The International Trade Commission (ITC) shattered its own record1 in 2010 by instituting fifty-one Section 337 patent infringement investigations. Will 2010 become the new standard or will it merely be a footnote in the agency’s history, representing an all-time high in instituted investigations? The answer may depend on whether the ITC is viewed as friendly to patent owners (as it traditionally has been seen) or not so friendly.
The challenging economic climate of late 2008 and 2009 caused a dropoff in instituted investigations for the first time since 2002. Putting aside 2009, the clear trend since 2003 has been double-digit increases in filings, or the number of investigations instituted in the ITC’s fiscal year, based on filing date.
Statistics on treatment of patents at the ITC
The winning percentage for complainants in patent cases at the ITC is traditionally higher than the winning percentage for patent plaintiffs in federal district courts. Between 1975 and 1988, complainants secured an infringement finding and avoided a finding of invalidity and/or unenforceability in 75 percent of patent cases brought before the ITC, compared with a sub-45 percent winning percentage in federal district courts.2 From 1995 to 2000, ITC complainants prevailed at a 67 percent rate, while the rate in federal district court cases was under 45 percent.3
What happened in 2010? As we have previously stated,4 we believe the truest view of the jurisprudence of this bench is best obtained by evaluating its approach to patent litigation on a patent-by-patent basis. Thus, the data set for this article is a review and analysis of any patent completely adjudicated5 by a member of the current bench of ALJs in 2010. In calendar year 2010, the current group of Administrative Law Judges issued 17 Initial Determinations in Section 337 patent investigations and, as defined above, “adjudicated” 42 patents. That is, in the investigations that went to hearing in 2010, and where an Initial Determination issued:
7 of 17 investigations resulted in a violation (41 percent)
15 of 42 relevant patents were infringed (36 percent)
9 of 42 relevant patents were invalid (21 percent), and
0 of the 42 patents were declared unenforceable
Comparable statistics for 2009 are useful:
6 of 15 investigations resulted in a violation (40 percent)
16 of 41 relevant patents were infringed (39 percent)
6 of 41 relevant patents were invalid (slightly less than 15 percent), and
0 of 41 patents were declared unenforceable
While this is an admittedly small sample size, it indicates the ITC appears to be deviating from its historical statistics. For the last two years, the ITC’s ALJs have found 36-39 percent of patents infringed. Or, perhaps more to the point, the prior 75 percent rate of violations found has dropped to approximately 40 percent in the last two years.
The currently appointed ALJs invalidated approximately one in five patents in 2010, which is a slightly higher rate than in 2009. Historically, the currently appointed ALJs found a patent unenforceable less than 4 percent of the time when patents were fully adjudicated. As was the case in 2009, not one patent was declared unenforceable in 2010. In light of the downward trend to find Section 337 violations, the ITC may no longer be the patent-friendly jurisdiction it once was, at least from an infringement perspective. It will be interesting to see what 2011 holds.
1 The previous record of 43 Section 337 investigations instituted in the ITC’s fiscal year was set in 2008.
2 Hahn, Robert W., Assessing Bias in Patent Infringement Cases: A Review of International Trade Commission Decisions, AEI-Brookings Joint Center Working Paper No. RP07-03, p. 3, 16 (February 2007) (citing Aoki, Reiko and Thomas J. Prusa, International Standards for Intellectual Property Protection and R&D Incentives, Journal of International Economics, vol. 35, pp 251-273 (1993)).
3 Id. at 16.
4 Intellectual Property and Technology News. Q1, 2010, issue 5, p. 10.
5 Cases adjudicated to completion result in either “no violation found” or “violation found.” This means, for example, that an infringement finding based on entry of default for failure to respond to the complaint are not counted (e.g., the -652 investigation) and an investigation where a Supplemental Initial Determination issued in 2009 (e.g., the -501 investigation) were not included in this tally.