a good forum for you to resolve your issues.
CLIENT: That sounds good, but before I determine that I want to file I want to know more
about the procedure.
ATTORNEY 2: Here is a flow chart that provides a quick overview of the process, I’ll send it
home with you so you can review it in detail. Let’s step through the process now.
ATTORNEY 2: The legal standards that govern a 337 investigation are found in Title 19 of the
United States Code and the Code of Federal Regulations. The ALJ may impose additional
ground rules for the proceedings.
CLIENT: Are there any filing requirements that are specific to patent cases?
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CLIENT INTERVIEW 1
ATTORNEY 1: Yes, for each patent you are requesting the ITC enforce, you must provide the
prosecution history as well as copies of technical references cited in the prosecution history.
Additionally, if a licensing agreement is the basis for standing or the domestic industry
requirement, then a copy of the license must be provided.
CLIENT: So I file and then the ITC starts investigating?
ATTORNEY 2: Not exactly. The commission is not required to initiate an investigation
because you filed a case. To decide whether to initiate an investigation, they review your
complaint and consider various public interests. If the commission decides to initiate an
investigation, the case proceeds.
ATTORNEY 2: In the ITC there are no jury trials, so all of the determinations are made by an
administrative law judge. There are currently 5 Administrative law judges, versus the hundreds
of district court judges. These judges at the ITC are becoming increasingly familiar with patent
litigation.
ATTORNEY 1: Another thing you should know about the ITC is that the public is also a party
to every ITC investigation. What this means practically is that there is a third party to the case,
where the public is represented by an attorney from the Commission. There are currently 14 of
these attorneys. On behalf of the public, they act like any other party: they can take a position
with respect to any issue, submit briefs, and cross-examine witnesses at trial. Like the ALJ, the
Commission staff attorneys are well-versed in patent law, so you can possibly make more
technical arguments than you might in front of a district court jury.
ATTORNEY 2: Also, the public is encouraged to comment on their interests during ITC cases,
which takes the form of third-party intervention.
CLIENT: What is discovery like in an ITC case?
ATTORNEY 2: Discovery is very similar to a district court case. All forms of discovery
available under the federal rules of civil procedure are also available in an ITC case. The major
difference is that responses to discovery requests are due within 10 days. This means that the
costs of discovery will be approximately the same as a district court case, but the costs will be
incurred over a much shorter period of time.
CLIENT: What happens after discovery?
ATTORNEY 1: A formal hearing is conducted to determine the merits of the case. The ALJ
presides over the hearing. Parties have the ability to present arguments and evidence like a
district court case.
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CLIENT INTERVIEW 1
ATTORNEY 1: After the hearing, the ALJ issues an initial determination on the case, which
may or may not be reviewed by the commission. Ultimately, if you are unhappy, there is the
potential to appeal to the Federal Circuit..
CLIENT: Ok, I think I want to file a case in the ITC.
ATTORNEY: Great, let’s meet again tomorrow to discuss details.
CLIENT FOLLOW-UP
ATTORNEY 2: Great news, we have received a favorable decision from the ALJ.
CLIENT: What does that mean exactly?
ATTORNEY 2: Well, after conducting the investigation, the ALJ determined that German
Electric Livers’s artificial livers infringe your patent.
CLIENT: That is good news. What happens next?
ATTORNEY 1: The Commission can grant an exclusion order, which prohibits the importation
of infringing goods in the US. The Commission can also issue a cease and desist order, which
prohibits the sale of German Electric Livers artificial livers that are already in the US. Cease and
desist orders are less common than exclusion orders but are still granted relatively frequently.
CLIENT: Does this happen automatically?
ATTORNEY 1: No, after the Commission determines Section 337 violation has occurred, it is
required to send its final determination to the President for review. The president may disapprove
an ITC order on policy grounds, approve an order, or take no action and allow the order to come
into force upon the expiration of a 60-day review period following the issuance of the order.
CLIENT: So President Obama himself will be reviewing my case?
ATTORNEY 1: Probably not. The President delegates his authority to the US Trade
Representative.
