ITC protections are broken, it’s time to fix them
The old Southern adage “if it ain’t broke, don’t fix it” is frequently used as an argument against incremental changes to systems that perform as intended, even though this may be at reduced reliability and efficiency. . As the people of Texas recently discovered in hindsight when the Great Arctic Vortex Storm of 2021 “broke” the system for delivering electricity to consumers, the system actually needed significant, incremental changes to handle the power. severe stress he was under.
Much like the Texas power grid, America’s system of protecting U.S. domestic industries and our economy from unfairly traded imports may require some attention. In particular, the decision of the International Trade Commission (ITC) on the cases brought under Article 337 blocking imports works sub-optimally, inconsistently and inefficiently.
It presents an ever-increasing workload for administrative law judges dealing with Section 337 cases, as well as repeated failures of the system in investigating complaints and issuing exclusions that harm American interests. The system requires readjustment in a number of areas if ITC is to fulfill its mission.
Scope of exclusion orders, section 337
Take one area — the scope of exclusion orders. To maintain a well-regulated economy with strong competition and consumer choice, decisions made in 337 cases must ensure that unfairly traded goods can be kept out of the United States, while international trade legitimate involving non-counterfeit, new and redesigned products can continue the United States without any problem.
To achieve this goal, when the ITC deploys its enormous power to block imports from the US market due to unfair competition, it must take all necessary precautions not to impede or stifle fair trade and innovation. healthy competition in the US market. In its current practice, ITC has unfortunately not listened to the need to take all necessary precautions to meet these key parameters.
Since the enactment of Section 337 through its amendments in the late 1980s and early 1990s, this legal remedy has become a very powerful weapon for intellectual property owners to block the importation of goods, which were generally counterfeit patented consumer goods or industrial equipment. Even in the 1990s, few cases involved complex products.
The system seemed to balance the need to protect US industries dependent on intellectual property, the rights of importers to import fair trade goods, and the need of US consumers for choice and competition in the marketplace.
The digital revolution brings complexity
Since the onset of the digital revolution, products and patents have become much more complex, making it more difficult, and even more necessary, to determine which products should be excluded and which products should not.
Unfortunately, the ITC’s exclusion orders have become increasingly broad, resulting in very few products in all categories having conclusively concluded that the ITC was in violation during its investigations. This has placed a huge burden on importers to prove to a completely different agency, US Customs, that their non-counterfeit products, including redesigned products, should not be stopped at the border after ITC investigations are completed.
The ITC has established a supposed policy of evaluating redesigns that were presented during the original 337 investigation and allowing them to import where they have not violated, in order to advance fair trade and innovation. It is a win-win policy. The intellectual property owner gets the infringement stopped, importers know which products can continue to be imported, and U.S. consumers have quick access to newly redesigned products to ensure a fair and competitive market.
However, the ITC’s lack of a consistent approach to reviewing redesigned products can generate alleged import bans on non-counterfeit products to the detriment of US importers and consumers. It also creates uncertainty for businesses.
Anytime ITC doesn’t evaluate a redesign, it only adds to the uncertainty that prevails over whether ITC will evaluate redesigns the next time around. Moreover, if the Respondent cannot hope to avoid the effects of an exclusion with a recast, it shifts the balance of power considerably, perversely increasing the influence of the plaintiffs to reach an exorbitant settlement.
Ultimately, such results undermine ITC’s credibility and the fulfillment of its mandate to protect free and fair trade.
How to remedy this situation? A modest change to the ITC Standards of Practice would establish a system by which the ITC would rule on a redesign of the product or component accused of infringing, if the redesign is submitted for evaluation during the investigation.
The other alternative, if the ITC cannot self-correct, would appear to be a full Congress review of the function of the ITC and the passage of ITC reform legislation. It takes much longer, when it looks like a timely incremental change will solve the problem.
Like the Texas electrical system, the ITC system was not disrupted until it was. Let’s fix it.
This column does not necessarily reflect the opinion of the Bureau of National Affairs, Inc. or its owners.
Charles B. “Chuck” Meyer, Licensed Patent Attorney, is a Texas-based technology lawyer with over 30 years of experience in international and national intellectual property law.