Things You Dont Know About China Patent Litigation
The International Trade Committee And The Secret Weapon Of Redundant Patent Litigation
Patent litigants have perfected the art of filing complaints in multiple venues.
Despite the pandemic, patent litigation in 2020 reached a new high. BakerHostetler's annual review reports some 3000 internet new patent accusations in district courts from the prior year, a 12% increase over the prior yr. However, some of those litigants also access a hugger-mugger weapon by filing a corresponding Section 337 complaint at the International Trade Commission (ITC).
Section 337 investigations accept become a get-to option for patent infringement claims as they overwhelmingly favor the complainants. The problem is especially acute for patent complaints related to consumer electronics, which can contain tens-of-thousands of patents. A brief review of ITC annual reports since 2010 shows that some 40 percent of all active Section 337 cases focus on disputes about electronics, and many succeed in leveraging the ITC's authority to block products from import, if not sale. An ITC complaint, or the threat of one, is as well used to weaponize patent licensing negotiations to force an overpriced settlement. Department 337 protections were intended to protect US-based entities and industry from unfair imports, but increasingly the complainants are not US-based while respondents are. This means that Commission is working in the opposite way information technology was intended. A case brought by Ericsson confronting Samsung demonstrates ITC patent litigation excess. Moreover, it as well could undermine US attempts to meet critical 5G goals similar speedy rollout, competition in the equipment vendor market place, and needed efforts to restrict Chinese military aligned vendors.
Why the ITC is bonny to patent litigants
The ITC offers many advantages to complainants over filing in US district courts, including less rigorous jurisdictional requirements, speed, and more than draconian remedies. Dissimilar commune courts, the ITC cannot consequence financial damages; rather, it awards patent holders with an exclusion order on all imports and end & desist orders for all US sales relating to the infringed patent. An analysis by Santa Clara Law Professor Colleen Chien found that the ITC'south advantages for complainants incentivize litigants to file in both venues, which creates duplicative litigation and the potential for inconsistent results. Other legal scholars claim the ITC's powers are needed to prosecute strange infringers which would otherwise evade U.Southward. district courts, but many observe that a large bulk of ITC complaints are already filed in the U.S. district courts. Further, these ITC measures are unfair and protectionist. Judging by the large per centum of U.S.-based respondents from 2016 to 2019, it appears the ITC is being abused by litigants.
The ITC itself, all the same, seems unaware of this problem and even enthused about increasing its 337 activities. In its FY22 budget request, the ITC details its increasing workload, as well every bit the costs for technical resources that facilitate adjudication of Section 337 complaints, including improvements to courtroom space, conquering of technology for virtual evidentiary hearings, substantial investments in the Electronic Document Data System, and the upgrade of 337Info, the agency-wide investigations database arrangement. The ITC says nothing well-nigh the problematic motivations behind the increase in 337 cases; it embraces the growth in litigation and uses its directly line to Congress to enquire for more money.
Ericsson-Samsung Case
In January 2021, Ericsson, the Swedish telecom networking company, filed a federal courtroom complaint against S Korea's Samsung in the Eastern District of Texas accusing Samsung of infringing 5 patents used in 5G base stations. Information technology complained soon thereafter at the ITC. The instance comes at a critical time in US technological development, every bit the federal government has mandated the fast rollout of 5G, while meantime working to secure the US national security by keeping Chinese equipment fabricated by Huawei, the world'due south largest telecom equipment vendor, out of the US. A side do good from the US policy is that it has opened the door to more than sophisticated tech companies to contribute to the 5G rollout. For example, Samsung has become the world's 4th largest network equipment provider, a welcome development in the concentrated marketplace. However, Samsung base stations might not be bachelor to U.s.a. network providers if Ericsson succeeds with its complaint, leaving the U.s. in the lurch. This would be an unfortunate and unintended outcome of a policy intended to ameliorate security.
Information technology's not the showtime fourth dimension that Ericsson and Samsung take come up to blows. Many companies in this infinite cantankerous-license each other'southward patents. While disputes are non necessarily illegitimate, companies negotiate privately or tin call on a court to decide a off-white royalty. If any Ericsson patents are infringed, commune courts can make that determination. They can also prescribe nuanced remedies. Withal when a company turns to the ITC equally Ericsson did, information technology excises the nuclear option to empower its hand for private negotiation. When hundreds of millions of dollars of licensing fees are at stake, a dominant supplier like Ericsson could heighten prices by reducing competition.
Luckily, Congress seems to be waking up to this problem. A 2020 bipartisan House bill introduced by Suzan DelBene (WA) and David Schweikert (AZ) contains multiple provisions to modernize and ameliorate the Section 337 procedure at the ITC. This would ensure that the ITC meets its statutory mandate to protect domestic industry from unfair import contest, while reducing incentive of complainants to weaponize ITC complaints. More than a generation has elapsed since the final significant update to the ITC; it is high fourth dimension for this reform. Permit usa hope the beak gets reintroduced and moves quickly. 5G rollout should not slowed by companies wielding a hugger-mugger weapon from the ITC, an outcome Congress never intended.
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Source: https://www.forbes.com/sites/roslynlayton/2021/04/21/the-international-trade-commission-and-the-secret-weapon-of-redundant-patent-litigation/
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