ITC Docket Update: Partial Settlement in Botox Dispute Leads to Rescission and Vacatur
The ITC has officially rescinded its exclusion order in Botulinum Toxin Products (Inv. 1145). There are numerous posts on this blog already criticizing the Commission’s entire approach to that case, in which a violation of Section 337 was found based on the foreign theft of foreign trade secrets that were not owned, known, or practiced by any U.S. company or domestic industry. R Street also submitted public interest comments unsuccessfully urging the agency not to issue an exclusion order that would merely serve to further the complainants’ anticompetitive market allocation scheme without protecting any U.S. intellectual property.
Before the exclusion order went into effect, however, a settlement was reached between the two complainants (Medytox and Allergan) and one of the respondents (Evolus, the U.S. distributor of the accused product). That settlement did not include respondent Daewoong, the Korean company that manufactures the product and was actually accused of trade secret misappropriation.
Daewoong did not object to the rescission of the exclusion order, but also requested that the Commission vacate its determination of violation to prevent it from affecting any future litigation.
In the Notice of Rescission, the Commission granted Daewoong’s request by formally indicating that it would vacate its determination as soon as the Federal Circuit deems the pending appeal to be moot. The decision on vacatur was opposed. however, by Commissioner Karpel, whose dissenting view is expressed in a 750-word footnote at the end of the Commission Opinion.
The actual effect of vacatur is probably limited. While ITC decisions on non-patent matters are typically granted preclusive effect in federal court, the fact that the alleged misappropriation took place entirely abroad poses jurisdictional hurdles that make such litigation unlikely to succeed anyway.
The most valuable consequence of vacatur for Daewoong may be at the ITC itself. Evolus only distributes Daewoong injections for cosmetic applications, but Daewoong is also developing a therapeutic product with a different distributor. With the 1145 determination vacated, Medytox and Allergan will have to initiate and complete an entire new Section 337 investigation in order to secure an exclusion order against the therapeutic product. And such an order would raise acutely obvious public interest concerns.
