Domestic Industry by Subpoena

New ITC Patent Investigation Exemplifies All That is Wrong With Section 337

The ITC’s patent powers do not exist so foreign licensing companies can bypass courts and extract settlements through the threat of trade action against American products. But that’s just what’s happening in Data Transmission Devices (Inv. 1150).

Year in Review 2018: Domestic Licensing Disputes

A look at the ITC's docket in 2018 shows how Section 337’s domestic industry requirement regularly fails to fulfill its legislative purpose.

What Does the ITC’s Domestic Industry Test Really Do?

Congress wanted Section 337 to be utilized on behalf of U.S. industries involved in trade disputes, but the ITC often adjudicates patent licensing disputes that have nothing to do with cross-border trade and issues remedies against domestic industries.

New Complaint: Integrated Circuits

On December 19—just two days before the government shutdown—the ITC received its last Section 337 complaint of 2018.  The total number of new complaints for the year was 47, which is perfectly even with the annual average over the last ten years.

In its complaint styled Integrated Circuits and Products Containing the Same, Tela Innovations is accusing certain Intel processors of infringing four patents related to circuit design.  The complaint names Intel as well as four device makers that use Intel chips: Acer, ASUS, Lenovo, and MSI.  

This is Tela's second time at the ITC.  They filed a similar complaint in 2013 naming five mobile phone makers as part of a dispute with Qualcomm.  That investigation was terminated when Tela and Qualcomm reached a settlement.  

It's worth noting that the legal dispute between Tela and Intel began after Intel sought a declaratory judgment of non-infringement in district court.  Intel was a major investor in Tela, and the two companies originally entered into a covenant not to sue for patent infringement.  The primary dispute between the parties is whether the patents at issue in this complaint are covered by that agreement.  

To satisfy the domestic industry test, Tela is relying on the domestic investments of Samsung as a third-party licensee. Interestingly, this is the second time in just a few months that Samsung has been drawn into an ITC complaint as a licensee by subpoena.  The other investigation is LTE- and 3G-Compliant Cellular Communication Devices—possibly the best example a terrible ITC case highlighting the need for Section 337 reform—in which a nonpracticing entity has hauled in an unwilling domestic industry in order to block imports of smartphones based on infringement of FRAND-encumbered standard-essential patents.

Because of the government shutdown, the ITC is not receiving or publishing docket submissions, so we haven’t yet seen any public interest comments from proposed respondents. Intel is currently at the center of the ITC’s public interest inquiry in Mobile Electronic Devices (Inv. 1065), in which the ALJ recommended against an exclusion order because blocking Apple phones with Intel chips would harm competitive conditions and national security. The new complaint from Tela involves processors for laptops and desktop computers—not phones—and doesn’t appear to implicate the same concerns.

Photo Credit: Ai.Comput’in