Certain changes enacted in 2011 to the ITC’s rules governing Section 337 investigations require the International Trade Commission (the “Commission”) to invite comments from the public and proposed respondents regarding public interest issues implicated by each newly filed complaint. As shown by Google Inc.’s (“Google”) submission in Inv. No. 337-TA-817, this early public interest briefing can be used to advance various policy based arguments with the ITC that may ultimately influence the appropriate remedy in the investigation. In Certain Communication Equipment, Google suggested that granting an exclusion order to the benefit of a non-practicing entity (“NPE”) may harm consumers and not be in the public’s best interest.
By way of background, on October 19, 2011, the Commission published a Notice of Final Rulemaking amending its rules and creating, inter alia, new rule 210.8(c)(1), which provides that upon the complaint’s filing, the Commission will publish a notice in the Federal Register inviting comments from the public and proposed respondents on any public interest issues raised by the complaint and potential exclusion and/or cease and desist orders. See our October 21, 2011 post for more details. In accordance with this new rule, on November 7, 2011, the Commission published a notice requesting comments on whether the issuance of an exclusion order and/or cease and desist order in Inv. No. 337-TA-817 would “negatively affect the public health and welfare in the United States, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, or United States Consumers.”
In response to the Commission’s request, Google filed a five page submission arguing that nothing in the complaint, or in other publicly available information, suggested that Complainant ChriMar Systems, Inc. d/b/a CMS Technologies’ (“ChriMar”) or its licensee can meet the demand for the wireless communication products it seeks to exclude and, as a result, issuing an exclusion order against the accused products “could severely harm the wireless communications industries, to the detriment of consumers, competitive conditions in the United States, and the public interest.” As a corollary to this argument, Google also asserted that denying an exclusion order as against the public interest when a complainant or its licensees cannot meet the market demand for an accused product will harmonize the remedies available to litigants at the Commission and district courts. In particular, the Commission may issue an injunction without having to consider the equitable guidelines set forth in the Supreme Court’s decision in eBay Inc. v. MercExchange LLC, 547 U.S. 388 (2006).
Under eBay, a patentee is unlikely to obtain a permanent injunction if it, or its licensees, do not manufacture, sell, practice or otherwise bring a product to market that competes with the accused device/method. Because many NPEs lack production-driven licensees that bring competitive products to market, they are less likely to receive a permanent injunction in district court. Thus, Google notes that an increasing number of NPEs are filing Section 337 complaints, where an injunction may issue absent consideration of eBay’s equitable factors, to increase the NPE’s bargaining position during settlement negotiations in concurrent district court proceedings. To prevent this end-run around eBay, and to “protect American industry and consumers,” Google argues that in most cases, when a Complainant (NPE or otherwise) and it licensees cannot meet the market demand for an accused product, an exclusion order should not issue. Google assumes that the Complainant in this scenario is more concerned with increasing its revenue, rather than excluding the Respondents from market and, therefore, concludes that the appropriate venue for the Complainant’s dispute is a district court where it may seek damages for past infringement and a running royalty for future infringement.
Following Google’s submission of its public interest statement, ChriMar served extensive discovery on Google, arguing that such discovery was warranted because Google had interjected itself into the investigation by filing a public interest statement. ChriMar also moved to strike Google’s submission after Google did not comply with ChriMar’s discovery requests. See our June 1, 2012 post for more details. In an Order dated May 29, 2012, ALJ Theodore R. Essex rejected each of ChriMar’s arguments. Specifically, the ALJ noted that Google did not “interject” itself into the investigation, as ChriMar contended, but simply responded to an invitation by the Commission to provide commentary on the investigation and its impact on the public interest. Additionally, because Google’s public interest statement was based entirely on public facts and raised what ALJ Essex determined to be “relatively straight forward arguments regarding eBay and the availability of alternative suppliers,” the ALJ found that Google’s submission raised no issues warranting discovery.
Whether the arguments made by Google gain significant traction with the Commission remains to be seen; however, Google’s submission directed towards NPE’s through the newly created public interest briefing is interesting and underscores the concerns shared by many about the increasing use of Section 337 by NPE’s. Moreover, ALJ Essex’s rejection of ChriMar’s discovery requests and motion to strike should provide parties contemplating submitting a public interest statement with a degree of certainty that such submissions should not typically subject the non-party to unwarranted and overly broad discovery.