Did You Know . . . Determinations Of Patent Issues At The ITC Are For Purposes Of Section 337 Only And Do Not Have Res Judicata Effect?

Posted On: March 19, 2009   by:

Patent owners often simultaneously file suits in both the ITC and district court on the same patent(s).  If an ITC investigation is ongoing, an accused infringer can request, as a matter of right, a stay of the parallel district court action under 28 U.S.C. § 1659.  Even if the accused infringer does not request a stay, the ITC investigation typically will conclude before (and sometimes well before) a trial in district court.  After the ITC issues a final determination on infringement, validity, and/or enforceability of a U.S. patent, one might think this ruling would be binding on a district court.  This is not the case, however, because the doctrine of res judicata does not apply to ITC determinations concerning patents. 

The doctrine of res judicata, which is also referred to as claim preclusion, means “the thing has been decided.”  The doctrine is rooted in the principle that once a competent court has rendered its final judgment on a matter, that judgment has a conclusive effect upon subsequent litigation between the parties regarding the same cause of action.  However the Federal Circuit has held that “ITC findings neither purport to be, nor can they be, regarded as binding interpretations of the U.S. patent laws in particular factual contexts.  Therefore, it seems clear that any disposition of a Commission action by a federal court should not have a res judicata or collateral estoppel effect in cases before such courts.”  Tandon Corp. v. U.S.I.T.C., 831 F.2d 1017, 1018 (Fed. Cir. 1987).  The reason often cited for lack of a preclusive effect for ITC holdings is that Congress intended the ITC to be primarily responsible for administrating the trade laws and not the patent laws which is specifically referenced in the legislative history of Section 337.  Texas Instruments v. Cypress Semiconductor Corp., 90 F.3d 1558 (Fed. Cir. 1996). 

Without the aid of res judicata, ITC determinations of non-infringement, invalidity, and/or unenforceability of a patent do not provide a complete barrier for a patent holder seeking to assert the same patent rights in district court.  However, while the ruling of the ITC is not binding on the district court, it can be used as persuasive evidence.  In Texas Instruments, the plaintiff initiated an ITC action against the defendants alleging unfair competition based on importation and sale of encapsulated circuits produced by processes covered by the plaintiffs’ patent claims.  The Federal Circuit held that even in the absence of res judicata the district court has broad interpretive discretion.  90 F.3d at 1569.  The Federal Circuit determined that, “[T]he district court can attribute whatever preclusive value to the prior ITC decision as it considers justified.”  Id.  But cf. In re Convertible Rowing Exerciser Patent Litigation, 721 F.Supp. 596, 603-604 (D. Del. 1989) (denying defendants’ motion for summary judgment of invalidity despite prior ITC determination of no violation of section 337 based on invalidity).

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