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You are here: Home / Patent Infringement / ITC No Longer Favored Forum for NPEs

ITC No Longer Favored Forum for NPEs

July 11, 2013 by James Yang

For judges, patent litigation cases are one of the most complex types of cases. Patent cases by their nature involve unique inventions and a patent document which is sometimes difficult to read and understand because of the technology. On top of this, the courts have to deal with their ever increasing case load which some attribute partly to Non Practicing Entities (NPEs). (see NPE article).

So what? This pressure on the courts affects how the courts are trying to deal with the parties contentions. Parties (including NPEs) may have to adjust their approach in a different manner based on the courts reaction. For example, in the ITC (International Trade Commission), the complainant must show that there is a “domestic industry” for a product covered by the claims of the patent being asserted. The complainant cannot merely own a patent and assert the patent at the ITC because the ITC is specifically designed to protect our country’s economy from infringing products being imported into the U.S. If the claims of the patent are directed to a product which has no industry in the U.S. then there is no harm in allowing the importation of a product covered by the claim into the U.S. For the NPE, this is problematic because by definition, they do not have an industry to protect. However, the “domestic injury” inquiry is typically made later on in the ITC process. (Lack of Domestic Injury is a defense).  To the extent that the ITC proceeding drags defendants into litigation and coerces them to settle earlier on in litigation, the “domestic industry” requirement is not too much of a concern for the NPE.

In Laminated Packaging (ITC Inv. No. 337-TA-874), the Commission ordered the Administrative Law Judge (ALJ) to hold an early evidentiary hearing on the issue of domestic injury. Laminated Packaging is an organization specifically designed to exploit its patents, not to make product. Hence, they are the atypical NPE. The ALJ issued an initial determination that Laminated Packaging could not satisfy the domestic injury requirement to proceed in the ITC. By conducting, early on as a threshold issue, evidentiary hearings and findings of fact on issues that might be difficult for the complainant to satisfy, the ITC is able to move cases faster off of their dockets.

For the NPE, this means that the ITC may now be a disfavored forum to drag alleged infringers into court. One point of clarification. The term NPE is misleading. If a company has a claim that does not cover one of their products or services, then for that claim, that company is considered to not practice that claimed product or service. Simply put, a portion of their business may be characterized as a non-practicing entity or a non-practicing business unit. In my ten years of experience as a patent attorney, if a company has more than a few patents, there are typically at least one or two claims if not entire patents which do not cover any of the company’s products or services. Product features change over a period of time. One claim may cover the company’s product while another do not. In this sense, it is unfair to single out companies such as Laminated Packaging and label them with a more derogatory term such as patent troll. Most companies in my experience would be considered to be a patent troll in the sense that they also have claims and patents that do not protect their products or services. Why do they maintain these patents? Some are maintained for defensive reasons. They want to be able to look in their patent portfolio to make a patent infringement counterclaim should they find themselves as a defendant in a patent infringement lawsuit. In a sense, there is strength in the number of patents.

I invite you to contact me with your patent questions at (949) 433-0900 or [email protected] Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.

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Filed Under: Patent Infringement Tagged With: ITC, Non-Practicing Entity

Author: James Yang

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