Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337) authorizes the U.S. International Trade Commission (USITC) to investigate complaints of certain unfair practices in import trade. These investigations most often involve allegations of patent or registered trademark infringement, although other forms of unfair competition may also be asserted, such as misappropriation of trade secrets, trade dress infringement, passing off, false advertising, and violations of the antitrust laws.
Section 337 investigations could be an attractive alternative to civil patent litigation for some corporations. The investigations, presided over by an administrative law judge, typically progress much faster than litigation filed in federal district courts, even in “rocket docket” jurisdictions. Most matters are targeted for resolution within 12 to 18 months, and under appropriate circumstances expedited temporary relief is available.
But the promise of this alternative has not been fully realized, for a couple of reasons. First, patent holders cannot obtain monetary relief in Section 337 investigations — the primary remedies available are exclusion orders that stop infringing imports from entering the United States, and cease-and-desist orders against persons engaged in unfair acts.
Second, discovery in Section 337 investigations has not been held in check by limitations like those in the Federal Rules of Civil Procedure. By the ITC’s own acknowledgement, the agency rules “contain[ed] no limitations on e-discovery and provide[d] little guidance on when it would be appropriate for an administrative law judge to limit discovery generally.” Within this loose framework, ediscovery became a free-for-all, and matters became needlessly and disproportionately expensive.
That is, until now. Earlier this summer the ITC adopted amendments to Section 210.27 of the ITC rules of procedure (19 C.F.R. § 210). The amendments are intended to “reduce expensive, inefficient, unjustified, or unnecessary discovery practices in agency proceedings while preserving the opportunity for fair and efficient discovery for all parties.” Under amended Rule 210.27, the scope of discovery changes dramatically so that it closely comports with Federal Rule of Civil Procedure 26(b)(1). Under the revised rule, a party can object to an e-discovery request if they are requested to produce data that is “not reasonably accessible because of undue burden or cost.” If the requesting party challenges a claim of undue burden or cost, it can file a motion to compel, at which point the producing party must make a showing supporting their claim. The rule also allows an administrative law judge to place limitations on discovery if the information being sought is duplicative or can be obtained through less costly means.
In adopting the new ediscovery rule, Amended Rule 210.27, the ITC has provided its administrative judges with the valuable discretion to manage both the cost and burden of discovery. Moreover, it rejected additional proposed provisions to limit that discretion, including such proposals as limiting e-discovery to five custodians per party and expressly defining categories of data that would be considered not reasonably accessible.
In theory, the revisions to Rule 210.27 should improve the ITC’s timely, but often costly, patent dispute resolution process. However, these additional efficiencies might be offset by the fact that administrative law judges will now have to wrestle with electronic discovery disputes and motion practice similar to what now exists in federal district courts. If the ITC can develop a process to efficiently limit unnecessary motion practice and quickly adjudicate appropriate disputes, more patent holders may forgo the potential of monetary damages and instead pursue injunctive relief with the ITC.
DiscoverReady clients who pursue patent challenges with the ITC should benefit from these amendments and new ITC ediscovery rules. For almost a decade, we have been helping clients manage the substantial cost and burden of the ITC discovery process. Through our consulting services, Dynamic Data Analysis™ team, Samplyzer™ product offering, and other analytic tools and services, we have a proven track record of making ediscovery more efficient, less expensive, and more valuable in resolving ITC complaints. Under the amended rules, we will be able to make even better use of these tools to help our clients limit discovery to a reasonable scope and cost.