When even the ITC can't find your "domestic industry"

In its quest to assert jurisdiction over a larger and larger share of private patent disputes, the U.S. International Trade Commission has rendered the domestic industry requirement of Section 337 nearly meaningless. So, it's pretty impressive when a case comes along where the quantity of domestic investment is just so miniscule that the complainant can't even pass the ITC's exceedingly lax standard.

Docket Update: Billions Worth of Consumer Devices Threatened as Semiconductor Foundry Dispute Comes to the ITC

Two new ITC patent complaints from GlobalFoundries seek to block a large swath of computing devices that rely on chips manufactured by TSMC, the world’s largest semiconductor fabrication company. But the patent owner assures the Commission that consumers won’t be harmed by the requested ban because at least 39% of the smartphone market will still be available.

ITC Patent Docket Update: Tide Pods, Keto Supplements, and Vintage Light Bulbs

So far in 2019, the ITC has received 27 new Section 337 complaints. Although this rate of filings is about even with the previous three years, there have been a relatively high number of complaints seeking a general exclusion order in 2019 and an unprecedented number of non-patent cases—as many in the first seven months of 2019 as in all of 2017 and 2018 combined. The three most recent ITC complaints seem to continue this trend.

Tide Pod Safety

In order to keep teenagers toddlers from eating liquid laundry detergent, Tide Pods now come in child-safe pouches. The tops of these pouches are made by Presto, a company that makes (among many other things) difficult-to-open "Child-Guard" slider closures. Presto also owns three patents related to this technology which it is asserting in a new Section 337 complaint awkwardly captioned Child Resistant Closures with Slider Devices Having a User Actuated Insertable Torpedo for Selectively Opening the Closures and Slider Devices Therefor.

One peculiar aspect of this complaint is that the complainant is hoping to secure a general exclusion order, a special remedy available under Section 337 in which the ITC imposes an import ban against everyone, not just the named respondents in the investigation. But securing a general exclusion order seems like a long shot in this case.

The remedy is reserved for cases where it is necessary "to prevent circumvention of an exclusion order" or when "there is a pattern of violation . . . and it is difficult to identify the source of infringing products." But here, the six named proposed respondents all appear to be affiliates of a single Japanese company. And so far, the only imports of the accused products are for display at trade shows, where the respondent was hoping to market its competing child-safe closures to American brands.

Considering that Presto has not filed a parallel infringement suit in district court, the company may be hoping to scare their would-be competitor into abandoning the U.S. market with maximum threat but minimal litigation cost.

Keto Supplements

According to companies that sell dietary supplements, you can take a dietary supplement to get the benefits of a zero-carb keto diet without actually eating zero carbs. One of those companies—New U Life—also believes its competitors are engaged in a conspiracy to restrain trade by "setting up a patent-based cartel."

The allegation in Exogenous Beta-Hydroxybutyrate Nutraceutical Products is that patent licensing company Axcess Global has conspired with its licensees to divide up the market among themselves while overstating the scope of its patent rights in order to bully non-licensed companies out of the market. This is not a patent-based Section 337 complaint; rather, the claim is that respondents misused their patent rights and engaged in behavior that complainant contends amounts to a violation of antitrust law.

Antitrust-based ITC complaints are not very common and almost never successful. And in this case, most of the complainant's "antitrust" claims are really just defenses it would raise in a patent infringement lawsuit, which, interestingly enough, the respondents have not yet filed against it.

Even if the complainant somehow prevailed on the merits of its Section 337 claim, it's difficult to fathom how the ITC could justify imposing an import ban against the products of a patent owner and its licensees as a remedy for patent misuse.

Vintage Light Bulbs

The University of California holds patents related to old-timey looking LED light bulbs and has started an aggressive litigation campaign against major retailers. That campaign includes an ITC complaint captioned Filament Light-Emitting Diodes and Products Containing Same that names Amazon, Bed Bath & Beyond, Ikea, Target, and Walmart as respondents. The accused products include not only store brands but also light bulbs made by major brands like Feit, Philips, Sylvania, and Westinghouse.

It's worth noting that the university, like all other patent licensing companies at the ITC, has absolutely no interest in actually preventing respondents' importation and sale of these light bulbs. It also has no plans to develop a competing product with a chosen licensee that could be thwarted by infringing imports. Instead, its goal is to secure licensing royalties from an already existing domestic industry—companies which, for some reason that will surely become apparent during litigation, have so far unanimously refused the university's demands to pay for a license.

As with so many ITC patent investigations, the dispute in Filament LEDs could easily be litigated in a court before a constitutionally-appointed judge perfectly capable of adjudicating patent claims and enforcing a remedy for infringement. Filing an ITC complaint merely enables the university to bypass federal courts and threaten respondents with a crippling remedy in order to prompt a more favorable settlement in a licensing dispute that has nothing to do with trade.