April 15, 2015
Law360
Authored by Smith R. Brittingham, IV and Elizabeth A. Niemeyer
In general, the U.S. International Trade Commission will exclude from the U.S. market products that infringe a valid U.S. intellectual property right if there is a domestic industry related to that IP right. 19 U.S.C. § 1337 (a)(2) and (3). The ITC's domestic industry requirement is an important hurdle an IP owner must overcome in order to take advantage of the ITC's unique remedies. To establish that a domestic industry exists, an IP owner, usually a patent owner, may rely on its own activities or those of a licensee. Certain Products Having Laminated Packaging, Laminated Packaging, and Components Thereof, Inv. No. 337TA874, Commission Opinion at 15 (Sept. 3, 2013 (public version)) ("a licensor may rely upon a licensee's domestic activities and investments"). In the latter situation, the patent owner can, and sometimes does, keep the identity of its domestic industry licensee a secret. See, e.g., Certain Digital Media Devices, Including Televisions, BluRay Disc Players, Home Theater Systems, Tablets and Mobile Phones, Components Thereof and Associated Software, Inv. No. 337TA882, Complaint, Section VIII.
This can create an unworkable issue because the source and character of the domestic industry is unknown to nearly everyone except attorneys representing parties to the case, which in turn can compromise the commission's ability to receive information it needs in order to determine whether to issue a remedial order designed to protect that very industry.
The situation generally results when a patent owner wants to rely on the activities of a licensee, but the license agreement includes a confidentiality clause that prohibits the patentee from disclosing the licensee's identity. The patent owner solves its problem by designating the name of its licensee, along with any other identifying information, confidential. But that relatively easy "solution" for the patent owner imposes additional burdens on the public, respondents and other government agencies, and undermines the commission's ability to collect and consider a full record on public interest.
From the public's perspective, the public has no way to meaningfully comment on the impact of any proposed remedial order when the identity of the companies making up the domestic industry is withheld. After each ITC complaint is filed, the commission solicits comments from "[p]roposed respondents, other interested parties, and members of the public" on five categories of information relating to the potential impact of any remedial orders on the public interest. See, e.g., Certain Protective Cases for Electronic Devices and Components Thereof, DN 3064, Notice of Receipt of Complaint; Solicitation of Comments Relating to the Public Interest, 80 Fed. Reg. 1389192. At least two of the identified categories specifically seek comments on products made by licensees, and a third topic asks for comments on "how the requested remedial orders would impact United States consumers." If the identity of the domestic industry licensee is a secret, no member of the public can submit meaningful comments on at least three of the five identified topics.
From a respondent's perspective, although outside counsel may know the identity of the domestic industry licensee after a protective order is issued, the respondent itself remains in the dark as to whom it is litigating against. A respondent could also inadvertently engage outside counsel who unknowingly has a conflict being adverse to the secret licensee, thus undermining the respondent's ability to muster a full and fair defense. More generally, parties to an ITC investigation commonly complain about the lack of access to information because of the breadth of the standard ITC protective order, which hampers their ability to independently assess the full strengths and weaknesses of a case. Parties must instead rely heavily on the assessments of counsel and publicly available information. Keeping secret the identity of the domestic industry licensee, however, adds further fuel to that fire and changes the battle from one where merely the size and strength of the enemy are unknown to one where the enemy itself is entirely unknown.
At times, even the licensee is unaware of its important role in the proposed ITC investigation until it is too late to articulate its own interests. Sometimes a patent owner will consult with its own licensee and cooperatively develop domestic industry information before filing an ITC complaint. But other times the patent owner proceeds independently of the domestic industry's concerns and without its knowledge. In that situation, the ITC complaint confidentially identifies which licensees are the purported domestic industry and the licensee is completely unaware that its own domestic activities are the basis for another company's claimed right to the ITC's unique injunctive remedies. By the time the licensee finally learns that it is integral to the case, it is too late to suggest to the ITC that the licensee, for example, is not interested in protecting its own domestic operations by rewarding its licensor with an exclusion order.
The commission is also required to consult with, and seek advice and information from, other government agencies during the course of each investigation. Those agencies include: "the Department of Health and Human Services, the Department of Justice, the Federal Trade Commission, and such other departments and agencies as it considers appropriate." 19 U.S.C. § 1337(b)(2). The statutory list of who may access information designated confidential, however, does not include HHS, the DOJ or the FTC. 19 U.S.C. § 1337(n). Consequently, none of the other agencies that the commission might reach out to regarding a particular investigation would be permitted to know the identity of a secret domestic industry licensee. Hypothetically, if the commission wanted the input of the DOJ on the potential impact of a case involving protective gear for soldiers and the domestic industry were based on a secret licensee, the DOJ would be seriously hampered in its ability to provide relevant, responsive information.
Some ITC practitioners have suggested amending the rules to require that the domestic industry entity join the investigation as a complainant. Absent any such amendment, however, the commission could seriously consider whether disclosing the mere identity of the entity being protected qualifies as confidential business information under 19 C.F.R. § 201.6. If complainants were required to disclose at least the identity of the domestic industry licensees in the complaint, at least the public could comment on whether public interest issues are present, the licensee itself could comment on whether it wanted the protection the patent owner is seeking, and other government agencies would have a more complete understanding of how the ITC investigation could impact matters under their jurisdiction.
Originally printed in Law360 (www.law360.com). Reprinted with permission. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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