Transparent Meetings Only Part of Solution to CBP Enforcement of Exclusion Orders, Say Officials
Bringing more transparency to CBP enforcement of International Trade Commission exclusion orders through meetings with both the patent holders and the importers may not be the panacea that some in industry anticipate, said government officials on Feb. 27 at a panel on Section 337 patent enforcement at the Georgetown Law School’s International Trade Update. In comments submitted last year, industry officials nearly universally called for CBP to sit down with both parties to a Section 337 patent dispute -- the rights holder and the importer -- when making decisions on whether to exclude a product. But in CBP’s experience, the inter partes procedure envisioned by industry often faces roadblocks from industry itself, said acting CBP Assistant Commissioner for Trade Richard DiNucci.
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“What we tried to do the last few years at Customs is to get the parties to the table to talk to one another,” said DiNucci. “They don’t always necessarily want to do that because they can’t agree on what they’re going to talk about.”
The White House Intellectual Property Enforcement Coordinator requested comments in June as part of an interagency effort to improve enforcement of Section 337 exclusion orders, which the ITC issues when it finds intellectual property rights violations in to block imports of infringing products. According to a letter from CBP in response to inquiries from Congress on the enforcement of exclusion orders, there were 92 exclusion orders in place as of December 2012, but only 33 shipments were refused admission in 2012 under the import bans.
In response, commenters overwhelmingly called on CBP to move from an opaque ex parte process where CBP individually meets with the importer or rights holder, to an inter partes process where all parties sit at the table, which would allow all parties to contribute insight or provide evidence of a violation (see 13072502).
However, even as it has attempted such a process, CBP has found that other problems arise, and that it can be difficult to get both parties to the table in the first place, said DiNucci. In some cases, the disputes involve intellectual property that the parties don’t want to show their competition, he said. In others, there may be an underlying issue like licensing fees that the parties may not be ready to talk about that. “One party may want to talk about x, the other wants to talk about y,” said DiNucci.
Even when the importer and the rights holder do get to the table, they often find themselves frustrated because their product development has outpaced the IPR enforcement discussion. ‘Sometimes the conversation has passed what was in the order because the products move so quickly in terms of their need … to compete In the marketplace,” said DiNucci. For example, in a dispute over smartphone patents, the phones had already been redesigned four or five times by the time the parties sat down with CBP to discuss how to interpret the exclusion order, said DiNucci.
Because of the scope of the enforcement issue, the inter partes process will only be part of solution to the puzzle, said Alex Niejelow, chief of staff of the Intellectual Property Enforcement Coordinator. It’s still “very much” on the table, but the idea has “pros and cons,” he said during the panel discussion. At the time it was proposed, the inter partes process was only supposed to be a stop gap. “That doesn’t mean that it can’t provide some continued benefits if we all decide that is going to be one of the routes that’s continued,” said Niejelow. But the ITC will also play a large role in solving Section 337 enforcement problems, he said.
“There’s obviously a clear role, an important one, for CBP without question,” he said. But there’s a potentially greater role for the ITC, said Niejelow, given that the commission has recent and recurring experience with the issues involved in interpreting Section 337 exclusion orders, he said. Niejelow said the Intellectual Property Enforcement Coordinator's findings from the interagency effort to improve enforcement should come in the next 5 to 7 weeks.
Meanwhile, CBP is making progress on its ability to address Section 337 enforcement, said DiNucci. Over the past two years, the agency has developed its expertise on patent issues. “We have some very good attorneys that focus on this and nothing but this,” he said. The centers of excellence and expertise (CEEs) have taken on the issue directly, said DiNucci, meeting with parties to Section 337 cases “to have the products put in front of them and to go through both the initial issues that were raised at the ITC and also the design arounds,” he said. So I’m much more confident of our ability in that regard now, in CBP’s ability.”