June 15, 2020
Intellectual Asset Management
By Anthony D. Del Monaco; Zachery D. Olah; Alissa E. Green
Intellectual property litigators understand that the International Trade Commission (ITC) is a unique forum. Companies with United States domestic industries, however, often overlook the benefits of enforcing their intellectual property there. From its strong remedies, to its quick timeline, the ITC offers litigation benefits for all IP owners, including medical devices companies, that other forums - like district court - do not.
Unlike other litigation forums, the ITC does not award money damages to a winning complainant/IP owner. Instead, after an IP owner files a complaint, the ITC has the authority to stop the accused entities from importing infringing products into the United States if it finds a violation. This is a powerful way to retain US market share.
Additionally, the ITC offers complainants the benefit of an expedited timeline to a final decision. Unlike district court cases that can take years to reach a conclusion, the ITC’s schedule is significantly shorter. At the ITC, a hearing is conducted before an ALJ as soon as nine months after the Commission institutes the investigation, while a final decision from the commission is provided as soon as 15 months.
Despite these benefits, the medical device industry has underused this forum. In fact, in the last 10 years, only 40 of the over 500 complaints filed at the ITC involved medical device products.
To analyse how medical device companies have performed at the ITC we looked at every investigation filed from January 2010 through February 2020. If the accused product(s) in an investigation involved medical devices and/or medical equipment, it was identified as a relevant investigation. We did not include ITC investigations relating to pharmaceutical companies or products.
To calculate the win rate, we defined an IP owner win as those cases where the IP owner was able to secure a settlement agreement, a consent order, a limited exclusion order, a general exclusion order and/or a cease and desist order against at least one of the of the accused products. The study does not include cases where a complaint was withdrawn.
Of the 40 complaints filed at the ITC since January 2010 by medical device companies, six had not yet concluded at the time of writing. Additionally, six complaints were withdrawn, leaving 28 cases involving medical device products where the investigation reached a conclusion.
Of these 28, the IP owner won 23, translating to an 82%-win rate. Breaking this down further, 12 of the “wins” involved a settlement, four involved a consent order and the remaining eight concluded with either a limited exclusion order, a general exclusion order, a cease and desist order or a combination thereof.
On the other hand, only five of the cases resulted in “losses” for the complainant, translating to a loss rate of 18%. In each of these cases, the respondent did not settle and the ITC found that it did not violate Section 337.
The 82%-win rate is even more encouraging when compared to the success rate of similar companies in district courts across the country. For example, according to statistics compiled by LegalMetric, at the district court level, medical device companies filing patent infringement lawsuits were only successful 40.7% of the time from January 2010 to December 2019. Similar to the ITC investigations analysed, LegalMetric defined medical device companies as any company whose primary business involves medical devices and/or medical equipment.
The discrepancy between win rates at the ITC versus district court should encourage more medical device IP owners to consider enforcing their IP rights at the ITC.
Digging deeper into the numbers, we determined that the average time to resolution on all medical device investigations at the ITC was just under 14 months. The 23 cases we analysed where the IP owner won were resolved within an average of 12 months.
One example of an ITC investigation that ended quickly with a settlement agreement is Certain Obstructive Sleep Apnea Treatment Mask Systems and Components Thereof, USITC Inv No 337-TA-1136. This case only took seven months to reach its conclusion. In considering an investigation on the longer side of the spectrum, in Certain Sleep-Disorder Breathing Treatment Systems and Components Thereof, USITC Inv No 337-TA-890, a commission opinion finding a violation of Section 337 took only 17 months to issue.
LegalMetric also compiled nationwide statistics for the length of medical device cases. These statistics included cases where the plaintiff won and lost. According to LegalMetric, in district court, medical device litigations over the same time period averaged 19 months to resolution. This statistic includes multiple types of terminations that were not considered for this article; for example, termination because cases were consolidated or transferred intra-district (an ITC case cannot be transferred to another jurisdiction). These district court cases had a very short average pendency of 2.4 months and 2.3 months respectively. Therefore, the average time to resolution in district court cases is slightly skewed and the length of cases with results most like those analysed at the ITC are much longer.
For example: district court cases resulting in a consent judgment averaged 26 months; grant of summary judgment averaged about 32 months; and jury verdict averaged about 37 months. Furthermore, it took parties an average of 16 months to reach a settlement in district court cases involving medical devices.
These figures not only highlight how quickly a medical device company can complete an ITC investigation compared to similar district court proceedings, but also emphasises that favourable decisions can come from the ITC in these shortened timelines.
Medical device companies can also effectively utilise the ITC by filing one complaint against multiple alleged infringers at the same time and in the same forum, so saving time and money for the complainant. This approach became beneficial after the AIA compelled parties enforcing their intellectual property to file different litigations against different defendants despite asserting the same intellectual property.
Additionally, unlike lawsuits filed in a district court, ITC investigations are not subject to the venue requirements of 28 USC § 1400(b). After the Supreme Court rejected the broad interpretation of § 1400(b) in TC Heartland LLC v Kraft Foods Group Brands LLC, some patent owners began looking to the ITC because of its unique governing statute, which includes its own jurisdictional requirements. Section 337 jurisdiction is based solely on the importation of products into the United States regardless of where the person or corporation making or importing the accused product resides. As such, when patent owners file their actions in the ITC against multiple defendants, there is no risk that the case may be transferred to a different jurisdiction due to lack of personal jurisdiction.
For example, in Certain Electric Skin Care Devices, Brushes and Chargers Thereof, and Kits Containing the Same, USITC Inv No 337-TA-959, complainant Pacific Bioscience Laboratories Inc filed a single complaint against 18 different respondents. They included companies from the United States, China, Korea, the United Kingdom, Canada and Israel. With one complaint in one jurisdiction, Pacific was able to get various positive outcomes against many of the respondents, including consent orders, exclusion orders, and settlement agreements.
For at least this efficiency, medical device IP owners considering asserting their rights against multiple infringers that import accused products should consider the ITC as a potential forum.
The ITC is a strong forum to litigate medical device intellectual property. With a recent success rate of 82%, expedited timeline to resolution and ability to address multiple infringers in one investigation in one forum, medical device companies should seriously consider enforcing their intellectual property at the ITC.
Originally printed in IAM on June 15, 2020. 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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