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CLIENT INTERVIEW 1
CLIENT: Has the President ever disapproved an exclusion order issued by the ITC? Isn’t that
what happened to Apple?
ATTORNEY 1: Yes, it has happened but it is very rare. Prior to President Obama’s decision
regarding Apple, there have only been five prior Presidential disapprovals and they were all in
the 1970’s and 1980’s. The last one was in 1987.
CLIENT: Why would the President or the USTR disapprove the Commission’s determination?
ATTORNEY 2: The USTR takes into account a number of considerations as being relevant to
public policy. It considers the effect the remedy will have upon the public health and welfare,
competitive conditions in the U.S. economy, the production of like or directly competitive
articles in the United States and U.S. consumers.
CLIENT: What exactly happened in the case of Apple and Samsung? Why did the USTR
overturn the ITC injunction?
ATTORNEY 1: Simplifying it a bit: the dispute between Apple and Samsung was over patents
on wireless communications. The ITC found one of the two patents asserted by Samsung to be
valid and infringed. The Commission determined the proper relief was a limited exclusion and
cease-and-desist order barring Apple from importing its iPhone 4, iPhone 3GS, iPad 3G, iPad 3
and iPad 2 models for sale in the U.S. The USTR disapproved of the ITC’s determination. The
USTR was concerned about the potential harms that can result from “patent hold-up.”
CLIENT: What does that mean in layman’s terms?
ATTORNEY 1: It refers to the undue leverage that results when the holder of standards
essential patents (SEP) seeks to exclude an implementer of a technology standard from a market
in order to leverage a higher price for use of the patent than would have been possible before the
standard was set.
CLIENT: Ok. If the President does not disapprove of the Commission’s order, what happens?
ATTORNEY 2: The exclusion orders become effective within 60 days of issuance and are
enforced by U.S. Customs and Border Protection. Exclusion orders and cease and desist orders
generally stay in effect until the expiration date of the patent.
CLIENT: How do they enforce an exclusion order?
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CLIENT INTERVIEW 1
ATTORNEY 2: The U.S. Customs and Border Protection (CBP) uses two processes to enforce
exclusion orders issued by the ITC. One is a four-phase process to detect and deny entry to or
seize infringing products at U.S. ports. The second is an administrative ruling process that
determines in advance of importing whether products are covered by exclusion orders. Before a
company attempts to import a certain product, it may request that CBP determine through its
administrative ruling process whether the product is covered by a particular exclusion order.
CLIENT: Do you know if CBP has actually excluded any products from entering the U.S.?
ATTORNEY 2: Yes. A recent report stated that between September 2010 and April 2014, CBP
excluded 158 shipments of products, such as ink cartridges and footwear.
CLIENT: I see. I think things look good for us. Thanks for all your hard work, let’s hope those
infringing livers are excluded.
ATTORNEY 2: Indeed, it was a pleasure working with you.
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TEAM 2 - INDUCED INFRINGEMENT SCRIPT
LAWYER: Good evening Mr. Foreign Manufacturer, what can I help you
with?
CLIENT: Our Company has been trying to enter into the wearable
device market and we have recently developed a product that we think
will be a game changer. It could change the way we sleep, eat, work,
exercise, and greatest of all… dress. We call it the Cell-Tee, it is a tee
shirt integrated with a cell phone… Take a look (Takes off jacket and
shows duct taped cell phone). Isn’t it wonderful?
LAWYER: Yeah, that’s really something…
CLIENT: We are planning to begin our US release in March, but our inhouse IP specialists came across a competitor’s patent that could be a
problem. So I was wondering what problems may arise if we were to
import our Cell-Tees into the United States.
LAWYER: First of all there are the traditional Federal Court
infringement actions. But these often take years to complete and often
settle before an injunction or damages are awarded. So that may not be
desirable for a product that will have a short lifespan such as the Celltee. So, a more likely risk is that they try to stop you at the border with
an ITC action. The ITC is a fast docket and has the ability to issue
injunctions that can see your products stopped by customs agents as
soon as the boat docks.
CLIENT: I’ve heard of this ITC thing. Didn’t Samsung just win a big ITC
case against Apple?
