The United States International Trade Commission (ITC) has historically been very reluctant to stay a Section 337 investigation. A recent decision by an ITC judge (administrative law judge or ALJ) suggests that even ongoing inter partes review (IPR) proceedings do not warrant a delay. In Certain Laser-Driven Light Sources, Subsystems Containing Laser-Driven Light Sources, and Products Containing Same, Inv. 337-TA-983, ALJ Shaw refused to stay an investigation pending the outcome of IPR proceedings on two of the three patents at issue, even though the IPRs had been instituted before the investigation began and would likely be completed six months before the target date for the ITC’s final determination. Unlike federal district courts, where stays are often entered under less compelling circumstances, the ITC adheres to its mandate to resolve investigations “at the earliest practicable time.”
The Commission takes seriously its duty to conduct investigations in an expeditious manner, and it rarely stays investigations even when there are parallel proceedings pending at the United States Patent and Trademark Office (PTO). In determining whether to issue a stay, the Commission has traditionally considered five factors: (1) the state of discovery and the hearing date; (2) whether a stay will simplify the issues and hearing of the case; (3) the undue prejudice or clear tactical disadvantage to any party; (4) the stage of the PTO proceedings; and (5) the efficient use of Commission resources.
In Laser-Driven Light Sources, IPR proceedings on two asserted patents began fifteen days before the complaint was filed with the Commission. The IPRs are scheduled to conclude in November 2016, while the ITC investigation is set to end in May 2017. The respondents promptly moved to stay the Investigation due to the IPR proceedings.
ALJ Shaw considered each of the five stay factors in turn and found that a stay was not warranted. The ALJ gave little weight to the first factor, noting that, although the investigation was “in its earliest phase,” because the IPR would likely conclude six months before the Commission’s investigation, “a window would exist to integrate the insights obtained from the IPRs into this investigation.” Thus, this first factor provided “no reason to say this investigation” – even though the motion to stay was brought only a month after the ITC complaint was filed.
The ALJ extensively analyzed the second factor – whether a stay would simplify the issues and hearing in the case. The ALJ stressed that patents remain presumptively valid even after an IPR has begun and expressed skepticism about the significance of the purported high rate (42%) at which patents are invalidated through IPRs. The ALJ also noted several differences between IPRs and ITC investigations, including the fact that the IPR process does not address indefiniteness or other invalidity issues beyond anticipation or obviousness. Moreover, one of the three patents at issue in the investigation was not being reviewed by the PTO. The ALJ did note, however, that estoppel would apply if the respondent attempted to raise issues before the Commission that it declined to raise before the PTO.
In considering the third factor – undue prejudice – the ALJ focused exclusively on the harm to the ITC complainant. He reasoned that if a stay were granted (thereby delaying a final determination), respondents would be allowed to continue importing infringing articles, thus giving the respondents an unfair advantage over the complainant. This factor thus did not support a stay.
As to the fourth factor, the ALJ noted simply that the IPR would be concluded before the ITC completes its investigation, and thus “any insights that emerge can be incorporated into this investigation . . . .” This is a somewhat surprising view, given that the purpose of a stay is to ensure that such “insights” are included before the investigation proceeds too far. But, the ALJ added, the ITC had previously “reversed a stay granted by an administrative law judge when there was no final judgment in the parallel proceeding.” This suggests that nothing short of an imminent final judgment would be considered as a possible basis to grant a stay.
And as to the fifth factor – efficient use of Commission resources – the ALJ merely noted that the IPR and Investigation proceedings “are not truly parallel” and therefore “the most efficient use of Commission resources is to proceed with this investigation in a timely fashion.” Accordingly, finding none of the factors to support issuing a stay, the ALJ denied the motion.
- At present, it appears the ITC is unlikely to stay an investigation for PTO proceedings. The only possible exception might be an imminently pending final decision. Thus, any IPRs should be initiated as soon as possible in the event that an investigation is threatened or suggested.
- It appears that the ITC is willing to consider the “insights” from PTO proceedings and will estop respondents from raising validity arguments at the ITC that could have been made in an IPR proceeding at the PTO. While such “insights” may be helpful, respondents should note the estoppel provision and ensure all appropriate arguments are timely raised in the IPR.