[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]






                    INTERNATIONAL TRADE COMMISSION 
                           PATENT LITIGATION

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                     COURTS, INTELLECTUAL PROPERTY,
                            AND THE INTERNET

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 14, 2016

                               __________

                           Serial No. 114-67

                               __________

         Printed for the use of the Committee on the Judiciary


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      Available via the World Wide Web: http://judiciary.house.gov
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                       COMMITTEE ON THE JUDICIARY

                   BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        JERROLD NADLER, New York
LAMAR S. SMITH, Texas                ZOE LOFGREN, California
STEVE CHABOT, Ohio                   SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California          STEVE COHEN, Tennessee
J. RANDY FORBES, Virginia            HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE KING, Iowa                       Georgia
TRENT FRANKS, Arizona                PEDRO R. PIERLUISI, Puerto Rico
LOUIE GOHMERT, Texas                 JUDY CHU, California
JIM JORDAN, Ohio                     TED DEUTCH, Florida
TED POE, Texas                       LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah                 KAREN BASS, California
TOM MARINO, Pennsylvania             CEDRIC RICHMOND, Louisiana
TREY GOWDY, South Carolina           SUZAN DelBENE, Washington
RAUL LABRADOR, Idaho                 HAKEEM JEFFRIES, New York
BLAKE FARENTHOLD, Texas              DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia                SCOTT PETERS, California
RON DeSANTIS, Florida
MIMI WALTERS, California
KEN BUCK, Colorado
JOHN RATCLIFFE, Texas
DAVE TROTT, Michigan
MIKE BISHOP, Michigan

           Shelley Husband, Chief of Staff & General Counsel
        Perry Apelbaum, Minority Staff Director & Chief Counsel
                                 ------                                

    Subcommittee on Courts, Intellectual Property, and the Internet

                 DARRELL E. ISSA, California, Chairman

                  DOUG COLLINS, Georgia, Vice-Chairman

F. JAMES SENSENBRENNER, Jr.,         JERROLD NADLER, New York
Wisconsin                            JUDY CHU, California
LAMAR S. SMITH, Texas                TED DEUTCH, Florida
STEVE CHABOT, Ohio                   KAREN BASS, California
J. RANDY FORBES, Virginia            CEDRIC RICHMOND, Louisiana
TRENT FRANKS, Arizona                SUZAN DelBENE, Washington
JIM JORDAN, Ohio                     HAKEEM JEFFRIES, New York
TED POE, Texas                       DAVID N. CICILLINE, Rhode Island
JASON CHAFFETZ, Utah                 SCOTT PETERS, California
TOM MARINO, Pennsylvania             ZOE LOFGREN, California
BLAKE FARENTHOLD, Texas              STEVE COHEN, Tennessee
RON DeSANTIS, Florida                HENRY C. ``HANK'' JOHNSON, Jr.,
MIMI WALTERS, California               Georgia

                       Joe Keeley, Chief Counsel

                    Jason Everett, Minority Counsel
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                            C O N T E N T S

                              ----------                              

                             APRIL 14, 2016

                                                                   Page

                           OPENING STATEMENTS

The Honorable Darrell E. Issa, a Representative in Congress from 
  the State of California, and Chairman, Subcommittee on Courts, 
  Intellectual Property, and the Internet........................     1
The Honorable Jerrold Nadler, a Representative in Congress from 
  the State of New York, and Ranking Member, Subcommittee on 
  Courts, Intellectual Property, and the Internet................     3
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Ranking Member, Committee on 
  the Judiciary..................................................     5
The Honorable Bob Goodlatte, a Representative in Congress from 
  the State of Virginia, and Chairman, Committee on the Judiciary    53

                               WITNESSES

Deanna Tanner Okun, former Chairman, International Trade 
  Commission, and Partner, Adduci, Mastriani & Schaumberg, LLP
  Oral Testimony.................................................     7
  Prepared Statement.............................................     9
John Thorne, Partner, Kellogg, Huber, Hansen, Todd, Evans & 
  Figel, PLLC
  Oral Testimony.................................................    25
  Prepared Statement.............................................    27
Mark L. Whitaker, Partner, Morrison & Foerster LLP
  Oral Testimony.................................................    34
  Prepared Statement.............................................    36
Fiona M. Scott Morton, Theodore Nierenberg Professor of 
  Economics, Yale School of Management
  Oral Testimony.................................................    44
  Prepared Statement.............................................    46
Thomas L. Stoll, Principal, Stoll IP Consulting
  Oral Testimony.................................................    54
  Prepared Statement.............................................    56
Dominic Bianchi, General Counsel, United States International 
  Trade Commission
  Oral Testimony.................................................    60
  Prepared Statement.............................................    62

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Material submitted by the Honorable Darrell E. Issa, a 
  Representative in Congress from the State of California, and 
  Chairman, Subcommittee on Courts, Intellectual Property, and 
  the Internet...................................................    82
Additional material submitted by the Honorable Darrell E. Issa, a 
  Representative in Congress from the State of California, and 
  Chairman, Subcommittee on Courts, Intellectual Property, and 
  the Internet...................................................    88

                                APPENDIX
               Material Submitted for the Hearing Record

International Trade Commission 337 Statistics Report.............    94
Response to Questions for the Record from Deanna Tanner Okun, 
  former Chairman, International Trade Commission, and Partner, 
  Adduci, Mastriani & Schaumberg, LLP............................    98
Response to Questions for the Record from John Thorne, Partner, 
  Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC..............   126
Response to Questions for the Record from Mark L. Whitaker, 
  Partner, Morrison & Foerster LLP...............................   159
Response to Questions for the Record from Fiona M. Scott Morton, 
  Theodore Nierenberg Professor of Economics, Yale School of 
  Management.....................................................   165
Response to Questions for the Record from Thomas L. Stoll, 
  Principal, Stoll IP Consulting.................................   167
Response to Questions for the Record from Dominic Bianchi, 
  General Counsel, United States International Trade Commission..   174
 
            INTERNATIONAL TRADE COMMISSION PATENT LITIGATION

                              ----------                              


                        THURSDAY, APRIL 14, 2016

                        House of Representatives

            Subcommittee on Courts, Intellectual Property, 
                            and the Internet

                       Committee on the Judiciary

                            Washington, DC.

