May 23, 2009

ITC: First Five Things to Do when You’ve Been Sued

By Gregory A. Stobbs, Principal

So your company has just been sued in the ITC? Perhaps this is a result of a dispute with one of your competitors; or perhaps your company simply supplies a product that is imported into the United States. If you do nothing, your product will be stopped at the United States border and you are going to lose your United States business.

So if this United States business is important to you, you need to learn quickly what to do. Fortunately, the ITC puzzle can be solved. Here are the first five steps to take.

1. Determine exactly which products are accused or likely to be accused so that you can assess the size of your financial exposure. The monetary value of this business will dictate whether you must fight, settle or simply stop selling the product in the U.S. market. Do not make the mistake of assuming only the named product is under investigation. If the cited patents may arguably cover other products, you should anticipate that those will be drawn into the investigation. For each product, determine how that product enters the United States. Perhaps you are the importer; perhaps another company is the importer; or perhaps your product is incorporated into your customer’s product and your customer’s product is imported. Determine if your company is a party to any indemnity agreement or other agreement that may require that you give someone else notice of the ITC Investigation.

2. Study the Complainant’s pleadings carefully, as they may give you valuable clues as to how to defend. The Complainant is required to show through analysis of at least one claim how your accused product infringes. Often you will be able to detect a weak point in the Complainant’s analysis. Perhaps your product does not work the way the Complainant believes it does. Also review the list of prior art stated on the Complainant’s patents. Perhaps you are aware of prior art that was not considered when the patent was granted. Such prior art may be used to invalidate the Complainant’s patent. If your product is also patented, look at the prior art cited on your patent. This prior art may very well help invalidate the Complainant’s patent.

The Complainant is not entitled to bring the action in the ITC unless it has a U.S. (domestic) industry. Thus the Complaint must show that at least one claim of the asserted patent is being practiced by the Complainant to support its U.S. business either through sales or licensing. Therefore, study these allegations carefully as they show how the Complainant construes its own claims and may help you show that the claims are limited.

3. Identify a “point person” in your company who will be in charge of coordinating your defense. Have that person identify (a)  the employees who have the best understanding of the technology embodied in your product and (b) the employees who have the best understanding of how the accused product enters the United States. Have your point person advise these persons not to destroy any documents, including electronic documents and email. Also advise these persons not to communicate in writing about the patent, the accused product or any of your planned defenses.

4. Retain the services of a U.S. ITC firm quickly. ITC actions proceed at a very rapid pace. After the ITC investigation is initiated you will have only 30 days to file a formal answer to the complaint. So you need to engage counsel quickly. Your designated “point person” should act as your company’s liaison with your ITC counsel. Communications between your company and your counsel are usually protected as “privileged” communications that cannot be discovered by your opponents. So you want to make sure all communications about the ITC action pass between your point person and your legal counsel and thus become part of these privileged communications.

You will be asked to furnish many documents during the discovery phase of the proceeding. So your counsel can become prepared quickly, identify first what documents you have that explain how your product works and how your product enters the United States. Do not begin translating any documents into English unless instructed by your counsel. During discovery you will be required to disclose documents in the form they are regularly kept in your business–in your native language. If you make translations other than for your counsel, you may be required to give these translations to your opponent. Why make it easy for your opponent.

If there are other Respondents named in the ITC action, such as other companies who import similar products, it is best to have your legal counsel contact the counsel for these other parties. Often it will be possible to develop a joint defense agreement whereby you can share information, and possibly expenses, with these other  Respondents. Be careful not to share information with the other Respondents until a formal joint defense agreement has been entered into. If you share information without such agreement you may lose your right to prevent your opponent from learning about privileged communications made to your counsel.

5. Begin looking for a good expert witness right away. ITC proceedings are handled largely through the testimony of expert witnesses. Because the proceedings are conducted in English, you will want to have impressive, native English speaking witnesses who know the technical subject matter well. You can help by furnishing your counsel with a list of technical consultants your company has worked with in the past. Be sure to have your point person as your technical people for a list of possible experts they may be acquainted with. Your counsel can then interview these people and determine if they can serve as an expert witness or can recommend someone who might be good.

Of course each ITC investigation is unique, but if you take these five steps first you will be well on your way to a successful resolution. For more information about how to defend yourself in a United States ITC investigation please don’t hesitate to contact us. We are here to help.