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What are Microsoft and Motorola Doing at the ITC?

by Orlando Lopez

On Friday, May 18, the U.S.  International Trade Commission (ITC) found that some Motorola smart phone products infringed one Microsoft patent and issued an order banning those products from importation into the United States.  At last sight, both Microsoft and Motorola are U.S. companies, but in the world of global companies, components and products are manufactured overseas and shipped to the US.  Consequently,  it is possible for a U.S. headquartered company to be in violation of the ban on importation of products that infringe a patent.  In the global manufacturing world, the ITC, through section 337 of the Tariff Act, is another possible and likely patent venue.  Although the ITC does not award damages, there are a number of attractive factors to patent actions through section 337 of the Tariff Act.

While injunctions are difficult to obtain after eBay v. MercExchange, an injunction in the form of the prevention of importation into the United States is the only remedy available through the ITC.  Although damages are tangible, stopping the product at the borders can quickly bring parties to the negotiating table in order to reach a license agreement.  The ITC section 337 action occurs at a significantly faster pace than a District Court infringement action, making the ITC a “rocket docket” (Microsoft also availed themselves of another “rocket docket” by filing an infringement action against Motorola in Germany, obtaining a judgment of infringement against Motorola on May 24, 2012).   Also, since the jurisdiction of the ITC is over the products, section 337 ITC actions are not limited by the America Invents Act (AIA aka the Patent Reform Act) limitations on “Joinder of parties” that could preclude multiple defendant suits.  These differences may bring NPEs, a.k.a. patent trolls, to the ITC.

Given the characteristics of the section 337 ITC actions and the global nature of most large companies, an increase in the number of section 337 ITC actions is to be expected.

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