LAWYER: Yes, that case has been getting a lot of press. [ASIDE TO
AUDIENCE] And giving us a lot of business. [END ASIDE].
CLIENT: Well, that sounds like a pretty good way for them to shut down
our product launch.
LAWYER: There is that potential. But, there is also a recent court
decision that could help your position. In Suprema v Mentalix the ITC
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found infringement and issued an exclusionary order, but then the
Federal Circuit reversed this decision and potentially opened the door
for importers who complete assembly of a product only after
importation. This deals with an area of infringement called induced
infringement.
CLIENT: Awesome! Hmmm. So, maybe we can import the tee-shirt and
the phone separately and then provide instructions on how to assemble
the Cell-Tee to our US distributors?
LAWYER: Tell me about the assembly process. What would you have
to tell the distributors?
CLIENT: Pretty simple actually. You take the shirt, and then you take
the phone, and you place the phone on the shirt, and then you rip off
about a 6” length of duct tape… and you tape the phone to the shirt.
LAWYER: [FROWNING] Really? That’s the assembly process? I was
hoping that you’d suggest something like import the phone affixed to
the shirt and then have the distributors load the software onto the
phone. Or perhaps import the assembled product with a missing piece
of trivial code that is added to the phone’s firmware after importation.
But, strangely, even though your assembly process is a bit basic, that
might do the trick.
CLIENT: Are you calling the assembly method of my Cell-Tee, trivial?
This is a highly sophisticated game changing product. It has already
received endorsements from a number of different esteemed celebrities
and initial funding from key angel inventors including Justin Beiber and
Kim Kardashian.
LAWYER: Sorry sir, I was not calling your product trivial. It really
is…something. No, that’s great, that’s great. I was just mentioning those
possibilities as they might improve your favor with a court. See, one of
the reasons that the Federal Circuit does not want these induced
infringement cases to be allowed at the ITC is that they believe that
infringement isn’t occurring until after importation, and if the ITC
blocks parts of an infringing product before it is assembled, there is a
2
chance that the parts may end up being used for a different purpose.
For instance, in the Suprema case, the infringer imported typical finger
scanners and provided a software develop kit for those scanners
configured so that the scanners could be easily programmed to infringe.
But the software development kit can also be used to program the
scanners to be other than infringing products. They can be used with all
sorts of different hardware. They are “staple articles” as the court says.
And there is the chance that something could change once they reach
port and that they end up being used with other software once in the US
that doesn’t make them infringing. So, the Federal Circuit doesn’t want
to block products that may or may not end up being infringing.
So, assembling your product in the US is one approach that you should
consider. But, the problem with that route is that it only works if the
Federal Circuit affirms the Suprema decision En Banc.
CLIENT: En Banc?
LAWYER: En Banc means the whole Federal Circuit—there are 12
judges. Only three of them heard the case at first. The entire Federal
Circuit further reviewed the case En Banc on February 5th. We will not
know of the decision for a few weeks. If the En Banc decision affirms the
three-judge panel’s decision then you may be able to use the strategy
that we’ve discussed to avoid liability at the ITC.
CLIENT: Do you think the En Banc Decision will affirm the panel?
LAWYER: There are two sides to this case with fuzzy precedent and
both sides have some good arguments. As I was saying a few moments
ago, the three-judge panel was concerned about products being stopped
at the border that may or may not ultimately be used in an infringing
assembly.
CLIENT: So in my case, the majority is worried that the ITC could issue
an exclusionary order stopping the importation of Duct Tape because it
has significant uses besides being used in my product…. Even though
the use in my product is most likely?
3
LAWYER: Exactly. The Federal Circuit Panel also noticed that the law
giving the ITC authority specifically refers to “articles” that are
imported, so there is some justification for suggesting that Congress
only intended the ITC to stop the importation of products that infringed
at the time of importation, not at a later point. The argument goes that
infringement at a later point can be handled by the district courts.
CLIENT: Hasn’t this situation come up before? Surely someone has
assembled an infringing product after importation before.
