With the rise and dominance of e-commerce and internet marketplaces as a sales channel, many US manufacturers face increasing competition from importing counterfeit and cheaper products online. Internet marketplaces have dramatically lowered the barriers to entry for counterfeit products and can quickly lead to lost sales for legitimate manufacturers. Many manufacturers are reluctant to spend the time and money filing a lawsuit in federal court, but there is an alternative. Often overlooked, proceedings before the U.S. International Trade Commission (ITC), known as “inquiries,” offer a quick and effective alternative to conventional litigation in federal courts for brands seeking to protect their intellectual property rights. Although not new, the ITC has become an increasingly desirable forum for owners of intellectual property rights – whether patents, trademarks or copyrights – to fight against counterfeiting. Faced with competition from imported counterfeits or infringing goods, manufacturers must consider whether an ITC proceeding, versus a federal lawsuit, can offer a quick and cost-effective solution.
WHAT IS AN ITC SHARE AND HOW DOES IT WORK?
Most commonly, the ITC is a forum used to block the importation of items that infringe U.S. intellectual property rights, including patents, trademarks, copyrights, masks, trade dress, and trade secrets. Although the vast majority of ITC investigations involve disputes over intellectual property infringement, the forum also deals with other forms of unfair competition in the importation of items, such as false advertising and antitrust allegations. .
An ITC investigation is initiated by the filing of a complaint.1 For an investigation involving intellectual property rights, the complaint must allege 1) the importation of products into the United States that infringe a valid and enforceable intellectual property right; and 2) the existence “of an industry in the United States, relating to the articles protected by the patent, copyright, trademark, mask or design concerned, exists or is in the process of being established”.2 Upon filing a complaint, the ITC decides whether or not to open an investigation, usually within 30 days.3 If an investigation is initiated, the proceeding is assigned to an Administrative Law Judge (ALJ), who acts as an investigator during the investigation, establishes discovery rules and timelines, and hears and decides motions. As a general rule, the ITC takes care of serving the complaint itself on the respondent of the investigation.4
Within 45 days of the initiation of the investigation, the presiding ALJ sets a target date for the completion of the investigation and the publication of a final decision, no later than 16 months after the initiation of the procedure , except for a valid reason.5 Like typical litigation, the procedural timeline for an ITC investigation includes discovery, motion practice, and hearings.6 However, the discovery was completed within months, unlike the federal court. After a hearing and a post-hearing briefing, the ALJ will issue a decision on the merits, called the “Initial Determination.” The initial determination must be issued no later than four months before the set target date.seven The ITC can then review all or part of the initial decision and make its “final determination”.8
WHAT REMEDIES ARE AVAILABLE?
While monetary damages and injunctive relief are both available in federal court, the primary remedies the ITC is authorized to grant include limited or blanket exclusion orders and cease and desist orders.9 A general exclusion order prohibits the importation into the United States of all counterfeit products, regardless of the identity of the importer or manufacturer, even those that are not parties to the ITC action. A limited exclusion order only prohibits the importation of counterfeit products from manufacturers or importers identified in the investigation.
ITC SURVEY VS. DISPUTES IN FEDERAL COURT
Ultimately, there are several distinctions between an ITC investigation and litigation in federal district court, including, among other things, the length, remedies, and significance of the process. Depending on the circumstances facing a manufacturer, an ITC investigation may be a more effective and equally effective alternative to litigation in federal court.
The main advantage of ITC surveys is speed. Unlike intellectual property infringement cases in federal courts, which take years to resolve, the duration of an ITC investigation is typically 12 to 18 months.ten
Additionally, since an ITC plaintiff cannot obtain damages, such as in federal court, ITC investigations are an effective and efficient tool to combat future competition from infringing importers, rather to repair past damages. Notably, as noted above, a manufacturer can obtain broad relief against the importation of any infringing goods through a general exclusion order.
Not only that, an ITC action can be faster than its Federal Court counterpart due to the sheer significance of the process. While a litigant in federal court must comply with often complex international service requirements, the ITC generally handles the service of the plaintiff in first instance. This can be particularly advantageous when dealing with many international offenders at once.
In the right situation, the ITC’s procedures provide intellectual property rights holders with a quick and effective remedy to fight counterfeiting in the United States.11 Certainly, the ITC investigations present a unique and complex opportunity for brands. Although ITC investigations may present faster results than litigation in federal courts, the rapid duration requires experienced and skilled attorneys. Brands facing international infringers should consult with an attorney to determine the best way to protect their intellectual property rights, not just in the United States, but around the world.
1Before filing a complaint, a potential complainant can work with the Office of Unfair Import Investigations to ensure that they comply with the applicable form requirements.
219 USC § 1337(a).
319 CFR § 210.10.
419 CFR § 201.16.
519 USC § 1337(b)(1); 19 CFR § 210.51; US INT’L TRADE COMM’N, ANSWERS TO FREQUENTLY ASKED QUESTIONS 20 n.16 (March 2009), https://www.usitc.gov/intellectual_property/documents/337_faqs.pdf.
6The ITC, however, limits the scope of discovery to information relevant to: 1)”[t]a claim or defense of the party seeking discovery or the claim or defense of any other party, including the existence, description, nature, custody, condition and location of any book, document or something tangible”; 2) “[t]the identity and location of persons having knowledge of any discoverable element”; 3)”[t]the appropriate remedy for a violation of Section 337 of the Tariff Act of 1930”; or 4)”[t]proper bond for respondents, under section 337(j)(3) of the Tariff Act 1930…. 19 CFR § 210.27(b)(1).
seven19 CFR § 210.42.
819 CFR § 210.43.
919 USC § 1137(d).
tenNotably, a defendant in an ITC investigation cannot file a counterclaim, which leads to a simplified procedure. While the defendant can challenge validity and enforceability, the ITC cannot actually invalidate an intellectual property right.
11Often, a parallel action in federal court is filed to repair past harms resulting from infringement. However, any matter in Federal Court will be stayed upon timely application by the defendant pending resolution of the ITC investigation. See 28 USC § 1659.