by Dennis Crouch
This essay focuses on proposed Advancing America’s Interests Act (H.R.3535) which aims to limit NPE access to the ITC by refining the economic prong of the domestic industry requirement and by adding a stronger public interest consideration prior to issuance of an exclusion order.
The International Trade Commission (ITC) is a branch of the U.S. government focused on protecting domestic industry against undue foreign competition. The ITC’s power extends in to several areas, but primarily by enforcing the laws of (1) intellectual property rights; (2) anti-dumping; and (3) countervailing duties.
- Intellectual Property Rights: Section 337 investigations constitute a significant portion of ITC’s enforcement activities. These investigations patent, trademark, or copyright violations caused by trade importation into the US. The ITC has the power to issue an exclusion order — much like an injunction — to bar infringing products from entering the US.
- Anti-dumping and Countervailing Duties: The ITC can impose anti-dumping duties on foreign manufacturers selling goods in the U.S. at less than fair value. The ITC can also impose countervailing duties to counter effects of foreign subsidies on products imported into the U.S.
Because the ITCs key role is protecting US industry, the agency can only act if there is a domestic industry to be protected. In recent years, the ITC and Federal Circuit have expanded the scope of what counts for ITC domestic industry. For instance, US investments in licensing of IP have been increasingly recognized as a major factor in establishing the economic prong of the domestic industry requirement. And, patent holders have been able to rely upon uses of their technology licensees as evidence of a domestic industry. Likewise, R&D may also satisfy the requirements. Changes like these have broadened the scope of the domestic industry requirement, making ITC action accessible to industries and companies that may not have traditional manufacturing facilities or significant capital investments in the United States. — i.e., non practicing entities.
H.R.3535 – Advancing America’s Interests Act (AAIA). This proposed legislation aims to amend Section 337 of the Tariff Act of 1930 to counteract some of these expansions by narrowing the definition of domestic industry. This is the third time that Rep Schweikert has introduced the legislation. And, the basic thrust is that non-practicing patent holders would have real difficulty in bringing Section 337 complaints.
Key features of the proposed amendments include:
- Licensing Activities: The Bill seeks to refine the economic prong of the domestic industry requirement by requiring that complainants demonstrate their licensing activities have led to the development of a product. This change is intended to prevent Non-Practicing Entities (NPEs), which often license their patents under threat of patent infringement suits, from establishing a domestic industry. This adjustment is designed to still permit entities who license patents as part of a technology transfer leading to new products, to assert their intellectual property rights at the ITC.
- Unwilling Licensees: The Bill proposes changes regarding the use of “unwilling” licensees to establish a domestic industry. Currently, a third-party licensee can be subpoenaed for confidential information, regardless of their desire to participate in the investigation. The proposed Act stipulates that the patent owner can only rely on the licensee’s activities to establish a domestic industry if the licensee joins the complaint under oath.
- Public Interest and Exclusion Orders: The Act introduces a significant shift in how the ITC considers exclusion orders. It requires the ITC to affirmatively determine that any exclusion serves the public interest. This change effectively removes the current presumption in favor of exclusionary relief — making ITC action more akin to the eBay analysis in district court..
- Expedited Fact Finding: The Act would codify the ITC’s existing “100-day early disposition program,” directing the ITC to consider at the beginning of an investigation whether there are potentially dispositive issues appropriate for an early Initial Determination by the presiding administrative law judge.
ITC action became much more popular in the wake of eBay and the difficulty of obtaining injunctive relief in district court. The proposal here would shift that dynamic once again and would represent a significant shift — coupled with the limits on NPE filings. If passed, this legislation would reshape the ITC’s approach and its effectiveness for many patent holders.
the people that want patent trolls to be able to exclude goods from the USA market entirely are not really thinking things through
Or they simply recognize the value of patents and understand the fundamental aspect of property being fully alienable.
You do suffer from the myopia of the “must make” fallacy.
