By: Daniel Kazhdan, Ph.D. and Ryan McCrum – Last week, in Laerdal Medical Corp. v. ITC, No. 17-2445 (Fed. Cir. Dec. 7, 2018), the Federal Circuit held that, once the ITC institutes an investigation, it cannot reconsider the adequacy of the complaint. Normally, that does not matter because the ITC can rule against the complainant on the merits. But, if the respondents default, the Commission has to rule against them and go to the relief phase.
Laerdal filed a complaint against a number of respondents, and the Commission instituted an investigation based on trade dress, patent, copyright, and trademark claims. No respondent answered. After a few warnings, the ALJ issued an initial determination that the respondents were in default, and the Commission did not review the decision. Laerdal then asked for a limited exclusion order. The Commission issued exclusion orders based on the patent and trademark claims but not the trade dress and copyright claims, finding the complaint’s allegations as to those claims inadequate. As we discussed in an earlier post, the Commission agreed that all Respondents were in default, and, pursuant to §1337(g)(l), presumed all facts alleged in the complaint were true. However, the Commission determined that Complainant did not adequately allege facts to support a violation for its copyright and trade dress claims.
Laerdal appealed, and the Federal Circuit has now reversed. The Court relied on 19 U.S.C. § 1337(g), which provides that, once instituted, the Commission “shall” issue an exclusion order. Accordingly, the Commission has the choice not to institute an investigation, but, once it has, it must to go through with it. The Commission has no discretion. The only thing left for the Commission to do is decide the public interest factors. If those factors favor granting certain relief then the Commission has to grant it—no matter how inadequate it now finds the allegations in the Complaint.
Laerdal is just one more example of the importance of responding to ITC investigations. As this case shows, once instituted, the Commission cannot retroactively bail a defaulting respondent out. While respondents may attempt to seek relief at the district court, as we noted previously, it is not clear that district courts can get a defaulting party out of a remedial order. In short, do not ignore ITC investigations.