Will the ITC Give Patent Trolls Injunctions Not Available From Federal Courts?

That is the central question now being determined by the ITC. Since Ebay, non-practicing entities (NPEs, or "patent trolls") have not had the injunction leverage for their shake downs that they had prior to Ebay. Until now, it was widely believed that patent trolls did not have access to ITC proceedings because they could not meet the domestic industry requirement for a Section 337 action, i.e., their corporate shell/shake down modus operandi was not considered a protectable domestic industry. However, the recent opinion by the Commission in Certain Coaxial Cable Connectors, Investigation No. 337-TA-650, might just have opened the doors of the ITC to the trolls.

The essential, technical question addressed by the Commission was whether "litigation expenses" alone could constitute "exploitation" of the patent(s)-in-suit under Section 337(a)(3)(c). More specifically, the Commission sought to determine whether licensing efforts for an asserted patent, including the aforementioned litigation expenses, satisfied the domestic industry requirement. The Commission noted that Congress stated that a domestic industry exists if there is substantial investment in the exploitation of a patent, including licensing of efforts for that patent. The Commission held that litigation activities may satisfy the requirements of the law if the complainant can prove that substantial investment in exploitation of a specific patent is related to licensing, and that such activities pertain to the patent at issue in any such litigation. For example, a patent troll complainant with a large portfolio cannot assert that a domestic industry was established based on litigation expenses for its entire portfolio if only a select set of patents from the portfolio are actually litigated. According to the decision, the complainant will have to prove the costs associated with the litigation activities and that the activities are directly tied to attempts to license the patent(s) at issue.

The current status of the Certain Coaxial Cable Connectors case is that the Commission has remanded it to the Administrative Law Judge to determine if the complainant had exploited the patents-in-suit along the lines set out in the opinion, or was in the process of establishing such exploitation. It appears that corporations should not rest so comfortably in the belief that injunctions are unavailable to patent trolls. The ITC has provided a road map for patent trolls to obtain an exclusion order. Thus, corporations involved in the global economy may be subject to the typical ITC strategy of suit in Federal Court for money damages and a simultaneous suit in the ITC for the general exclusion order, albeit from a patent troll.

This Greenberg Traurig Client Advisory is issued for informational purposes only and is not intended to be construed or used as general legal advice. Please contact the author(s) or your Greenberg Traurig contact if you have questions regarding the currency of this information. The hiring of a lawyer is an important decision. Before you decide, ask for written information about the lawyer's legal qualifications and experience. Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2010 Greenberg Traurig, LLP. All rights reserved. *Operates as Greenberg Traurig Maher LLP. **Greenberg Traurig is not responsible for any legal or other services rendered by attorneys employed by the Strategic Alliance firms.