Policy Studies Technology and Innovation

Preserving the role of courts through ITC patent reform

Author

Bill Watson
Associate Fellow

Key Points

While the ITC’s broad powers to block infringing imports may be useful in some circumstances, most Section 337 investigations duplicate, and even interfere with, the work of federal courts. Most ITC cases are brought against U.S. companies or large multinational who can easily be sued in court.

Having a separate litigation venue outside the federal court system has frustrated congressional and judicial oversight of U.S. patent law. For example, recent reforms meant to prevent abusive litigation had no effect on the ITC, making the agency a more attractive venue for patent trolls.

Section 337 should be amended to ensure that the ITC’s patent powers are available as a gap-filler for when courts cannot act—not as an alternative to them.

Introduction

Article III of the U.S. Constitution vests the judicial power of the United States in the federal courts. That power “extends to all cases [. . .] arising under [. . .] the laws of the United States,” and surely includes U.S. patent infringement suits. Nevertheless, dozens of patent disputes are adjudicated every year outside the federal courts by an executive agency.

Under Section 337 of the Tariff Act of 1930, the U.S. International Trade Commission (ITC) has the power to exclude imports from the U.S. market to prevent “unfair methods of competition.” This broad authority is supplemented by provisions specifically related to the infringement of intellectual property rights. Patent infringement is by far the most common complaint. As a result, Section 337 enables the ITC to operate as an administrative patent court for imports.

Giving a trade agency the power to adjudicate patent disputes is ostensibly justified by the inability of district courts to effectively address patent infringement by foreign entities. But the vast majority of Section 337 investigations involve parties that can and do sue each other in federal district court. And, in these cases, ITC litigation allows some patent owners to bypass the rules and remedies of Article III courts in order to get a second chance against some alleged infringers.

In addition to giving patent holders two bites at the apple, the ITC’s patent jurisdiction has led to mischief and disruption. Because of Section 337, the United States has a dual-track patent litigation system in which outcomes are determined by different laws, procedures and remedies depending on the venue. This evolution of U.S. patent law through new jurisprudence or legislative reform continuously creates pointless inconsistency in the rights of litigants in district court and the ITC.

Adjudicating patent infringement fits squarely within the proper role of Article III courts, and thus by expressly limiting the ITC’s jurisdiction to cases where patent owners genuinely cannot get adequate relief in court, we can eliminate the problems caused by Section 337’s duplicative and disruptive role in the patent system.

Featured Publications