There is no “must make” in general. But to get an injunction, YES: that should definitely be a requirement. It is in district court. And in the ITC there at least has to be a domestic industry for the patent. So even in the ITC you can’t just be a straight troll. The trolls have been working hard to weaken the domestic industry requirement (e.g., they provide a license to a third party and try to use the third party’s product as the domestic industry– even though the third party does not own the patent and is not the Complainant). Appropriate legislation could rein that in. The ITC should not be for trolls, because the only remedy available is an exclusion order (injunction). Trolls should stay in the EDTX and try to get damages.
Lol. Your insistence only exemplifies that you do not understand what the patent right actually is.
My those “0h N0es Tr011s” propaganda Kool-aid stains on your face are deep.
The idea of a domestic industry requirement for an ITC enforcement is just a bad idea in the first place. If the goods infringe U.S. IP, then they should not be allowed through customs regardless of who owns the IP. If the goods do not infringe U.S. IP—and if they are not some other species of contraband—then they ought to move through customs without obstacle. If there is a willing buyer and a willing seller, then the ITC should not exist to stop the voluntary transaction (except with regard to contraband).
If we want to impose obstacles in the way of IP enforcement by NPEs (and I express no strong views on that point one way or the other), then we should have a working requirement—full stop. Not a working requirement only if the goods are imported, but a working requirement that applies in all instances, domestic and imported. Maybe that is a good idea and maybe it is not, but it does not become a good idea in the context of imports but a bad idea in the context of domestic markets. It is either a good idea all around or it is not.
“then we should have a working requirement—full stop”
Lol — “or any improvement thereof.”
Any 1L’s out there care to point out Big Pharma minded Greg’s critical mistake?
“y”
Lol “WHY” indeed.
The legislation that set up the ITC was supposed to PROTECT American industry from foreign industry (hence the requirement to show that the accused infringing goods are “imported”). Under your view that the patent owner needs no domestic industry at all to get an injunction, America would be greatly harmed. The patent owner could exclude products from the USA while not making products of its own. So that would just be a net subtraction of goods and services from the US economy. That would be the opposite of what the whole ITC system was supposed to do.
Oopsie – you confuse “must make” with “industry.”
The two are NOT the same.
Right. I am saying that what the ITC was set up to do is bunkum, and we should just scrap it. I cannot credit that “America would be greatly harmed” by her citizens buying and selling legal goods on the open market, regardless of whether those goods are manufactured domestically or abroad.
I agree that the domestic industry is a threshold inquiry of any ITC enforcement action as the law presently stands. I am suggesting that the law as it presently stands reflects a useless and ill-informed mercantilist perspective, and that we would all be a deal better off to rework it in a fundamental fashion.
“America would be greatly harmed”
Nonsense.
Your thinking is way too simple.
The ability of an innovator to control (via the patent) simply includes the ability to deny.
There is both a carrot and a stick aspect to the patent right.
Your inability to see the value of the stick is evident in your false equivalence of this as “harm to America.”
Making the patent right strong (including this “deny” aspect) makes America stronger.
It is a false notion that ‘denied’ must be equivalent to weaker.
Innovation is promoted when one is faced with a “you can’t have” because this drives to innovate something else to have instead.
Changes like these have broadened the scope of the domestic industry requirement, making ITC action accessible to industries and companies that may not have traditional manufacturing facilities or significant capital investments in the United States. — i.e., non practicing entities.
So the proposal is basically to ignore that innovation is an industry in itself. Few companies design/manufacture/sell their own products these days. Rather products are designed in California (and other states, naturally), manufactured in China (and other low-cost countries), and sold throughout the world in trade channels not necessarily related to the designer or manufacturer.
The entities more likely to meet these newly-imposed provisions are larger companies, which means yet another system put in place that benefits larger companies over smaller companies. The rich get richer and the big get bigger — this is the way of the US IP system (aka ‘the sport of kings’).
There is little “reasonable” wonder why patents are attacked by both the “political” Left (all personal property is “B-A-d”) and what I had previously categorized as a “non-political” Right (better categorized as Efficient Infringers (anyone else’s personal property is “B-A-D”).
Those that have studied innovation are well aware that Most All (with a few notable exceptions) established companies (and especially LARGE established companies) would rather compete on non-innovation factors.
