The ITC is used against US companies by foreign firms

Maybe it is not such a surprise that Chinese patent holders can assert U.S. patents against U.S. companies. What is perhaps more surprising, though, is that one of the venues where Chinese patent holders do this is a federal agency established to protect U.S. companies from unfair foreign competition.

The U.S. International Trade Commission (“ITC”) is an independent administrative agency that adjudicates unfair acts of importation into the United States.⁴⁸ Under section 337 of the Tariff Act of 1930, the ITC investigates patent and other IP infringement as a species of those unfair acts, and has powers to exclude infringing articles from importation.⁴⁹ Because the importer of infringing articles is sometimes outside the jurisdiction of federal courts, the agency serves an important purpose of policing and enforcing IP rights at the border, making the ITC investigation an important tool for mitigating IP theft by foreign nations such as China.⁵⁰

Statutes make clear that the ITC is intended to support American inventors against foreign infringers. To qualify for an investigation to be brought, a complainant before the ITC must prove a "domestic industry," showing that it engages in productive activities under the relevant patent within the United States.51 One cannot ask the ITC to block the importation of infringing computer chips, for example, without making the patented chips in the United States. The agency also must consider a list of U.S.- centric public interest factors before ordering any exclusion of imported articles.52 Those public interest factors would seem an ideal way for the ITC to incorporate national security concerns into its decisionmaking.53 Finally, since the agency's authority is limited to border control, American companies operating purely domestic businesses ought to be immune to the agency's jurisdiction.54

In recent years, though, every one of these protections has been undermined, in large part due to the ITC's efforts toward expansion of authority.55 The agency (with support of statutory amendments) has interpreted "domestic industry" broadly, such that a foreign patent holder can minimally satisfy the requirement by licensing a patent to just one U.S. company, even one unwilling to participate in the investigation.56 The public interest factors have received virtually no attention in ITC final determinations for decades.57 And the agency has manufactured several ways to use purely domestic activity to support infringement findings, applying its exclusionary powers to block importation of staple articles that themselves infringe no asserted patents.58

The unsurprising result has been an influx of ITC investigations in which foreign patent holders target American firms. In a study of recent investigations, I found that there were over four times as many foreign-against-domestic ITC investigations as there were of the expected domestic-against-foreign type.59 Excluding investigations involving American companies against each other or involving only foreign ones (both of which are odd for other reasons), the ITC appears to be more often used against American innovators than in support of them. And this does not count patent assertion entities for which the full chain of ownership is unknown.60

The ITC is often considered a favored forum for patent assertion because of its powerful remedies and expedited timelines.61 As a protection for U.S. intellectual property against foreign misappropriation, this makes a great deal of sense. But the fact that the ITC has been turned on its head reflects not just a need for reform of the agency62 but a more general lack of attention to the offensive exploitation of patents.