The Strategic Importance of the ITC for Patent Owners | IPWatchdog Unleashed

This week on IPWatchdog Unleashed, our conversation is with Josh Hartman, a partner at Merchant and Gould in the firm’s Washington, DC office, and the head of the firm’s ITC litigation practice. The International Trade Commission, or the ITC, as it is commonly called, is an independent, nonpartisan, quasi-judicial federal agency that fulfills a range of trade-related mandates. And one of the primary areas where the ITC has jurisdiction is with respect to unfair importation. Unfair importation practices, which are prohibited by Section 337, most often involve claims relating to intellectual property rights, such as allegations of patent infringement, various forms of trademark infringement or trade secret misappropriation.

What makes the ITC such an important venue for intellectual property rights owners is the ability to rather quickly obtain injunctive relief in the form of an exclusion order, which prohibits the importation of infringing goods into the United States.

And while there are other federal venues where injunctive relief can be obtained for trademark infringement, counterfeiting, and trade secret misappropriation, since the Supreme Court issued its landmark decision in eBay v. MercExchange in 2006, it is has been increasingly difficult, in fact absolutely impossible for many patent owners to obtain any form of injunctive relieve against infringers even after the infringer has been adjudicated as being liable as an infringer and the patent in question has withstood all challenges in all forums.

But the eBay decision does not apply to the ITC, for reasons I discuss with Josh. This means that for patent owners who really need an injunction the only viable path to one in the United States is through the ITC.

“Another really significant advantage is the remedy that you can obtain,” Hartman explained. “In district court litigation it’s very difficult to obtain any kind of injunctive relief at this point in the post eBay world, but at the ITC the primary form of relief is injunctive— in the form of an exclusion order that the U.S. customs enforces.”

Of course, it can’t be that simple, right? No. There are many patent owners who are not capable of using the ITC. And this isn’t just because ITC litigation is expensive, but rather because not all patent owners qualify to use the ITC. This is because there is a requirement for the patent owners to have what is called a domestic industry in the United States, and although the name of that test seems like it would be easy enough to satisfy, it can be difficult for many patent owners who most need injunctive relief.

“The ITC has a requirement for complainants. It’s called the domestic industry requirement,” Hartman explained. “What this means at a high level is that the complainant has to show that there has been significant or substantial U.S. Investment in bringing the product to market or commercializing the product or developing the product that is protected by the asserted patent or the asserted trademark… ITC case law going back many years generally looks with disfavor on sales and marketing activities in connection with the domestic industry requirement. There’s a kind of long-standing antipathy to complainants who rely primarily or heavily or disproportionately on sales and marketing expenditures to satisfy the domestic industry requirement.”

It is the historic disfavor toward sales and marketing activities that cause problems for individual patent owners and small businesses, who do invent in America but then manufacture overseas. During our conversation we further explore the contours of the domestic industry requirement, and we also discuss the much-anticipated Lashify decision due out from the Federal Circuit any time really, which could expand the domestic industry requirement and make it easier for patent owners to access the ITC. We also discuss a recent victory at the ITC by Ridge, the wallet company that is constantly being knocked-off by sellers on Amazon and elsewhere.

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