Government officials and industry representatives cautioned against changes...

efforts to suppress non-practicing entities (NPEs) and patent assertion entities (PAEs) from getting ITC exclusion orders under Section 337. Industry representatives sought to amend the criteria for qualifying as a U.S. industry that can cause a Section 337 investigation. The subcommittee held a similar hearing last year (CD July 19 p13) . “Congress should amend Section 337 to change the domestic industry requirements by limiting qualification to those who engaged in production-based licensing, and not allow complainants to rely on revenue based licensing to satisfy domestic industry,” said Russell Binns, Avaya associate general counsel, in written testimony (http://1.usa.gov/15g457h). NPEs can also use the threat of an exclusion order to “hold up” for excessive payments respondents accused of infringement, because the accused can’t afford the risk of being excluded from the U.S. market, said David Foster, chairman of the ITC Trial Lawyers Association Trade Committee, in written testimony (http://1.usa.gov/15mRvDE). But he and others opposed changing the statute, citing progress ITC has made on its own to better apply the law. Recent ITC decisions, such as the HTC Android smartphone case, show increased attention to the public interest, he said. Proponents of editing the law, including Binns, have also argued for the ITC to include the eBay standard, referring to the Supreme Court’s 2006 decision in eBay v. MercExchange, which affirmed the traditional four-factor test for deciding when injunctive relief is appropriate for patent cases. Implementing the eBay test would “engender confusion and uncertainty,” Foster said. It would increase the cost and length of investigations, since parties would need to undergo “additional steps to prove their cases,” he said. That standard would also reintroduce an injury test in the ITC, “despite proof of injury specifically being eliminated in the 1988 legislation as necessary to establish a patent-based violation,” Foster said. Others at the hearing discounted arguments about the recent Section 337-fueled rise in ITC cases. Former ITC Chairman Deanna Tanner Okun cited (http://1.usa.gov/ZydAIg) a commission fact sheet which said that from May 2006 to June 2012, NPEs accounted for just 10 percent of Section 337 investigations. PAEs accounted for 8 percent of investigations in the same period, said the handout. The ITC is “tailoring its remedial orders to reflect economic and practical realities, and public interest concerns are being carefully addressed,” Okun testified. “The ITC’s recent decisions and administrative actions have sent a clear message that this is not the forum for patent holders who do not make the investments in the U.S. economy mandated by Congress.”