On April 14, 2016, the House Judiciary Committee held a hearing
to examine patent litigation at the International Trade Commission
("ITC"). What was anticipated to be an inquiry into the
proposed
Trade Protection Not Troll Protection Act, H.R. 4829, quickly
developed into the Committee's questioning whether the ITC has
too-broad authority that is duplicative of Article III federal
courts. If the Committee's apparent inclination to limit ITC
jurisdiction is codified into law, it could lead to a limited
ability to protect U.S. industry.
Subcommittee Chairman Rep. Darrell Issa (R-Calif.) opened the
hearing by noting the duplicative authority of the ITC and federal
courts and asserting that the ITC should not have jurisdiction over
patent infringement cases against U.S. entities that can be brought
in federal court. Rep. Issa cited to ITC Inv. Nos. 337-TA-703
(Kodak v. Apple, et al.) and 337-TA-543 (Broadcom v.
Qualcomm) as examples of cases over which he believes the ITC
should not have had jurisdiction. He further suggested that federal
courts be provided the authority to stay ITC proceedings. However,
the different evidentiary and procedural burdens in administrative
actions targeted at U.S. trade remedies as opposed to federal court
actions targeting individual damage theories were not addressed
during the hearing.
Rep. Jerrold Nadler (D-N.Y.) took issue with the Commission's
decision to impose exclusion orders without considering the
equitable factors for patent injunctive relief provided by the U.S.
Supreme Court in eBay v. MercExchange. Rep. Nadler,
however, did not address the statutory nature of ITC remedial
orders contrasted with the equitable powers of federal
courts.
Chairman Rep. Bob Goodlatte (R-Va.) steered the hearing back to the
issue of nonpracticing entities when he lamented that statistics
indicate that patent assertion entities, commonly referred to as
patent trolls, are using the ITC to exploit U.S. patent laws.
The Committee took testimony from several witnesses who disagreed
that the ITC is a favorable venue for patent assertion entities.
Former ITC Commissioner Deanna Tanner Okun said that the
Commission's domestic industry requirement is a significant
barrier to nonpracticing entities filing in the ITC and noted that
only four nonpracticing entities have successfully obtained
exclusion orders over the past decade. Thomas L. Stoll, principal
of Stoll IP Consulting, cited to the Commission's tightening of
the domestic industry requirement and institution of the 100-day
pilot program as examples of successful efforts to curb
nonpracticing entities from filing suit in the ITC.
Other witnesses testified that the current efforts on the part of
the Commission are not enough. For example, Dr. Fiona M. Scott
Morton, professor of economics at the Yale School of Management,
testified that the Commission's ability to issue an exclusion
order for a device covered by thousands of patents as a remedy for
the infringement of a single patent leads to unfair royalties in
settlements. She suggested that legislation that goes beyond
changes in procedure is necessary. However, Dr. Scott Morton did
not identify substantive changes and how they would address her
expressed concerns over unfair settlements.
Takeaway
The ITC is currently one of the most important venues for the protection of U.S. innovation and research and development. To the extent that Congress feels it necessary to address nonpracticing entities by limiting the scope of the ITC's authority, it should be cognizant that doing so can diminish important trade protections for U.S. industry. Jones Day will continue to monitor Congress's actions with respect to the ITC and will provide updates as they develop.
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