    The Subcommittee met, pursuant to call, at 10 a.m., in room 
2141, Rayburn House Office Building, the Honorable Darrell E. 
Issa, (Chairman of the Subcommittee) presiding.
    Present: Representatives Issa, Goodlatte, Collins, Franks, 
Jordan, Marino, Farenthold, DeSantis, Walters, Nadler, Conyers, 
Lofgren, Johnson, Chu, DelBene, Jeffries, and Peters.
    Staff Present: (Majority) Vishal Amin, Senior Counsel; Eric 
Bagwell, Clerk; and (Minority) Jason Everett, Minority Counsel.
    Mr. Issa. The Committee will come to order. The 
Subcommittee on Courts, Intellectual Property, and the Internet 
will come to order. Without objection, the Chair is authorized 
to declare a recess of the Subcommittee at any time. We welcome 
everyone here today to a hearing specifically on the role of 
the International Trade Commission (ITC) in patent litigation.
    Imagine, if you will, a scenario under current law. A 
foreign patent assertion entity has their lawyer file a lawsuit 
against a domestic entity in order to have them take a license 
and pay some type of royalty. Under current law, once receiving 
even one dollar in royalty, they then sue a U.S. company for 
patent infringement in Federal court, and concurrently file a 
case in the ITC.
    The defendant also files an interparty review before the 
Patent and Trademark Office, alleging, in validity, or at least 
substantial differences between the assertion and the product 
being produced. You now have, under current law, three separate 
adjudications at the same time. Under the law--and by the way, 
you do not have to imagine, this has happened--there can be 
discovery, oft times it is simple form discovery by the 
plaintiff; and for purposes of my opening statement, plaintiff 
and troll will be interchangeable.
    Now, under current law, the PAE could succeed in getting an 
exclusion order against the defendant. Well, the alleged 
infringer could win, at PTAB, the claims that the patent is 
ruled invalid. But still, under current law would be prevented 
from manufacturing that product, since the exclusion order 
would be in effect until the Federal circuit gets around to 
reversing the ITC. And under current law, the Federal circuit 
reversals, you could be back in district court going through 
the whole trial process again. Again, if the PTO only rules 
that some patent claims are invalid or limited, but allows a 
few limited patent claims to remain, you get to do this all 
over again.
    The International Trade Commission exists for one purpose: 
it is a necessary exclusion organization that protects American 
industry, industry being a broad term, from unfair competition; 
from, in fact, products coming through our border for a myriad 
of reasons.
    It is a protectionist trade organization by definition. And 
I use that not in a pejorative way, but I use it in a fair way; 
that in fact, often, U.S. industries need protection from 
unfair trade practices.
    When, in 1988, patents became part of it, most envisioned 
that you were simply talking about an entity that could not be 
reached in the Federal courts, that was sending in a product 
that was a knockoff of an American patent. And in that 
situation, it would be no different than, in fact, if you were 
sending counterfeit goods into the United States with somebody 
else's trademark on it.
    The ITC exists, and will continue to exist, for those kinds 
of protections under any reform. However, in an era in which 
this Committee, on a broadly bipartisan basis, has recognized 
that troll activity needs to be prevented, we need to recognize 
that non-practicing entities are using the ITC not often, but 
often effectively, to extort additional dollars.
    Plus, to be candid, it is our responsibility to preserve 
the constitutional right of an American entity to have their 
claims, whether plaintiff or defendant, adjudicated within the 
court constitutionally established, or often called an Article 
III court. Under the current law, Article I adjudication is 
occurring far too often. And not by the PTO, but rather, by the 
ITC.
    I will just touch for a moment on two notable events. 
Several years ago, Kodak v. Apple in the ITC. Now there was a 
foreign importer somewhere there; an entity that could not be 
reached; an entity who had assets that were beyond the Federal 
court. The problem is, I cannot figure out which one it would 
be. Kodak was not, in fact, a domestic company to any greater 
extent than Apple. Both of them relied on extensive use of 
imported parts. Oddly enough, Apple had enough cash in the bank 
to buy Kodak in a moment's notice. And yet, Kodak went to the 
ITC asserting that they needed to get injunctive relief, or, if 
you will, trade relief, against Apple, as though the Federal 
court could not give them sufficient remedy.
    Prior to the eBay decision, we could all have had a 
discussion about--an injunction is an injunction, whether it is 
called an exclusion or not. And in the 1990's, when I found 
myself in the ITC and in Federal court, they really were a 
question of how fast you got to the question of whether or not 
you were guilty and whether or not you were--the patent was 
valid, and whether or not, quite frankly, you were going to be 
enjoined. But that is not the case today.
    Post-eBay, it is not an effective or honest case to exclude 
a product that ultimately, if they failed in district court, 
would not be excluded, but rather, would be adjudicated for 
monies. Obviously, in the case of Apple, Apple could have not 
only paid all the damages, but could have bought Kodak on the 
open market.
    Second case, one that Congressman Schiff and I both 
participated in with great frustration, was Broadcom v. 
Qualcomm in the ITC. Now, these were two companies whose CEOs 
could meet, 1 hour drive each, away from their corporate 
headquarters. Located less than 100 miles apart, they found 
themselves in the District of Columbia, in court, 3,000 miles--
2,700 miles away. Why? Was it because Broadcom believed that 
Qualcomm, a company listed on the S&P 500, was unable to pay 
damages? No. It was simply because the leverage of the ITC 
allowed them to go after, in this case not even Qualcomm 
directly, but products being imported bearing chips.
    The merits of this case do not particularly make any 
difference. The question is, should Broadcom and Qualcomm been 
able to be in the ITC, while simultaneously in the district 
court? They were not in the ITC because they wanted or needed 
an exclusion order for its own sake. They were in the ITC 
because they wanted to use it as part of the leverage, hoping 
it would move quickly and bring about a settlement that they 
would take perhaps longer to get in district court. But 
ultimately, the money damages would have been the same.
    This Committee has exclusive jurisdiction over patents. 
This Committee has exclusive jurisdiction over trademarks. This 
Committee has exclusive jurisdiction over the Article III 
courts. This Committee has exclusive jurisdiction over the 
bankruptcy courts. I do not consider that jurisdiction a 
jurisdictional fight.
    In fact, I believe that the ITC has a reason to exist. It 
appropriately is a trade activity, and should be in the Ways 
and Means. But it is my hope that, through this hearing and 
likely legislation, that we can, in fact, straighten out a 
situation in which, if you should be in one court, another 
court, or in fact, at the PTO, that you not be simultaneously 
in all three, or that trolls be able to leverage one against 
the other. With that, I look forward to our witnesses and 
recognize the Ranking Member for his opening statement.
    Mr. Nadler. Thank you, Mr. Chairman. Today we consider 
patent litigation at the International Trade Commission. The 
ITC is not widely known or understood outside of a narrow group 
of practitioners and interested parties. But it plays an 
important role in shaping trade policy in the United States. 
Among its duties is to adjudicate cases involving imports that 
allegedly infringe intellectual property rights, and to 
potentially exclude such products from entering the United 
States.
    Because the ITC is becoming an increasingly popular venue 
for bringing patent infringement claims in recent years, it is 
appropriate for this Subcommittee to examine how the ITC 
handles patent litigation, and whether any legislative or 
regulatory changes are warranted.
    When we last considered this topic in 2013, we did so in 
the context of the ongoing crisis of abusive patent litigation. 
We heard testimony that patent trolls had identified the ITC as 
a friendly forum, and were flooding the system with abusive and 
frivolous claims, particularly after the Supreme Court's 2006 
decision in eBay v. Merck Exchange.
    Prior to the eBay case, injunctions in patent cases were 
viewed as almost automatic. However, the court ruled that 
patent holders in district court cases must satisfy the same 
four-factor test applied to other plaintiffs seeking an 
injunction, including showing that monetary damages are 
insufficient to compensate the plaintiff, and that the 
plaintiff will suffer irreparable harm without an injunction.
    By some estimates, the eBay standard reduced the chances of 
an injunction being granted to just 1 in 3. Concerns were 
raised that, after this decision, non-practicing entities, or 
NPEs, were flocking to the ITC, which does not apply the eBay 
analysis, and where an exclusion order is almost automatic if 
infringement is found.
    The drastic step of an exclusion order can serve as a death 
knell for a business. As manufacturing has increasingly moved 
overseas in recent years, even an American company may find its 
products excluded from the U.S. if they are found to be 
infringing. Because the consequences of having one's product 
prevented from being imported into the U.S. are so great, NPEs 
were exploiting this risk to pressure defendants into settling 
even frivolous cases.
    Since we last considered this issue, the ITC has taken some 
steps to attempt to address some of the concerns over NPEs and 
abusive litigation. For example, as ITC case law continues to 
evolve, NPEs, whose entire business model depends on 
litigation, may find it more difficult to establish that there 
is a domestic industry that would be threatened by the 
importation of a particular product, as is required under 
Section 337 of the Tariff Act.
    In addition, the ITC has begun a pilot project, which it 
proposes to codify and expand, allowing the Commission to 
identify potentially case dispositive issues when the 
investigation begins, and direct the presiding judge to issue 
an initial determination of those issues within 100 days. If 
used to its full extent and made permanent, this may help weed 
out weak claims at an early stage and discourage many others 
from even being filed. Indeed, recent statistics indicate that 
filings by NPEs has dropped from its peak, between 2008 and 
2011.
    I hope our witnesses will help us to understand whether 
this reduction in filings is just temporary, or whether the ITC 
has adequately addressed the concern over abusive litigation 
through these and other measures. And if further action is 
necessary, does the ITC have sufficient tools at its disposal? 
Or is Congressional action required? I also look forward to a 
discussion of whether patent litigation at the ITC serves as a 
complement to district court litigation, or whether they 
conflict with each other.
    As an independent, quasi-judicial Federal agency focused 
solely on trade, the ITC operates under a different set of 
rules, with a different mandate, than Article III courts. What 
sorts of incentives do plaintiffs have to pick district court 
or the ITC as an appropriate forum, or to file parallel 
litigation in both arenas? Are defendants being treated fairly 
in this process? And what are the implications for developing a 
uniform understanding of patent law, when it is being 
administered and interpreted by two different judicial bodies? 
Are any reforms needed? And if so, should Congress enact 
legislative changes? Or should they be accomplished through the 
regulatory process? I look forward to hearing from our 
witnesses about these and other important matters, and I yield 
back the balance of my time.
    Mr. Issa. I thank the gentleman. We now recognize the 
Ranking Member of the full Committee, Mr. Conyers, for his 
opening statement.
    Mr. Conyers. Thank you, Chairman Issa. And welcome to--we 
only have six witnesses today, so I guess we will have to do 
the best we can with the subject.
    Mr. Issa. John, there are four more panels. Are you going 
to come back?
    Mr. Conyers. Oh, oh boy. We welcome you all here today for 
this discussion. We think it is an important one, because it 
gives us an opportunity to study how the International Trade 
Commission handles patent disputes, and whether it sufficiently 
protects American innovation.
    We should focus on whether the Commission produces fair 
results to litigants, and, most importantly, whether these 
results are beneficial to the American consumer. Congress 
established the Commission as an independent, quasi-judicial, 
Federal agency to provide non-partisan counsel to the 
legislative and executive branches of government. It is charged 
with protecting United States consumers and industry from 
unfair foreign trade practices, and has the power to issue 
cease and desist and exclusion orders.
    For example, patent holders who believe that imported 
products infringe their patents may file a complaint with the 
Commission, pursuant to Section 337 of the Tariff Act. Some are 
concerned, however, that as a result of the Commission's patent 
dispute resolutions, there have been adverse consequences to 
American consumers in the form of higher prices, for example.
    I am particularly concerned that some large, monopolistic 
players actively collect patents as a way to concentrate their 
market power, and to eliminate competitors under the watch of 
the Commission. It is imperative that our Nation's patent 
system protect American innovation and foster enterprise, but 
not at the expense of allowing the system to be distorted to 
favor players with the largest litigation budgets.
    Also, we should continue to examine whether the increase in 
Section 337 investigations is due to abusive behavior by non-
practicing entities and patent assertion entities. There are 
concerns that these entities acquire patents solely for the 
purpose of litigation before the Commission, to threaten United 
States-operating companies with exclusion orders that they 
otherwise may not obtain in Federal court.
    In support of these concerns, some cite the fact that 
Commission filings spiked in 2011, and that a large percentage 
of these cases proceeded simultaneously in Federal district 
court. While a patent holder is not barred from pursuing a 
claim before the Commission and the Federal courts 
simultaneously, some argue this presents the problem of 
inconsistent results.
    At this point, however, we know that, based on the 
Commission's own statistics, the number of investigations 
instituted has dropped, and it appears the number of filings by 
non-practicing entities is also lower. The Commission appears 
to be taking effective steps to address the problem.
    And finally, any legislative changes to Section 337 should 
avoid unintended consequences, particularly with respect to any 
adverse impact they may have on American innovators. Any such 
changes should also be considered in light of the Supreme 
Court's 2006 decision in eBay v. Merck Exchange, which made it 
more difficult for patent holders to receive injunctive relief 
in Federal district court.
    The ramifications of that decision could be driving an 
increase in Commission filings, for instance. Although I am 
skeptical of current proposals to curb abusive patent 
litigation by reforming the Commission legislatively, I do look 
forward to the hearing from today's witness. And I thank the 
Chairman for holding this hearing. I yield back any time 
remaining.
    Mr. Issa. I thank the gentleman. All other Members will 
have 5 legislative days in which to place their opening 
statements in the record.
    Today we have a distinguished panel of six witnesses, as 
the Ranking Member said. These witnesses' written statements 
will be entered in the record in entirety, and I ask that the 
witnesses summarize, in approximately 5 minutes, their opening 
statements.
    For those who have not testified before, the lights are 
just like a traffic light. And we ask you to please go as fast 
or slow as you want on green, rush through the intersection on 
yellow, and stop on red. Before I introduce the witnesses, it 
is the Committee's standing rule that all witnesses be sworn.
    So would you please all rise, and raise your right hand? Do 
all of you solemnly swear or affirm that the testimony that you 
are about to give will be the truth, the whole truth, and 
nothing but the truth?
    Thank you, please be seated. Let the record reflect that 
all witnesses answered in the affirmative.
    Our witnesses today include the former chairwoman of the 
International Trade Commission, Deanna Okun, partner at Adduci 
and Mastriani and Schaumberg, LLP. Boy, that is a good one. But 
they get better.
    The second one is--and welcome--John Thorne, partner at 
Kellogg, Huber, Hansen, Todd, Evans and Figel, PLLC.
    And next we have Mr. Mark Whitaker, partner at Morrison and 
Foerster, thank you.
    Dr. Fiona Scott Morton, professor of economics at the Yale 
School of Management; Mr. Thomas Stoll, principal of Stoll IP 
Consulting, LLC, and Mr. Dominic Bianchi, general counsel at 
the International Trade Commission.
    So I want to welcome all of you. I recognize that each of 
you, perhaps except for the government witnesses, have both 
your written statements and individual testimony. I would 
suggest that, if you want to deviate from your written 
statement, remember your entire written statement will be in 
the record. But I would ask that you remain within the 5 
minutes.
    With that, Ms. Okun.