LAWYER: Yeah, that’s where it gets complicated. There is a similar but
subtly different situation, where the Federal Circuit and the ITC are both
in agreement about blocking importation. That is when the parts being
imported are not staple articles—they don’t have significant uses
outside of the infringing assembly. This is called contributory
infringement and that is still firmly within the ITC’s authority to block.
CLIENT: Ok, but what about other cases where the articles being
imported have other significant uses—that seems like the more likely
situation.
LAWYER: And that’s where the other side’s arguments come into play.
The government, who is arguing in support of the ITC against the
Federal Circuit Panel’s decision, as well as Cross Match, the patent
holder, various industry supporters, and importantly, one of the three
Federal Circuit judges who dissented from the decision, cite a line of
cases before the ITC showing that it has long ruled on induced
infringement cases—where the imported article was assembled after
importation and had significant other uses. So, they say there is a
longstanding trend of the ITC handling these types of cases, and little
reason to change that role of the ITC.
CLIENT: Well it looks like times are changing. I think going with the US
assembly strategy is a good plan.
LAWYER: Whoa whoa, the ITC’s arguments don’t stop there—and
frankly the line of precedent for the ITC hearing such cases is a strong
argument. They also make a congressional intent argument and point to
the fact that the ITC has long heard these induced infringement cases
4
and that Congress when passing the Tariff Act, which gives the ITC its
authority, added language so that the ITC could hear patent cases, if they
wanted to change the Court’s authority wouldn’t they have explicitly
said “no induced infringement?” So, it doesn’t make sense that Congress
would suddenly revoke the ITC’s authority over induced infringement
cases. Along these same lines they argue that it doesn’t make sense that
Congress would establish the ITC in order to stop noncompetitive
activates, such as patent infringement, but then allow such a simple way
around the court—intentionally assembling the product after
importation just to avoid liability at the ITC. Such anti-competitive
behavior is exactly what the ITC was established to prevent.
CLIENT: You said they have already heard the En Banc rehearing?
LAWYER: Yes.
CLIENT: Well maybe I should just wait for the decision to be issued.
The trouble is, if I do that, the vast market for Cell phone integrated Teeshirts may be tapped. What will I do then mister hot shot lawyer?
LAWYER: It is probably wise to wait for the Federal Circuit decision
before you proceed if you can. Maybe you should create some cell
phone integrated shoes. That could be an easy excuse for you to put
your foot in your mouth.
5
SKIT #3-Patent Troll & Domestic Industry
[CHANGE TO INTRO SLIDE (at the offices of …)]
CLIENT: Well, it’s really nice to meet you both. Now, I just saw this report about the ITC on
CNN. I want to start asserting my patents in the ITC!
ATTORNEY 1: We’ve been hearing a lot about this report. Before we take your case, can you
tell us a little bit about your patents and your company?
CLIENT: Sure. My company is called “Valentine’s Patents R Us”.
ATTORNEY 2: And can you tell us a little bit about the patent you are considering for
assertion?
[CHANGE TO SLIDE ON ‘327 PATENT ROMANTIC CARD]
CLIENT: Of course. We’re pretty psyched about U.S. Patent No. 5,318,327, which relates to a
new and novel romantic greeting card. To call it revolutionary would be an understatement.
ATTORNEY 1: Revolutionary? Wow. What’s so unique about it?
CLIENT: Well, lots of reasons, of course. But, the main feature – the one that really elevates it
– is the ability to adhere things to the card. You know, like pictures, messages, or, you know,
hair. Whatever you want.
ATTORNEY 2: I’m sorry; did you say hair?
CLIENT: Yes, hair clippings! What better way to show your undying love and affection than
sending your sweetheart some of your hair! It’s basically the hottest thing going in Paris right
now.
And, we’ve got a few other awesome patents in our portfolio.
[CHANGE TO SLIDE ON PENDING PATENT GIFT BAG]
For example, one that’s pending is this patent for drawstring bag that contains a new message
strip for each day of the year to remind your lover how special they are.
[CHANGE TO SLIDE ON PENDING PATENT HEART SHAPED PEPPERONI SLICE]
And the one I’m most excited about is a design patent I’ve got on the ornamental design for a
heart shaped pepperoni slice. What doesn’t scream love like a pizza cover in those?
