The United States International Trade Commission (“ITC”) is a unique forum in the realm of intellectual property litigation. Originally established as a trade body to assess tariffs and the economic implications of global trade, the ITC now operates under the Administrative Procedure Act to handle a broad range of IP disputes. Disputes at the ITC proceed at a lightning-fast pace before an Administrative Law Judge. Standard Essential Patents are a key subset of patents that are integral to some of the most significant achievements in cooperation among global companies. These patents cover essential technologies like cellular communication, video compression and decompression, and Wi-Fi. The structure, rules, and history of the ITC create a distinctive, often complex, forum for enforcing the crucial intellectual property rights in Standard Essential Patents.

I. Background of the International Trade Commission and Standard Essential Patents
The ITC began as the United States Tariff Commission in 1916.[1] President Woodrow Wilson, who would sign the legislation creating the body, said, “[t]he tariff question is at the heart of every other economic question we have to deal with, and until we have dealt with that properly we can deal with nothing in a way that will be satisfactory and lasting.”[2] Major legislation in 1930 and 1988 transformed the body into the modern ITC that exists today.[3]

The ITC is headed by a panel of Principal Officers of the United States known as Commissioners (collectively the “Commission”).[4] The Commission chooses to institute investigations overseen by an Administrative Law Judge (“ALJ”) with experience in technology and patent law.[5] Complainants before the ITC are offered relief in the form of general or limited exclusion orders and cease-and-desist orders, but only if they meet the technical and economic prongs of the domestic industry requirement.[6] The ITC’s ‘statutory authority’ under Article I is different from the jurisdictional requirements of an Article III Court. The outcomes at the ITC are thus shaped by its structure. The ITC and the cases it oversees are important in shaping the global aspects of supply chains and cross-border disputes.[7] One effect is that a company may choose to move low-margin manufacturing to the United States, while remaining free to create intellectual property and related high-margin businesses anywhere in the world. The fast pace, sweeping, powerful remedy, and experienced ALJs provide an appealing forum for intellectual property rights holders who qualify.

Seemingly unrelated to trade, a different pillar of intellectual property is developing, licensing, and litigating the rights protecting essential aspects of technology standards.[8] The quintessential example is the wireless communication standards that comprise 2G/3G/4G/5G/6G.[9] These standards, created by stakeholders at every level of the supply chain, allow cellular phones and other devices to seamlessly connect. Innovators and implementers, the terms that represent the rights holders and the rights users, work collaboratively to create these public protocols.[10] Any patent required to practice an agreed-on protocol becomes a Standard Essential Patent (“SEP”).[11] The catch is how a company can fairly and reasonably provide equal access to its intellectual property without selective or discriminatory treatment when it knows that future companies will be locked in. Simple, promise to the relevant Standard Development Organization (“SDO”)[12]  you are prepared to offer a license on Fair Reasonable And Non-Discriminatory (“(F)RAND”)[13] terms. However, this phrase is highly contested among parties in licensing SEPs and in the litigation that follows.[14]

II. How to Litigate SEPs (F)RAND Disputes at the ITC
SEP disputes can sprawl beyond the basic patent infringement fight. The litigation often focuses on non-patent issues, such as breach of contract, antitrust or competition law principles, and remedies, because infringement is often conceded when an SEP is involved. The implementer–the entity selling the consumer product that uses the standard–generally is a third-party beneficiary of the “promise” the innovator–the IP rights holder–made to the SDO. At the ITC, an accused infringer has several different options to escape an exclusion order, including typical defenses such as noninfringement or breach of contract, or, under the statutory public-interest factors, a respondent may convince the ITC to set aside a remedial order.

At the ITC, the framework hinges on the relevant SDO’s intellectual rights policy and whether either or both parties negotiated in good faith to create a license. If either party fails to negotiate in good faith, then the reciprocal duty is suspended.[15] How such a defense is raised procedurally is more complicated.

The public-interest factors at the ITC balance the needs of strong intellectual property enforcement without depriving domestic consumers of necessary or essential technology.[16] For example, the Commission has set aside remedial orders when medical technology, such as burn victim beds, is at issue.[17] The United States Trade Representative (“USTR”) requires the Commission to make certain findings in SEP cases:

“[I]n any future cases involving SEPs that are subject to voluntary FRAND commitments, the Commission should be certain to . . . seek proactively to have the parties develop a comprehensive factual record related to these issues . . . including information on . . . the presence or absence of patent hold-up or reverse hold-up.”[18]

While the USTR has required the USITC to develop the public-interest factual record, the ITC itself has never set aside a remedial order for an SEP solely on public-interest grounds.[19]

Contract law principles require the parties to act in good faith to reach a licensing deal, but there is no requirement that a (F)RAND deal be completed. When no good faith efforts have been made, a respondent can argue that a complainant has waived the right to seek injunctive or exclusionary relief or that an exclusionary remedy is otherwise unenforceable due to breach of contract.[20] Under either option, the ALJ’s decision on any (F)RAND defense is based on whether the parties negotiated in good faith during any licensing negotiations.[21] It is imperative to properly develop the record with evidence of the actions of all parties during licensing negotiations.

III. Anti-Suit Injunctions and the ITC
SEP disputes often morph into global intellectual property wars because the parties are multinational behemoths with sales worldwide.[22] In response, a rising trend is for courts to set global (F)RAND rates.[23] Courts that set or seek to set global (F)RAND rates enforce the decisions by issuing Anti-Suit Injunctions (“ASI”). ASIs are orders by a court enjoining a party from participating in or enforcing any order from a parallel proceeding in a foreign jurisdiction.[24] Some courts have even entered Anti-Anti-Suit Injunctions (“AASI”).[25] An AASI is an order, from a foreign court, enjoining one or more parties, either before or after an ASI is issued, from applying for or enforcing an ASI.[26] These disputes, which initially arose among companies, have caused nations to litigate over who will decide the value of intellectual property.[27]

Parties before the ITC are even subject to injunctions. In Realtek Semiconductor Corporation v. LSI Corporation, Realtek moved for summary judgment of breach of contract and to enjoin LSI from enforcing any exclusion order by the ITC.[28] The court in the Northern District of California agreed on both counts.[29] In the parallel ITC case, the ALJ found the ITC was not bound by collateral estoppel and that the developed factual record supported enforceability.[30] Although the ITC plays only an indirect role in global royalty rate disputes, it can determine whether a rate is (F)RAND. The ITC, as an Article I court, lacks the statutory authority to enter ASIs or dictate global (F)RAND rates. If an exclusion order is issued, the parties must negotiate among themselves to decide on a (F)RAND rate to fully settle the dispute.

Despite the ITC being a premier forum for intellectual property disputes and for important conversations about the value of intellectual property, it’s entirely cut out of the SEP valuation conversation. Ironically, the ITC, which requires substantial economic impact analysis to determine whether an exclusion order can issue, is prohibited from performing further economic analysis to set (F)RAND rates for parties. The United States set up the ITC at the turn of the 19th century to address the effects of increasingly global trade. Due to the lack of an effective tool for responding to ASIs or setting global (F)RAND rates, the role of the ITC in 21st-century conversations on intellectual property and global technological advances has changed.[31]

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