Nuts and Bolts of ITC Investigations

In recent years, the International Trade Commission ('ITC') has become an increasingly popular venue for parties seeking to enforce patent rights. There are several reasons for this trend. First, the ITC is a high-speed venue. The ITC's investigation of a patentee's allegations of infringement is typically completed within 12 to 15 months, far more quickly than cases in most U.S. district courts. Second, the ITC offers a powerful remedy: exclusion of infringing products from the United States. The U.S. Customs Service enforces the exclusion order. Of course, this remedy is available only when the infringing products are being imported. However, there are many industries in which most, if not all, manufacturing takes place overseas. As a result, resort to the ITC is often available even with respect to domestic competitors. Third, although the ITC does not award damages, the patentee has the option of seeking damages in a parallel case in federal district court. Thus, the patentee can obtain both damages and an exclusion order by pursuing relief before the ITC and a district court.

An ITC investigation of allegations of patent infringement is similar, in many ways, to a district court case. The ITC's determinations on patent infringement, like those of a district court, are controlled by Federal Circuit precedent and can be appealed to the Federal Circuit. In an ITC investigation, the usual defenses of non-infringement, invalidity, and unenforceability are available to the accused infringer. The ITC has rules allowing discovery that are similar to the discovery provisions of the Federal Rules of Civil Procedure. The ITC rules also provide for an evidentiary hearing before an Administrative Law Judge ('ALJ'), which is similar in many ways to a bench trial in federal district court.

However, there are a number of important practical differences between participating in an ITC investigation and litigating in federal district court. These include the requirement for the patentee to prove the existence of a domestic industry; the pleading requirements; the pace, extent and conduct of discovery; the likelihood of early settlement; the nature and extent of pre- and post-hearing briefing; and the participation of an attorney representing the public interest.

The ITC is charged, under the Tariff Act of 1930 (19 U.S.C '1337), with protecting businesses in the United States from injury caused by unfair importation. Therefore, an important difference between a district court case and an ITC investigation is that the ITC requires the patentee (called the 'complainant') to establish that a domestic industry exists, or is in the process of being established, with respect to the patent at issue. Often, the complainant will prove the existence of a domestic industry by demonstrating that its own products practice the patent at issue, and that it has made significant investments in designing and/or manufacturing those products in the United States. These two aspects of domestic industry are commonly referred to as the 'technical branch' and 'economic branch' of the domestic industry requirement. Thus, as a practical matter, the design and operation of both the accused products and the patentee's own products will often be at issue in an ITC investigation. There are other approaches to establishing domestic industry. For example, if the patentee does not manufacture products, substantial expenditures to license the patent may be relied upon to show that a domestic industry exists.

To ensure that the ITC's resources are not expended on the investigation of spurious claims, an ITC complaint alleging patent infringement goes well beyond notice pleading. The complaint must be signed under oath by the complainant and must provide factual support for essentially every element of the complainant's case. Thus, the complaint should include a claim chart supporting the allegations of infringement by the accused product. If the patentee is relying on the design and/or manufacture of products in the United States to establish the technical branch of domestic industry, the complaint should also include a claim chart supporting the allegation that the domestic industry products practice the patent at issue. In addition, the complaint should include support for the economic branch of domestic industry. Copies of any licenses to the patent must also be included. If possible, samples of the accused products should be included with the complaint, as well as samples of any domestic industry products. Finally, the complaint must provide evidence of importation of the accused products. If the complaint meets the ITC's requirements, an investigation will typically be instituted 30 days after the complaint is filed. Once the investigation is instituted, a notice will be published in the Federal Register, and the ITC will serve the accused in-fringers (called the 'respondents') with a copy of the complaint.

As mentioned above, the ITC rules governing discovery parallel, in many respects, the Federal Rules of Civil Procedure that govern discovery. However, there are a number of important practical differences between discovery in the ITC and discovery in federal district court. In the ITC, discovery may be served as soon as the notice of investigation is published in the Federal Register. The time from institution of the investigation to issuance of an exclusion order ' the 'target date' ' is about 12 to 15 months. The hearing is typically about 6 months before the target date, leaving only about 6 to 9 months to conduct discovery. Thus, while more discovery must be obtained in an ITC case than in a district court case, due to the need to prove domestic industry and importation, the time available to take discovery is much less than is typical in a district court case. As a result, a party to an ITC investigation is allowed only 10 days to respond to discovery requests ' much less than the 30 days allowed in a district court case. Moreover, unlike a district court, the ITC typically imposes no limits on either the number of interrogatories that a party may propound or the number or length of depositions that a party may take. In short, discovery in the ITC is both expansive and ex-tremely fast-paced.

