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October 6, 2020

A New Development on the Interplay of ITC Section 337 Investigations and IPR Proceedings


In the past, proceedings before the Patent Trials and Appeal Board (PTAB) of the US Patent and Trademark Office (PTO), such as inter partes reviews (IPRs), have been viewed as unlikely to impact Section 337 investigations before the US International Trade Commission (ITC). But last month, in Certain Unmanned Aerial Vehicles and Components Thereof,1 the ITC suspended enforcement of its remedial orders pending the resolution of an IPR. This opinion appears to have a significant impact on how IPRs may be used as part of a defense strategy at the ITC.

Unmanned Aerial Vehicles

On March 2, 2020, Chief Administrative Law Judge (ALJ) Charles E. Bullock issued a final initial determination finding a violation of Section 337.2 On May 29, 2020, while petitions for review of the initial determination were pending, the respondents informed the Commission that in co-pending IPRs, the PTAB had issued Final Written Decisions finding that all of the patent claims asserted in the ITC investigation were unpatentable.3 In this case, the target date had been extended three times, first in February 2019 due to the 2018 government shutdown4 and then again in March 2020 and June 2020 for unspecified reasons.5 The respondents informed the Commission of the Final Written Decision and the Commission decided to review the impact of the PTAB's Final Written Decisions and requested briefing.6

In deciding to suspend its remedial orders, the Commission focused on its power to issue remedial orders where accused articles "infringe a valid and enforceable United States patent."7 The Commission held that suspending remedial orders was consistent with its approach in previous cases where the final written decision by PTAB issued before a violation was determined.8 The Commission further emphasized the "PTO's role as the lead agency in assessing the patentability, or validity, of proposed or issued claims" and congressional intent to provide a "quick, inexpensive, and reliable alternative to district court litigation to resolve questions of patent validity."9

As will be discussed further below, the Commission's opinion demonstrates that IPRs may assist respondents in two ways. First, the Commission clarified that suspension of remedial orders is appropriate where the PTAB issues a final written decision prior to issuance of the remedial orders. Second, although it did not directly decide the issue, the opinion suggests that an interim order staying an investigation may be available if one or more final written decisions have been issued by the PTAB prior to the evidentiary hearing.

The Commission is Willing to Suspend Its Remedial Orders if a Final Written Decision Precedes the Issuance of the Remedial Orders

The ITC typically has suspended its remedial orders if the PTAB issues a final written decision prior to its determination of a violation and issuance of remedial orders. However, such suspensions have been limited to the particular claims canceled during IPR and have had little practical effect. For example, in Three-Dimensional Cinema Systems, the ITC found Section 337 violations of various claims of three patents. However, prior to the Commission issuing an opinion, the PTAB issued a final written decision canceling claims of one of the three patents.10 Although the Commission declined to give preclusive weight to the IPR decision, the Commission suspended its remedial orders as to the patent for which the final written decision had issued.11 But because only some of the infringed claims were found unpatentable by the PTAB, and the Commission did not suspend its remedial orders for the other claims, the suspension had little practical effect. Similarly, in Magnetic Tape Cartridges,12 the ITC suspended enforcement of its remedial orders as to one claim of one of two patents where the Commission found Section 337 violations, but again the suspension was only partial and had little practical effect. The PTAB had issued a final written decision canceling only one of several asserted claims. The Commission explicitly rejected the complainant's argument that the Commission should not suspend a remedial order as to only one claim of a patent.13 The Commission noted that it finds violations of section 337 on a per claim basis rather and that the suspension as to one claim had no practical effect since the products at issue would still be excluded based on the other asserted claims.14

On the other hand, in Network Devices (II) the ITC found a Section 337 violation for two patents and issued a limited exclusion order (LEO) and a cease-and-desist order (CDO) on May 4, 2017.15 Shortly thereafter on May 25, 2017 and June 1, 2017, the PTAB issued decisions finding asserted claims in that investigation unpatentable, before the LEO and CDO took effect.16 The respondent filed an emergency petition to suspend or rescind the LEO and CDO, but the Commission denied that petition on July 20, 2017, despite those decisions from the PTAB.17 Notably, the petition to suspend or rescind was brought under 19 U.S.C. § 1337(k) and 19 C.F.R. § 210.76, which allows for modification or recission of remedial orders where there are "changed circumstances."18 The Commission held that the issuance of a final written decision is not a "changed circumstance" because a certificate cancelling claims had not issued.19

The Commission's Opinion in Unmanned Aerial Vehicles is consistent with this history, but extends these principles to completely suspend its remedial orders in certain circumstances. In deciding to suspend its remedial orders in Unmanned Aerial Vehicles, the Commission distinguished its earlier decision in Network Devices (II) by noting that in that case, the Commission had issued its remedial order before the PTAB had issued a final written decision.20 On the other hand, citing Three-Dimensional Cinema Systems and in Magnetic Tape Cartridges, the Commission acknowledged that the parties could not identify any case where it had ever denied a motion to suspend its remedial orders, at least in part where the PTAB had issued its final written decision prior to issuance of remedial orders.21 However, unlike those previous cases, the Commission in Unmanned Aerial Vehicles suspended its remedial orders in their entirety because the final written decision covered all claims for which a Section 337 violation had been found.

