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ITC Litigation in the U.S.
MIP Global IP Briefing
August 26, 2015, Singapore
22
Presenters
• Shaobin Zhu (朱韶斌): Moderator
Attorney at Law, Shanghai Representative Office
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
• Jason Loh
Head of IP Group (ASEA)
Panasonic
• Shang-Jyh Liu (劉尚志)Dean of Law School
National Chiao Tung University, Taiwan
• Tony Piotrowski
General Counsel
MPEG LA, LLC
2
33
U.S. ITC: Statutory Authority
• 19 U.S. Code § 1337 gives the ITC the power to stop importations into the U.S.
of:
– Section (A) − goods that are involved in unfair methods of competition that threaten
to destroy or substantially injure a U.S. industry
– Section (B) − goods that infringe a U.S. patent or registered copyright that is also
used by a domestic industry in the U.S.
– Section (C) − goods that infringe a U.S. registered trademark
– Section (D) − semiconductors that infringe a registered mask work
– Section (E) − goods that infringe a U.S. design
44
U.S. International Trade Commission(500 E Street SW, Washington D.C.)
55
Related Government Entities/Courts
66
337 Investigations: Institution by Year
77
337 Investigations: Accused Products
88
Perspectives from an Operating Entity
1. Since 2011 (69 investigations instituted), about 40 or less cases are
instituted each year. What are the reasons causing the decreases?
2. What percentage of the ITC cases were filed by operating entities
vs. NPEs each year? How can an NPE satisfy the domestic industry
requirement?
3. Why would a company choose the ITC forum, instead of a federal
district court, to stop IP infringement?
99
Some Empirical Findings of ITC
Litigation: Perspective of Asian Enterprises
1. What are your findings of ITC litigations from the perspective of
Asian enterprises?
2. In the past 5 years, more than 1/3 of the respondents in the ITC
were Asian enterprises. Why were so many Asian enterprises sued
at the ITC?
3. How can Asian enterprises change this trend?
1010
Standard-Essential Patents and FRAND Defense at the ITC
1. What are the advantages and disadvantages to enforce SEPs in the
ITC?
2. Since the ITC has no jurisdiction in determining damages, how can
the ITC determine whether the patentee of a SEP meet the FRAND
requirement, including the FRAND royalty?
3. How can a respondent assert a FRAND defense in the ITC?
1111
Questions?
• Questions from the audience:
ITC Litigation in the USA
Perspectives from an Operating Entity
August 26, 2015
MIP Global Intellectual Property Briefing 2015
Marina Bay Sands, Singapore
Content
Disclaimer
Brief Overview of ITC Litigation
Why choose ITC Litigation?
DISCLAIMER
Disclaimer
• The views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of Panasonic Corporation.
BRIEF OVERVIEW OF ITC LITIGATION
Comparison between ITC and District Court Litigation
Litigation Element Section 337 ITC Litigation District Court Patent Litigation
Jurisdiction and Importation In Rem jurisdiction over products imported into the US
Court must have personal jurisdiction over defendant and subject matter jurisdiction over the action.
Parties Complainants and Respondents Plaintiffs and Defendants
Judge One of six Administrative Law Judges (ALJs) assigned to the ITC
Article III judge or magistrate judge.
Domestic Industry All complainants must demonstrate domestic exploitation of the asserted IPR
Not required
Applicable Procedural Rules Commission Rules of Practice and Procedure and ALJ’s Ground Rules.
Federal Rules of Civil Procedure, Local Rules
Response to Discovery 10 days 30 days
Response to Motions 10 days Varies (2-4 weeks)
Time Frame to Resolution 15-18 months 2-3 years or even more
Possible Remedies Exclusion order, cease-and-desist order Damages, injunction if eBay factors met
Appellate Review Federal Circuit Federal Circuit
Comparison between ITC and District Court Litigation
ITC Fed. District Ct.
Average Litigation Cost
$1-10M: $1,967,000$10-25M: $3,410,000
>$25M: $6,242,000
$1-10M: $2,100,000$10-25M: $3,554,000
>$25M: $5,911,000
Source : AIPLA Economic survey (2013)
Exemplary Cost Breakdown
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Typical ITC Patent Suit Budget
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10
Federal Court and ITC Budget Comparison
ITC suit duration
Majority of litigation costs are incurred in Discovery
Front end loaded Costs
Source : AIPLA Economic survey (2013)
ITC Remedies• Two types of remedies available upon a finding of violation: exclusion orders and
cease-and-desist orders. Both are injunctive in nature and prospective in scope.Money damages are not available at the ITC, although civil penalties may beassessed in certain narrow circumstances.
Remedy
1. Exclusion
1a. General exclusion
1b. Limited exclusion
2. Cease-and-desist
ITC orders are enforced by the U.S. Customs and Border Protection (CBP), a component of the Department of Homeland Security.
Note: Remedies at ITC can be both Cease-and-Desist Order and Exclusion Order.
ITC (US)
337-TA-xxx
337-TA-xxx (SEPs)
DC (US)
2:15-cv-xxx (SEPs)
2:15-cv-xxx
2:15-cv-xxx
2:15-cv-xxx
2:15-cv-xxx
2:15-cv-xxx
2:15-cv-xxx
xx D
ate
Xx
Dat
e Netherlands
Both SEPs and Non-SEPs
UK
Both SEPs and Non-SEPs
Germany
Both SEPs and Non-SEPs
ITC Can go in Parallel with DC Litigations
WHY CHOOSE ITC LITIGATION?
Any importation to the U.S.?
Owns a valid U.S. patent, copyright or trademark?