TESTIMONY OF DEANNA TANNER OKUN, FORMER CHAIRMAN, INTERNATIONAL 
TRADE COMMISSION, AND PARTNER, ADDUCI, MASTRIANI & SCHAUMBERG, 
                              LLP

    Ms. Okun. Thank you, Chairman Issa, Ranking Member Nadler, 
and other Members of the Subcommittee. I welcome the 
opportunity to testify for you today. I have been privileged to 
be part of the international trade community for more than 25 
years. Let me reiterate that I appear today in my personal 
capacity, and not on behalf of Adduci and Mastriani and 
Schaumberg, or any of our clients. And, of course, I do not 
speak for the Commission or for my former colleagues.
    My purpose is to share my perspective based on my 12 years 
serving on the International Trade Commission. I will focus my 
remarks on a few key points, but will refer you to my written 
statement.
    First, the ITC is an expert trade agency that provides an 
effective remedy to combat the pervasive problem of infringing 
imports, providing essential protection to U.S. IPR owners and 
fostering U.S. competitiveness and innovation.
    Second, through its decisions and administrative actions, 
the ITC has sent a clear message that only entities with 
substantial domestic ties will succeed. The data demonstrate 
that NPEs rarely file cases with the ITC, and that particularly 
with respect to PAEs, they rarely succeed. And it is important 
to set context. We are talking about a docket of 36 cases this 
year; and of those 36, 34 of 36 were brought by manufacturing 
entities. In 2014, it was 36 of 39. At its high water mark in 
2011, there were 69 investigations.
    So we are talking about a very small docket, which I say 
will remain so because of the high threshold to succeed, and 
because of the institutional requirements to be at the ITC.
    Third, the ITC, perhaps because it is small, non-partisan, 
quasi-judicial, has been nimble in addressing litigation issues 
by pursuing case management and rule changes to reduce the cost 
and burden of litigation. This type of agency activity should 
be encouraged, not criticized. We want our most innovative 
companies to have more, not fewer, tools to address the very 
real and costly problem of infringement.
    In that respect, Section 337, in my view, is functioning as 
Congress intended, and recent proposals to amend the statute 
are unnecessary and likely counterproductive. Moreover, our 
trading partners increasingly recognize that innovation is the 
fundamental competitive advantage. Countries like China are 
modifying their laws to strengthen IP protection, and the 
European Union has moved toward a unitary patent court. It 
would send the wrong message for the United States to weaken 
protections at a time when U.S. trade negotiators have been 
working hard to raise IPR standards in agreements such as TPP 
and TTIP.
    Allow me to elaborate briefly. There is a direct link 
between the protection of U.S. IPR and American 
competitiveness. Constitutionally protected patent rights 
incentivize investments and innovation, a key engine of 
economic growth. IP-intensive industries account for more than 
$5 trillion in value added, or approximately 35 percent of GDP.
    From a trade perspective, we must have effective border 
remedies to stop unfairly traded and infringing imports. The 
ITC serves as the front line in protecting domestic industries. 
As the Joint Economic Committee found in 2012, infringement of 
IPR is a pervasive problem that harms companies, consumers, and 
all levels of government.
    Between 2008 and 2015, approximately 80 percent of the 
products accused in Section 337 were imported from China. And 
while this hearing is focused on investigations involving 
patents, Section 337 also covers other unfair acts, such as 
copyright, trademark, and trade secret laws. Moreover, for many 
companies, the advantages of expeditious adjudication, 
experienced ITC judges, in rem jurisdiction, and effective 
remedies at the border, can make the difference in their 
commercial success.
    The data simply do not support the assertion that the ITC 
has a patent troll problem. Overall, Section 337 filings have 
decreased significantly in the past few years, from what was 
already a low number, particularly compared to district courts. 
The number of cases institute in each calendar year, from 2000 
to 2015, has steadily decreased from 69 to 36. Complainants at 
the ITC are overwhelmingly domestic industries that manufacture 
a product.
    Moreover, of the 67 exclusion orders issued by the 
Commission in the last 10 years, only four were on behalf of 
NPEs. The ITC is not inundated with frivolous cases, nor is its 
caseload unmanageable. But that does not mean NPEs--and I do 
mean NPEs, not PAEs--should not have the opportunity to 
consider the ITC as they evaluate their options for protecting 
their intellectual property.
    Congress acknowledged the critical role of IPR as a source 
of value by expanding Section 337 in 1988 to cover companies 
making a substantial investment in a patent's exploitation, 
including engineering, research and development, or licensing.
    Yet over the last 5 years, it has become more difficult to 
establish a domestic industry and obtain relief and, since 
2011, only three NPEs have succeeded in establishing a 
licensing-based domestic industry. I realize, Mr. Chairman, 
that my red light is coming on, and I hope that, in listening 
to Mr. Bianchi's testimony, you will hear about the many 
actions the ITC has taken to help combat any type of abuse at 
the ITC. Thank you.
    [The prepared statement of Ms. Okun follows:]
    
    
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
                                       __________
    
    Mr. Issa. I thank you. And if you had not shortened non-
practicing entities and so on with those acronyms, it would 
have been much longer.
    Ms. Okun. Try that.
    Mr. Issa. Mr. Thorne. For all the witnesses----
    Ms. Okun. Not going to worry about it.
    Mr. Issa. Yeah, yeah. For all the witnesses here on the 
dais, of course, we are familiar with the acronyms. But to the 
greatest extent possible, at least once in your testimony, make 
sure that you describe fully, because for the record, a lot of 
people, including the people behind you in the audience, may 
not know the shortened terms. Thank you. Mr. Thorne?

  TESTIMONY OF JOHN THORNE, PARTNER, KELLOGG, HUBER, HANSEN, 
                   TODD, EVANS & FIGEL, PLLC

    Mr. Thorne. There, I have got my microphone. Mr. Chairman, 
Mr. Ranking Member, and other members of the Subcommittee, 
thank you for inviting me today.
    I have not worked in the government in this area, but I 
have represented companies on both sides, bringing cases at the 
ITC, defending cases at the ITC, bringing injunction cases in 
Federal district court, defending against injunction cases in 
district court.
    And since the written testimony is going to be submitted, I 
just thought I would summarize a little bit about why, from the 
private point of view, why would somebody bring a case to the 
ITC, as opposed to going to district court? And as you have 
seen in the numbers, that both forums are usually available. We 
did a quick count of the cases we believe were NPE cases at the 
ITC--NPE meaning non-practicing entities of the ITC. We did a 
quick count to see, well, how many of those organizations were 
American companies that could have been sued in district court?
    And the answer is almost all of them. And it is something 
like two-thirds of all the cases, not just NPE cases, but all 
of them, actually have a parallel district court case, as the 
Chairman pointed out at the beginning.
    So you have a choice. You can sue at the ITC, you can sue 
at the district. What are the considerations? I count four. I 
do not know if, in my 5 minutes, I will get through all four, 
but the first one is leverage. Just pure leverage.
    I have an example similar to the one the Chairman opened 
with, similar to the Broadcom case, which I was involved in. My 
example involved one New York company bringing an ITC case 
against another New York company. One was in Manhattan, the 
other was in Long Island. They were maybe 20 miles apart. They 
could have sued in the eastern district of New York, probably 
in the southern district of New York, maybe other places where 
they did business. But the plaintiff who I represented picked 
the ITC because its remedy would be uniquely leveraging--if I 
can use the L word--it gave power--if we succeeded in obtaining 
a recommended exclusion order, that would give a lot of 
leverage.
    Now, the defendant, or the respondent in the case was a 
cable TV company. Most of their business is people installing 
wires, fiber optic cables to homes, and managing central hubs 
where the TV signals come in. They engage with programmers, the 
Hollywood and New York programming.
    So almost all of the American activity of the respondent 
had nothing to do with what we targeted. We targeted the set 
top boxes, which they imported, or some of the components of 
the set top box were imported. We had a patent that covered one 
of the many functions of the set top box.
    So you have got a fairly complicated business doing lots of 
things, but if they want to add a customer, they need another 
set top box; or if a customer's box breaks, they need to 
replace the set top box. The set top box itself is kind of 
complicated, many thousands of functions inside it. We had a 
patent that addressed one of the functions.
    The ITC remedy would allow us to stop them adding 
customers, because one of the many functions in the set top box 
was infringing a patent we owned. So we could go to district 
court, and what I think would have happened at district court 
is, under the eBay case, under the normal balancing of equities 
the district courts conduct, the district court would say, 
``Well, I see a harm to the plaintiff. Your patent is being 
infringed.
    But I see a much greater harm to the defendant because it 
is got a large business that will be disrupted if they cannot 
get set top boxes. In fact, I see a harm to the public because, 
you know, it is basketball season. You want to watch games.'' 
And so, if you balance the harms the way a district court does 
in a normal injunction case, I think the district court would 
have said, ``Well, let's measure your money damages.'' You will 
get money for the patent infringement. Maybe over some period 
of time, the defendant will be required to stop the 
infringement, but no immediate loss of ability to add 
customers. That would not have been the remedy at district 
court. So where do you get leverage? You get leverage at the 
ITC.
    Now, I have also brought injunction cases in the district 
court. I brought a case against a startup telephone company, 
and I won a damage remedy for $50 million, and I won an 
injunction, and I then traded the injunction for all the money 
they had, which was quite a bit more than 50 million. I gave a 
portion of that to intercity educational charities. We were 
pleased to do a little bit of good in the case. But you get 
leverage with an injunction. That was a case where an 
injunction in district court was deserved, based on the facts. 
But the difference between a damage remedy and injunctive 
remedy is, there is a lot of daylight there.
    So just briefly, three other reasons that you might 
consider the ITC instead of a district court, as one of former 
Commissioner Okun's partners advertises, the ITC is less likely 
to invalidate patents, just--that is in practice.
    The same rules apply, but the ITC tends to throw out a bad 
patent about half as often as a district court. The ITC will 
enforce standard essential patents. That is a patent that 
governs a standard. And last, the ITC does not follow what this 
Congress passed in 2011 that says you cannot bring in 30 or 40 
or 50 different respondents in a single case. You have to sue 
them individually in district court. Thank you very much.
    [The prepared statement of Mr. Thorne follows:]
    
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                               __________
    
    Mr. Issa. Thank you. Thanks for your experience. Mr. 
Whitaker.

