In this second installment of our series, The Calm Before the Storm, we suggest five initial actions to consider during the first 30 days after an International Trade Commission (ITC) complaint is filed. The actions we recommend are important actions for a company to take right away, in order for it to mount an effective defense. Particular facts and circumstances will likely lead to some tailoring of these actions, but it is important to take them promptly, in the relatively calm days following the filing of a complaint.
Of course, a company should work with experienced ITC counsel in implementing these actions. Some readers have asked why a company would need to go to the trouble and expense of retaining counsel before it becomes clear that the ITC will in fact start an investigation. The answer is that, in almost all instances, the ITC starts an investigation. Unlike federal district court procedure, where complaints require only notice pleading with very few facts included, the ITC rules require intense fact pleading with ample exhibits supporting the facts alleged in the complaint. As long as those detailed requirements are met, either initially or after the ITC requests additional information of the complainant, the ITC is required by law to start an investigation.
- Put a litigation hold in place. The ITC recently found that a delay in putting a litigation hold in place was one factor supporting the imposition of millions of dollars in sanctions against both a respondent and its ITC counsel. Thus, a litigation hold should be circulated as early as possible within the proposed respondent’s company to make relevant individuals aware of the litigation and to ensure that no documents or other information that may be relevant to a current or anticipated legal action involving the company is lost. For all relevant documents, a company should immediately adjust whatever record destruction program may be in place.
- Be proactive with customers. Unlike in US federal courts, the ITC may only grant injunctive relief in the form of orders barring a company from importing products or requiring imported products to be reexported. Complaints filed at the ITC are publicly available on the Internet, so when a company is named in an ITC complaint, its customers may find out and be concerned that the product supply may be stopped. Moreover, a third-party supplier (or even the complainant) may inform various customers that a suit has been filed against a competitor so that supplies may be stopped. As with many things, a proactive (as opposed to a reactive) approach is most effective. The time to trial is shorter than in US federal courts and an injunction is less likely in district courts. As such, the company sued at the ITC should promptly develop a plan to deal with customers. The following things should be considered immediately: (1) who will communicate with customers; (2) what will be said; (3) how questions will be answered generally; and (4) who will decide how to respond to specific questions.
- Prepare for discovery. Discovery at the ITC starts almost immediately after the ITC provides notice that it has begun an investigation. Discovery must be completed within a few months. Generally, discovery at the ITC is broader than in US federal courts and the time to respond to discovery is much shorter in the ITC. Early attention to discovery, both responsive and offensive, is necessary.
- Gather information to respond to the complaint. Complaints in a district court action are generally found sufficient as long as they provide adequate notice of the plaintiff’s allegations. As noted above, however, ITC complaints must provide detailed, factual support for each allegation. Similarly, under the ITC Rules, a company sued at the ITC must prepare a detailed, substantive response to the Complaint and Notice of Investigation; this response must contain much more detail than an answer to a complaint in US federal court. In addition to providing facts constituting each ground of any defenses that are pleaded, the response must also include statistical data on the quantity and value of imports of the involved articles, the Harmonized Tariff Schedule item number(s) for importations of the accused imports, a statement concerning the company’s capacity to produce the subject article, the relative significance of the United States market to its operations, and the name and address of the supplier of imports if the company does not manufacture its accused imports. During the thirty-day period, a company should begin gathering the information needed to prepare this detailed response that will be due 20-30 days after the complaint is served on the company sued at the ITC.
- Hire an expert with strong communication skills. As noted in last month’s advisory, the expert witness is often the most critical witness in an ITC investigation. Given the expedited schedule of an ITC investigation, it is important to retain and begin to work with an expert as soon as possible. The expert must explain the relevant technology and the parties’ positions on such key issues as claim interpretation, domestic industry, infringement, and validity. Depending on which ITC judge is assigned to the matter, the expert’s testimony will be submitted either live (by testimony from the witness stand) or by witness statements prepared in advance of trial. In any event, the expert must have certain qualities, skills, and abilities to convey the necessary information and to withstand cross-examination at deposition and at trial. While the ITC complainant may attempt to retain the best experts before filing the complaint, this is not always done. This creates an opportunity for the company sued to get the best experts. A company sued at the ITC should immediately begin identifying and interviewing expert candidates. A primary consideration must be whether this expert can explain the technology and the products at issue to people who are not steeped in the technology.
Upcoming advisories will discuss preparing for discovery and selecting the most effective expert in more detail.