Patent Law

The following is excerpted from a May 17, 2010 Patent Litigation Weekly article at Law.com's Corporate Counsel site:

The International Trade Commission was created in 1916 to protect U.S.-based companies that made and sold goods within the country's borders. In recent years, however, the agency's definition of what qualifies as "domestic industry" has expanded to the point that small patent-holding companies with just a handful of employees...and even individual inventors have been allowed to proceed with ITC litigation.

Congress helped expand the ranks of who could seek remedies at the ITC in 1988 when it amended the "domestic industry" requirement to include "licensing" as qualification.

Over the past two decades, the question of what constitutes a domestic industry has typically been heard by the same ITC administrative law judges who ultimately rule on the patent disputes that come before the agency. It's rare that the full commission considers the issue. On April 14, though, the full commission did weigh in on the subject, issuing a striking ruling that will make it easier than ever for patent-holding companies to enforce patents at the ITC?and put added pressure on the companies getting sued there.

Big companies that are frequent targets of holding company infringement claims have good reasons not to want the ITC to open its doors any wider to NPEs. After all, only a tiny fraction of district court infringement cases go to trial, with the typical defendant paying an estimated average of $5 million per case. By contrast, 40 percent of ITC cases go to trial and the average defendant there can expect to rack up as much as $10 million in litigation costs over a much shorter period of time. And while the ITC can't award damages for patent infringement, it can impose bans on imported goods deemed to be infringing, giving NPEs a powerful lever for extracting cash payments from their targets.

The significance of the commission's April 14 ruling in the case titled Certain Coaxial Cable Connectors and Components Thereof and Products Containing Same, ITC investigation no. 337-TA-650 is the finding that in most circumstances, merely engaging in litigation?and spending money on it?is enough to qualify an ITC complainant as an "industry" worthy of protection. In essence, the Coaxial Cable case represented the first open, public battle over who deserves to be at the ITC, pitting Big Tech on one side against NPEs on the other?and Big Tech came out the big loser.

See the full article here.