Law360, New York (May 13, 2016, 12:35 PM ET) -- In this installment of our series on responding to US International Trade Commission Section337 complaints, we discuss why a respondent should begin preparing for discovery and selecting what likely will be the most important witness (the expert) as soon as it is named in a Section 337 complaint.
The commission generally decides whether to start an investigation approximately one month after a complaint is filed. A typical ITC investigation lasts 15-16 months from start to finish, but parties can begin demanding documents, the identification of witnesses and verified answers to formal written questions almost as soon as the ITC starts an investigation. A bench trial before an ITC judge takes place about eight or nine months after the complaint is filed. Under such a schedule, the parties will have approximately five months or fewer to complete fact discovery — much of which may involve depositions abroad. By contrast, fact discovery can last two years or more in district court. While a complainant may need relatively little discovery to prepare its case, a respondent must scramble to create a work plan for discovery and implement it, including locating prior art, relevant witnesses and conducting depositions. Below, we identify some categories of information that a party named in an ITC complaint should immediately begin to locate and gather — even before the investigation formally begins — in order to ensure it will be able to meet its discovery obligations and fully present its case.
In stark contrast to federal court (where discovery is more limited and where a company typically has 30 days to respond to discovery requests), a party at the ITC only has 10 days to provide responses to numerous requests. In addition to the private parties, the ITC’s Office of Unfair Import Investigations will often serve additional discovery requests on the parties including discovery seeking targeted information regarding importation of the accused products and other ITC-specific issues. Given these time constraints, a respondent must immediately develop a discovery plan by identifying witnesses as well as gathering and organizing documents.
Discovery in an ITC investigation will include certain information specific to the importation of the accused products such as the items listed below, that a company should begin collecting soon after the complaint is received (and the various US lawyers begin calling to offer their help):
- Statistics on the quantity and value of the accused products imported into the US
- Customs documents related to imports of the accused products
- The Harmonized Tariff Schedule item number(s) for the accused products
- Information regarding the respondent’s production capacity and the significance of the US market to its operations
- The name and address of any relevant suppliers of parts or materials used in the accused products
In addition to such ITC-specific information, a named respondent should also identify:
- Detailed technical information about the accused products, including the identification of any suppliers of key components related to the allegations in the complaint
- Communications with customers about the relevant products
- Communications with the complainant
- Any relevant prior art
- Employees (or other witnesses) with the most relevant knowledge; one or more of these employees could be the company’s corporate witness
As noted, the pace of an ITC investigation is much faster than that typically found in US district court. Also, the scope of ITC discovery will be broader with respect to certain issues. Appropriate planning and an organized, methodical approach to discovery are critical and will strengthen a company’s position in the investigation. Because ITC investigations are conducted so quickly, unless good cause is shown, ITC judges rarely grant extensions of time. Failing to act quickly is unlikely to be seen as a good enough cause for an extension. Moreover, there are issues that must be addressed in ITC proceedings that do not even arise in district court. The limited amount of time allowed to conduct discovery should be spent implementing a discovery plan developed during the month-long period after the filing of the complaint. This saves costs (including attorney fees) and minimizes the inevitable headaches caused by the need to spend valuable time preparing and then implementing a plan for discovery under the pressures of extremely tight time deadlines.
As part of preparing for discovery, a respondent that has selected and retained an expert in the first 30 days after the filing of a complaint will be better positioned throughout the investigation. Companies involved in litigation often wish to delay retaining an expert in the hope that fees for expert work can be minimized. In many district court proceedings, for example, the expert can be selected months or even years after the case begins. In contrast, selecting an expert during the month-long period after the ITC complaint is filed has the strong potential to affect the outcome of a Section 337 investigation. Of course, the well-prepared complainant in an ITC proceeding has likely already retained what it views as the best experts. Thus, the field may be narrowed somewhat by the time a named respondent begins its expert search. Unlike in district court proceedings, the ITC judge will set a procedural schedule soon after the commission starts the investigation. Many ITC schedules require the disclosure of expert witnesses as early as two months after the investigation begins. Also, the ITC schedule will require the disclosure of prior art references relatively early in the investigation. Experts can often assist in directing searches for prior art references before the deadline by which prior art must be identified in the investigation, which is typically much shorter than in district court proceedings. An expert can also be quite helpful in reviewing the references before they are disclosed. For these reasons alone, the expert should be retained as soon as possible after the ITC complaint is filed.
Another reason why the expert should be retained sooner rather than later in an ITC investigation: ITC judges have publicly stated that testimony from the experts is frequently more important than from any other witness. In ITC proceedings, a party presents most, if not all, of its evidence regarding validity, infringement and the domestic industry requirement through expert testimony. Accordingly, an expert’s credibility and effectiveness can greatly influence the overall outcome of the dispute. Just as the commission is required to resolve investigations “at the earliest practicable time,” a respondent should move promptly to identify, interview and select the expert or experts it will use in the investigation. Having an expert who has spent sufficient time understanding the technical aspects of the dispute and who prepares his or her report (working with counsel) can determine whether a respondent wins the ITC case (or saves on shipping costs when its products are banned from the US market).
In addition to paying close attention to the expert candidate’s technical credentials and litigation experience, one should thoroughly consider the importance of the expert’s demeanor and presentation abilities. Evaluate how the candidate writes and speaks — is she or he able to articulate complex technical ideas and distill them down into digestible and coherent explanations that can be easily grasped by the decision makers at the ITC, namely the judge and commissioners? At every stage of the selection process ask yourself, is this person an independent thinker who will prepare his or her own reports versus merely editing and signing documents prepared by counsel? Can she respond to tough questions under pressure and defend her position without appearing too rigid or inflexible? Credibility is critical; as noted, ITC judges are experienced in weighing competing experts and rely heavily on the experts’ testimony in deciding key issues.
Preparing for discovery during the relatively calm days immediately after the ITC complaint is filed is a wise investment of resources and produces a much better return than waiting until later to create a work plan for discovery and implement it. Moreover, selecting and working with an expert early in an ITC investigation will maximize a party’s chances of building a solid evidentiary record and presenting its best, most accurate points to the ITC judge deciding the issues in the investigation.