[CHANGE TO PICTURE SLIDE of pizzas floating in]
ATTORNEY 1: How did you come up with such exciting inventions?
CLIENT: Well…we didn’t exactly come up with the inventions.
ATTORNEY 1: You didn’t? Then how were you issued the patents?
CLIENT: Well…we weren’t issued the patents. We bought them from a Valentine’s focused
company that was going under. Got a great deal!
ATTORNEY 2: Ok. Now is probably a good time to clarify what you mean by “we.” How
many employees does your company have?
CLIENT: Well…we don’t have any employees “per se.” Let’s see…I’m the president. And I’m
also the CEO. And…well that about covers our employee roster.
ATTORNEY 1: Oh boy. I think I understand what you’re telling me. Now is probably a good
time to talk about one of the important requirements to succeed in an ITC case: the “domestic
industry” requirement.
CLIENT: Oh well that’s no problem, I’m a U.S. company! I even have an office in Marshall,
Texas.
ATTORNEY 2: An office?
CLIENT: Well, it’s actually just a cubicle I rent in a strip mall there. I’ve never actually been
there, to be honest. But that’s not enough to prove I’m in the domestic industry here in the U.S.?
ATTORNEY 1: The “domestic industry” requirement for the ITC is actually a little more
complicated than that.
[CHANGE TO SLIDE ON DOMESTIC INDUSTRY REQUIREMENT]
ATTORNEY 2: Section 337 of the Tariff Act, which provides the basis for bringing a patent
infringement claim in the ITC, states that it only applies “if an industry in the United States,
relating to the articles protected by the patent . . . exists or is in the process of being established.”
[CHANGE TO SLIDE ON INDUSTRY EXISTENCE]
ATTORNEY 1: The statute goes on to say that an industry exists in the U.S. with respect to the
articles protected by the patent . . . if there is significant investment in plant and equipment,
significant employment of labor or capital, or substantial investment in the patent’s exploitation,
including engineering, research and development, or licensing.
[CHANGE TO SLIDE ON FEDERAL CIRCUIT TEST]
ATTORNEY 2: Courts applies a two-prong test to show a domestic industry. There must be
evidence of a domestic industry, and that industry must produce products related to the patented
product. This second part is called the “technical prong.”
CLIENT: Oh that’s no problem; I have lots of evidence about our involvement in domestic
industry.
ATTORNEY 1: Ok, great. What kinds of things?
-2-
CLIENT: Well, I send a lot of letters to people demanding money to license the use of the
patents. I’ve made a good chunk of change with that!
ATTORNEY 2: I thought you might say that. It’s true that the statute does say that licensing can
be a type of “domestic industry,”
CLIENT: Great! Let’s file the case!
ATTORNEY 1: It’s not quite that easy though. While historically the ITC has set the bar for
domestic industry fairly low, allowing trolls…I mean, “Non-Practicing Entities,” to satisfy the
domestic industry requirement, the tide seems to be changing on that.
[CHANGE TO SLIDE ON IMPACT OF LICENSING]
ATTORNEY 2: That’s very true. In 2013, the Federal Circuit said that for licensing to
constitute a domestic industry, that licensing investment must be “substantial.” (InterDigital
Communications, LLC v. International Trade Com'n, 707 F.3d 1295, 1299 n.2, 105 U.S.P.Q.2d
1581 (Fed. Cir. 2013).
CLIENT: Oh. (sounding disappointed).
[CHANGE TO SLIDE ON NON-PRACTICING ENTITIES]
ATTORNEY 1: And in 2014, the ITC appeared to reverse its long-standing precedent on
licensing, and held that to use licensing activities to satisfy the domestic industry requirement for
suing at the ITC, non-practicing entities must prove that there are actual products that practice
the patent. (Certain Computer and Computer Peripheral Devices and Components Thereof and
Products Containing the Same, Inv. No. 337-TA-841).
CLIENT: Oh. (sounding disappointed).
