July 18, 2012, 2:33 PM — Patent licensing firms that can't get satisfactory results in patent infringement cases in U.S. courts are abusing a patent complaint process at the U.S. International Trade Commission that can lead to products made by U.S. companies being excluded from sale in the country, some U.S. lawmakers suggested Wednesday.
Several members of the U.S. House of Representatives Judiciary Committee, along with representatives of Cisco Systems and Ford Motor Co., raised concerns about the number of patent complaints being filed at the USITC in recent years. The USITC's section 337 process, intended to protect U.S. companies against foreign companies selling infringing products inside the country, is being used against U.S. companies, Colleen Chien, a law professor at Santa Clara University, said during a hearing of the committee's intellectual property subcommittee.
In section 337 cases, a company filing a patent infringement claim can seek an injunction to have the defendant's infringing products barred from import into the U.S. But in the past year-and-a-half, patent-owning companies that don't make products -- what Chien called patent "trolls" -- have brought more than 330 infringement cases at the USITC, with more than 60 percent of the cases targeting U.S. companies, she said.
"Even though you think of the ITC as wanting to protect American companies, often it's being used against them," she said.
Cisco spent more than US$13 million defending itself against a 2011 patent infringement case at the USITC brought by a Canadian company with one U.S. employee, said Neal Rubin, Cisco's vice president of litigation.
A 2006 Supreme Court decision made it difficult for patent-holding firms that don't market products to obtain product injunctions in U.S. courts, Rubin said. Instead, they're now turning to the USITC for injunctions, he said.
The USITC has continued to recognize the patent claims of firms engaged in "revenue-driven licensing" instead of the manufacture of products, he said. Those companies do not "design, develop, sell or import any products," Rubin said. "Their efforts merely raise the price of existing products."
Rubin called on Congress to limit the ability of nonpracticing patent holders to bring cases at the USITC.
A representative of the USITC didn't immediately return a message seeking comment on the House hearing.