by Alexander W. Koff, a partner in the Baltimore office of the law firm Whiteford, Taylor & Preston, LLP whose practice includes representing complainants and respondents before the ITC in Section 337 investigations.
Section 337 is codified at 19 U.S.C. § 1337. It provides a powerful trade remedy that helps to prevent, among other things, the infringement of a valid U.S. patent right. Recognizing this, companies are flocking to file Section 337 cases at the U.S. International Trade Commission (“USITC” or “Commission”).
The rise in Section 337 cases is due in no small part to the distinct advantages it offers. Compared to federal district court, Section 337 cases are decided by judges who specialize in intellectual property and unfair competition matters. Exclusion orders preventing the importation of infringing products into the United States, a key Section 337 remedy, is enforced directly by U.S. Customs and Border Protection. By contrast a winning plaintiff in federal court must enforce the award herself.
Perhaps most important, however, is that results can be obtained in relatively quick fashion. A Section 337 case typically may take 14 to 16 months, whereas a similar federal court case takes two to three years. In short, the USITC works hard to be an expeditious forum for parties. The recent decision in Inv. No. 337-TA-874, Certain Products Having Laminated Packaging, Laminated Packaging, and Components Thereof (“the 874 investigation”) underscores this effort.
On February 20, 2013, Lamina Packaging Innovations, LLC of Longview, Texas (a popular patent-licensing company outpost) filed a Section 337 complaint with the ITC. Lamina’s complaint alleges that some 15 respondents who make or use products with laminated packaging, including certain alcoholic beverages, electronics, personal healthcare products and toy products, are infringing two patents that provide for more environmentally-friendly packaging.
After filing an amended complaint on March 12, the Commission issued a notice of institution on March 22 for the 874 investigation. In the notice, the Commission directed that the judge “shall hold an early evidentiary hearing, find facts, and issue an early decision, as to whether the complainant has satisfied the economic prong of the domestic industry requirement …” This is the first investigation using what the USITC is calling a “pilot program.”
On June 24, the Commission issued a press release on the pilot program and supplemented it with a posting on its website. The materials explain that, for selected investigations, the Commission will direct the presiding Administrative Law Judge (ALJ) to expedite discovery and factfinding in the investigation (including an early evidentiary hearing) and issue an early initial determination (“ID”) on the potentially dispositive issue within 100 days of institution. The website post makes clear that “[t]he pilot program is the Commission’s latest action in its ongoing efforts to improve section 337 investigation procedures and meets its obligation to complete investigations expeditiously.”
The existence of a domestic industry is only one issue ripe for such early determinations. Other examples include importation or standing. The USITC explained that typically the initial ruling on domestic industry has come relatively late in an investigation, often after months of litigation and an evidentiary hearing. The goal of the pilot program is to reduce this time and any unnecessary litigation and expense. Recognizing that resolving such issues quickly are challenging, the Commission notes that the complainant controls the timing of when to file the complaint and should be prepared to provide its case without extensive discovery.
On July 5, ALJ Essex issued an ID in the 874 investigation holding that Lamina failed to satisfy the economic prong of the domestic industry requirement, which stays the investigation. Petitions for review are due five calendar days after the ID is served on the parties, and the Commission will determine whether to review the early ID within 30 days after issuance. If the Commission does not review the ID, the ALJ’s decision becomes the Commission’s final determination.
The take-away is for complainants to have in-hand – or have a well-developed plan on how to obtain quickly – all evidence needed to demonstrate the existence of a domestic industry, importation, or standing. This is particularly important if the domestic industry showing relies heavily on the activity of licensees. Expect adjustments and tweaks to the program over time, but this new program and the recent decision creates some interesting developments for Section 337 practitioners.