Feb 22, 2023Legal
Patexia Insight 169: ITC Section 337 Investigations Continue to Rise

Tomorrow, we will release our fourth annual ITC Intelligence Report, which focuses on the International Trade Commission Section 337 investigations filed under Section 337 in the last six years between January 1, 2017, and December 31, 2022. The report provides high-level statistics derived from these investigations, along with rankings of activity and performance across various categories for all parties and their representatives. Today, we will review the current filing trends using the latest numbers provided in this report.

A total of 416 ITC Section 337 Investigations were filed during the period of our study, from January 1, 2017, through December 31, 2022. These investigations involved 386 law firms and 4,768 attorneys representing 307 complainants and 1,689 respondents, with 1,040 patents being the primary focus.

As illustrated in the chart below, the number of ITC investigations has fluctuated year-over-year (YoY), with 59 cases in both 2018 and 2019, and a record-high of 78 cases in 2022. This upward trend began in 2020, with a filing activity increase of 18.64% compared to 2019, followed by a 5.71% increase in 2021 and a 5.41% increase in 2022. Notably, there were several high-profile lateral moves among ITC attorneys during the 2022-2023 period, resulting in a significant shift in the landscape. One such move occurred in early 2023, when key attorneys from AMS Trade joined Polsinelli. These lateral moves may indicate further changes in the future as we have covered in the report.

The growth of Section 337 investigations conducted by the ITC appears to be part of an overall trend that has occurred over several decades. The ITC was established in 1916, while Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337) was enacted in 1930, granting the ITC the authority to investigate and issue exclusion orders against imported products that violate U.S. patents, trademarks, copyrights, or other forms of intellectual property (IP) rights. Over time, the scope of the law and the ITC's procedures for handling Section 337 investigations have evolved through legislative amendments and court decisions. As a result, the number of instituted Section 337 investigations during the ITC's first 40 years was less than 5% of the number conducted in the past decade alone.

The reasons behind the rise in popularity of Section 337 investigations may belong to the realm of speculation, but experts attribute it to a combination of factors:

  • Non-patent claims - In recent years, the ITC has seen a sharp increase in the number of Section 337 investigations alleging non-patent claims. As indicated in our report, 56 out of 416 (or 13.5%) investigations initiated during the past six years mention trade secret infringement, trademark infringement, unfair competition, copyright infringement, or trade dress infringement as unfair act. The distribution of these investigations is not equal throughout the years, as they have become popular recently.
  • Effectiveness for patent owners - Compared to pursuing a patent infringement claim in U.S. District Court, opting for an ITC investigation offers multiple benefits for patent owners. These include the statutory requirements that result in faster resolution of cases, the possibility of including multiple infringers in a single matter, limited counterclaims from the opposing party, more stable outcomes with less likelihood of being overturned on appeal, and the option to request an Exclusion Order that can prohibit infringing products from being imported into the United States, which is a powerful remedy.
  • Forum shopping - Some parties may prefer to litigate in front of the ITC because it is perceived as being more favorable to patent holders than district courts. Forum shopping refers to the practice of choosing a legal forum that is perceived to be more advantageous to a party's interests. In the context of patent litigation, forum shopping can involve selecting a venue that is more likely to result in a favorable outcome for the patent holder. The ITC has become an increasingly popular forum for patent litigation because it is perceived as being more favorable to patent holders than district courts.
  • Influential cases - There have been several cases where the ITC has issued powerful exclusion orders, prohibiting major companies from importing their products into the United States. Apple Inc. v. Samsung Electronics Co. patent battle involved a dispute between Apple and Samsung over alleged patent infringement related to certain mobile devices. The ITC issued several exclusion orders prohibiting the importation of certain products into the United States.

Despite the advantages of pursuing a patent infringement claim at the ITC through Section 337, it can be questioned why the number of cases filed there is not comparable to those in U.S. District Court for patent litigation. The answer is that the ITC has a narrower jurisdiction than district courts and can only issue remedies related to importation where there is an actual or potential injury to a U.S. industry. Moreover, the ITC does not have the authority to award damages in a Section 337 investigation. If a patent owner seeks damages for patent infringement, they must file a separate lawsuit in a U.S. District Court.

The full ITC Intelligence Report delves deeper into an analysis of high-level statistics, which includes filing trends, investigation outcomes, appealed cases, time from filing to termination, and the most frequently used IPC codes for patent infringement unfair acts, among other factors. Apart from the rankings of law firms, attorneys, and companies, the report also covers the top clients for each law firm and attorney. Moreover, for the third year in a row, the report tracks important lateral movements and expansions of law firms. The increase in ITC filings appears to have spurred lateral movements between Am Law 200 firms. In our ITC 2023 Report, we dedicate a section to the lateral moves occurring in 2022, as these movements may signal a change in the landscape and potentially further increases in filing activity in the near future.

Stay tuned, as in the coming weeks, we will highlight additional statistics from this report and cover some of the top-performing entities in patent litigation, and ITC Section 337 litigation, based on activity and performance.

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