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New ITC Pilot Program Put to Test

Daily Journal
07/05/2013

The International Trade Commission is preparing for its first-ever ruling issued under a new preliminary procedure that some experts say would aid operating companies in their fight against patent holding companies.

The ruling, expected to be handed down by Administrative Law Judge Theodore R. Essex on Friday, would determine whether a Texas-based company, Lamina Packinging Innovations LLC, meets the domestic industry standard, which mandates parties show they have significant investment in labor, infrastructure, development or licensing in the U.S.

The introductory domestic industry decision in the Lamina investigation would be issued just days after the commission launched a pilot program that would allow broader implementation of the procedure in other patent infringement investigations involving so-called patent assertion entities, or PAEs.

Lawyers who have represented operating companies in commission proceedings claim that patent assertion entities lack the investment to constitute a domestic industry since their business models tend to rely on litigation settlements.

The commission's pilot program launch came in the same month that the Obama Administration announced a broad agenda of policy recommendations and legislative proposals seeking to restrict lawsuits by holding companies, known critically as trolls.

The Federal Trade Commission, another executive branch agency, also announced last month that it would investigate the business practices of such entities. Large Silicon Valley companies, some of which directly compete against each other, have banded together to push for favorable changes in the International Trade Commission.

A lobbying body known as the ITC Working Group, which counts Apple Inc., Broadcom Corp., Cisco Systems Inc., Google Inc., Hewlett-Packard Co., Intel Corp. and Oracle Corp. among its members, hailed the pilot program.

Keker & Van Nest LLP partner Ashok Ramani said he did not know if non-practicing entities would be dissuaded from pursing infringement claims by the new procedure. He noted that these patent holding companies have successfully argued to both the commission and the U.S. Court of Appeals for the Federal Circuit that litigation costs are instrumental to licensing efforts.

"I think domestic industry requirements are relatively clear from the commission and the Federal Circuit, and it's clear a non-practicing entity can satisfy domestic industry requirements so long as you provide a nexus to licensing," Ramani said. "Some people think this will drastically reduce NPE litigation. I don't know if that will be the case."

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About Ashok Ramani
Netflix, TSMC, Google, HTC and other leading technology companies rely on Ashok Ramani to resolve their most complex intellectual property disputes. Having tried 15 jury and bench trials nationwide and before the US International Trade Commission, Mr. Ramani understands how to use litigation strategies to achieve his clients’ goals, and how to translate sophisticated technology and legal concepts to judges and juries alike.