Obtaining a Stay of ITC Proceedings Pending IPR Remains Difficult

The ITC has rarely granted stays because of PTO proceedings, in part because the Commission has a statutory mandate to complete Section 337 investigations "at the earliest practicable time after the date of publication of the notice of publication" of the investigation.22 ITC investigations have historically concluded within sixteen months of institution, but in recent years, investigations have often been delayed and the average is now over nineteen months.23 An IPR, on the other hand, is required to be completed within 18 months of institution,24 but is not final until appeals are exhausted.25

Given the tight timeline, ALJs have been reluctant to grant stays. For example, in Memory Modules, 26 Chief ALJ Bullock denied a motion to stay the case pending the PTAB's final written decisions in the related IPR proceedings. In that case, the PTAB had issued a final written decision canceling the claims of one of the two asserted patents after discovery had closed and the evidentiary hearing had begun.27 The target date of the investigation had been extended by ten weeks during the hearing due to the 2018 US government shutdown.28 The Chief ALJ applied a five-factor test to determine whether a stay was warranted, considering: "(1) the state of discovery and the hearing date; (2) whether a stay will simplify the issues and hearing of the case; (3) the undue prejudice or clear tactical disadvantage to any party; (4) the stage of the PTO proceedings; and (5) the efficient use of Commission resources."29 Although the Chief ALJ found that the first and third factors weighed heavily against a stay and the fourth factor weighed against a stay, the second factor weighed heavily in favor of a stay and the fifth factor was neutral. With respect to the third factor, the Chief ALJ found that there was no disadvantage to the respondents given the Commission's willingness to suspend enforcement of remedial orders pending the resolution of the final written decisions.

Importantly however, the Commission distinguished Memory Modules in Unmanned Aerial Vehicles at least in part by noting that "inter partes reviews against the other two asserted patents" remained pending. The Commission further emphasized that the ALJ had found that little would have been gained by a stay because the PTAB was unlikely to issue the remaining two final written decisions before the evidentiary hearing.30 By emphasizing this aspect of the ALJ's order, the Commission might have been signaling that a stay would have been appropriate had it been likely that the PTAB would issue final written decisions covering all asserted patents before the evidentiary hearing.

Practical Advice When Considering Parallel IPR and ITC Proceedings

Respondents facing the possibility or threat of a Section 337 complaint should consider preparing IPR petitions as soon as possible. Once a Section 337 complaint is filed, respondents should move quickly to file their IPR petitions and maximize the likelihood of obtaining a final written decision before the issuance of remedial orders, or better yet, before the ITC holds an evidentiary hearing. Even with the lengthening of ITC investigations in recent years, investigations on average are only one month longer than IPR proceedings. Failing to file quickly enough may cost respondents severely in view of the ITC's reluctance to suspend remedial orders after they have issued. Respondents should also attempt to cover all asserted claims in their IPR petitions because partially suspended remedial would not prevent the exclusion of infringing products based on the surviving claims. Having final IPR written decisions covering all asserted claims in hand prior to the ITC's issuance of remedial orders increases a respondent's chance of obtaining a suspension of those remedial orders. This may allow respondents to continue importing even while the results of the IPRs are reviewed by the Federal Circuit. Finally, if respondents receive final written decisions prior to the evidentiary hearing in the ITC, they should consider filing a motion to stay.

© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

  1. Certain Unmanned Aerial Vehicles and Components Thereof (Unmanned Aerial Vehicles), Inv. No. 337-TA-1133, Comm'n Op. (Sept. 8, 2020).

  2. Id. at 5.

  3. Id. at 4-5.

  4. Id., Order No. 9 (Feb. 14, 2019).

  5. Id., Notice (June 9, 2020).

  6. Id. Comm'n Op. at 4-5 (Sept. 8, 2020).

  7. Id. at 35 (quoting 19 U.S.C. § 1337(a)(1)(B)(i), (d)(1)) (emphasis original).

  8. Id. (citing Certain Magnetic Tape Cartridges and Tape Components Thereof (Magnetic Tape Cartridges), Inv. No. 337-TA-1058, Comm'n Op. at 62-63, 2019 WL 2635509 at *38 (Apr. 9, 2019); Certain Three-Dimensional Cinema Sys. and Components Thereof (Three-Dimensional Cinema Systems), Inv. No. 337-TA-939, Comm'n Op. at 60, 2016 WL 7635412 at *37 (July 21, 2016)).

  9. Id. at 37-38(quoting S. REP. No. 110-259, at 20 (2008)).

  10. See Three-Dimensional Cinema Systems, Comm'n Op. at 60-61.

  11. Id. at 55-56, 60-61.

  12. Magnetic Tape Cartridges, Comm'n Op. at 62.

  13. Id.

  14. Id.

  15. See Certain Network Devices, Related Software and Components Thereof (II) (Network Devices (II)), Inv. No. 337-TA-945, Notice at 2 (July 20, 2017).

  16. See 19 U.S.C. § 1337(j).

  17. Network Devices (II), Notice at 2 (July 20, 2017).

  18. Id.

  19.  Id. at 2-3; id., Comm'n Op. at 14 (Aug. 16, 2017).

  20. See Three-Dimensional Cinema Systems, Comm'n Op. at 35 (Aug. 23, 2016).

  21. Id.

  22. 19 U.S.C. § 1337(b)(1).

  23. USITC, Section 337 Statistics: Average Length of Investigations, (retrieved Sept. 23, 2020).

  24. 35 U.S.C. § 316(a)(11).

  25. 37 C.F.R. § 42.80.

  26. Certain Memory Modules and Components Thereof (Memory Modules), Inv. No. 337-TA-1089, Order No. 49 at 1-4 (April 11, 2019).

  27. Id.

  28. See id., Order No. 33 (February 21, 2019).

  29. Id. Order No. 49 at 2 (quoting Certain Semiconductor Chips with Minimized Chip Package Size & Products Containing Same, Inv. No. 337-TA-605, Comm'n Op. at 3 (May 27, 2008)).

  30. Unmanned Aerial Vehicles, Comm'n Op. at 36, n.16.