ATTORNEY 2: And last year, a bipartisan-sponsored bill was introduced in Congress called
“Trade Protection Not Troll Protection” Act, which would limit patent assertions at the ITC to
entities that “have a vested interest in the patent, including development of the product
described.”
ATTORNEY 1: So it seems the tides may be turning.
ATTORNEY 2: Yes, they are. So unfortunately, I don’t think we can recommend an ITC suit to
Valentine’s Patents R Us. It’s just too uncertain and risky right now, and might not pay off.
CLIENT: Well, thanks for your honest assessment. I guess I will stick to my letter-writing for
now.
-3-
A: Hi Kayla. It’s great to meet you in person after our phone call earlier this week.
During our phone call, you were asking about filing a trademark infringement
lawsuit. What exactly would you like to discuss today?
K: Well, I was watching CNN last night and I saw this story about the Samsung /
Apple case brought before the International Trade Commission (the “ITC” I think)…I
did some research and found out that the ITC has presided over cases involving patent
infringement, trade secret misappropriation, copyright infringement, trademark dilution,
trade dress infringement and trademark infringement. Is that correct?
A: Yes. That is correct but only certain cases are appropriate for filing with the ITC.
K: Well I think this ITC could help me with the trademark infringement problem I
told you about. You might be recognize my product… [produces a North Face jacket].
As you know, I am the owner of The North Face Apparel Corp. and we own The
North Face trademark.
A: Oh yes, North Face! Er, wait… [squints at jacket] The North east face?
K: Yeah. We’ve also seen The North West face, and, somehow, The North South face.
Infringing products have been appearing at the Mile High Flea market for months.
And, the infringers are selling The North East Face jackets for as low as $10 a pop.
Anyway, we found some likely culprits over in China, and we want to take them to
task at the ITC for infringing our mark.
A: The ITC may be an option, but there are some factors we need to consider before
we decide if it’s right for you. Did you bring copies of your trademark registrations
with you?
K: Yes. We have 3 marks that are registered with the USPTO: a mark for the words
only (i.e. The North Face); a mark for the logo design and a mark for the words used
with the logo. We use them all for high-end winter jackets and other apparel. You’re
Coloradan, surely you have at least 6 of them.
A: What are the infringing products like?
K: Cheap as dirt, with our mark plastered all over it. When they started showing up
at thrift markets here in Colorado, we started investigating. We traced some back to
a retail distributor based in California and a factory in Beijing that manufactures the
infringing products and then they are imported into the U.S. We know there are
more Chinese companies creating these infringing products that are imported into
the U.S. but these operations are set up and dissolved so quickly, we’ve had a hard
time nailing them all down.
A: Well it sounds like you’ve satisfied one of the two primary jurisdictional
requirements for cases brought before the ITC. This requirement is that the
infringing product must be imported from outside the U.S. From what you are telling
me, it sounds like infringing items are definitely being imported into the U.S.
K: What’s the other requirement?
A: You will have to establish that your corporation, The North Face Apparel
Corporation, has significant domestic industry investment in the US.
K: No problem, we’re headquartered in California and have lots of domestic plants
and offices.
A: Well, then you are probably well-suited to meet the domestic industry
requirement.
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A: Getting back to importation, it sounds like the infringing products are being
imported from Bejing and the other Chinese companies. What about the products
being distributed by the California distributor? Are you sure that the products that
the California company distributes are imported from outside the U.S.? If it turns out
that those infringing products are made in the US, and not imported, the ITC won’t
have jurisdiction to address that particular instance of infringement.
K: Yes, we believe that the California company is distributing products
manufactured in China and imported into the U.S. We’ve got the name of at least
one factory in China that is the source of the imported products that are distributed
by the California company. The problem is, we have no idea how we are going to get
jurisdiction over the Chinese company here in the US. All we have is their name and
a few dozen boxes of “North South Face” vests.
A: That may be all you need actually. The ITC needs only in rem jurisdiction which
means that for the ITC, jurisdiction is based on the products themselves and not the
parties involved in the dispute. With in rem jurisdiction, the ITC can issue general
exclusionary orders against infringing products being imported into the U.S.
regardless of their source. This means that you can obtain a remedy against
infringers that you haven’t identified yet. If we succeed in obtaining a general
exclusionary order, the exclusion order will stop the importation of any products
infringing your trademarks, even if you don’t know where the products are coming
from.
