Strategic Applications of ITC Admin Law Judge Pilot Program

On May 12, the US International Trade Commission announced a new pilot program that will allow administrative law judges to issue interim initial determinations on fewer than all issues in Section 337 investigations.¹

This pilot program, like the previous 100-day pilot program² that the ITC has since codified,³ is aimed at focusing on key issues, curbing unnecessary litigation, saving time and costs for involved parties, and assisting the commission in meeting its obligation to complete investigations expeditiously.

But a fundamental difference requiring strategic consideration is that application of this latest pilot program is left to the discretion of the ALJ after institution as opposed to the commission at institution.⁴

This new procedural mechanism is primed to be a useful tool for both complainants and respondents at the ITC to raise key issues, including potentially case-dispositive issues, early. Thus, the new program seems poised to be more accessible and amenable to facilitating early settlement and resolution.

This article provides key information about the new program and provides guidance on potential issues that may be well-suited for application of the pilot program and related strategy considerations.

Features of the New Pilot Program

The commission has undertaken several initiatives to improve its procedures for Section 337 investigations over the years to meet its statutory obligation to complete investigations expeditiously.⁵.

The recently announced pilot program permits the presiding ALJ in an investigation to hold an evidentiary hearing and receive briefing on one or more discrete issues before the main evidentiary hearing to fully develop the factual record and resolve such issues.

As detailed by the ITC's recent press release about the program, the new program will operate as follows:

Interim initial determinations under the pilot program will be available in all investigations instituted on or after May 12 and to investigations instituted prior to that date at the discretion of the presiding ALJ.

Presiding ALJs will be able to put issues into the pilot program as they deem appropriate and will have discretion to allow parties to file motions seeking to put particular issues into the pilot program that they believe will resolve the investigation expeditiously or facilitate settlement.

The presiding ALJ will fully develop the factual record and arguments on the discrete issues within the program, including, as appropriate, through an evidentiary hearing and briefing on those issues.

Interim initial determinations will be based on a full evidentiary record and all applicable legal standards and burdens of proof, including the requirements of the Administrative Procedure Act.

Interim initial determinations are to be issued no later than 45 days before the scheduled start of the main evidentiary hearing in the investigation.

The presiding ALJ may determine to stay discovery on other issues not in the pilot program during the interim initial determination process, taking into account the commission's obligation to complete investigations expeditiously and with a view toward avoiding extension of the target date.

The presiding ALJ may also determine to place the remaining procedural schedule of an investigation on hold while an interim initial determination is before the commission, again taking into account the need to complete investigations expeditiously and avoiding an extension of the target date.

Petitions for review of interim IDs will be due eight calendar days after the interim initial determination issues; responses will be due five business days later.

The commission will normally determine whether to review an interim initial determination within 45 days of issuance and resolve any review within another 45 days, but it can set a different time frame for good cause.

The commission will waive any commission rules as needed for the pilot program.

Potential Applications of the New Pilot Program

As discussed above, the purpose of the new pilot program is to assist the commission in meeting its statutory obligation to expeditiously complete investigations.⁶

As such, it is anticipated that ALJs will exercise their discretion to put issues into the new pilot program or to allow motions to place issues into the program where interim initial determinations are sought on case-dispositive and/or other significant issues that may drive settlement.

For example, in the ITC's recent press release concerning the new program, the commission expressly contemplated issues such as infringement, patent invalidity, patent eligibility, standing or satisfaction of the domestic industry requirement.

While these express examples are largely directed toward allegations of patent infringement, parties should also consider how issues relevant to other unfair acts may be primed for early adjudication, particularly given the recent increase in nonpatent Section 337 investigations.⁷

Below are several exemplary issues that may be worth considering in view of the particular facts of each investigation.

Trade Secret Misappropriation

In investigations alleging trade secret misappropriation, there are several inquiries that could be excellent candidates for an interim initial determination. For example, a threshold question in trade secret disputes is whether the subject matter involved qualifies for trade secret protection.⁸

Other examples may include whether the respondent used or disclosed an asserted trade secret causing injury, or whether facts exist for the commission to issue terminating sanctions for conduct such as spoliation.⁹

False Advertising

False advertising claims require certain threshold facts that could also be prime targets for an interim initial determination. For example, a complainant alleging false advertising must prove inter alia that the alleged statements are false or misleading, that deception is likely to influence purchasing and that the advertised good was in interstate commerce.¹⁰

Trademark and Copyright Infringement

Trademark and copyright protectability may be strong targets for interim initial determinations. For example, with respect to trademark infringement, several discrete inquiries may include whether a mark has acquired secondary meaning, whether a claimed trade dress is functional, or whether a mark is famous.

Similarly, in certain cases, infringement or subsidiary issues — e.g., likelihood of confusion, substantial similarity, etc. — may be good candidates for an interim initial determination.

Strategic Takeaways

Complainants and respondents should begin assessing what issues may be resolved as early as practicable.

Although the current pilot program does not require application at the time of institution like its predecessor program, early identification of key weaknesses in one's opponent's case facilitates a more comprehensive and expedited development of the evidentiary record necessary should an interim initial determination procedure be used.

Early identification may also serve a cost-saving function should the ALJ determine to stay discovery on issues not subject to an interim initial determination.

For complainants, this may involve reviewing potential issues for an interim initial determination with the Office of Unfair Import Investigations before the complaint is filed to ensure that the staff is given an opportunity to weigh in.

Respondents will likely want to develop discovery requests before institution with an eye toward discovery that may help establish the utility of the interim initial determination procedure in the Investigation and may want to engage experts earlier to find key or case-dispositive issues.

Complainants and respondents should also consider how to best position themselves to convince the ALJ to apply the pilot program.

As the stated goal of the pilot program is to achieve an early resolution and assist the commission in meetings its statutory obligation to complete its investigations expeditiously, parties to an ITC investigation should consider whether and to what extent seeking an interim initial determination on a single issue sharing overlapping facts with another might impact the time to resolution of an investigation.

For example, false advertising under both the Lanham Act and Section 337 requires a showing of a nexus between an alleged act of false advertising and injury. Depending on the facts of a particular investigation, addressing only one of these issues in an interim hearing may lead to an inefficient use of commission time and resources if the same or similar issues need to be relitigated at the main hearing.

But in situations in which both can be addressed in a single interim initial determination, the program may be efficient and a particularly attractive option.

Another critical consideration for both complainants and respondents is whether seeking summary determination as opposed to an interim initial determination on a particular issue is advantageous. On the surface, the new pilot program appears to be geared toward the same types of issues for which litigants have used summary determination motions — i.e., issues that are case-dispositive or otherwise significant.

And both an interim initial determination and an order of summary determination constitute an initial determination appealable to the commission.¹¹ But they differ significantly in that summary determination requires there be no genuine issues as to any material fact, whereas the pilot program contains no such requirement.¹² Thus, the pilot program may be a tactical alternative where the prospect of achieving a summary determination order appears daunting in view of potential factual disputes.

Conclusion

Although the precise mechanics of the new pilot program have yet to be tested, the stated goal of expeditiously resolving disputes by narrowing key issues is something that will likely be viewed favorably by many parties.

But given the ambiguities surrounding what issues and under what circumstances interim initial determinations will be entered, parties should carefully consider how this new program might fit their litigation strategies given the specific facts of their cases.

Philip Marsh is a partner, and Michael Gershoni and Bridgette Boyd are associates, at Arnold & Porter.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.