Complainant satisfy Domestic Industry requirement?
Against multiple parties over multiple jurisdictions?
Nation wide or worldwide discovery necessary?
Is time of essence?
When to Choose ITC for Litigation?
Extremely expedited proceedings
Single case, multiple respondents, different Jurisdictions
In Rem jurisdiction over foreign manufacturers
Potentially Stronger Injunction Equivalent
Immediate and significant threat (60-day after presidential review)
No Jury concerns
Why to File Cases at ITC?
Front-end loaded costs
Domestic Industry requirement for the complainant
Significant public interest issues considerations
Stricter in finding violations of NPE complainants
Very rare SEP related remedial orders
Limitations of ITC Litigation
ITC’s decisions are not binding on a US district court
THANK YOU
USITC IP Litigation: Some Empirical Findings
& the Perspective of Asian Enterprises
LIU Shang-JyhNational Chiao Tung University, Taiwan
劉尚志國立交通大學 (台灣)
Section 337
28
ITC District Court
Length ≤ 18 months Average of 3 years
Parties multiple parties without joinder
restrictions;
ITC Office of Unfair Import
Investigations may participate
AIA new joinder rules apply
Discovery Broad; nation-wide subpoena
power; short discovery deadlines
Federal Rules apply; limited
subpoena power; slow discovery
Judges 6 Administrative Law Judges
handling only IP cases
677 judges with diverse caseload
Confidentiality Strictly policed, one-level
(highest) protective order
Inconsistent enforcement of
protective orders
Remedy Automatic injunction (“exclusion
order”) barring infringing imports
if successful
Injunction potential, but must first
satisfy eBay factors
Review/Appeals Federal Circuit Federal Circuit (patents)
Other Circuits (trademarks, etc.)
The Increasing Use of Section 337
29
0
10
20
30
40
50
60
70
1990 1995 2000 2005 2010 2013
Kyocera, eBay (S.Ct. 2006) & NPEs
30
1/3
Domestic Industry
July 2011,ITC 337-TA-694 Investigation
Pioneer v.Honeywell & Garmin
FD v. ID
Industry-Creating, Production Driven
Oct. , 2011 John Mezzalingua Associates, Inc. v. ITC, 2011
WL 4552462 (Fed. Cir. 2011).
Patent Portfolio
Licensing Negotiation before Litigation
31
No Violation
Violation
Terminated Due to
Arbitration
Settled
Complaint
Withdrawn
Complaint
Withdrawn13%
No Violation19%
Violation20%Settled
47%
Dispositions 2004 – 201332
Terminated Dueto Arbitration
1%
Geographic Distribution of Respondents
(2010-2013)
33
16%EUROPE
69%
ASIA
2%
Other
China 24%
Taiwan 15%
Japan 12%
Korea 9%
Hong Kong 6%
Malaysia 2%
Singapore 1%
Macao <1%
Details for Asia Data:
Section 337 Usage by
Non-U.S. Based Complainants
34
0
10
20
30
40
50
60
70 Non-U.S. Based Complainants
U.S. Complainants 29%
36%
39%
30%
35%
20%
28%
27%
33%
15%
5%
12%
17%
0%
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
Representative Usage (2012 - 2013)
35
Non-U.S. Based Complainants
Australia ResMed Ltd (2013)
Belgium Federal-Mogul S.A. (2013)
Canada Neptune Technologies & Bioresources Inc., Acasta Pharma
Inc. (2013)
China Fellowes Office Products (2012)
Finland Nokia (2012 and 2013)
Germany MT.Derm GmbH (2012), Linear Actuators and Dewert Okin
GmbH (2013)
Israel Human Eyes Technologies, Ltd. (2012)
Japan Canon Inc., Hitachi Metals, Ltd., (2012), Toyo Tire & Rubber
Co., Ltd. (2013)
Korea Samsung (2012)
Norway Navico Holding AS (2013)
Singapore Avago Technologies Fiber IP, Avago Technologies General
IP (2012)
Switzerland Merck & Cie (2012)
Taiwan ITRI, Realtek Semiconductor (2012)
UK Mondis Technology, Ltd. (2012)
ITC Adjudications
36
American Firms
RespondentsEqually with foreign
firms
Complainants Winning Rate: 2 times
Favorable
Intellectual Property Rights
37
The key is ownership and use of IP
Establish a domestic industry
Domestic Industry Standard for IP-Based
Investigations 19 U.S.C. §1337(a)(3)
A. Significant investment in plant and equipment;
B. Significant employment of labor or capital; or
C. Substantial investment in its exploitation, including
engineering, research & development, or licensing
Early Planning to Avoid Adverse Impact
38
Products at risk likely to be broader than
model numbers accused in the
Complaint
Notice of Investigation controls scope of
potential remedial order
o Caption of case reveals products at risk
Request Complainant to Disclose
Contentions of Products at Risk
Products under development at risk
Remedial Orders
39
General Exclusion Order
Limited Exclusion Order
Cease and Desist Order
Seizure or forfeiture
Enforcement of Exclusion Orders
40
U.S. Customs & Border Protection - (formerly Customs
Service) within the U.S. Department of Homeland Security
Office of International Trade
o Regulations & Rulings; IPR Branch
Educate Customs
o Provide samples of infringing goods
o Provide patent excerpts, technology tutorial
Provide industry intelligence to Customs - e.g., preferred
ports, likely means of importation
Alternative Strategies
41
Settlement
o License
o Joint venture
o Technology exchange
Prepare to Withdraw from U.S. Market
Default
Fight the charges to stay in the U.S. market
Prepare a counter offensive using your IP
o Cross-licensing
Recommended