Reframing ITC’s Role: The Advancing America’s Interests Act

Patent

by Dennis Crouch

This essay focuses on proposed Advancing America’s Interests Act (H.R.3535) which aims to limit NPE access to the ITC by refining the economic prong of the domestic industry requirement and by adding a stronger public interest consideration prior to issuance of an exclusion order. 

The International Trade Commission (ITC) is a branch of the U.S. government focused on protecting domestic industry against undue foreign competition.  The ITC’s power extends in to several areas, but primarily by enforcing the laws of (1) intellectual property rights; (2) anti-dumping; and (3) countervailing duties.

  1. Intellectual Property Rights: Section 337 investigations constitute a significant portion of ITC’s enforcement activities. These investigations patent, trademark, or copyright violations caused by trade importation into the US. The ITC has the power to issue an exclusion order — much like an injunction — to bar infringing products from entering the US.
  2. Anti-dumping and Countervailing Duties: The ITC can impose anti-dumping duties on foreign manufacturers selling goods in the U.S. at less than fair value. The ITC can also impose countervailing duties to counter effects of foreign subsidies on products imported into the U.S.

Because the ITCs key role is protecting US industry, the agency can only act if there is a domestic industry to be protected.   In recent years, the ITC and Federal Circuit have expanded the scope of what counts for ITC domestic industry.  For instance, US investments in licensing of IP have been increasingly recognized as a major factor in establishing the economic prong of the domestic industry requirement.  And, patent holders have been able to rely upon uses of their technology licensees as evidence of a domestic industry.  Likewise, R&D may also satisfy the requirements. Changes like these have broadened the scope of the domestic industry requirement, making ITC action accessible to industries and companies that may not have traditional manufacturing facilities or significant capital investments in the United States. — i.e., non practicing entities.

H.R.3535 – Advancing America’s Interests Act (AAIA).  This proposed legislation aims to amend Section 337 of the Tariff Act of 1930 to counteract some of these expansions by narrowing the definition of domestic industry.  This is the third time that Rep Schweikert has introduced the legislation. And, the basic thrust is that non-practicing patent holders would have real difficulty in bringing Section 337 complaints.

Key features of the proposed amendments include:

  1. Licensing Activities: The Bill seeks to refine the economic prong of the domestic industry requirement by requiring that complainants demonstrate their licensing activities have led to the development of a product. This change is intended to prevent Non-Practicing Entities (NPEs), which often license their patents under threat of patent infringement suits, from establishing a domestic industry. This adjustment is designed to still permit entities who license patents as part of a technology transfer leading to new products, to assert their intellectual property rights at the ITC.
  2. Unwilling Licensees: The Bill proposes changes regarding the use of “unwilling” licensees to establish a domestic industry. Currently, a third-party licensee can be subpoenaed for confidential information, regardless of their desire to participate in the investigation. The proposed Act stipulates that the patent owner can only rely on the licensee’s activities to establish a domestic industry if the licensee joins the complaint under oath.
  3. Public Interest and Exclusion Orders: The Act introduces a significant shift in how the ITC considers exclusion orders. It requires the ITC to affirmatively determine that any exclusion serves the public interest. This change effectively removes the current presumption in favor of exclusionary relief — making ITC action more akin to the eBay analysis in district court..
  4. Expedited Fact Finding: The Act would codify the ITC’s existing “100-day early disposition program,” directing the ITC to consider at the beginning of an investigation whether there are potentially dispositive issues appropriate for an early Initial Determination by the presiding administrative law judge.

ITC action became much more popular in the wake of eBay and the difficulty of obtaining injunctive relief in district court. The proposal here would shift that dynamic once again and would represent a significant shift — coupled with the limits on NPE filings.  If passed, this legislation would reshape the ITC’s approach and its effectiveness for many patent holders.