A critical difference between an ITC investigation and a district court case is that an ITC investigation is far more likely to proceed all the way through discovery and a hearing on the merits without settling. An evidentiary hearing is conducted in approximately 30% to 40% of ITC investigations. In contrast, only a very small percentage of district court cases go to trial. This difference may stem from the fact that an ITC investigation generally offers fewer opportunities for the parties to obtain early information about their likelihood of succeeding on the merits. For example, in the ITC, claim construction, which is often outcome-determinative, is rarely, if ever, decided as the result of a separate Markman hearing. Instead, claim construction is typically at issue during the evidentiary hearing and in the related pre- and post-hearing briefing. Also, the accelerated schedule in the ITC seldom allows enough time for summary determination motions to be heard and decided before the evidentiary hearing. Whatever the reasons, early settlement occurs far less often in ITC investigations than in cases litigated in district court. The parties to an ITC investigation should fully expect and prepare to have the case heard by the ALJ.

The ITC requires extensive pre- and post-hearing briefing, far more so than is typical in a district court case. The purpose of the pre-hearing statements is to inform the ALJ of all the legal issues and factual disputes prior to the hearing. Each party's pre-hearing statement should discuss the party's contentions with respect to every issue that will be addressed at the hearing, including those issues on which the party does not bear the burden of proof. Contentions that are not briefed may be deemed waived, and a party may be precluded from presenting evidence with respect to those contentions. The post-hearing briefing typically consists of opening and responsive briefs and proposed findings of fact. With its opening brief, each party must propose findings of fact for every issue on which it bears the burden and must support each proposed finding by citing to the evidence of record. Objections to each party's proposed findings are made, and counter-findings are proposed with the responsive brief. The post-hearing briefing is a very substantial undertaking. It generally takes place immediately after the hearing, and the ALJ usually allows 3 or 4 weeks to complete the briefing.

As a final point, in an ITC investigation, unlike a district court case, the patentee and the accused infringer(s) are not the only parties. The ITC's Office of Unfair Import Investigation ('OUII') also participates in the investigation as a representative of the public interest. A staff investigative attorney from OUII participates in discovery and pre-hearing activities. At the hearing, the staff investigative attorney may question witnesses and give the OUII's position on evidentiary issues as they arise. The staff investigative attorney will also submit pre- and post-hearing briefings, giving the OUII's position, and the basis for its position, on issues including infringement, validity, and enforceability. The participation of the OUII provides the ALJ and the ITC with an independent view on the substantive and procedural issues throughout the investigation.

Conclusion

There are many practical differences between litigating a patent infringement case in federal district court and being a party to an ITC investigation. From the drafting of the complaint through the completion of the post-hearing briefing, an ITC investigation is much faster-paced and is a much more intensive effort.

Julie Holloway is a partner in Wilson Sonsini Goodrich and Rosati, in Palo Alto, CA. She specializes in patent litigation in district court and before the ITC and may be contacted at 650-320-4562 or [email protected].

In recent years, the International Trade Commission ('ITC') has become an increasingly popular venue for parties seeking to enforce patent rights. There are several reasons for this trend. First, the ITC is a high-speed venue. The ITC's investigation of a patentee's allegations of infringement is typically completed within 12 to 15 months, far more quickly than cases in most U.S. district courts. Second, the ITC offers a powerful remedy: exclusion of infringing products from the United States. The U.S. Customs Service enforces the exclusion order. Of course, this remedy is available only when the infringing products are being imported. However, there are many industries in which most, if not all, manufacturing takes place overseas. As a result, resort to the ITC is often available even with respect to domestic competitors. Third, although the ITC does not award damages, the patentee has the option of seeking damages in a parallel case in federal district court. Thus, the patentee can obtain both damages and an exclusion order by pursuing relief before the ITC and a district court.

An ITC investigation of allegations of patent infringement is similar, in many ways, to a district court case. The ITC's determinations on patent infringement, like those of a district court, are controlled by Federal Circuit precedent and can be appealed to the Federal Circuit. In an ITC investigation, the usual defenses of non-infringement, invalidity, and unenforceability are available to the accused infringer. The ITC has rules allowing discovery that are similar to the discovery provisions of the Federal Rules of Civil Procedure. The ITC rules also provide for an evidentiary hearing before an Administrative Law Judge ('ALJ'), which is similar in many ways to a bench trial in federal district court.

However, there are a number of important practical differences between participating in an ITC investigation and litigating in federal district court. These include the requirement for the patentee to prove the existence of a domestic industry; the pleading requirements; the pace, extent and conduct of discovery; the likelihood of early settlement; the nature and extent of pre- and post-hearing briefing; and the participation of an attorney representing the public interest.

The ITC is charged, under the Tariff Act of 1930 (19 U.S.C '1337), with protecting businesses in the United States from injury caused by unfair importation. Therefore, an important difference between a district court case and an ITC investigation is that the ITC requires the patentee (called the 'complainant') to establish that a domestic industry exists, or is in the process of being established, with respect to the patent at issue. Often, the complainant will prove the existence of a domestic industry by demonstrating that its own products practice the patent at issue, and that it has made significant investments in designing and/or manufacturing those products in the United States. These two aspects of domestic industry are commonly referred to as the 'technical branch' and 'economic branch' of the domestic industry requirement. Thus, as a practical matter, the design and operation of both the accused products and the patentee's own products will often be at issue in an ITC investigation. There are other approaches to establishing domestic industry. For example, if the patentee does not manufacture products, substantial expenditures to license the patent may be relied upon to show that a domestic industry exists.

