The U.S. International Trade Commission ("ITC" or "Commission") has become an increasingly popular forum for patent litigation involving imported products.  This fiscal year, filings of Section 337 complaints before the ITC, principally patent-based, appear ready to approach or exceed the record for such cases in recent times.  The ITC has instituted the following numbers of Section 337 investigations in recent years: 

Link to table

^*In addition to 20 cases already instituted in FY 2006, there are 6 cases pending institution as of June 7, 2006

Following the high-water mark set back in fiscal year 2001 when 32 cases were instituted, the ITC has instituted an average of 20-25 Section 337 cases each fiscal year.  However, that number has increased over the last several years and is likely to continue increasing over the next few years. 

There are a number of reasons.  The ITC continues to offer a speedy forum to enforce patents relative to most federal district courts.  Most Section 337 proceedings are scheduled by the ITC for final determination within 12 to 14 months after institution, with trials often occurring roughly 7 months after institution.  Additionally, although the ITC does not have power to award damages to patent holders, the injunctive relief it is authorized to grant—exclusion orders enforced by U.S. Customs and Border Protection interdicting infringing imports, and cease-and-desist orders prohibiting distribution of U.S. inventories—are considered potent forms of relief.  Further, the ITC’s four administrative law judges (a fourth was added in early 2005) handle exclusively Section 337 cases, most of which are patent-based.  Finally, the ITC has become a popular venue for major U.S. and international technology companies such as electronics and pharmaceutical manufacturers to enforce their patent and other IP rights and to address counterfeit and pirated products.  In particular, because jurisdiction is in rem over the infringing products, proceedings may be brought against foreign companies who have no U.S. presence.[1]

Moreover, not only is the ITC’s Section 337 docket already very busy, there is a likelihood that the Supreme Court’s recent decision in eBay, Inc. v. MercExchange, LLC, 126 S. Ct. 1837, 2006 WL 1310670 (May 15, 2006), will spur further filings.  The Court held in eBay that district courts must apply the traditional four-factor test when considering whether to award permanent injunctive relief to prevailing plaintiffs in patent infringement litigation.  The Court also held, reversing the Federal Circuit, that the Patent Act does not justify a general rule in favor of granting a permanent injunction to prevailing patent holders in an infringement case. 

In the wake of the eBay decision some entities, particularly non-producing entities or licensing firms, also sometimes referred to as "patent trolls," may have a more difficult time in meeting the four-factor test to obtain a permanent injunction.  However, if such a non-operating entity can qualify as a domestic industry under Section 337, and it prevails on a Section 337 patent infringement claim against infringing imports, it is entitled to a virtually automatic injunction – an ITC exclusion order.[2]  Pursuant to ITC precedent such as Digital Satellite Receivers, ITC Inv. No. 337-TA-392, Initial and Recommended Determinations (October 20, 1997), there is solid ground to believe that non-operating licensing companies can qualify under the statute to file Section 337 complaints before the ITC. 

Another reason for a potential increase in future Section 337 filings is the difference between U.S. district court and ITC practice regarding stays during reexamination proceedings before the USPTO.  In the event a reexam is initiated before the PTO, it is common for a district court to stay a related patent infringement case until the reexam is completed.  By contrast, because of the ITC’s expedited scheduling and statutory deadlines for Section 337 proceedings, the ITC rarely stays such proceedings pending a reexam. 

Thus, it is highly likely that the ITC’s already busy Section 337 patent litigation docket will mushroom in coming months and years.  Indeed, the ITC office that handles such cases, the Office of Unfair Import Investigations ("OUII"), is adding a supervisory attorney and more staff lawyers to handle these cases.  Also, the American Bar Association’s ITC Subcommittee is pushing a resolution to increase resources devoted to ITC Section 337, cases including the possibility of adding a fifth administrative law judge and an additional courtroom for Section 337 trials.  When the Commission itself has asked for additional resources and increased budget allocations in prior years, it has found a very receptive Congress that appears to recognize the ITC’s increasing importance in intellectual property enforcement.