            TESTIMONY OF MARK L. WHITAKER, PARTNER, 
                    MORRISON & FOERSTER LLP

    Mr. Whitaker. Mr. Chairman and distinguished Members of the 
Subcommittee, thank you for convening this hearing, and for the 
opportunity to testify. It is an honor to speak with you 
regarding this important topic today. I am a partner with 
Morrison and Foerster, and I have practiced before the ITC, 
district courts, and Court of Federal Claims for the past 24 
years. I am currently the president-elect of the American 
Intellectual Property Law Association, and serve as a member of 
the counsel for the ABA section of Intellectual Property Law. I 
appear today in my individual capacity, however, and not on 
behalf of my firm or any of its clients, the AIPLA or the ABA.
    I offer a few litigator's observations about the ITC's 
policies and effectiveness in combatting abusive litigation by 
non-practicing entities, as well as overlapping considerations 
for litigants bringing patent complaints before the ITC and 
U.S. district courts, and I do so referring in part to H.R. 
4829, entitled Trade Protection Not Troll Protection Act.
    Congress intended that the Commission provide the owners of 
intellectual property rights with broad protections against a 
wide range of unfair acts of importation. Section 337 is more 
than a mere surrogate to the district court to the application 
of U.S. patent laws to infringing imports. Instead, it is 
directed to trade protection that is informed by U.S. patent 
law. At bottom, Section 337 protects American jobs and American 
market strength.
    First, with respect to the domestic industry requirement, 
complainants already have to establish that a U.S. licensing 
industry exists related to patents being asserted in cases 
being based on licensing. The proposed legislation would not 
allow the complainant to rely on the licensing activity unless 
it is able to show that, ``The license leads to the adoption 
and development of articles that incorporate the claimed 
patent.''
    While this change could potentially limit the ability of 
NPEs to use the Section 337 in practice, investigations brought 
by such entities do not account for many investigations--three 
in 2014, two in 2015, and just one in the first quarter of 
2016. Further, prior to 2014, entities that manufactured and 
patented articles in the U.S. had a greater burden of proving 
their domestic industry than entities that relied on their U.S. 
licensing activities.
    As recently confirmed by the Federal circuit, however, 
establishing a domestic industry based on licensing now 
requires proof of an article that practices the patent in suit. 
There also needs to be shown a nexus between the asserted 
patent and the U.S. investment in that patent when the domestic 
industry evidence is based on licensing.
    With respect to the public interest issues, the Commission 
introduced new rules that require complainants to submit a 
separate statement providing specific content with respect to 
the public interest factors. These rules also provide members 
of the public, including proposed respondents, an opportunity 
to respond to the complainant's statement and highlight public 
interest issues before institutions so the Commission can 
direct the administrative law judge to make a full record and 
recommendation on such issues in appropriate cases.
    Next, the proposed legislation would require that a 
licensee join an investigation as a co-complainant in order for 
licensing activities to qualify under the domestic industry 
prong. This would require, for example, a research and 
development entity, such as a university, to persuade one or 
more of its licensees to agree to be a co-complainant in order 
to make use of Section 337.
    Also, for example, a technology company that licenses some 
subset of its patent portfolios to others to exploit the 
technology and that does not exploit that particular technology 
itself because of its business structure or economic objectives 
might be impacted negatively by provisions in a bill that tries 
to reduce NPE filings at the ITC. Remember that Congress 
intended to open the ITC up to certain non-practicing entities 
with its 1988 amendments as, ``such a change would enable 
universities and small businesses who do not have the capital 
to actually make good in the United States to still have access 
to the ITC forum for the protection of their rights.'' The 
Commission also unveiled, as was previously stated, a new 100-
day program aimed at providing expedited investigations without 
burden and cost of a full length of investigation.
    For both, legislation may also have the effect of importing 
the eBay injunction criteria into the ITC's public interest 
analysis. But the Federal circuit has held that the eBay 
factors are not applicable in these investigations because of 
the different statutory underpinnings for relief before the 
Commission.
    Moreover, inadequacy of money damages is not applicable in 
Section 337 investigations, and as such, there is no equitable 
balancing of purely private remedial interests, and Congress 
eliminated the need to establish industry in a domestic--to a 
domestic industry and investigation covering the statutory 
acts.
    As I see that my time has come to an end, I will leave the 
balance of my statement for the written record.
    [The prepared statement of Mr. Whitaker follows:]
    
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    Mr. Issa. And we thank you. Dr. Scott Morton.

    TESTIMONY OF FIONA M. SCOTT MORTON, THEODORE NIERENBERG 
       PROFESSOR OF ECONOMICS, YALE SCHOOL OF MANAGEMENT

    Ms. Scott Morton. Thank you very much, Mr. Chairman, 
Ranking Members and Members of the Committee, for the 
invitation to testify today. I am a professor of economics at 
Yale, I am a former chief economist at the Department of 
Justice Antitrust Division, and I have worked on a number of 
ITC cases. The basic problem here is----
    Mr. Issa. Could you place your mike a little closer, 
please?
    Ms. Scott Morton. Is that better?
    Mr. Issa. Much better.
    Ms. Scott Morton. Okay. The basic problem here is that the 
ITC duplicates the function of the Federal courts with a 
different process that gives patent holders power in excess of 
the value of their intellectual property. That power is used to 
extract money from implementers. As the Chairman noted earlier, 
this is mostly a U.S.-on-U.S. problem. Companies like Acacia or 
InterDigital or Kodak against Apple or Dell or Microsoft, and 
this is because, of course, we manufacture so many components 
outside the United States, we necessarily are importing them. 
However, these are not trade disputes.
    The problem that I see with the ITC is not the problem of 
trade disputes. Trade disputes, I think, is a very legitimate 
issue. It has been covered by other people. There is nothing 
wrong with that. But the intellectual property leverage here 
that the ITC gives creates a distortion in U.S. contractual 
negotiations over intellectual property royalties.
    The incentive created by the duplicative but favorable 
court creates forum shopping, and a lot of business for the 
ITC. We have heard some data today that suggest that this is 
going down. I would say that if you count these cases by both 
the number of companies involved, and also by whether the 
patent holder is interested in money damages, rather than 
whether they fall in a narrow bucket called an NPE or a PAE, 
you would get a much larger number.
    So I am talking about cases where it is not that I have a 
widget and you have a widget and I need to block yours because 
I am trying to sell mine, but rather I have intellectual 
property that I would like to monetize, regardless of whether I 
have some widgets in another area that is for sale or not, 
okay?
    So these cases could be pursued in Federal court, and we 
would get an answer that there that was fair and guided by the 
Supreme Court. Note that the business model of licensing does 
not actually want an injunction. If I am licensing, I need you 
to sell in order to take a fraction of your revenue as income 
for me. So I do not actually want the injunction, I want 
leverage, as Mr. Thorne said. And I get less leverage in 
Federal court because it is harder to get an injunction.
    Why is the injunction so useful? It is a huge threat. 
Suppose my royalty ask is 50 cents on a $600 device? The risk 
of exclusion is like a $600 royalty. You cannot sell your 
device. So the correct royalty you would get in Federal court 
might be two cents, but I may be willing to settle for 50 cents 
because I do not like the risk of losing the whole $600 on my 
device.
    So the injunction in Federal court is only given when money 
damages are inadequate, and that is rare. And at the ITC, this 
injunction threat is much easier to get, and so monetizers 
prefer the ITC. This is not about trade. It is about 
duplicative forum shopping in royalty negotiations. This is 
particularly a problem with standard essential patents, as I 
focus on in my written testimony.
    These standard essential patents are patents that are part 
of a standard, such as LTE. And in order to make a compliant 
product, such as a phone that works, you must infringe that 
patent. The owner of that patent has agreed voluntarily to 
charge a friend royalty--fair, reasonable, and 
nondiscriminatory; so that means that they are in the business 
of collecting money. They are licensing their intellectual 
property. An injunction, again, is not, at the end of the day, 
what they want.
    So these patents are ripe for abuse at the ITC because 
there is no way to avoid using them, and the injunction, again, 
gives the owner a very powerful threat. If the implementer is 
not participating in the Federal court system, and we have a 
trade issue, that is one thing.
    But I think most of these cases are actually--as previously 
noted, two-thirds of them are already ongoing in the Federal 
courts; and the courts do very well with regular royalty 
disputes.
    So my policy concern and recommendation is that I think we 
need to eliminate ITC jurisdiction over licensing disputes that 
can safely go to Federal court. This is, as you pointed out, 
you know, the duplication is a waste of everybody's effort and 
resources, and we would get the right answer in Federal court.
    So I hear today also some attention and--to the process 
reforms at the ITC, as if those would be a solution. We have a 
100-day process. We have a domestic industry test. These 
process reforms are a poor substitute for getting rid of the 
incentive in the first place. Process is not going to work if 
you have a determined complainant who has got money that they 
see that they can get. If you eliminate the incentive to go to 
the ITC in the first place, then you do not have to worry so 
much about process.
    So I really do not think the process reforms will do the 
job. Thank you very much.
    [The prepared statement of Ms. Morton follows:]
    
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                               __________
                               
    Mr. Issa. Thank you. It is now my pleasure to recognize the 
Chairman of the full Committee, Mr. Goodlatte, for his opening 
statement.
    Mr. Goodlatte. Mr. Chairman, thank you for your 
forbearance. I want to especially thank Mr. Stoll and Mr. 
Bianchi, to interrupt you right as you were ready to go, but I 
do have to be in two places at one time, so I want to share my 
thoughts.
    Abusive patent litigation is a drag on our economy. 
Everyone from independent inventors to startups to mid- and 
large-size businesses face this constant threat. Many of these 
lawsuits are filed against small and medium-size businesses, 
targeting a settlement just under what it would cost for 
litigation, knowing that these businesses will want to avoid 
costly litigation and probably pay up. And it is this type of 
tactic that has made the International Trade Commission a 
potentially attractive venue for patent cases.
    The ITC has at its disposal the ability to issue exclusion 
orders that block the importation of infringing products into 
the United States. Since the ITC is a Federal agency and not an 
Article III court, it makes sense that it is limited to this 
single remedy.
    In recent years, however, patent assertion entities have 
used the Commission as a forum to assert weak or poorly-issued 
patents against American businesses. It is evident that there 
are cases that have come before the ITC that probably should 
have been litigated exclusively in our U.S. district courts.
    Nowhere is the disharmony between patent law and Article 
III court precedent more on display than the application of 
exclusion orders in technology cases in the ITC. For example, 
Congress established an important counterbalance to the blunt 
sanction of the exclusion order in the public interest test 
provided under Section 337. The statute requires the ITC to 
consider public health and welfare, and the impact of an 
exclusion order on competition in the marketplace before 
issuing an exclusion order.
    Yet the ITC rarely exercises its responsibility to apply 
the public interest test. This failure to follow the law has 
particularly damaging results in today's technology markets in 
which products are often reliant on hundreds or thousands of 
patents. The ITC has the ability to take certain immediate 
steps within its statutory authority to correct these problems. 
The following are some steps stakeholders have recommended the 
ITC take to address this problem.
    First, a return to a pre-2010 domestic industry standard 
that does not allow legal expenses, airplane flights and the 
like to satisfy the domestic industry requirement. Second, 
application of the public interest test and economic interest 
test at the beginning of Section 337 review for purposes of 
determining claims consideration, as well as the issuance of 
exclusion orders.
    And third, based on the public interest and economic 
interest test analysis, articulation of standards that clarify 
which patent disputes should be adjudicated by the ITC, and 
those which are more properly addressed by U.S. district 
courts.
    I look forward to hearing from the rest of the witnesses, 
but I will have to read your testimony since I am about to 
leave. And I do want to say that in addition to those remedies, 
I do think the suggestions of Dr. Scott Morton with regard to 
where the ITC jurisdiction should not exist--and it should be 
exclusively the jurisdiction of Article III courts--is also 
worthy of our consideration.
    So I thank you all for your testimony here today, and Mr. 
Chairman, I yield back.
    Mr. Issa. Thank you, Mr. Chairman. Mr. Stoll.