This is also why (the likes of Greg and others) are ‘all about’ wanting legislative “solutions” to integrate “all stakeholders” as opposed to solutions actually geared to promoting innovation in and of itself.
Econ and Tech DI is not an issue even when manufacturing is done in China, and the language of the bill has a carveout for the “innovation industry” you refer to:
““(D) substantial investment in licensing activities that leads to the adoption and development of articles that incorporate the patent, copyright, trademark, mask work, or design.”;”
and further states:
““(4) For purposes of paragraph (3), the complainant may not rely upon activities by its licensees unless the license leads to the adoption and development of articles that incorporate the claimed patent, copyright, trademark, mask work, or design for sale in the United States.”.”
“language of the bill has a carveout for the “innovation industry” you refer to:”
With a Jedi hand wave, “this is not the carve-out that you are looking for.”
Why?
Because that “carve-out” must still have the “must-make” aspect, and that simply is not congruent with the actual nature of what a patent is.
The industry of innovation simply exceeds the “must-make” mindset.
Your obsession with automatic injunctions suggests that you work for IV.
[Y]ou work for IV.
Could be, I suppose. IV is the sort of outfit that might care enough about affecting the narrative around patent law to pay a non-lawyer to make comments on legal-interest blogs.
He’s not a lawyer? If true, that makes so much more sense.
Ask yourself this: have you seen him write anything that evidences legal knowledge more sophisticated than that which one might pick up from watching Schoolhouse Rock cartoons?
No, but that’s also true for the “lawyers” that IP Edge hires.
Fair point. I do not pretend to know any more about anon than can be gleaned from reading his work here over a succession of years. I do not know his offline identity, and cannot prove anything about his offline life.
There are people on this board like myself and David Boundy who use our real names. You can look us up on Martindale and see that we are bar-admitted lawyers. Then there are people like Wandering through or iwasthere, who use pseudonyms, but whose output on these boards bespeak the sort of sophistication of legal knowledge that suggest that the writer is a law-school educated legal professional.
Finally, there are people like anon, whose pseudonymity precludes looking them up on Martindale, and whose written output offers no evidence of legal education. I see no reason to suppose that such people are lawyers. If you subscribe to a less suspicious hermeneutic, however, that is your prerogative.
What you’re saying is perfectly sound. I’m just making the overused “there are a lot of bad lawyers out there” point.
Too, too funny (read that as ultimately very very sad), as Greg (I-Use-My-Real-Name-Except-When-I-Don’t) DeLassus is playing patticake with a moniker that has shown exactly zero legal sophistication about pseudonymous posters that they want to attribute to be “bad lawyers.”
“If you subscribe to a less suspicious hermeneutic, however, that is your prerogative.”
Who speaks like that? On a blog, no less?
Hint: really bad lawyers – with oversized egos.
And (yet again), for all the prior assertions from Greg that he cannot even SEE my posts, given that the neophyte litigator (who has zero appreciation for actual patent law) has NOT used my moniker, Greg certainly wants to A S S ume it’s me.
Maybe he just wanted to do more of his signaling…
¯\_(ツ)_/¯
Umm, Greg said you’re not a lawyer. You responded with invective.
That’s not exactly a denial.
You must be new around here – Greg’s assertion is false, as other denigrators have made that accusation and long ago I explicitly refuted it.
I am a patent attorney registered with the USPTO.
Speaking of “not exactly,” you never answered my prior question to you in regards to whether you are just a litigator or if you have ever worked to earn inventors patent protection.
Hmmm?
Fair enough: that is a substantive answer.
To answer your question, I did some patent prosecution as a very junior associate and then lateralled to a firm whose IP group only did litigation. Since then, I’ve only done litigation work.
Thanks – if I may indulge further….
How much is “some?”
Were you employed in a paid-engineer capacity prior to or during law school, or did you take an academic route avoiding hands-on with innovation?
That’s not exactly a denial.
And what if it were a more explicit denial? Anyone can say anything. That does not make it true.
One should believe everything that one reads on the internet. It is best to employ one’s critical faculties and only accept as true that which has evidence to support it.
