The U.S.I.T.C. instituted its first investigation under its 100-day pilot program for early determination of a specific potentially case-dispositive issue.

On March 12, 2015, the Commission issued its Notice of Investigation in Certain Audio Processing Hardware and Software and Products Containing Same, ITC Inv. No. 337-TA-949. The complaint filed by Andrea Electronics Corporation alleges that the Respondents unlawfully import into the United States certain microphone inputs, microphones and microphone arrays, audio codecs, audio processing software, and personal computers (including laptops, desktops, notebooks, and tablets). The named Respondents include Acer, ASUSTek, Dell, Hewlett Packard, Lenovo, Toshiba, and Realtek Semiconductor. Certain Audio Processing Hardware and Software and Products Containing Same, ITC Inv. No. 337-TA-949, Complaint (Feb. 9, 2015).

As part of the Notice of Investigation, the Commission directed the Administrative Law Judge (ALJ) to hold an early evidentiary hearing into whether the Complainant has standing to assert each of the five asserted patents. This Investigation is the first time the pilot program has been used its creation in June 2013 during Certain Products Having Laminated Packaging, Laminated Packaging, and Components Thereof, No. 337-TA-874, and the first time an early determination has been used to examine issues of standing. The issue subjected to the early determination in Laminated Packaging was whether the Complainant satisfied the economic prong of  domestic industry requirement under 19 U.S.C. 1337(a)(3).

The stated goal of the Commission’s pilot program is an effort to minimize the cost of litigation—both to the Commission and private parties. “Under the pilot program, the Commission will identify, at institution, investigations that are likely to present a potentially dispositive issue, such as the existence of a domestic industry, importation, or standing.” (Faster Investigation Resolution, Lower Litigation Costs Are Goals of USITC Section 337 Pilot Program, U.S.I.T.C. News Release, June 24, 2013). For investigations selected for the pilot program, the Commission directs the ALJ “to expedite discovery and factfinding in the investigation (including an early evidentiary hearing) and issue an early initial determination (ID) on the potentially dispositive issue within 100 days of institution.” Id.

In their letter to the Commission requesting the use of the 100-day pilot program, Respondents Hewlett Packard and Dell relied extensively on Andrea’s SEC filings, alleging that Andrea did not hold “all right, title and interest” in the patents-in-suit. Certain Audio Processing Hardware and Software and Products Containing Same, ITC Inv. No. 337-TA-949, Namrow Letter to Secretary Barton (Feb. 25, 2015) at 2. The Respondents alleged that Andrea had assigned “substantial ownership interest in the patents” to an investment management firm. Id. Respondents further stated that in exchange for significant capital and a line of credit, Andrea was required to “‘use its best efforts to diligently pursue the [monetization] of the patents’” and the patents are being held in escrow as collateral. Id. (quoting the SEC filings). In response, Andrea alleges that the agreements Respondents rely upon have been further modified and are “inoperative.” Certain Audio Processing Hardware and Software and Products Containing Same, ITC Inv. No. 337-TA-949, Patnaik Letter to Secretary Barton (March 3, 2015) at 2-3.

The Commission’s Notice of Investigation directed the ALJ to issue an Initial Determination (ID) relating to the standing issues within 100 days of institution. “The issuance of an early ID finding complainant does not have standing to assert the asserted patents shall stay the investigation unless the Commission orders otherwise; any other decision shall not stay the investigation or delay the issuance of a final ID covering the other issues of the investigation.” Certain Audio Processing Hardware and Software and Products Containing Same, ITC Inv. No. 337-TA-949, Notice of Investigation (March 12, 2015) at 2. The case has been assigned to ALJ Thomas B. Pender. The early ID is expected to be issued in mid-June.