           TESTIMONY OF THOMAS L. STOLL, PRINCIPAL, 
                      STOLL IP CONSULTING

    Mr. Stoll. Good morning, Chairman Issa, Ranking Member 
Nadler, and Members of the Subcommittee. Thank you for inviting 
me to testify today on patent litigation before the 
International Trade Commission. It is an honor to be here today 
to discuss this very important topic. My name is Tom Stoll, and 
for the last several years I have been advising clients and 
employers, including the ABA's Intellectual Property Law 
section, the Boeing Company, the USPTO, and the White House on 
issues relating to IP litigation and IP-related legislation, 
including proposed changes to the laws to limit litigation 
abuse in district courts and the ITC.
    My advice is informed by more than 20 years of IP 
litigation experience with law firms, the USPTO's solicitor's 
Oofice, as a law clerk and staff attorney with the Federal 
circuit, all in cases filed in district courts, the ITC, the 
Federal circuit, and the U.S. Supreme Court. I would like to 
emphasize that I am testifying on my own behalf today and not 
on behalf of my current client, the ABA.
    While ITC filings by patent owners certainly spiked in 
2011, over the last few years the ITC has made great strides in 
reducing the risk that ITC proceedings can be misused. The 
ITC's own statistics show that the number of investigations 
instituted has dropped to historically consistent numbers, and 
that the number of filings by non-practicing entities is lower 
than it was before the jump in overall filings.
    To the extent the ITC had a patent troll problem, it 
appears the Commission has addressed it. U.S. patent laws are 
extremely beneficial to society, by providing the incentive for 
inventors and companies to invest in the development of 
groundbreaking new technologies, knowing their investment can 
be protected, often enabling startups and other small companies 
to secure the funding they need to grow.
    The ITC is charged with preventing unfair trade practices, 
including the theft or unauthorized use of intellectual 
property. It has the extraordinary authority to issue general 
exclusion orders barring all imports that infringe a patent.
    In the U.S. Supreme Court's 2006 decision in eBay vs. 
MercExchange, the court held that a district court cannot 
automatically issue an injunction in a patent case. Patent 
owners, including non-practicing entities, began asserting 
their patents in the ITC with much greater frequency. The ITC 
had become a more attractive venue for those seeking the threat 
of an injunction, and many argued, was being used to extract 
unjust settlements.
    Two recent developments, however, have significantly 
reduced the risk that an ITC proceeding based on frivolous 
claims could be used to unjustly extract a settlement. First, 
the Commission has applied the domestic industry requirement 
much more rigorously. Second, the ITC has instituted a 100-day 
program to quickly dispense with cases that lack merit, and 
thereby preventing abuse.
    Additionally, recent U.S. Supreme Court decisions 
significantly limiting the scope of patent-eligible subject 
matter and requiring greater clarity and patent claiming may 
also deter some patent owners from filing claims of 
infringement in the ITC. As a result, the number of cases 
instituted by the ITC has dropped in recent years from 69 in 
2011 to 36 in 2015. Non-practicing entities were the 
complainants in only two of the 36 investigations instituted 
last year.
    Let me explain how the ITC has changed its application of 
the domestic industry requirement. Under that requirement, a 
party much show that there is a significant or substantial 
investment in a U.S. industry that requires protection. Until 
very recently, a patent owner could satisfy the requirement 
simply by establishing the substantiality of its economic 
investment and licensing activities.
    In the last few years, however, the Commission began to 
require more, and the Federal circuit now seems to agree. In 
Motiva, for example, the Federal circuit affirmed the 
Commission's finding of no domestic industry, stressing that 
the complainant must show that the licensing program was being 
used to encourage adoption and development of articles that 
incorporated the patented technology.
    In LSI, the Federal circuit again affirmed a Commission 
determination that a domestic industry did not exist because 
the complainant's licensing activities did not relate 
specifically to articles protected by the asserted patent.
    The ITC's new 100-day program is designed to help companies 
avoid the significant expense associated with litigating a 
full-blown proceeding where the claim is baseless, and to deter 
those seeking to leverage that expense to extract an unjust 
settlement. It enables the Commission to quickly resolve an 
investigation by requiring that the ALJ rule on a dispositive 
issue, such as lack of domestic industry, within 100 days of 
institution of the investigation.
    These efforts and the resulting reduction, in the number of 
cases that have been instituted in the last few years, appear 
to have gone far to address concerns that the ITC has become an 
attractive forum for patent owners whose cases lack merit, and 
who seek to leverage this proceeding to extract an unjust 
settlement. I am grateful to the Subcommittee for taking the 
time to conduct this hearing and for taking a close look at 
this important issue. I am honored to have been invited to 
speak with you today, and look forward to answering your 
questions. Thank you.
    [The prepared statement of Mr. Stoll follows:]
    
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    Mr. Issa. Thank you. Mr. Bianchi.

 TESTIMONY OF DOMINIC BIANCHI, GENERAL COUNSEL, UNITED STATES 
                 INTERNATIONAL TRADE COMMISSION

    Mr. Bianchi. Mr. Chairman and distinguished Members of the 
Subcommittee, my name is Dominic Bianchi, and I am the general 
counsel of the U.S. International Trade Commission. Thank you 
for inviting me to appear today before you. As Mr. Conyers 
noted earlier on, the Commission is an independent quasi-
judicial Federal agency. We are actually more unique than any 
other independent agency or commission that is out there. We do 
not do policy. We do not address policy. That is for Congress 
and the executive branch to do.
    So I want to assure you that the Commission implements the 
law that Congress has passed. We will continue to implement 
that, based on the interpretations by the Federal circuit until 
Congress amends the law. If Congress does amend the law or the 
Federal circuit changes one of our decisions, we will implement 
that policy.
    In Section 337 cases, however, the Commission sits akin to 
an Article III Court, as mentioned before, in hearing cases. 
The overwhelming majority of investigations that occur under 
the Section 337 before the Commission are based on claims of 
patent infringement. If a violation is found, as noted earlier, 
the statute allows for only two types of remedies, at the ITC--
an exclusion order and/or a cease-and-desist order.
    The Commission focuses on conducting expeditious, fair, and 
technically sound decision-making to resolve allegations of 
intellectual property infringement and other unfair acts. 
Similar to the Federal courts, a Section 337 investigation 
includes all aspects of patent disputes, including topics 
relating to validity, infringement, remedy, and competitive 
conditions. We apply the same law that the district courts do.
    What differentiates the Commission, however, from Federal 
courts is that the Commission does not institute an 
investigation before the sufficiency of a complaint is 
assessed. This assessment includes the agency requesting input 
from the potential respondents and the public regarding whether 
there are statutory public interest considerations raised by 
the complaint. At the time of institution, if the Commission 
determines that there are any particular case-dispositive 
issues that may resolve the investigation within a matter of 
months, it may place it in an early disposition program, as 
mentioned earlier today.
    Also as you have heard, the Commission has established a 
practice of responding to community input by initiating a 
variety of programs to more efficiently and expeditiously bring 
to a close those matters that otherwise would impose undue 
costs on parties, the Commission, and the broader system.
    The Commission also determines whether the public interest 
considerations warrant the development of a full factual record 
regarding the statutory public interest factors, and thus it 
can delegate this issue to the administrative law judge for 
fact-finding. Once the investigation begins, the agency 
develops a complete administrative record based on discovery, 
provides a full and fair opportunity for the parties to present 
testimony and cross-examination at a hearing, and provides the 
parties with the opportunity to provide written briefs. The 
Commission staffs its investigatory process with IP experts, IP 
attorneys and qualified ALJs solely dedicated to adjudicating 
IP cases.
    After the ALJ issues a final, initial determination, the 
parties have the opportunity to petition the Commission for 
review. Typically, if the Commission determines to review, it 
will ask the parties to respond to specific questions, 
including specific questions regarding the public interest 
factors.
    If the Commission finds a violation and a remedy, and 
issues a remedy, the President of the United States has 60 days 
to review the order and determine whether to disapprove the 
order on policy grounds. Appeals of the Commission's decisions 
in Section 337 investigations are made to the U.S. Court of 
Appeals for the Federal Circuit--the same court that reviews 
patent decisions of the district courts.
    The Commission recognizes the statutory mandate to resolve 
cases at the earliest practical time and has taken a variety of 
steps to do so. These include developing pilot programs, 
developing new procedural rules, and substantial investment in 
the Commission's electronic record system for case management. 
The Commission routinely seeks input in its processes and 
diligently considers feedback from stakeholders on ways to 
improve the processes and procedures. I welcome the Committee's 
views. Thank you.
    [The prepared statement of Mr. Bianchi follows:]
    
