ITC Stays Section 337 Investigation on Eve of Trial with Reexamination Rejections

On February 26, 2008, in "Certain of Certain Semiconductor Chips with Minimized Chip Package Size and Products Containing Same," Inv. No. 337-TA-605 Administrative Law Judge Theodore R. Essex issued an Initial Determination "Order Granting Respondents' Motion for Stay Pending Reexamination." As noted by Judge Essex,

The Commission does not have a per se rule regarding whether to stay an investigation in light of an ongoing reexamination proceeding at the PTO. Rather, each case is decided on its own unique facts based on a careful balancing of the equities. Thus, under “appropriate circumstances,” an Administrative Law Judge may stay an investigation. See e.g., Certain Personal Computed Consumer Electronic Convergent Devices, Components Thereof, and Products Containing Same, 2006 ITC Lexis 52, Inv. No. 337-TA-558, Order No. 6 at 11-12 (February 7, 2006[; three-month stay where all claims were rejected in Initial Office Action issued in
reexamination before complaint was filed] )(Commission notice of decision not to
review an Initial Determination ordering a temporary stay (March 10, 2006))(“Personal Computers”). In determining whether a stay is appropriate, several factors are weighed, including: (1) the state of discovery and the hearing date; (2) whether a stay will simplify the issues and hearing of the case; (3) the undue prejudice or clear tactical disadvantage to any party; (4) the stage of the PTO proceedings; (5) the efficient use of Commission resources; and (6) the alternative remedies available in federal court.

. . . Contrary to Tessera’s argument, Microsphere Adhesives is distinguishable from the facts of this investigation. In Microsphere Adhesives, the motion to stay was based on a reexamination in which the reexamination had been ordered but no rejections stood outstanding. In the present investigation, the PTO has issued office actions in both the‘326 reexam and the ‘419 reexam rejecting all of the claims at issue in this investigation.

. . . Although discovery is closed and the hearing in this investigation was scheduled to begin on February 25, 2008, significant public and private resources may still be saved if respondents' motion for stay is granted. Specifically, the parties may be saved the time and expense of the hearing itself, the time and expense to file post-hearing briefs, the time and expense of filing any petitions for review, and ultimately the time and expense of taking an appeal of the Commission’s final determination to the Court of Appeals for the Federal Circuit. Additionally, the International Trade Commission and its staff may be saved the time required for the hearing and the time and energy required to process this matter to final decision. Accordingly, this factor
weights in favor of granting the motion to stay.

The fact that the Commission may rescind an order granting relief, does not guarantee that respondents will not be significantly harmed if the stay was denied. If indeed the stay was denied, the hearing was to go forward, and an initial determination was to issue finding respondents in violation of Section 337, the remedy of a limited exclusion order is most likely. That would, at a minimum, prevent respondents from importing the accused products into the United States.

. . . As previously noted, an Initial Office Action issued in the ‘326 patent on February 21, 2008, and an Action Closing Prosecution issued in the ‘419 patent on February 19, 2008.2 When a reexamination is pending concerning a patent which is in litigation, the PTO processes the reexamination with “special dispatch.” MPEP 2261. Thus, there is every reason to believe that the reexamination process will continue to proceed in a timely manner. Because the PTO proceeding is at an advanced stage, this factor weighs in favor of granting a stay.

The Initial Determination of the Administrative law Judge will become the determination of the Commission 30 days after its date of service unless the Commission orders review within those 30 days.

A "Beginner's Guide to Unfair Import Investigations" is available here. My June 2002 APLF Roundtable presentation on "Unfair Import Investigations at the U.S. International Trade Commission" is watchable at http://www.aplf.org/events/roundtables/2002-06-20.shtml. Official information on "Understanding Investigations of Intellectual Property Infringement and Other Unfair Practices in Import Trade" is available from the ITC at http://www.usitc.gov/us337.htm, including "Answers to Frequently Asked Questions" at ftp://ftp.usitc.gov/pub/reports/studies/PUB3516.PDF. "