Dave Foster, a member of the law firm of Miller & Chevalier, recently shared his insights concerning Section 337 practice at the ITC with the ITC 337 Law Blog.
Dave practices in Miller & Chevalier’s International Trade Department. From 1973 to 1977, Dave served in the General Counsel’s office and the Chairman’s office of the U.S. International Trade Commission (“ITC”). From 1977-1981, he served as the International Trade Counsel for the U.S. Senate Finance Committee. For the last twenty-eight years, Dave has been in private practice, principally representing both U.S. and foreign-based companies in Section 337 cases. He was involved at the ITC with the rewriting of Section 337 into its current form in the Trade Act of 1974, chaired the ITC committee that prepared the initial implementing regulations, oversaw the statute while on the Finance Committee Staff, and has represented parties in over 60 Section 337 cases while in private practice. Dave spoke recently to ITC 337 Law Blog.
What are some of the most significant changes to Section 337 practice since you started in private practice?
In terms of the practice, the annual number of cases being litigated under Section 337 has tripled or quadrupled, and the number of lawyers and firms participating has risen even more substantially. The type of case being litigated has also changed, from initially cases mostly involving low-tech products to now cases mostly involving advanced technology products. The number of foreign-based firms bringing cases has also grown substantially, as the domestic industry requirement has become easier to satisfy. The target of the cases in terms of the country of the respondents have also changed, progressing from Japan to Taiwan to China, with some upturn in Korean cases also over the last decade. Finally, the commitment of the ITC to supporting the implementation of Section 337, which has always been there, in recent years has increased even more, particularly in terms of the number of ALJs and staff devoted to implementing the statute.
What are some of the advantages of commencing a Section 337 investigation versus a district court action?
The advantages of Section 337 over a district court action can be numerous. First, there is speed to decision. Section 337 offers the only consistently rapid IP docket in the United States, typically with a final decision in 13-16 months (and an initial determination (“ID”) by the ALJ in 9-12 months), as district court “rocket dockets” often have been a victim of their own success, e.g., the Eastern District of Texas. Secondly, there are few jurisdictional issues in a Section 337 case; if there is an import, there is jurisdiction. This avoids the often time consuming and expensive jurisdictional and venue issues encountered in district court. Third, the usual, statutorily provided remedy under Section 337 is an exclusion order, enforced by the U.S. Customs and Border Protection Agency within DHS, so e-Bay considerations relating to issuance of injunctions, and the necessity of contempt proceedings to enforce an order, do not play a role in Section 337 cases. Fourth, there are no effective counterclaims in Section 337 cases; while counterclaims are permitted, they are removed to a district court and typically will not be decided, if at all, until well after a Section 337 case is finished. Indeed, in a Section 337 action, it is usually the case that the Complainant typically puts the respondents at risk of losing 3 times (the ALJ’s ID, the Commissions’ final determination, and CAFC review) before any district court action by a respondent will be decided that may put Complainant at risk. There are other advantages, such as a judge’s corp second to none in the IP area, but the ones I just mentioned are plainly significant ones.
To what do you attribute the steady increase in Section 337 filings at the ITC?
The steady increase in my view has been driven by the few rocket dockets in district courts slowing down as previously noted; by foreign-based companies bringing more complaints, avoiding the issues raised by being in front of a U.S. jury and gaining the advantage of being in front of experienced IP judges, as well as benefiting from the other advantages mentioned earlier; the e-Bay decision, which makes Section 337 more attractive in terms of securing an exclusive order versus receiving injunctive relief in the district courts; the expansion of activities which satisfy the domestic industry requirement of Section 337 making it easier to satisfy that requirement; and in general, increasing awareness among companies and their counsel of the benefits of Section 337 compared to the district court.
Do you envision more foreign-based companies bringing Section 337 complaints over the coming years?
Yes, I do. Interestingly, several foreign-based companies have actually told us that they are tired of being targets of Section 337, and want to take advantage of it as Complainants. Especially with the satisfaction of the domestic industry requirement of the statute becoming easier, foreign-based companies are increasingly making consideration of a Section 337 action one of their routine tactical options for defending their U.S. intellectual property.
Do you envision more non-practicing patent owners (e.g., patent trolls) bringing Section 337 complaints over the coming years?
I think NPE’s will increase their use of Section 337. The speed of Section 337 cases and hence the avoidance of protracted, expensive litigation which can strain resources, and the avoidance of juries and e-Bay make Section 337 particularly attractive to NPEs.
If there is one thing that you want our readers to know about the ITC and/or Section 337 practice, what is it?
Probably the aspect of Section 337 which gives practitioners the most problem is one of its principal advantages — speed to decision. Because of the pace it is critical to know Section 337 practice and manage the case well from the start, which means putting together the best team you can from available resources, including firms other than your own, and preparing for trial from day one. I cannot tell you how many times cases are affected, even to the point of losing, because time was not well-managed and decisions were made that reflected a lack of appreciation for the differences between Section 337 cases and district court cases, and the strategical and tactical differences resulting therefrom.