“One should not believe everything that one reads on the internet.” Corrected.
“n” and “e”…
Yup,
Greg is more interested in his nigh constant signaling.
How very sad.
It is rather NOT an “0bsess10n,” but rather a better understanding of the nature of both the patent right and the principles of equity.
… and beyond your own ‘invective’ of “0bsess10n,” I have never indicated “automatic” as far as injunction.
Certainly, the nature of each of the right transgressed, the call of remedy to make the transgressed as whole as possible TO the nature of the right transgressed, and understanding the Congressional delegation of their authority to the courts for application of equity (see 35 USC 283 – emphasis added):
The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable.
will make it a rather exceptional case to not provide injunction, the analysis STILL needs be engaged.
Never have I ever indicated this to be automatic.
Mister SS,
Am I to presume that your 0bsess10n is empty invective and running away when you are questioned?
Afraid of what those answers will reveal?
Here’s a hint: actual good lawyers (not Greg) embrace who they are, faults and all, welcome sunlight on such faults, ENGAGE (even when they may have the lesser side), and grow.
Bad attorneys (like Greg) think WAY too highly of themselves, do not engage, and do not grow.
Do not be like Greg.
The tyranny of “must make” runs smack into a lack of understanding of what patents ARE.
FYI, Killian v. Vidal is officially on the docket
link to supremecourt.gov
Go get ’em, you two.
Once in awhile a David bests a Goliath. In this case, multiple Goliaths.
For the sake of American innovation, may this be one of those times.
Wow. Great job B!
Just get rid of the domestic industry requirement. If that helps NPEs, so be it. Free trade is more of a benefit to the American economy than NPEs are a detriment to it.
“Sketchy gun charge”
Author: Drum.
Kool-aid Quaffer: Greg.
¯\_(ツ)_/¯
IDK. It probably should be called the “Advancing Foreign Corporations Act.” Saving a few “resources” at the ITC is a pretty thin reed on which to base a claim of “America’s” interest on.
Side note: interesting timing given how prominent payments (bribes) from foreign corporations are likely to be in the next several news cycles.
The legislation looks like a long-needed fix. Hopefully it passes quickly.
But Malcolm’s not anti-patent…
A remedy under an unfair competition statute should probably require a threshold showing of harm to competition, no?
District Court litigation is perfectly adequate for the money damages that most trolls are looking for.
Ah, my pal the litigator with an absence of appreciation of innovation protection…
I see that you have fully bought into the “0h N0es Tr011s” narrative, and it can easily be seen that you just do not understand the nature of the patent right as a negative right.
Speaking of “remedy” then with a wooden view of merely “money damages” paints you as a neophyte (no matter how many years you may have been actually litigating).
Have you ever considered reading the text of Section 337? It’s an unfair competition statute. There has to actually be competition for there to be any kind of remedy under that statute.
Saying “I want an injunction because muh patents” is silly, and saying “a patent right is a negative right with an absolute right to exclude” makes you sound like a first semester 1L who has no concept of remedies.
Actually, if you had been around the block on the patent side (at all), you would recognize that the view i espouse as to remedies related to patents is highly advanced, and that your viewpoint is — by far — the immature one.
If your view is that advanced, it shouldn’t be that hard to restate it.
Been there done that.
Typically I don’t play the “repeat yourself, Br’er Rabbit” game.
In a nutshell:
The primary aim of remedy is to make the transgressed as whole as possible.
The nature of the patent right — being a negative right overrides the wooden (and juvenile) view in general that injunctions are the “atom bomb” of remedies.
Transgression of the patent right simply has no connection with that right holder BEING one that “makes.”
Understanding the nature of patents — especially improvement patents (which are the predominant form of patent) — must recognize that a holder of a right may not even be permitted to make, as a baseline to which an improvement has been made may well be under patent to another.
As you indicated in our last exchange (both through your answers and your choice of non-answers), your opinion on these things is very much UNinformed.
That view is highly advanced only by the standards of kindergarteners.
As it far surpasses your view, how much lower than kindergartners does that make you?
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