These days, Comcast might be able to empathize with Hank Morgan, the titular 19th-century machinist in Mark Twain’s A Connecticut Yankee in King Arthur’s Court (1911) who wakes up in medieval times at the business end of a knight’s jousting lance. This is because the Internet technology company from Philadelphia, which offers only American services and imports nothing from abroad, has similarly found itself at the business end of a government order issued not by a court or even by a domestic administrative body, but by an importation agency called the International Trade Commission (ITC).
How did a domestic service company find itself squaring off with a federal agency that deals with foreign trade? The situation arises out of the ITC’s recent decision against Comcast entitled In re Certain Digital Video Receivers. That decision, now on appeal before the U.S. Court of Appeals for the Federal Circuit, represents a dramatic expansion of the ITC’s jurisdiction that almost completely untethers the agency’s patent enforcement power from its trade-related mission. Should the decision be left intact, the ITC could decide a great swath of domestic patent disputes that incidentally and unremarkably involve the use of imported products. In effect, the agency’s power to block imports will serve as an extra-judicial remedy for domestic patent infringement.
However, this is not a good outcome. No trade or patent policy goals are served by denying American companies accused of patent infringement in the United States the right to defend themselves in a court of law. This is particularly true as the ITC’s procedures and remedies lack many features of district court litigation that protect defendants from the abusive tactics of patent trolls. Further, expanding the ITC’s jurisdiction to cover domestic patent disputes will do nothing to prevent unfair trade, but it will needlessly expose American businesses to more litigation.
As a result of the Digital Video Receivers decision, a variety of domestic businesses could potentially come into the crosshairs of the ITC. For example, service companies that use imported equipment, retailers that stock imported goods and American manufacturers that use imported parts—even if those companies import nothing themselves—could now be hauled before the agency. In short, this takes an agency that should be highly limited in its purview over border control and allows that agency to insert itself into practically every aspect of the domestic American economy. This is a result not intended by Congress and not warranted by good policy.
Accordingly, the present study first reviews the nature of the ITC and its focus as a trade agency. It then turns to the Comcast investigation to explain the erroneous legal precedents and theories that allowed such an agency to issue compulsory orders against a domestic company not involved in trade. It next considers the potential breadth of that result and, in particular, how the ITC could potentially inject itself into other purely domestic disputes. Finally, the paper discusses reasons why—as a matter of policy—the ITC is ill equipped and poorly situated to become a general patent court. In fact, should the Federal Circuit fail to reverse this decision, lawmakers should be greatly concerned about this attempted expansion of authority on the part of the ITC.