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    Mr. Issa. Thank you. I will now recognize myself for a 
question. And do not turn off your mike, Mr. Bianchi. I will 
ask you the first question. Since I think four of the six 
witnesses mentioned the pilot program: how many cases have been 
adjudicated under the pilot program?
    Mr. Bianchi. The former--and so, whether there is one 
case----
    Mr. Issa. Is one not the right answer?
    Mr. Bianchi. Sorry, sir. One is the correct answer under 
the pilot program. Under the previous program before we 
developed the pilot program, there was another case that the 
Commission essentially did.
    Mr. Issa. Okay. So a lot of talk about a program that has 
hardly ever been used at this point. So I have high hopes for 
the future that it does something, but I noticed nobody talked 
about the benefits and successes of the program, only that it 
existed. And I bring that up because I want the record to be 
clear that it is pretty premature to talk about a pilot 
dismissing cases that are frivolously brought at this point. 
Hopefully, it will be a factor in the near future.
    Mr. Whitaker, you brought up a point, and I just want to 
make sure that I amplify it by asking it. Currently, is it your 
understanding that the ITC does not have to meet a standard of 
harm to a licensee? In other words, when a non-practicing 
entity brings a case in which they have one or more licensees, 
currently they do not have to show that there would be any harm 
to that licensee, and the licensee does not have to assert any 
harm if the importation continues. Is that correct?
    Mr. Whitaker. When you say ``does not have to show harm,'' 
in effect, there is harm that is demonstrated, and that harm is 
demonstrated through a few means--the active importation, the 
active infringement, and then the damage to the domestic 
industry of that license.
    Mr. Issa. Right, but the domestic industry damage--let's 
just say that as has happened in real cases, that somebody goes 
and gets a licensee on an interpretation of the product, and a 
completely different product is being imported--not in the same 
market, not affecting it at all--that domestic market rule 
still is used by the ITC.
    In other words, one licensee who may have just paid a 
license in order to make the case go away, who would not assert 
that they even believe that they infringed the patent, but 
rather they simply paid it because somebody came to it and it 
was cheaper to settle than to fight it, that person is not a 
participant under current law and does not have to be in any 
way a plaintiff, or even assert that they are using what they 
have licensed. Is that correct?
    Mr. Whitaker. If I follow the Chairman's line of logic, I 
think that is correct.
    Mr. Issa. Okay. Ms. Okun, you know, you had a very long 
time on the Commission, and probably the most senior person we 
could ask for advice. Is that not a question that has not been 
formally answered in the history of the ITC? In other words, as 
you as a trade entity have looked to meet the congressional 
obligation that there is a domestic industry, has there not 
been, if you will, a minimalization of that test, and is that 
not one of the challenges? And it is not the main thrust for 
today, but is it not a fact that it only takes sort of a straw 
to get the requirement when it comes to patent licensing?
    Ms. Okun. Mr. Chairman, I would disagree with you.
    Mr. Issa. Okay. Can you name a case during your decade of 
service in which there was a license and that you ruled that 
the entity was not entitled to a domestic market even though 
there was a domestic license granted?
    Ms. Okun. I mean, for the record, I would be happy to 
provide many of those cases, but I think the point, if I 
understand, or----
    Mr. Issa. For the cases where the ITC said yes, you have 
got a license and yes, somebody is importing, but we are going 
to turn down the domestic market, we are going to find that you 
did not meet it.
    Ms. Okun. Right, there are cases where, in looking at the 
domestic industry requirement, which requires a substantial 
investment and exploitation in the patent where licensing--
having a licensee is not enough. They often bring them into--or 
they are often part of a case because it is part of, if you do 
not manufacture, that you have a licensee.
    But the Commission, if anything--I mean, it is interesting 
to hear the reference to the--Chairman Goodlatte's reference to 
pre-2010 law because I would say that--post-2010--I would be 
curious what my colleagues say; I think there has been a 
heightening of the threshold with respect to domestic industry 
with----
    Mr. Issa. Well, I appreciate that, and I want to quickly 
run up an additional question for every member of the panel. I 
mentioned and others have mentioned the Dell, Kodak, Apple, 
obviously Qualcomm, Broadcom. How many of you believe that 
those cases were appropriate for the ITC; that in fact they 
were the most appropriate remedy?
    Please raise your right hand if you believe they were 
appropriate to be before the ITC as trade importers. I have 
one. Two. You believe that that was--okay, three. How many of 
you believe that it was not appropriate to have these 
substantial multibillion dollar companies in a trade dispute 
before an administrative court while they all were 
simultaneously in Article III courts? Okay.
    So I have three, two, and Mr. Bianchi is not entitled to a 
vote, apparently. Okay, there will be more questions, but I 
want to be respectful of the time, and with that I recognize 
the Ranking Member, Mr. Nadler.
    Mr. Nadler. Thank you, Mr. Chairman. Mr. Thorne, you 
testified, with respect to the leverage, that the ITC process 
gives someone--where they can get relief where you could not 
get an injunction in court because of the--presumably the 
balance of equities that would not yield an injunction. Do you 
think it is right you should be able to have a forum to get 
relief when on the balance of equity you could not get relief?
    Mr. Thorne. My personal belief, not on behalf of any 
client, is that----
    Mr. Nadler. Well, that is granted.
    Mr. Thorne [continuing]. The Supreme Court's law--and in 
fact, the history of the court's application of equitable 
principles is the right way to approach that. Injunctions are 
powerful tools. They are sometimes necessary, they are 
sometimes just the right remedy. I have won them and thought I 
was right in winning them. But if money will work, that is the 
alternative. If your harm as a plaintiff is less than the harm 
you are inflicting, it is appropriate to deny the injunction.
    Mr. Nadler. That is the balance of equities test that a 
court of equity, the Article III court, will do. Now, the ITC 
does not use that balance of equity, so my question is, is it 
right as a matter of equity and fairness that we have a forum 
where those equitable principles are bypassed?
    Mr. Thorne. You see, this is a confusion I have, and I 
apologize for--I hope this answers the question. 337C, which 
lists what does the ITC do if it finds a violation, says ``all 
equitable defenses may be presented''--in all cases. The ITC 
has power in its current statute to recognize equitable 
defenses.
    The ITC, when eBay was decided by the Supreme Court, could 
have said, ``You know what? We are going to improve our 
process, too. We are going to balance the equities, because 
equitable defenses are in our statute.'' And they made a 
choice, ``Nah, eBay is not for us. Our statute is different.'' 
And the Federal circuit supported that out of Chevron 
deference, so they chose a different path.
    Mr. Nadler. So you have a forum where they can bypass the 
normal equitable balancing of--the normal balancing of equities 
and issue a contrary decision with a powerful--not injunction--
a powerful exclusion which has the effect of an injunction?
    Mr. Thorne. That is correct.
    Mr. Nadler. Dr. Morton, would you comment on that?
    Ms. Scott Morton. I am not going to comment on the law, 
because that is not my area of expertise, but----
    Mr. Nadler. Do you think it is right that we have such a--
--
    Ms. Scott Morton. It is a great tool when you have actual 
trade disputes where you have an infringing thing that is 
coming in where you cannot go to Federal court and get money. I 
think when you have these cases--a lot of the problem here has 
arisen because we have many products now that infringe on 
thousands and thousands of patents. Your average device, set 
top box or handset or whatever, reacts on thousands and 
thousands of patents.
    So the example I gave before of the $600 device and a two-
cent royalty, is very often the case. And what the ITC is doing 
is essentially imposing a $600 royalty with an exclusion order, 
and I do not think that is right.
    Mr. Nadler. So you are saying, in that kind of a case, an 
Article III court with a balance of equities test would be much 
less of a blunt instrument.
    Ms. Scott Morton. Exactly.
    Mr. Nadler. Ms. Okun.
    Ms. Okun. Mr. Nadler, I would like to counter that with 
respect to a couple things about eBay. First, it is not as if--
I was on the Commission in, during this period--so speaking for 
myself, it was not as if the Commission looked at what happened 
and said, ``Oh, we do not want to do that.'' The Commission 
looked at the Section 337 statute, which does provide for all 
equitable defenses, but the Section 337 has additional 
safeguards. There is a public interest test--one of the parts 
of the injunction test. It applies a public interest test. 
There is an additional safeguard. The President can disapprove 
any exclusion order at the end for any policy reason, and 
Congress only gave--again, it is an independent agency, just 
like you have a PTO and others--only gave the ITC one remedy, a 
border remedy, exclusion order to cease-and-desist and consent.
    Mr. Nadler. I understand that. I am concerned--I am hearing 
this--I am concerned about why, as a matter of policy, we 
should have a separate remedial forum that is not subject--
although it can use--is not subject to normal equitable 
balances. And let me ask one further question first, Ms. Okun 
and maybe Mr. Thorne and Dr. Morton. In most administrative 
agencies, you can remove a case to Federal court. That would 
seem to be a safeguard. Here you cannot. Should you be able to?
    Ms. Okun. Well, it is actually the opposite, which is you--
I mean, because of our international trading obligations, you 
can stay the district court actions. So if there is both, you 
would stay--you can stay.
    Mr. Nadler. But why not go the other way around?
    Ms. Okun. Well, the statute does not allow that.
    Mr. Nadler. I understand that. Why should we not--I am 
asking what should the statute say, not what does it.
    Ms. Okun. Well, so I am going to answer from the trade--or 
the perspective from how you would do that, because what the 
statute tells you is if they are imports, okay? It does not 
matter if it is import by a U.K.-headquartered company out of 
China, or a Chinese company, or an American company, right? An 
import is an import, and that is what the Commission has to 
look for, for its jurisdiction for the case. Domestic industry, 
again, it relates to its activities in the United States, not 
actually where it is headquartered.
    So, again, I see it from a different perspective, which is 
the statute does not--the statute gives a trade remedy--which I 
think is an effective trade remedy--and again, I would think is 
a complement to the district court, particularly for those 
companies who are looking to stop infringing goods at the 
border and keep them out of the United States.
    Mr. Nadler. My time is expired, but I would like to hear 
Mr. Thorne's comment and anyone else who wants to comment on 
that.
    Mr. Issa. That would be okay.
    Mr. Thorne. I just want to strongly say that, in my 
personal view, if a district court remedy is available, that is 
where the case belongs. There are some situations----
    Mr. Nadler. So it should be removable.
    Mr. Thorne. It should be exclusive. There would be no 
reason for the ITC to do something duplicative. The ITC should 
dismiss an investigation that either has been filed in a 
district court--in a parallel case in a district court or could 
be filed in a district court, because otherwise it is not just 
that you have got two forums that would be available. One forum 
has very different rules and will attract cases that can 
exploit those differences.
    Mr. Issa. Mr. Marino, if I could have your indulgence just 
