By Michael Rosen

In September 2021, Reps. Suzan DelBene (D-WA) and David Schweikert (R-AZ) reintroduced the Advancing America’s Interests Act (AAIA), which seeks to alter the way the US International Trade Commission (ITC) operates.

The ITC is an independent, quasi-judicial federal agency established to foster and protect American innovation and manufacturing. Among its duties, the ITC investigates infringement of the intellectual property (IP) of companies with a domestic industry around their IP and prevents the importation of infringing products through exclusion orders.

But the term “domestic industry” has aroused significant
controversy, as courts have interpreted it to include even licenses granted by patent
assertion entities (PAEs) as a result of litigation. It has also been held to encompass licenses held by companies that are not
named in an ITC investigation but that manufacture components of allegedly
infringing products. This practice is called creating
a “domestic industry by subpoena” and has aggravated respondents in ITC investigations
who otherwise would presumably defeat the complainants’ claims of domestic
industry.

So the AAIA, originally introduced in 2020 and revived in the fall of 2021, seeks to more precisely define the scope of domestic industry and generally curtail abuse in ITC practice. The cosponsors argued that “patent licensing entities, which produce no goods or services, have used the ITC as a forum to file expensive patent cases against American companies” in order “to shake down American companies in search of large multi-million-dollar payouts.”

Specifically, the AAIA would:

• Require that an ITC “complainant may not rely upon activities by its licensees unless the license leads to the adoption and development of articles that incorporate the claimed patent, copyright, trademark, mask work, or design for sale in the United States” (i.e., the license must result in actual products embodying the IP asset in question);
• Mandate that “a person may be relied upon to qualify as [domestic] industry . . . only if the person joins the complaint under oath,” thus ending the practice of domestic industry by subpoena;
• Direct the ITC to expressly find that “exclusion of the articles concerned would be in the interest of the public,” as opposed to current practice, which effectively encourages the commission to uphold an infringement finding so long as it does not consider such a finding contrary to the public interest (and sometimes even when it does); and
• Require the commission to “identify, at the beginning of an investigation, whether the investigation presents a dispositive issue appropriate for an expedited fact finding,” thereby short-circuiting frivolous claims.

As Patent Progress’s Josh Landau observed in 2021, “the ‘typical’ ITC case of an American company using the ITC to protect itself against foreign companies is anything but typical.” Instead, he argues, enacting the AAIA

would significantly improve the situation for U.S. industry at the ITC, limiting their exposure to PAEs funded by private equity and letting companies that take a license not worry about being hauled to the ITC to support someone else’s financial interests.

One recent study found that 10–20 percent of all ITC complaints are filed by PAEs, and implementing the AAIA would likely affect those entities with a “primary focus on purchasing and asserting patents for profit.” The study also concluded that requiring a would-be domestic industry “partner” to join the complaint would make things more difficult for PAEs and would “[level] the playfield on access to relevant information about domestic industry.” And as an even more detailed study by R Street found in November 2021, nearly a quarter of ITC complaints since 2017 have been filed by PAEs; accordingly, the AAIA is “responsive to the concerns about non-practicing entities taking advantage of the ITC.”

And while the AAIA hasn’t made much discernible progress since its reintroduction in fall 2021, it may be thrust back into the spotlight in the coming months as Arigna Technology, a prominent Irish PAE, seeks an exclusion order against Apple, Microsoft, Samsung, and others over a power management chip whose patent rights Arigna acquired. Stay tuned for potential fireworks.

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