It’s no secret that finding new ways to rein in patent trolls is de rigueur these days: President Obama recently announced a dozen legislative and executive proposals aimed at curtailing lawsuits filed by patent assertion entities. Several legislative bills targeting non-practicing entities have been introduced and received media attention this year including the End Anonymous Patents Act, the Patent Quality Improvement Act of 2013, the Shield (Saving High-Tech Innovators from Egregious Legal Disputes) Act of 2013, and the Patent Abuse Reduction Act of 2013. The Vermont Legislature even passed a state law prohibiting bad faith patent infringement allegations. Click here to read Adam Steinert’s article.
Now, the United States International Trade Commission (ITC) is getting in on the action.
In late June, the ITC announced a pilot program for some Section 337 investigations, expediting initial discovery and providing for a preliminary hearing to resolve dispositive issues such as whether a complainant has standing at the Commission. In particular, the new program will directly and quickly address whether a non-practicing entity should be allowed to assert a specific patent at the ITC.
In Section 337 investigations, a patent holder plaintiff is required to establish that it conducts economic activity within the U.S. connected to the exploitation of at least one claim of its asserted patent – the “domestic industry” requirement. Whether the domestic industry requirement is satisfied is typically not addressed until the end of an investigation. Accordingly, while many patent assertion entities struggle to satisfy the requirement by tying a single, specific patent to their licensing activities (which more often relate to entire patent portfolios), they were nevertheless able to leverage the full cost of defending an investigation in settlement talks with accused infringers. The ITC pilot program will remove that arrow from the patent troll’s quiver, forcing non-practicing patent holders to prove a nexus between their licensing activities and the asserted patent(s) at the outset of an investigation.
The ITC will examine initial pleadings to determine whether a particular investigation should participate in the pilot program. The commission did not disclose what criteria will be evaluated in making that determination, but has stated an expectation that issues submitted to the pilot program should be fully resolved within 100 days.