Article: February 2019: ITC Treatment of IPR Decisions

The International Trade Commission (“ITC”) is a fast-paced venue for claims involving intellectual property rights. These claims, adjudicated as Section 337 investigations, typically reach trial less than ten months after the initial complaint. Because the overwhelming majority of Section 337 investigations involve allegations of patent infringement, it is important for practitioners to understand the interplay between the ITC and another fast-paced patent adjudication vehicle—the inter partes review (“IPR”) proceeding conducted by the Patent Trial and Appeal Board (“PTAB”).

An IPR is unique in that it adjudicates only the patentability of an issued patent, not whether any party’s patent rights have been infringed. The PTAB has the statutory power to cancel a patent (or certain patent claims) that it deems invalid over prior art patents and publications. 35 U.S.C. § 311(b). In light of this power, patents asserted in the ITC are often concurrently challenged via IPR. When this is the case, what deference does the ITC pay to the IPR decisions?

There are two key milestones in an IPR proceeding that have bearing on a concurrent Section 337 investigation: (1) the PTAB’s decision to institute the IPR, and (2) the PTAB’s issuance of an IPR “final written decision” canceling a patent or patent claims. The ITC has traditionally treated each of these milestones very differently.

Because of the speed at which a Section 337 investigation proceeds, IPRs have historically had little impact on the schedule of Section 337 investigations. This is especially true for IPRs that have hit the first milestone but yet to reach the second. In fact, the ITC has never stayed a Section 337 investigation based on a pending IPR—meaning an IPR that has been instituted but has yet to reach a final written decision. In denying motions to stay, ITC Administrative Law Judges (“ALJs”) often point to the statutory mandate that ITC investigations conclude “at the earliest practicable time” after an investigation is initiated. Because it generally takes 18 months from the filing of an IPR petition to the issuance of a final written decision, staying an Section 337 investigation based on a pending IPR runs contrary to that mandate. The ITC’s indifference to pending IPRs is an important contrast to federal district court patent cases, which are often stayed based on pending IPRs.

Once the PTAB issues a final written decision, however, that final decision could deeply impact a Section 337 investigation. These investigations consist of two primary phases: the violation phase (starting with discovery and concluding with the ALJ’s issuance of an initial determination) and the remedy phase (starting after the ALJ’s issuance of an initial determination and concluding with the Commission’s final disposition of the investigation or the expiration of remedial relief). Recent developments at the ITC make clear that an IPR final written decision could, in certain circumstances, impact either phase.

In August 2018, for the first time ever, the ITC stayed a violation-phase Section 337 investigation based on an IPR final written decision. The groundbreaking order was issued by Chief ALJ Bullock in Certain Integrated Circuits with Voltage Regulators and Products Containing Same, Inv. No. 337-TA-1024. Order No. 55. Although a violation-phase Section 337 investigation had never before been stayed based on an IPR, the order likely does not suggest any policy shift by the ITC. Indeed, the 1024 investigation involved an unusual set of circumstances (briefly summarized below) resulting in numerous delays that ultimately pushed the ITC schedule far behind that of the IPR schedule. The other rarity is that all parties (the complainant, the respondents, and the Office of Unfair Import Investigations (“OUII”)) supported the stay.

As for the unusual circumstances of the 1024 investigation: The evidentiary hearing was originally scheduled to begin on July 24, 2017. Order No. 5. On July 6, 2017, Judge Bullock canceled the July hearing date due to a medical issue. Notice Regarding the Evidentiary Hearing. The hearing was ultimately rescheduled for November 2017. Order No. 43. Then, in October 2017, Judge Bullock granted the respondents’ motion for summary determination of non-infringement on the lone asserted patent. Order No. 46. This order effectively paused the violation phase of the investigation. The complainant petitioned the Commission to review Judge Bullock’s order, and in February 2018, the Commission remanded the case back to Judge Bullock for further consideration. Comm’n Order (Feb. 20, 2018). Discovery was also reopened, and the hearing was reset for April 2019. Order No. 54. But long before the scheduled April hearing date, on July 31, 2018, the PTAB issued an IPR final written decision invalidating the lone patent asserted in the investigation. In light of that decision, the respondents promptly moved to stay the investigation pending any appeal of the decision to the Federal Circuit. Both the complainant and OUII filed responses supporting the motion to stay.