K: Sounds like the ITC might work! What are the differences between instituting an
action in district court versus filing one with the ITC?
3
A: For one, ITC actions are faster than district court actions. An ITC investigation is
usually wrapped up in about 12 – 18 months. District court actions can take years 3 years is not uncommon.
K: ITC: 1, District Court 0. I’m leaning toward the ITC.
A: Don’t get too excited yet. The filing of a complaint with the ITC does not give you
the automatic right to proceed before the ITC. The ITC will accept your case and
launch an investigation only if they determine that the complaint is properly filed
and the allegations are properly supported.
K: How much support are we talking? Details are pretty sketchy at this point. I don’t
want to file just to get denied an investigation, and waste all that time.
A: It’s relatively rare for the ITC to decline an investigation. But the notice pleading
standard we talked about for district court actions won’t cut it. We will have to have
concrete details and supporting evidence. On that note, the detail required in an ITC
complaint will increase the cost of drafting the complaint when compared with
drafting a pleading to be filed in district court.
K: If we end up with a general exclusionary order, it’s worth the extra cost. As for the
evidence and detail, I’m sure we can scrape up enough support. Enough to convince
a jury, anyway.
A: Ah, there’s another thing. A jury will not be deciding your case if you proceed
with an ITC action.
K: But I’m so sympathetic!
A: Unfortunately that’s just how it works. An ITC Administrative Law Judge will be
assigned to the investigation of your case. That judge’s role will be similar to that of
4
a district court judge in a bench trial, where there is no jury. The ALJ will preside
over discovery, motions, pleadings, and the like.
K: What if things go wrong? Can I appeal?
A: Yes. You do have the right to appeal determinations of the ITC. You can appeal to
the Court of Appeals for the Federal Circuit, and these appeals are de novo, meaning
that the Appellate Court will review the case as if no decision had been made at the
ITC.
K: Alright, that’s reassuring. What about relief? Really what I care about most is
stopping the flow of these products into the States.
A: That’s good, because it’s actually easier to obtain injunctive relief at the ITC than
it is in actions before the district court. In district court, even if infringement is
proven, you might not get injunctive relief because there is a higher standard for
obtaining injunctive relief in district court thanks to the e-Bay ruling. We discussed
the E-Bay standard during our phone call earlier this week.
K: Yes, I remember the Ebay standard. As we discussed, my main goal is to obtain
some form of injunctive relief as quickly as possible.
A: At the ITC, injunctions are the default remedy.
K: What kinds of relief are not available at the ITC?
A: Most importantly, no monetary damages can be awarded. If you feel that you’ve
lost profits due to the infringement, you cannot recover those damages. Also, you
cannot be awarded your attorney’s fees and costs in proceedings before the ITC.
Also, one advantage in district court is the ability to obtain unique and specifically
tailored relief. For example, in one case that I know of, the infringers created
5
business cards using the Plaintiff’s trademark and the business cards diverted
customer phone calls to the infringers. Part of the relief awarded by the district
court was an order requiring the infringers to set up an intercept operator to advise
callers of the correct telephone number for the Plaintiff, the true owner of the mark
at issue. This type of creative solution or relief is not available in proceedings before
the ITC.
K: What happens if the ITC says there’s no infringement? Can I file an action with the
district court and would the determination of the ITC be harmful to my case in
district court?
A: That’s an interesting point. Federal courts have been unwilling to give dispositive
weight to determinations by the ITC in patent cases. But, it’s very important to
remember that in trademark cases, it is likely that the commission’s determination
will be binding and will be accorded res judicata effect by the district court.
K: Then let’s try not to lose.
A: I can’t make any guarantees!
K: Well, I have a lot to think about, but I think I’d like to proceed with the ITC. Can
we meet next week after I make a final decision?
A: Sure, if you have any questions in the meantime, feel free to give us a call.
6