The Growing Influence of Post-Grant Proceedings in Section 337 Investigations

Since the passage of the Leahy-Smith America Invents Act (AIA), post-grant proceedings at the U.S. Patent and Trademark Office (USPTO) are interacting more with Section 337 investigations at the International Trade Commission (ITC). As a follow-up to our ITC best practices article, we would like to discuss the growing influence of post-grant proceedings of the Patent Trial and Appeal Board (PTAB) on motions to stay, remedial orders, and evidence considered in Section 337 investigations.

The ITC is statutorily required to complete Section 337 investigations “at the earliest practicable time,” and generally completes an investigation within sixteen months. The PTAB must issue a final determination no later than one year after institution, and generally completes a post-grant proceeding within eighteen months. However, despite the pre-AIA trend of granting stays for reexaminations, the ITC has yet to grant a stay based on a pending post-grant proceeding. With increasingly more post-grant proceedings, including those at advanced stages, filed before parallel Section 337 investigations, the patent bar has inquired whether it may be time for the ITC to rethink its staunch denial of stays in order to consider relevant PTAB evidence, avoid undue prejudice to parties, and achieve “efficient use of Commission resources.”

There has been a limited ITC history of granting stays in Section 337 investigations. The ITC follows a six-factor analysis when considering whether to grant a stay: (1) the state of discovery and the hearing date; (2) whether a stay will simplify the issues of the hearing; (3) the undue prejudice or clear tactical advantage to any party; (4) the stage of the USPTO proceedings; (5) the efficient use of Commission resources; and (6) alternative remedies available in federal court.

Before passage of the AIA, the ITC granted stays pending reexaminations.[i] However post-AIA, the ITC has followed a staunch denial of stays pending post-grant proceedings.[ii] But the ITC has granted stays for remedial orders.[iii] Recently, there have been instances of the ITC considering PTAB evidence in Section 337 investigations.[iv] At any time prior to filing the Initial Determination (ID), the Administrative Law Judge (ALJ) may reopen proceedings in order to add to the evidentiary record. Closed PTAB trial records have been leveraged to assist a number of disputed issues, from claim construction to invalidity determinations. In particular, a PTAB decision denying institution can be especially relevant in a parallel ITC investigation, since the institution decision will issue less than six months from filing and is not appealable.

Overall, the ITC has indicated it may grant a stay if the PTAB issues a final written decision prior to an ITC evidentiary hearing (i.e., typically nine months from ITC institution) and will not stay a Section 337 investigation if the motion is made after PTAB institution. If a motion to stay is made prior to PTAB institution, the ITC will conduct the six-factor analysis and consider key indicators, including (1) stage of USPTO proceedings, (2) stage of ITC investigation, and (3) remaining patent term of asserted patent(s).

The ITC has considered PTAB evidence from post-grant proceedings regarding periodic updates for motions to stay, motions to compel discovery, denial of institutions, and inequitable conduct. The ITC has reasoned that if proceedings against all asserted claims are not complete or near completion (i.e., if all appeals have not been exhausted), regardless of the PTAB evidence or decision of invalidity, no stay should be granted.

The patent bar has inquired whether the ITC should consider the consequences and potential undue prejudice to parties under this precedent, which essentially promotes banning products based on invalid patents. Moreover, the patent bar has inquired whether increased use of PTAB evidence and granting of stays pending advanced post-grant proceedings in Section 337 investigations would decrease duplicative agency work and achieve interagency efficiency, while still maintaining the ITC’s statutory timeframe requirements.