Section 337 Investigations: An Alternative to Block Infringing Competitors

 

With just $5 billion in online sales in 1998, e-commerce has grown several times two decades later. Especially with the pandemic situation, the e-commerce industry in the USA experienced a boom rising from $571.2 billion in 2019 to $815.4 billion in 2020 and ultimately reaching $960.1 billion in 2021. This growth has downsides as well, especially for the US manufacturers that need to keep an eye on products infringing their intellectual property. Cheaper prices and possible infringement from these products can quickly lead to lost sales for the legitimate manufacturers and they are constantly looking for ways to remedy this.

Besides the district court litigation, many companies are turning their attention to the Section 337 ITC proceedings. Patexia released its ITC Intelligence 2022 Report covering in detail not only the trends and statistics but also the rankings of all stakeholders based on their performance and activity. The trend of the Section 337 cases was analyzed in Patexia 129 along with the types of infringement that were brought at most before the ITC. While not new, the Section 337 cases have been growing in popularity during the past decade. With the pandemic, the number of proceedings grew further during 2020 and 2021 along with the workload as there were more unique patents involved per each case. But what advantages offers the ITC with the investigations that make them an attractive choice?

ITC can be effectively used to block the importation of products that infringe U.S. intellectual property starting from patents, trademarks, copyrights as well as trade dress and trade secrets. Upon filing the complaint, the ITC responds in 30 days if it will institute an investigation and then the case is assigned to an Administrative Law Judge. He then establishes the schedule and a target date for the completion of the investigation which is earlier than 16 months from the initiation date of the investigation. If the products are found to be infringing of a US manufacturer, then the ITC issues an exclusion or cease-and-desist order that blocks the imports of these products. When compared to the district court litigation, instead of years of litigation, the ITC proceedings get resolved in 12-16 months. On the other side, it's also true that in an ITC investigation the claimant cannot ask for monetary damages. This makes these cases not an ideal tool to remedy the harm done in the past but quite effective to stop quickly an infringer and the future unfair competition coming from them.

In conclusion, the ITC differs from district court litigation in terms of procedures and requirements, however, those who understand those differences can make use of the powerful remedies that ITC offers for the right cases.