Early Determination Proceeding Leads to Withdrawal of Complaint

28282495476_2e2547f20c_o.jpg

In order to reduce abusive litigation and conserve agency resources, the ITC will sometimes opt to conduct an expedited hearing in a Section 337 investigation and issue an early determination on a dispositive threshold issue like standing, importation, or domestic industry.  The value of this early disposition process was recently demonstrated when the ITC instituted Taurine (Inv. 1146) and called for an early determination on the question of whether complainant's "licensing" investments were sufficient to meet Section 337's domestic industry requirement.  The complainant then withdrew the complaint before proceedings could get underway.

As discussed in a previous post, the complainant in Taurine is an independent inventor who owns a patent for a particular method of producing taurine, an ingredient in energy drinks.  He accused three Chinese companies (who supply almost all the taurine consumed in the United States) of using his patented method and then selling the product in the U.S. market without a license.  

To show a domestic industry, the complainant was planning to rely on expenses he incurred traveling to China during his so-far unsuccessful attempts to license the patent.  Respondents argued that the these "purported 'efforts to protect and to license' [the] inventions are no different than the types of efforts the Commission would expect to see from a foreign U.S. patent holder with no connection to the United States."  Respondents further noted that while the complainant may "want to license its patents . . .  its mere intent to do so is insufficient to establish a domestic industry. If it were otherwise, any future patent owner could avail itself of the ITC merely by expressing a desire to execute licenses using the leverage generated by the Section 337 investigation itself."  

In instituting the investigation, the ITC granted respondents' request to conduct early disposition proceedings and issue a decision on the domestic industry question within 100 days.  The purpose of the early disposition option is to avoid the time and expense of conducting a complex infringement trial when a case obviously hinges on a threshold issue like domestic industry, importation, or standing that could be resolved much more quickly.  Ideally, early disposition can be used to dissuade complainants from filing meritless cases simply to impose litigation costs and uncertainty on respondents during settlement negotiations.

That may have been what happened in this case.  The complaint was withdrawn just two days before the parties were scheduled to begin taking depositions from the complainant and his employee leading up to the early hearing at the end of April.  

Like many licensing companies who file ITC cases, the complainant in Taurine wouldn't actually benefit from an exclusion order.  What he wants is licensing revenue, not relief from foreign competition, which is why this dispute belongs in federal district court, where it is already being litigated.  

The withdrawal of the Taurine complaint shows how the early disposition program is helping to reduce the ITC's disruptive impact on the U.S. patent system by weeding out some duplicative Section 337 cases that have no patent or trade policy rationale.

Photo Credit: Scott McLeod