The U.S. ITC and the Korea Trade Commission: Outliers in the Global System of Border Measures?

I recently published a response in the Cornell Law Review Online to a very good article by Colleen Chien and Mark Lemley, Patent Holdup, the ITC, and the Public Interest, 98 Cornell Law Review 1 (2012).  (Readers who are not already familiar with U.S. ITC investigations can get a quick run-down on them from either of the above links or from my book, particularly pages 90-93 and 107). Basically, the ITC provides an alternative forum for excluding infringing goods from entering the United States.  For a variety of reasons, including the relative speed of proceedings and the fact that the ITC can only award injunctive relief (it does not award damages, and eBay does not apply), it has become an increasingly popular--and controversial--venue for U.S. patent owners.  Critics argue, and I agree, that the lack of a damages-only option in ITC proceedings can exacerbate patent holdup.  To reduce the risk of holdup, Chien and Lemley propose that the ITC should sometimes grandfather in existing products that contain an infringing component; that it should sometimes delay entering an exclusion order so that the defendant can design around the patent in suit; and that it should sometimes stay its orders, on condition that the defendant pay a “comparably  higher bond”—in effect, “a payment of an ongoing royalty” during the period of the stay.  In my response, I express agreement with these three proposals while at the same time questioning whether we really need to have an ITC at all, given that almost all ITC patent infringement investigations can be (and in the majority of cases are) the subject of parallel patent infringement proceedings in U.S. district court.

One of the points I make in my response that readers of this blog may find particularly interesting is that ITC proceedings are, from a global perspective, a very unusual form of "border measure."  Most countries have border measures for the exclusion of products that infringe some forms of IP rights.  TRIPs does not require border measures for the exclusion or patent-infringing goods, but many countries voluntarily have extended their border measures to cover such goods.  More specifically, as I note in my response, many countries "permit customs officials to detain trademark, copyright, and patent-infringing products on request or ex officio, though with the understanding that customs officials often are not well-placed to determine whether a given product infringes a domestic utility patent; common practice in these countries is for IP owners to commence patent infringement litigation against the importer of allegedly infringing merchandise, if the importer does not acquiesce in the customs service’s decision to exclude those goods.   To my knowledge, however, other patent systems generally do not provide a separate forum, analogous to our ITC, specifically to deal with imports that infringe utility patents."  

The one principal exception is South Korea.  As noted in my response:

. . . the Korea Trade Commission (hereinafter, “KTC”) is accorded statutory authorization to investigate (among other things) allegations of the importation of intellectual property-infringing goods. See Act on the Investigation of Unfair International Trade Practices and Remedy Against Injury to Industry, Act No. 6417, Feb. 3, 2001, arts. 4–6, amended by Act No. 10230, Apr. 5, 2010 (S. Kor.) [hereinafter Korea Trade Remedy Act], http://www.wipo.int/wipolex/en/text.jsp?file_id=281959; Korea Trade Commission, Unfair Trade Practice, http://www.ktc.go.kr/en/pro/EG34000.jsp (last visited Mar. 18, 2013); Jacqueline Lee, Is the U.S. International Trade Commission Protectionist? A Comparative Study of Border Enforcement Measures. 40 AIPLA Q. J. 593, 601–02 (2012). According to one source, the KTC held a patent in suit to be in valid in a proceeding initiated last year by a non-practicing entity. See Yeon Song Kim & Peter K. Paik, Successful Defense of a KTC Action Initiated by Non-Practicing Entity, Kim & Chang Intell. Prop. Newsl., Fall 2012, at 4, http://www.lexology.com/library/detail.aspx?g=76958394-6d1a-411d-bf6b-f75e272e4cc5. Statistics on the KTC’s website show that out of 302 intellectual property-related investigations carried out by the KTC from 1987–2011, 34 involved utility patents (in addition to four utility models and fourteen design patents); in the past decade, investigations relating to utility patents have ranged from one to seven. See Korea Trade Commission, TR Measures: Unfair International Trade Practices, http://www.ktc.go.kr/en/trmeasures/EG43000.jsp (last visited Mar. 12, 2013).

While it might make sense in theory to have a specialized forum like the ITC or the KTC to deal with infringing imports, I still question whether it is really a necessity--or good policy--to have such bodies in place when more traditional judicial fora are also available.