By: Charles Lee and Vishal Khatri – The COVID-19 pandemic surprisingly is not impacting the number of filings at the ITC in fiscal year (“FY”) 2020.  Prior to the start of quarantine on March 16, 2020, fifteen (15) new complaints were filed at the ITC.  On average, approximately 2-3 new complaints were being filed per month.  Since then, six (6) new complaints were filed at the ITC, keeping the average at approximately 2-3 new complaints per month.  Extrapolating the numbers, approximately thirty-two (32) new complaints will be filed and thirty-four (34) investigations will be completed in FY 2020.  Both estimates are significantly lower than the numbers from FY 2019.  Although there appears to be a sharp decline in overall filings for FY 2020, the decline is not attributable to the pandemic.

It is too early to predict whether the pandemic will affect the ITC’s ability to timely complete investigations.  Currently the ITC has 90 active investigations compared with  127 in FY 2019.  As of April 15, 2020, seventeen (17) investigations were completed this year.  But according to a notice issued on May 20, 2020, the Commission has ordered the Administrative Law Judges to postpone any Section 337 hearings until after July 10, 2020.  Although the ITC has postponed its hearings for approximately four months, the smaller number of pending cases and their willingness to consider alternatives to live testimony, suggest the postponement may not have a significant impact on operations in FY 2020.

FY 2019 also had a decrease in the number of complaints filed.  A total of fifty-eight (58) new complaints were filed in FY 2019, the lowest it has been since FY 2015.  Sixty (60) investigations were completed during the same period.  Accordingly, the number of active investigations decreased from 130 in FY 2018, the highest number of active investigations in the ITC’s history, to 127 in FY 2019.

The ITC issued five (5) General Exclusion Orders (“GEOs”), ten (10) Limited Exclusion Orders (“LEOs”) and sixteen (16) Cease and Desist Orders (“CDOs”) in FY 2019.  The fifteen (15) total exclusion orders represented 25% of the sixty (60) investigations and ancillary proceedings completed during FY 2019, representing the highest mark since FY 2009.

The ITC continued to produce complainant-friendly results in FY 2019.  Without including ancillary proceedings, the ITC considered forty-two (42) total investigations in FY 2019.  Twenty (20) investigations (47%) either resulted in settlement, ended with a consent order, or were withdrawn.  This significant dip in the settlement rate in FY 2019 (58% in FY 2018 to 47% in FY 2019) suggests that respondents are now more likely to continue through the investigation to a determination.  The ITC found violations in fifteen (15) of the remaining twenty-two (22) investigations.  Accordingly, only 7 (17%) of the forty-two (42) total investigations considered resulted in a no violation determination.

Settlement and Violation Rates (FY 2019)

The average settlement rate for investigations since FY 2011 has been 62%.  The 17% no violation determination rate in FY 2019 was consistent with the average rate since FY 2011.  Finally, since FY 2011, 21% of all investigations (55% of investigations that did not settle) resulted in a violation determination.

Average Settlement and Violation Rates (FY 2011 – FY 2019)

Takeaway

These statistics reflect that the ITC continues to be an attractive venue for IP litigation.  Given the trends to-date in FY 2020, we expect to see minimal disruption in the number of filings due to COVID-19.  The impact on case schedules is uncertain.

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Vishal Khatri is an intellectual property lawyer with more than 15 years of experience representing clients in high stakes, bet-the-company patent litigation and procurement matters around the world. He routinely represents clients in matters before U.S. district courts, the United States International Trade Commission (ITC), and the United States Patent and Trademark Office (USPTO), including Inter Partes Review (IPR) proceedings before the Patent Trial and Appeal Board (PTAB).