On September 24, 2015, the ITC published a Notice of Proposed Rulemaking (“NOPR”) to make several amendments to its Rules of Practice and Procedure, including, inter alia, (1) codifying and expanding the pilot program for early resolution of potentially dispositive issues within 100 days of institution, (2) allowing for institution of multiple investigations based on a single complaint, and (3) requiring the notice of institution to specify the accused products within the scope of the investigation. See our prior post regarding the NOPR. Six companies and non-profit organizations, including the Intellectual Property Owners Association (“IPO”), the ITC Trial Lawyers Association (“ITCTLA”), and the ITC Working Group (“ITCWG”), submitted comments on the proposed amendments. Comments regarding the most significant proposed rules changes are discussed below.
100-Day Program for Designation of Case-Dispositive Issues
Under the proposed rules amendments, the ITC would codify and expand the 100-day pilot program it announced in June 2013 for the identification and early adjudication of potentially dispositive issues. See our previous client alert. The pilot program allows the Commission to identify potentially case-dispositive issues in the notice of investigation and directs the presiding Judge to issue an initial determination (“ID”) on the designated issues within 100 days of institution. The proposed rule would expand the pilot program by allowing, within 30 days of institution, (a) parties to file a motion asking the Judge to designate a potentially case-dispositive issue for early ruling; and (b) the Judge, on his or her own initiative, to designate a potentially case-dispositive issue for expedited ruling. The Judge would issue an ID within 100 days of any such designation.
Commenters generally supported codification of the existing 100-day pilot program. However, several commenters expressed concern that the proposed expansion of the program to allow 100-day designations after institution could encourage disruptive motions practice or otherwise delay Section 337 proceedings. For example, the ITCWG, a group of companies in the technology and automotive industries concerned about the use of the ITC by patent assertion entities, commented that the proposed expansion of the program to allow post-institution designations “may invite motions practice that will likely have no meaningful benefit. Specifically, it is unlikely that parties or the ALJ will be in a better position in the first 30 days of an investigation to assess whether an issue is more suitable for assignment than the Commission will be during its pre-institution review.” Another concern regarding 100-day designations was raised by the IPO, which urged the Commission to provide for a mandatory stay of discovery on other issues during the 100-day proceeding and during Commission review of the resulting ID to ensure the program did not unintentionally increase the burden and expense of a Section 337 proceeding. Other commenters suggested that the Judge be afforded additional time to issue an order designating an issue for early ruling beyond the proposed 30 days allotted to parties to move for such a designation; that the Commission clarify what constitutes a “potentially dispositive issue” (e.g., must it be capable of disposing of an entire investigation); and that the rule provide a deadline for the Commission to determine whether to review an ID or issue its own determination on the designated dispositive issue.
Institution of Multiple Investigations Based on a Single Complaint and Severance of an Investigation
Under the proposed rules amendments, the Commission could institute multiple investigations based on a single complaint, where necessary, to limit the number of technologies and/or unrelated patents asserted in a single investigation. Also, the Administrative Law Judges would have the authority to sever an investigation into two or more investigations prior to or upon issuance of the procedural schedule.
Several commenters asserted that this proposed amendment is unnecessary since the Commission and Judges have consolidated and severed investigations in the past and have expressed concern that the proposed amendment could lead to increased motions practice. For example, the IPO commented that “the proposed rule’s silence regarding whether a severed case stays with the originally assigned administrative law judge might invite motions for severance that are actually attempts at ‘administrative law judge shopping.’” Several commenters also requested that the Commission provide the criteria by which it will evaluate whether to institute multiple investigations based on a single complaint or sever an investigation. Other commenters suggested that the respondent be allowed to request severance and to object to it. The ITCTLA suggested that a Judge’s decision to sever should be in the form of an order rather than an ID to avoid delays stemming from the review process for IDs.
Identifying Accused Products in Notice of Institution
Under the proposed rules amendments, the notice of institution would have to specify in plain language the accused products that will be within the scope of the investigation.
Most commenters supported the Commission’s effort to narrow the products potentially within the scope of an investigation, but suggested that instead of specifying the accused products, the notice of investigation should identify the types or categories of accused products within the scope of the investigation. For example, the ITCWG expressed concern that complainants in some investigations “seek improper discovery on product types that have not been formally accused” and suggested that the Commission may wish to consider language in the notice specifying the “type of accused products.” In particular, the ITCWG suggested that when software is at issue, the Commission should consider enumerating the specific accused software rather than merely referring to devices, such as smartphones, in the notice. All commenters except the China Chamber of Commerce for Import & Export of Machinery & Electronic Products (“CCCME”) opposed limiting the scope of investigations to the specific products identified in the complaint. The CCCME proposed that “the description of the scope of the investigation shall include the product code of respondent’s alleged infringing product to avoid ambiguity.”
The proposed amendments would clarify that a party served with a subpoena may serve objections to or move to quash the subpoena within 10 days of receipt of the subpoena, with the possibility of requesting an extension of time for good cause shown.
Commenters generally supported the Commission’s effort to bring its subpoena practice into closer conformity with the Federal Rules of Civil Procedure. However, several commenters suggested that the proposed amendments be modified to (a) allow the Judges more flexibility with regard to extensions for serving objections and filing motions to quash subpoenas and (b) provide subpoena recipients with an opportunity to interpose objections before filing a motion to quash. In this regard, commenters suggested that a “good cause” showing should not be a prerequisite for extending the proposed 10-day period to serve objections or move to quash. The ITCTLA also commented that it is unclear from the proposed amendments whether, upon service of objections the subpoenaed party would have discharged its obligations with respect to the subpoena, or would have to simultaneously file both objections and a motion to quash if it seeks to limit a subpoena. Several commenters suggested that a motion to quash should be allowed within 20, rather than 10, days of receipt of the subpoena in order to allow adequate time within which to meet and confer regarding objections to the subpoena before filing a motion to quash.
Breach of Protective Order
The proposed amendments would remove the mandatory requirement that the Commission or Judge allow the parties to make written submissions or present oral arguments bearing on the issue of violation of a protective order and the appropriate sanctions therefor. The proposed rule would give the Commission or Judge the discretion to allow these written submissions.
The ITCWG recommended against amendment of the protective order enforcement procedures. The group expressed concern that the proposed amendment would not promote transparency and understanding of investigative proceedings and would introduce uncertainty into the process. The ITCWG also observed that the comment accompanying the proposed amendment “appears to suggest that the Commission need not notify a party whose CBI was breached.” The IPO also expressed concern that it was unclear whether the proposed changes would affect the notice of an alleged or actual breach and, therefore, supported leaving the current rule unchanged.