This article is reprinted with permission from The MEMS Industry Group Newsletter, June 9, 2006.
Companies involved with Micro-Electro-Mechanical Systems (MEMS) are typically very familiar with the benefits of patent protection as well as the enforcement of those patent rights through the federal district courts. Less familiar to most MEMS companies is the availability of enforcement of intellectual property rights through an investigation under Section 337 at the United States International Trade Commission.
What Is an Investigation Under Section 337 at the USInternational Trade Commission?
Ordinarily, when a United States patent or trademark is infringed, a complaint is filed in federal court seeking an injunction to stop the infringement along with an award of monetary damages to compensate the owner for the effect of the infringement. If the infringement has been willful, the court may increase the award of damages and may also force the infringer to pay the attorneys fees of the patent or trademark owner.
If the infringing products are being imported into the United States , the patent or trademark owner frequently has another option in addition to federal district court litigation. This option is to file a complaint at the United States International Trade Commission (USITC) under Section 337 of the Customs Laws, which protect against infringement of US patents or trademarks (as well as copyrights or trade secrets, but these investigations are relatively rare) by importations. The owner of the patent or trademark must have an "industry" in the US relating to the articles protected by the patent or trademark. This requirement for an "industry" is a relatively easy standard to meet and can be satisfied by a significant investment in plant and equipment, through the significant employment of labor or capital, or through a substantial investment in engineering, research and development, or licensing.
Unlike district court litigation where the judge or jury decides a dispute between the opposing parties, under Section 337, the US government conducts an official "investigation" to determine whether a violation of the US laws is being committed by the importation of the infringing products. To represent the "public interest", the ITC appoints a "staff attorney" who functions as an independent third party during the investigation. The staff attorney participates both in the trial (or "Hearing") as well as in "discovery" to obtain information and documents from the patent owner or from the trademark owner as well as from the accused infringers.
Why Does a Patent or Trademark Owner Choose to Litigate at the ITC?
There are several situations when a company would likely choose to file an action at the USITC instead of, or in addition to, litigation at a federal district court. In one typical situation, many foreign infringers exist and it is difficult or impossible to identify all of the infringers and to obtain jurisdiction over them in federal district court. At the ITC, the owner of the patent or trademark needs only to identify those companies known or suspected of infringing activity. If a violation of Section 337 is found and there are many infringers (especially when there are infringers who are not participating in the investigation), the ITC usually grants a general exclusion order that applies to all products which infringe. In this way, it is possible to obtain effective relief against all infringers in one litigation even if all infringers cannot be identified or served with the complaint.
An investigation at the USITC is also desirable because it has a relatively short time frame – the period for discovery and trial before an Administrative Law Judge (ALJ) (rather than before a jury) is about 6 months. The ALJ typically decides the case in about three months after the hearing and, if the Complainant (the patent owner or the trademark owner) is successful, the Exclusion Order will be granted about a year after the complaint was filed.
Patent and trademark owners sometimes choose the ITC because it can also be difficult for accused infringers who are unfamiliar with the procedures for discovery and trial in a Section 337 Investigation. Sometimes the accused infringers are, in effect, caught off guard and are unable (or unwilling) to deal with the unusual and swift discovery that is commonplace at the ITC. For example, at the ITC, discovery responses are due only 10 days after service of the discovery requests. This is much shorter than the 30 days (and sometimes several months) that a party receives to provide discovery responses in district court.
In the ITC, if a motion is filed with the ALJ, the opposition to the motion is typically due only six business days after the motion is served (as compared to the 14 days or more that are common in district court). Also, the ALJ typically rules on motions in a matter of a few days, as contrasted with the several months that can occur before a decision is rendered on a motion in court.
Why Would a MEMS Company Prefer an ITC Investigation Over the District Court?
There are several reasons why a MEMS Company may favor an ITC investigation over district court litigation. One reason is that the ITC promptly issues and vigorously enforces a standard Protective Order to prevent the disclosure of confidential business information to opposing parties. Proprietary information is likely extremely important to the cutting edge technology involved in MEMS products and processes. Such proprietary information is available to attorneys working for both sides of the investigation, as well as to the Staff at the ITC and the ALJ, but is not available to anyone in-house at the opposing party. This sharply contrasts with district court litigation where typically at least some group of employees of the opposing party are given access to the confidential business information of the opponent.
Another reason why a MEMS Company may be happy with having the ITC decide a patent infringement question is because the ALJs at the ITC are experienced with patent litigation. In district court, the judge may have had only one or two prior patent matters (if any). If the case is tried before a jury, the jury members may be totally unfamiliar with the technology involved and the intricacies of patent law. This is particularly important in complex technologies where the judge and jury would have tremendous difficulty in understanding the invention and the prior art.
Brief Overview of a Section 337 Investigation
In the ITC, a Complainant (the patent owner or the trademark owner) needs to prepare a detailed complaint and typically meets several times with Staff Attorneys at the ITC to revise the complaint as necessary to have the investigation started at the ITC. Also, the Complainant likely has already prepared discovery requests for the opponents, along with draft responses to anticipated requests from the opponents (and has collected its documents).
Since the complaint has been previously reviewed by the Staff attorneys and revised, as necessary, the investigation is typically instituted 30 days after filing. As mentioned above, discovery of the parties proceeds very rapidly (usually for about five months) with both sides producing extensive amounts of documents. Many employees of the parties are usually "deposed" at which time the attorney for the other side is permitted to conduct extensive questioning of the persons while they are sworn to "tell the truth".
Usually about six months after the investigation is instituted, the ALJ will hold a hearing for about a week or so at which time the parties present their arguments and evidence regarding infringement and invalidity. After the hearing, the parties file lengthy post-hearing briefs and then the ALJ issues an Initial Determination (ID) about three months later. The ITC Commissioners have 45 days for review of the ID and they either decide not to review the ID or they issue their own Final Determination. The President of the United States has 60 days to revise the Final Determination on policy grounds but this rarely happens. If the Final Determination is favorable to the Complainant, an exclusion order typically comes into effect and is enforced by the Customs Service. In addition, a cease and desist order can be granted and this is then enforced by the ITC through District Court action, if necessary. A losing party may file an appeal within 60 days following expiration of the Presidential review period but the exclusion order is in effect during such an appeal and further importation cannot occur.
The USITC is a particularly good forum for conducting patent infringement litigation against foreign imports especially in high technology cases. The ITC has frequently conducted investigations involving such technology intensive matters as IC fabrication, semiconductor circuitry and chip design, with the result that the Administrative Law Judges at the ITC are very familiar with complex technology such as would be encountered in any MEMS related patent infringement action. The advantages provided to the patentee by an ITC investigation under Section 337 make it a favorable forum particularly for a MEMS company trying to stop the importation of infringing products.