Lawmakers question patent complaint process at USITC

Some witnesses call for Congress to change the way the agency hears patent disputes

The U.S. Congress should limit the ability of patent holders that don't make products to file infringement complaints at the U.S. International Trade Commission because of a huge increase in cases there, representatives of some companies told lawmakers Tuesday.

Patent assertion entities (PAEs), companies that own patents but don't make products, are using the patent complaint process at the USITC to "coerce settlements" from other companies, said Russell Binns Jr., associate general counsel at networking vendor Avaya. In many cases, PAEs -- often called patent trolls -- don't want the USITC to use its power to bar the importation of infringing products, but instead, they want to use the USITC to drive settlements in corresponding court cases, he said.

Patent complaints are costing U.S. companies billions of dollars, Binns told the U.S. House of Representatives Judiciary Committee's intellectual property subcommittee.

"PAEs have discovered that the much lower bar for obtaining exclusion orders at the ITC gives them tremendous leverage to demand outrageous licensing fees -- even as they pursue cases in federal court," he said. "This often leads to companies being left with little choice but to give in to PAE demands, resulting in truly wasted capital, higher costs for consumers, and barriers to American innovation."

The number of so-called section 337 complaints filed at the USITC during the past decade is triple the number from decades before, said Representative Howard Coble, a North Carolina Republican. "The cost to defend [a patent complaint] far outweighs the cost to accuse," he said.

The USITC can unleash the "ultimate punishment" against alleged infringers by barring their products from import into the U.S., Coble said.

More than 90 percent of patent infringement cases at the USITC in 2012 had a corresponding court case elsewhere, added Colleen Chien, an intellectual property law professor at the Santa Clara University School of Law.

"The freedom of PAEs to litigate has created serious issues for the patent system," she said. "Scads of entities that have nothing to do with the patent system -- retailers, bakeries, funeral homes, advertising firms, and even politicians -- are getting sued and receiving demand letters."

Some subcommittee members suggested they are looking for ways to limit the number of patent complaints filed at the USITC. Chien called on Congress to prohibit companies from having patent infringement lawsuits in court while they have an active complaint at the USITC. Congress should limit patent infringement complaints against users of potentially infringing technologies, she added.

Other witnesses called on Congress or the USITC to tighten the definition of companies eligible to file USITC complaints. PAEs should not qualify as domestic industries that can file the complaints, he said.

But other witnesses questioned whether major changes are needed. Since 2006, the USITC has issued 50 exclusion orders to keep infringing products out of the U.S., and only four of those orders came on behalf of companies that could be classified as PAEs, said Deanna Tanner Okun, former chairwoman at the USITC. The agency has taken several steps to reduce abuses of the complaint process, she added.

The USITC "provides an effective remedy to combat the pervasive problem of infringing imports, thereby providing essential protection" to U.S. companies, she said.

Kevin Rhodes, chief intellectual property counsel at 3M, agreed. A focus on the PAE business model overlooks patent abuses by companies that make and sell products, he said.

The labeling of patent holders as PAEs runs "the risk of penalizing independent inventors, universities, start-ups, technology licensing firms and others legitimately seeking to exploit their patent rights through litigation of entirely meritorious claims," he said.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags Russell Binns Jr.Kevin RhodeslegislationColleen ChientradeU.S. International Trade Commission3MSanta Clara University School of LawHoward Cobleintellectual propertyU.S. House of RepresentativespatentlegalDeanna Tanner OkungovernmentAvaya

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Grant Gross

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?