The International Trade Commission, or ITC, is a federal agency in Washington D.C. that investigates unfair trade practices. Unfortunately, in recent years, it has also become a magnet for some of the worst abusers of the U.S. patent system. Now, there’s a bill in Congress, the Protecting America’s Interest Act (H.R. 8037), that could finally get patent trolls out of the ITC—a place they never should have been allowed in the first place.
Patent owners can ask the Commission to investigate an allegation of infringement, in addition to their right to bring a patent infringement case into federal court. The ITC can’t award damages like a district court can, but the ITC can grant an “exclusion order,” which bans importation of the excluded item, and orders customs agents to seize products at the border.
Not everyone is entitled to ask the ITC for an exclusion order; the complainant must be part of a “domestic industry.” But over the years, administrative law judges at the ITC have lowered the bar for what that requires. Engaging in patent licensing and litigation—without more—is enough to establish a “domestic industry” in this country, in the eyes of ITC judges. That means patent trolls, which produce no goods or services, can qualify. Even patent assertion entities based in other countries are using the ITC. For example, last year, the ITC took up a case in which an Ireland-based patent troll sought to stop 80% of U.S. imports on Android tablets, 86% of Windows tablets, and more than 50% of Android smartphones.
The ITC was never intended to be a forum for domestic companies based on allegations of patent infringement. But that’s exactly what it has become. Since 2006, the ITC’s own data show that between 6 and 33 percent of the venue’s patent cases are brought by entities that don’t practice the patent, which are, more often than not, patent trolls. The fast pace of ITC litigation, which has an 18-month time limit, makes it more expensive and less fair to defendants than district court litigation. When U.S. companies are forced to pay huge legal fees, and big settlements, to avoid threatening their product lines, prices go up and consumers are the losers.
Our patent system is broken, and in need of reform. Getting patent trolls out of the ITC is one important step toward that goal—and one we can achieve. The Advancing America’s Interests Act, H.R. 8037, would require complainants at the ITC to show that they are part of a real domestic industry—one that employs labor or capital, or invests in plants, equipment, or research and development. “Licensing” would meet the requirement for a domestic industry only if it leads to “adoption and development of articles” that embody the patented work.
H.R. 8037, sponsored by Representatives Suzan DelBene (D-WA) and David Schweikert (R-AZ), would also compel the commission to put the public interest front and center when it considers issuing an “exclusion order.” Currently, the law only requires that the ITC consider the public interest as one of four separate factors. If H.R. 8037 were to pass, the ITC would have to affirmatively decide that each exclusion order is in the public interest.
While Congress may not have time to take this bill up before the election, we hope ITC reform is on the table in 2021. We supported a nearly-identical bill in 2016. Since then, patent abusers continue to be regulars at the ITC. It’s time to bid them farewell.