In Microfuidic Devices (Inv. 1068)—a patent dispute between two U.S.-based biotechnology companies that make competing products used for gene sequencing—the ITC is currently reviewing an initial determination in which the administrative law judge found that 10X Genomics violated Section 337 by importing products that infringe patents owned by Bio-Rad Laboratories. In an official notice published on June 10, the Commission requested additional comments from the parties and public on whether the public interest would be served by carving out a very specific subset of imports from a potential exclusion order. The notice reveals that the ITC is seriously considering the unusual step of using Section 337's public interest test in this case to tailor a remedy.
Before issuing any exclusion order under Section 337, the ITC must consider whether doing so would harm the public interest. The law lays out four specific factors, requiring the agency to consider the effect of a remedy on (1) the public health and welfare, (2) competitive conditions in the U.S. economy, (3) the production of like or directly competitive articles in the United States, and (4) U.S. consumers.
In practice, the ITC almost never decides against a remedy on public interest grounds. Although Congress established the public interest test in 1974, the agency has only refused to grant a remedy three times; and the last time was in 1984. Since then, the ITC has developed an unspoken policy of never denying an exclusion order, finding in every case that the enforcement of intellectual property rights is worth whatever market disruption might be cause by an import ban.
This policy became more controversial after the Supreme Court's 2006 decision in eBay v. MercExchange ended the practice of granting automatic injunctions in patent cases in federal court. When patent owners began to use Section 337 as a way to secure excessive remedies they were no longer entitled to under the patent law, political pressure prompted the ITC to take the public interest test more seriously.
Most notably, the Commission began a policy of instructing administrative law judges in some cases to gather evidence and conduct hearings on the public interest in order to develop an evidentiary record that could assist the Commission in its public interest analysis. Ideally, this would lead to a consistent and predictable interpretation of the public interest factors, making it easier to apply in future cases.
Although this renewed focus on the public interest test has not yet led the ITC to forego issuing an exclusion order in its entirety, the agency has occasionally been willing to tailor a remedy in light of public interest concerns. They have done this by granting carve outs, exemptions, or temporary delays meant to reduce the harm an exclusion order will cause for third parties that rely on the accused imports.
In Microfluidic Devices, the Commission is considering whether and how to allow medical research labs to keep using the accused products so as not to disrupt ongoing research projects that could not continue without an additional supply of the respondent's devices. In response to the Commission's request for comments, a number of academic institutions offered descriptions of how they use the accused products and how changing to a new system would disrupt their experiments.
It's good that the ITC is willing to tailor remedies, and the public interest factors are the right guide for doing that. It's also worth remember that most patent cases at the ITC are redundant duplications of litigation occurring simultaneously in federal district court. Patent owners do not need exclusion orders to enforce their rights or to secure compensation for infringement. Section 337 is a trade remedy that exists on top of the remedies available under the patent law, and it is not only acceptable but desirable for the ITC to limit exclusion orders that could harm other interests, whether that's life saving medical research or general economic welfare.