to make sure we make something clear that Ms. Okun said, is it 
your assertion today, as a former chair of the ITC, that the 
Federal court, an Article III judge, has no authority to tell 
the ITC to stay its transactions, that under statute they are 
limited and do not have that authority?
    Ms. Okun. Does the Federal court--does the Federal district 
court have the ability to stay that?
    Mr. Issa. When you were chair, if you received an order to 
stay your case from an Article III judge who had the same case 
before him, you would assert that you had a statute which did 
not allow you to honor that order.
    Ms. Okun. Right, but the statute actually says the 
opposite, that the respondent could move to stay the district 
court.
    Mr. Issa. Okay. I just want to make sure that is clear for 
the record, because it is critical to--I think----
    Mr. Thorne. Mr. Chairman, may I follow up on that for just 
a second?
    Mr. Issa. As long as Mr. Marino does not mind.
    Mr. Thorne. The situation that Doctor Scott Morton referred 
to, where you have a standard essential patent, a patent 
necessary to practice a standard, where the patent holder has 
promised to seek only a reasonable royalty--not to go try to 
shut you down, but only seek a reasonable royalty--in that 
situation, it may be an example where you could go to a 
district court and say, ``Wait a minute. The patent holder is 
doing something beyond what it promised to do. Please make them 
stop.'' And you get an injunction not against the ITC but 
against the attempted assertion by the person that had 
committed to fair licensing.
    Mr. Issa. Thank you. Mr. Marino, thank you for your 
indulgence. You are recognized.
    Mr. Marino. Thank you, Chairman. Dr. Scott Morton, you 
talked about there should be situations where the courts, 
Federal courts, should be involved, and not the ITC. Could you 
give me an example or two of a case or cases, any why?
    Ms. Scott Morton. Sure. I would rather actually speak just 
generally about the features of the cases that would lead to 
that.
    Mr. Marino. That is fine.
    Ms. Scott Morton. So why? Let's take a standard essential 
patent example, as Mr. Thorne just described--there the 
license--the holder of the patent has already agreed that it 
wants money. So if there is a dispute over how much money, that 
is properly dealt with in the district court, and we do not 
want consumers to suffer the loss of that product from the 
store shelves or the implementers to face a loss of business, 
because really you are just arguing over whether it is 2 cents, 
3 cents, or 10 cents.
    Mr. Marino. Okay. How does timing fit into that with a 
situation where a court may settle it quicker or the ITC may 
settle it quicker?
    Ms. Scott Morton. The court can award interest, can award 
any kind of compensation to the holder of the patent that it 
deems to be fair.
    Mr. Marino. But is that the end of litigation, though?
    Ms. Scott Morton. At the end of the litigation, you have an 
answer.
    Mr. Marino. Right, the whole process.
    Ms. Scott Morton. Yep, we go through the whole process. We 
get an answer. What is the damage? What is the fair royalty? 
What is the appropriate payment to make? The owner of the 
patent whole, now that we know it is a valid patent, infringed, 
and here is how much it is worth.
    Mr. Marino. Thank you. Ms. Okun, you have heard my 
question. Do you want me to repeat it? Okay. And you heard the 
response from Dr. Scott Morton. Given the ITC's position on 
Federal Court vs. ITC--and let's talk about streamlining too, a 
little bit.
    Ms. Okun. But to be clear, I am not giving the agency 
perspective on this question, but just my own personal 
perspective.
    Mr. Marino. I understand that. I am going for your 
experience.
    Ms. Okun. But again, I see the ITC as playing a 
complementary as opposed to redundant role, and I see it as an 
additional tool. And so I guess when I hear these questions, I 
wonder why you would say to a patent owner that Congress has 
authorized--you know, is authorized in a statute to bring a 
case to the ITC, we want you to not seek fast, effective 
relief, but we want to send you over to the district court, 
which is often longer and be more expensive.
    And in some cases damages are not what a company is looking 
for, particularly in a high-tech industry where what is 
important is getting your product to market quickly. If you 
look at an exclusion order, for example, for OtterBox, which 
was just trying to stop--because the smartphones change so 
much, OtterBox needed to get its products in quickly. Without 
an exclusion order--it was not looking for damages. It wanted 
to get its products out in front, and not the infringing 
products. So I guess that would be an example that I would give 
where I just do not see damages as always being the best 
remedy.
    Mr. Marino. Okay, thank you. Attorney Bianchi, am I correct 
when--understanding that you said the omission has two sources 
of remedy exclusion and cease-and-desist?
    Mr. Bianchi. That is correct.
    Mr. Marino. No injunction.
    Mr. Bianchi. That is correct.
    Mr. Marino. Tell me the difference, because I heard one of 
the panelists referred to exclusion as akin to an injunction. 
Could you explain that to me, please?
    Mr. Bianchi. So in a district court where an injunction is 
available, in essence the court would be saying to one of the 
parties, you cannot do something.
    Mr. Marino. At any given time, early on in a case--and we 
are not talking about the end of the case, correct? An 
injunction--a court can order an injunction early on if the 
evidence is there.
    Mr. Bianchi. It depends.
    Mr. Marino. If they meet the criteria.
    Mr. Bianchi. If the judge were to feel that the evidence 
were there and requirements were met for injunctive release, 
then yes.
    Mr. Marino. Okay, I am going to cut to the chase here. You 
have stated that unlike the Federal courts, the Commission does 
not institute an investigation before the sufficiency of the 
complaint is assessed. What can you do--and how long does that 
take? Let's start with how long did--was--an average 
investigation take, because that--I am looking at individuals, 
small businesses, small entrepreneurs with patents who they 
want their patent--they want to get it out. They want to 
continue to make money.
    Without any injunctive power, based on the fact that you do 
an investigation, there is a long time--there could be a long 
period of time by which that individual is waiting for a 
decision from the Commission. Is that correct?
    Mr. Bianchi. Sorry, sir. Mr. Chairman, do I have----
    Mr. Issa. He was very indulgent with the prior question.
    Mr. Bianchi. I just wanted to make sure. So I think it is 
actually the reverse of what you are saying. The Commission is 
typically much faster than a district court. So let me give you 
an example.
    Mr. Marino. Okay.
    Mr. Bianchi. At the Commission, once a case is instituted 
by the Commission, you will get to a hearing before an ALJ 
within about nine and a half months. In a district court, it 
could easily be two and a half years.
    Mr. Marino. But you could have an injunction long before 
two and a half years in a Federal court.
    Mr. Bianchi. If the Federal court felt that the measures 
were met, but most likely what I was trying to articulate, sir, 
under where we differ from Federal courts----
    Mr. Marino. I understand.
    Mr. Bianchi [continuing]. Is that we have very specific 
pleading requirements that--and requirements before we 
institute. The Commission has 30 days to decide whether or not 
those requirements are met, whereas in a district court 
proceeding, you have a notice pleading in general.
    Mr. Marino. A notice to appear before Federal court.
    Mr. Bianchi [continuing]. And it could be a year later 
before you get to the point where we are at after 1 month at 
the Commission.
    Mr. Marino. Thank you. And, Chairman, thank you for the 
extended time.
    Mr. Issa. Thank you. And with that, the gentlelady from 
California, Ms. Chu.
    Ms. Chu. Mr. Thorne, you and other witnesses argue that the 
Supreme Court's decision in eBay vs. MercExchange, which made 
receiving an injunction more difficult in Federal court, had 
the effect of entities moving forward to the International 
Trade Commission. At the ITC, these entities could pursue an 
exclusion order with less vigorous tests. You also state that 
the ITC is an attractive forum for non-practicing entities 
because the ITC and district courts apply divergent joinder 
rules. Could you describe what effect this has on cases moving 
forward at the ITC?
    Mr. Thorne. Thank you for those questions. First of all, on 
the effect of the Supreme Court's eBay decision, it is been my 
experience that that caused a shift, but it was also the ITC's 
own experience. So in their 2012 budget request, they wrote to 
Congress. Since the United States Supreme Court 2006 eBay 
decision, which has made it more difficult for patent holders 
that do not themselves practice a patent to obtain injunctions 
in district court, exclusion orders have increasingly been 
sought by non-practicing entities that hold U.S. patents. That 
is the ITC writing to Congress in its 2012 request.
    Now, the numbers of NPE cases reached a peak in, I think, 
2011 or 2012. I reported numbers in my testimony based on--
there is a company that is good at analyzing these cases called 
RPX. But what we counted was not the number of investigations 
launched, but the number of companies sued. And under the 2011 
American Invents Act, in Federal district court, you now have--
you cannot sue 30 companies or 40 companies or 50 companies 
that you say all infringe the patent. You can only sue people 
that are involved in the same transaction or occurrence.
    And so what the ITC can do with one case against 30 
companies, this is the same thing that would be 30 cases in 
Federal district court. Counting it that way, the NPE docket of 
the ITC is still at about one quarter.
    Ms. Chu. Well, Mr. Stoll, you also state the eBay case may 
have made the ITC an attractive venue. I understand that in the 
last few years the ITC has taken steps to free--to try to weed 
out these frivolous claims. And can you describe how the ITC 
altered the licensing prong within the domestic industry test 
to address frivolous claims? And what effect did it have in the 
Federal circuit? And also, Ms. Okun, if you could respond to 
what was said.
    Mr. Stoll. Yes, I can. I think the ITC has done a better 
job of requiring the evidence linking the licensing effort to 
the particular--the patent involved to the particular product 
that the license relates to so that, you know, we are not 
comparing apples to oranges. So the products that are subject 
to the license should be pretty closely related to the product 
that this patent owner is seeking to have excluded.
    So it is the relationship there that they have tightened up 
the standard--the burden of proof has gone up. I think what is 
going on here is although there was only one case subject to 
the pilot program and there was another case before that, but 
what is going on is practitioners are getting together with 
their clients and discussing, given this higher burden of 
proof, should we even try to file in the ITC or not? And I do 
believe that even the pilot program, as well as the Federal 
circuit cases that are supporting the Commission's efforts to 
tighten up the standard, have discouraged people from bringing, 
you know, at least frivolous claims to the ITC, which I think 
is the goal here.
    Ms. Chu. Ms. Okun?
    Ms. Okun. Oh, I would agree with those comments. I mean, I 
think if you, again, look at the numbers--and just to back up 1 
minute about the budget justification, of course, when an 
agency is trying to evaluate it--having been there when we were 
doing budget justifications, when you are trying to say what 
our case load is, it is better to overestimate than to 
underestimate in terms of your funding, so I think that 
explains some of that.
    Because if you actually look at the numbers post-2011, they 
have gone down. And I think the point is, there have been 
changes both in the case law and with the Commission taking its 
own steps to--with the 100-day program and--which is in 
rulemaking right now for additional changes. So you see a 
decline.
    There were three cases, two cases, and we are talking about 
a very small number of cases at the ITC, and I think that, 
