Chairman Goodlatte: Abusive patent litigation is a drag on our economy. Everyone from independent inventors, to start-ups, to mid and large sized businesses face this constant threat.
Many of these lawsuits are filed against small and medium-sized businesses, targeting a settlement just under what it would cost for litigation, knowing that these businesses will want to avoid costly litigation and probably pay up. And it is this type of tactic that has made the International Trade Commission (ITC) a potentially attractive venue for patent cases.
The ITC has at its disposal the ability to issue exclusion orders that block the importation of “infringing” products into the United States. Since the ITC is a federal agency and not an Article III court, it makes sense that it is limited to this single remedy.
In recent years, however, patent assertion entities have used the Commission as a forum to assert weak or poorly-issued patents against American businesses.
It is evident that there are cases that have come before the ITC that probably should have been litigated exclusively in our U.S. District Courts. Nowhere is the disharmony between patent law and Article III court precedent more on display than the application of exclusion orders in technology cases at the ITC.
For example, Congress established an important counter-balance to the blunt sanction of the exclusion order in the public-interest test provided under Section 337. The statute requires the ITC to consider public health and welfare, and the impact of an exclusion order on competition in the marketplace before issuing an exclusion order; yet the ITC rarely exercises its responsibility to apply the public-interest test. This failure to follow the law has particularly damaging results in today’s technology markets in which products are often reliant on hundreds or thousands of patents. The ITC has the ability to take certain immediate steps within its statutory authority to correct these problems.
The following are some steps stakeholders have recommended the ITC take to address this problem. First, a return to a pre-2010 domestic-industry standard that does not allow legal expenses, airplane flights, and the like to satisfy the domestic-industry requirement.
Second, application of the public-interest test and economic-interest test at the beginning of a Section 337 review for purposes of determining claims consideration as well as the issuance of exclusion orders.
And third, based on the public-interest and economic-interest test analysis, articulation of standards that clarify which patent disputes should be adjudicated by the ITC and those which are more properly addressed by U.S. district courts.
I look forward to hearing from all of our witnesses on patent litigation issues at the ITC, to learn more about the progress that has been made and the work that still remains, in order to ensure that we continue to promote American ingenuity, innovation and jobs.