In granting the motion, Judge Bullock noted that while “stays of section 337 investigations are generally disfavored, it is clear from the Commission’s opinions that stays in section 337 investigations are permissible.” Order No. 55 at 6 (emphasis in original). He further found that the 1024 “Investigation presents a clear example of when a stay is in the best interest,” as all “private parties all believe that judicial economy favors a stay, and [OUII] is not opposed,” and “the factors present in other investigations—such as a soon-to-expire patent or being at an advanced stage of the investigation combined with being at the initial stages of reexamination—are not present here.” Id.

Given the rare circumstances and the language of Judge Bullock’s stay order, it is unlikely that the 1024 investigation represents any shift in the ITC’s longstanding policy of disfavoring stays of Section 337 cases. The 1024 investigation does, however, show that it is possible to obtain a stay of an investigation that is still in its violation phase.

Like the violation phase, the remedy phase of a Section 337 investigation can be impacted by an IPR final written decision. Specifically, a concluded IPR finding a patent unenforceable can potentially cause the ITC to suspend enforcement of remedial relief. Two recent ITC cases provide a roadmap as to how the ITC is likely to treat remedial relief after the PTAB issues an IPR final written decision.

First, the very scenario of the ITC suspending enforcement of remedial relief based on an IPR final written decision occurred in Certain Three Dimensional Cinema Systems and Components Thereof, Inv. No. 337- TA-939. Prior to the Commission’s suspension of the issued remedial relief in that case, the ITC had never stayed or suspended its own activities in response to an IPR. In the 939 investigation, five months after the ALJ issued an initial determination finding a Section 337 violation based on infringement of the asserted ’934 patent—but before the Commission reviewed the ALJ’s determination or issued any remedial relief—the PTAB issued an IPR final written decision finding the ’934 patent invalid. Three months after the PTAB decision, the Commission affirmed the ALJ’s finding that the ’934 patent was not invalid. Comm’n Op. (July 21, 2016). Despite confirming its disagreement with the PTAB on the validity of the ’934 patent, the Commission nevertheless suspended enforcement of the remedial relief it issued, pending any appellate review of the PTAB decision. The Commission noted that “upon final resolution, including any appeal of the PTAB’s final decision, the Commission will take appropriate action as to the ’934 patent claims.” Id. at 61.

The second roadmap case (Certain Network Devices, Related Software and Components Thereof (II), Inv. No. 337-TA-945) concluded after the 939 investigation and took an opposite approach— ultimately holding that the IPR final written decision at issue did not suspend enforcement of the ITC’s remedial relief. There, the Commission issued remedial relief (based on infringement of two patents) just three weeks before the PTAB issued a final written decision finding those same two patents invalid. Comm’n Op. (May 4, 2017). Despite the PTAB’s decision, the Commission denied the respondent’s requests to suspend enforcement of the already issued remedial relief. Comm’n Op. (July 25, 2017); Comm’n Op. (Sept. 11, 2017). The Commission reconciled its directive here with the one it made in the 939 investigation by distinguishing the cases on two key grounds: (1) here, the remedial relief had already been issued by the time the PTAB issued its final written decision, whereas in the 939 case, no remedial relief had been issued at the time of the PTAB’s final written decision; and (2) here, suspension would require remedial relief to be completely denied while the PTAB decision undergoes the appeal process, whereas in the 939 case, the suspension of remedial relief applied to only one patent (the ’934 patent) out of the three patents on which the ITC had found a Section 337 violation, so relief was not completely denied. See Comm’n Op. at 13-14 (July 25, 2017); Comm’n Op. (Sept. 11, 2017) at 9 n.8.

It also bears mention that a patent is valid during appeal of an IPR final written decision. 35 U.S.C. § 318(b) (stating that the PTAB will not issue a certificate of cancellation until all appeals are exhausted or the time for appeal has expired); see also Certain Network Devices, Comm’n Op. at 12 (July 25, 2017) (“By contrast, the Federal Circuit has explained that a finding of invalidity by a federal district court has immediate preclusive effects upon the continued vitality of Commission remedial orders.”).

Taken together, the 1024, 939, and 945 holdings suggest that in the right circumstances—e.g., an IPR final written decision that issues before the ITC issues remedial relief—the ITC may use its discretion to pause a Section 337 investigation, including the enforcement of any subsequently issued remedy. But aside from these narrow sets of circumstances, the ITC does not appear likely to stay either its case schedule or any issued remedial relief.