To ensure that the ITC's resources are not expended on the investigation of spurious claims, an ITC complaint alleging patent infringement goes well beyond notice pleading. The complaint must be signed under oath by the complainant and must provide factual support for essentially every element of the complainant's case. Thus, the complaint should include a claim chart supporting the allegations of infringement by the accused product. If the patentee is relying on the design and/or manufacture of products in the United States to establish the technical branch of domestic industry, the complaint should also include a claim chart supporting the allegation that the domestic industry products practice the patent at issue. In addition, the complaint should include support for the economic branch of domestic industry. Copies of any licenses to the patent must also be included. If possible, samples of the accused products should be included with the complaint, as well as samples of any domestic industry products. Finally, the complaint must provide evidence of importation of the accused products. If the complaint meets the ITC's requirements, an investigation will typically be instituted 30 days after the complaint is filed. Once the investigation is instituted, a notice will be published in the Federal Register, and the ITC will serve the accused in-fringers (called the 'respondents') with a copy of the complaint.

As mentioned above, the ITC rules governing discovery parallel, in many respects, the Federal Rules of Civil Procedure that govern discovery. However, there are a number of important practical differences between discovery in the ITC and discovery in federal district court. In the ITC, discovery may be served as soon as the notice of investigation is published in the Federal Register. The time from institution of the investigation to issuance of an exclusion order ' the 'target date' ' is about 12 to 15 months. The hearing is typically about 6 months before the target date, leaving only about 6 to 9 months to conduct discovery. Thus, while more discovery must be obtained in an ITC case than in a district court case, due to the need to prove domestic industry and importation, the time available to take discovery is much less than is typical in a district court case. As a result, a party to an ITC investigation is allowed only 10 days to respond to discovery requests ' much less than the 30 days allowed in a district court case. Moreover, unlike a district court, the ITC typically imposes no limits on either the number of interrogatories that a party may propound or the number or length of depositions that a party may take. In short, discovery in the ITC is both expansive and ex-tremely fast-paced.

A critical difference between an ITC investigation and a district court case is that an ITC investigation is far more likely to proceed all the way through discovery and a hearing on the merits without settling. An evidentiary hearing is conducted in approximately 30% to 40% of ITC investigations. In contrast, only a very small percentage of district court cases go to trial. This difference may stem from the fact that an ITC investigation generally offers fewer opportunities for the parties to obtain early information about their likelihood of succeeding on the merits. For example, in the ITC, claim construction, which is often outcome-determinative, is rarely, if ever, decided as the result of a separate Markman hearing. Instead, claim construction is typically at issue during the evidentiary hearing and in the related pre- and post-hearing briefing. Also, the accelerated schedule in the ITC seldom allows enough time for summary determination motions to be heard and decided before the evidentiary hearing. Whatever the reasons, early settlement occurs far less often in ITC investigations than in cases litigated in district court. The parties to an ITC investigation should fully expect and prepare to have the case heard by the ALJ.

The ITC requires extensive pre- and post-hearing briefing, far more so than is typical in a district court case. The purpose of the pre-hearing statements is to inform the ALJ of all the legal issues and factual disputes prior to the hearing. Each party's pre-hearing statement should discuss the party's contentions with respect to every issue that will be addressed at the hearing, including those issues on which the party does not bear the burden of proof. Contentions that are not briefed may be deemed waived, and a party may be precluded from presenting evidence with respect to those contentions. The post-hearing briefing typically consists of opening and responsive briefs and proposed findings of fact. With its opening brief, each party must propose findings of fact for every issue on which it bears the burden and must support each proposed finding by citing to the evidence of record. Objections to each party's proposed findings are made, and counter-findings are proposed with the responsive brief. The post-hearing briefing is a very substantial undertaking. It generally takes place immediately after the hearing, and the ALJ usually allows 3 or 4 weeks to complete the briefing.

As a final point, in an ITC investigation, unlike a district court case, the patentee and the accused infringer(s) are not the only parties. The ITC's Office of Unfair Import Investigation ('OUII') also participates in the investigation as a representative of the public interest. A staff investigative attorney from OUII participates in discovery and pre-hearing activities. At the hearing, the staff investigative attorney may question witnesses and give the OUII's position on evidentiary issues as they arise. The staff investigative attorney will also submit pre- and post-hearing briefings, giving the OUII's position, and the basis for its position, on issues including infringement, validity, and enforceability. The participation of the OUII provides the ALJ and the ITC with an independent view on the substantive and procedural issues throughout the investigation.

Conclusion

There are many practical differences between litigating a patent infringement case in federal district court and being a party to an ITC investigation. From the drafting of the complaint through the completion of the post-hearing briefing, an ITC investigation is much faster-paced and is a much more intensive effort.

Julie Holloway is a partner in Wilson Sonsini Goodrich and Rosati, in Palo Alto, CA. She specializes in patent litigation in district court and before the ITC and may be contacted at 650-320-4562 or [email protected].