ITC Grants Partial, Preliminary Win to Apple against HTC Droid Phones

Our Chicago technology attorneys were interested in a recent example of how patent owners can relatively quickly seek resolution of certain infringement claims.

In March of 2010, Apple filed a complaint against HTC Corporation claiming that the company infringed 10 of its patents with respect to Droid and other smartphone elements. On July 15, 2011, the U.S. International Trade Commission ("ITC") issued an initial ruling in Apple's favor on two of the patents at issue.

Because the ITC has the power to ban products from coming into the United States, a final ruling against HTC could mean that HTC products will be unable to enter the country. Given such a ruling could have widespread implications for HTC, the company plans on appealing the decision. However, if the appeal is not successful, HTC might have to settle with Apple. This means that in addition to paying Microsoft $5 for each Android device they sell, HTC might also have to pay Apple royalties from its sales. The General Counsel for HTC, Grace Lei, recently commented that "we are highly confident we have a strong case for the ITC appeals process and are fully prepared to defend ourselves using all means possible." However, these may just be fighting words.

This is not the first time that the ITC has had the potential to affect large companies in patent disputes. In fact, the ITC is quickly becoming a popular forum for owners of intellectual property trying to prohibit infringing products from the United States market. Using the ITC as a forum for resolving patent disputes has its advantages. Since it usually takes less than a year for cases going though the ITC to go to trial, the ITC is generally able to provide quick verdicts. The ITC also has in rem jurisdiction over the imports in question. This means that a complainant can bring one action against several respondents in different jurisdictions. Lastly, using a jury is not an option in ITC trials. Rather, an administrative law judge presides over the proceeding. As the judge usually has specialized knowledge in patent law, the result is arguably a fairer trial than if a jury was present.

However, going the ITC route is not without its problems. Since the ITC is a federal agency, ITC final decisions do not bind a U.S. District Court. This means that parties unsatisfied by an ITC ruling can choose to bring suit again in district court. Lastly, to have standing with the ITC, the complaining party needs to show that there is or will be a U.S. industry connected to the products protected by the alleged intellectual property rights. Such a requirement does not exist if a suit is being filed in a U.S. district court.

An ITC action is one of the first measures to be considered when considering patent infringement strategies involving imported goods or articles.

This post was prepared by summer research assistant Yelena R. Our Chicago business lawyers frequently counsel clients about protecting or defending their patent, trademark, copyright, trade secret and other intellectual property rights with corporations, limited liabilities companies and individuals in Illinois.