again, these--the case law and the administrative actions have 
sent a strong message to lawyers and clients. Do not come to 
the ITC unless you can walk in the door with a complaint that 
is sufficient.
    Ms. Chu. Mr. Thorne, what are your thoughts on these 
changes and the fact that the number of cases are going down?
    Mr. Thorne. The number of cases, as I said, is probably not 
the way you want to measure it. The way you want to measure is 
the number of companies that are sued. Each company will be 
allowed and will need to present its own claim constructions, 
its own non-infringement defense, its own invalidity defense.
    There is some coordination between companies, but there is 
also often a difficulty to get everybody on the same page 
because they have got different products that are differently 
accused. It is a kind of bedlam where in 2011, as part of the 
America Invents Act, Congress said for district courts we are 
not going that anymore.
    In district court, it is not enough to say you all infringe 
the same patent. You are entitled to your own day in court and 
a separate case. So taking the cue from Congress, I would count 
the numbers based on how many respondents are sued. And by 
those numbers, one quarter of the cases at the ITC over the 
last 3 years have been NPE cases.
    Ms. Chu. Ms. Okun wants to respond. Could she?
    Mr. Issa. Briefly.
    Ms. Okun. Just a note on the number of respondents two 
things. One, post the Broadcom v. Qualcomm litigation, after 
the Federal circuit decision, parties have to name the 
downstream producers, and so there was increase in the number 
of respondents because you had to name everyone in order to get 
the jurisdiction.
    Two, it is true that at the ITC, one of its advantages for 
someone facing foreign imports coming in from a whack-a-mole 
Chinese company, here, there, and everywhere, can name 
everybody and get an exclusion order against them without 
having to go to district court several times. And there are 
many cases in my written testimony where I point that out.
    Ms. Chu. Thank you. Thank you, I yield back.
    Mr. Issa. Thank you. Ms. DelBene.
    Ms. DelBene. Thank you, Mr. Chair. Thanks to all of you for 
spending time with us today. As you know, the DOJ opposes 
mergers or acquisitions when it finds that a transaction would 
unduly concentrate market share, eliminate competition to the 
detriment of consumers. So, for example, GE withdrew an 
attempted sale of its appliance business to Electrolux after 
the DOJ filed suit to block the sale based on similar types of 
concerns.
    So I wanted to start with Dr. Morton. Do you think some of 
the same market conditions appear in ITC investigations and--
where a complainant seeks to ban a large percentage of products 
and players in question?
    Ms. Scott Morton. It is not the same concern that you have 
with a merger, because it is not the case that the two firms 
are getting together. But there is consumer harm. Where does 
the consumer harm come from? Well, as I said, let's say we have 
a $600 device and the owner of the patent asks for 50 cents in 
royalty and should be paying only--should be getting only two 
cents. That extra 48 cents is passed on to the consumer.
    Some fraction of that is passed on to the consumer. Let's 
assume there are 20, 50 firms all engaging patent holders, all 
engaging in this behavior. The price of that product will be 
higher. The consumer will be harmed. There is going to be less 
incentive to make that product better and include more 
features, if that is going to attract more people suing you at 
the ITC. So it does create consumer harm. It is the problem I 
wrote about in my testimony, hold-up, and it is of concern. The 
tech industry is a very important American industry, and it is 
being harmed by these patent assertion entities that are 
extracting profits from implementers way in excess of the value 
of their technology.
    Ms. DelBene. And Mr. Bianchi or Ms. Okun, do you feel--
yeah, how does the ITC take into consideration the effect on 
competitive conditions when you are looking at your public 
interest analysis? You can look at each other and decide who 
wants to go first.
    Mr. Bianchi. Well, I have to answer from the perspective of 
the Commission, which sits in this instance as a court. So I 
cannot address specifics other than to let you know that we are 
statutorily required to consider four public interest factors, 
including competitive conditions in the United States, and also 
the effect on consumers. The Commission does that when it 
considers a remedy. And as was noted earlier, there is an 
additional backstop there that the president can disapprove any 
recommended remedy within 60 days based off of any policy 
consideration.
    Ms. DelBene. Ms. Okun, go ahead.
    Ms. Okun. Briefly, my perspective on that, which is, as Mr. 
Bianchi states, it is correct. The Commission does look at that 
before imposing any remedy. And I guess my question is, it is 
almost like proving a negative. In other words, if all these 
technology companies that have somehow come to the ITC, if 
their actions have proved to stifle innovation, I do not see 
the evidence of that.
    I mean, if you look at what is going on in mobile 
communications, all these things, I mean, there is leaps and 
bounds. And I think I come from the perspective that what you 
do not want to do is de-incentivize those companies that are 
making these strides from having the ability to seek an 
exclusion order when necessary and--but the Commission should 
look at it carefully and see if there are other products in the 
market and make sure that those competitive conditions are 
maintained.
    Mr. Thorne. Could I jump in with a supplemental answer?
    Ms. DelBene. Certainly.
    Mr. Thorne. When Ms. Okun was the chair of the agency, 
there was the dispute that the Chairman mentioned between 
Broadcom and Qualcomm. The one patent on which everything 
hinged was an idea for how to save battery life on a phone. All 
the phones that were imported into the U.S. using 3G 
technology, all the phones, were threatened by a battery-saving 
idea. There are millions and millions of--these are marvels of 
engineering--there are millions of functions embedded in these. 
There are some fraction of a million patents that read on those 
functions. This is a battery-saving idea that was worth 
pennies.
    And the administrative law judge, using what I would have 
thought was a district court-like common sense, said, ``I see 
the violation. The battery patent is infringed. But we are not 
going to have an exclusion order. The Commission reversed that 
and said, ``No, we are going to have an exclusion order against 
not just the chips that were defended by Qualcomm, the party in 
the case, but all these other people that were not there. Their 
phones were going to be excluded.
    Ms. DelBene. Dr. Scott Morton, you looked like you were 
going to----
    Ms. Scott Morton. Yeah, thank you. The issue of stopping 
the ITC from excluding a product does not create disincentives 
for innovation. A party that has a great patent can go to 
Federal court and explain why their patent is great and get a 
fair return on that innovation. What the ITC allows that party 
to do is get, as John just said, the whole value of the phone, 
which is not the value of the battery-saving patent. You want 
them to be able to go to a judge and explicitly explain what 
the value of the battery-saving patent is and get paid for 
that. And that then stimulates innovation that we want in all 
sorts of features like batteries.
    Ms. DelBene. Thank you. My time has expired. I yield back, 
Mr. Chair.
    Mr. Issa. Thank you. We now to go the other--oh, no, Mr. 
Jeffries of New York.
    Mr. Jeffries. Thank you, Mr. Chair. And I want to thank the 
witnesses for your presence here today and the informative 
testimony today. I will start with Ms. Okun. The ITC 
proceedings are limited in terms of the ultimate remedy to 
equitable relief. Is that correct?
    Ms. Okun. Limited--excuse me--limited to an exclusion order 
or a cease-and-desist order.
    Mr. Jeffries. Okay. Now once that determination is made as 
to what the appropriate remedy would be, either cease-and-
desist or an exclusion order, there is then a process, as I 
understand it, for the--I guess it is called the Office of 
Unfair Import Investigations. Is that correct?
    Ms. Okun. There is an Office of Unfair Import 
Investigations, correct.
    Mr. Jeffries. And what exactly is the role that they play 
in an ITC proceeding?
    Ms. Okun. Maybe we can do two questions. I think your first 
part was what does the Commission evaluate before it would 
impose one of these remedies, and that there is a public 
interest test that the Commission goes through. And I would 
note it is one of the changes that the Commission has made in 
the last few years to allow the administrative law judge in a 
case where they think that there might be public interest 
issues, including with respect to components to take evidence.
    And so the administrative law judge can develop a record 
that would then be before the Commission when it looks on 
impact on consumers, public health and welfare, competitive 
conditions, and like indirectly-competitive products. So that 
evaluation is a very important part of what the Commission 
does. With respect to the Office of Unfair Import 
Investigations, I am actually going to turn that over to Mr. 
Bianchi. I could explain it, but because it is a Commission 
agency I think it would but helpful to have him elaborate on 
that.
    Mr. Bianchi. So if I understand your question correctly, 
sir, the Office of OUII, as we refer to it, serves several 
different functions. But it is a separate--during an 
investigation, it serves as a separate, independent body. So it 
is a party, sorry, not body. So it serves the role of not one 
of the parties of interest, and they are looking to areas that 
can help develop the record more.
    They also operate in the proceedings as a way to try to 
encourage settlements or negotiations amongst the parties. They 
help the administrative law judge develop certain kinds of 
record evidence. So in that situation, they are acting as a 
party but not a party of interest, if you will, in the 
proceeding. When it gets to the Commission stage, they also 
work as a party.
    They may decide that the ALJs--the administrative law 
judge's--initial final determination is that there is something 
that should be reviewed by the Commission so they can petition 
the Commission to review it. Or they may be--or some other 
party may and they may comment on it. They also play the role 
of--in the remedy proceedings--of making recommendations as a 
party to the proceeding to the Commission on what the remedy 
may be. Does that answer your questions?
    Mr. Jeffries. Yes, and I appreciate the thorough answer. 
And the role essentially is to function as an ombudsman in the 
public interest or an advocate in the public interest during 
the proceedings? Is that right?
    Mr. Bianchi. I would say that is one of the roles that it 
plays.
    Mr. Jeffries. Just sort of walking through the procedural 
determinations, if a conclusion is made that there was 
infringement but it is subsequently determined, notwithstanding 
the infringement, that it is in the public interest not to 
permit exclusion, at what point in the process is that public 
interest determination made? It is my understanding that comes 
at the end, not the beginning. Is that right?
    Mr. Bianchi. That is correct, although the Commission, in 
order to save time and resources of the parties, oftentimes 
will ask the administrative law judge at the beginning of the 
process to collect evidence on that so that the Commission will 
have that when it needs to make its decision on remedy.
    Mr. Jeffries. The issue, in conclusion, that I want to 
raise is it seems to me that if, in fact, there are a set of 
circumstances which suggest that even if infringement may 
ultimately be found during the course of the determinations by 
the ALJ or by the ITC, that there is a strong enough public 
interest in not allowing for exclusion or even cease and 
desist, should that not actually happen at the beginning of the 
process as opposed to an entire litigation taking place? A 
finding of infringement, but ultimately no order issued to 
exclude or cease and desist because of the strength of the 
public interest?
    Mr. Bianchi. So if I may, I view that as a policy question, 
which I should not be opining upon. I believe Ms. Okun would be 
able to opine up on that.
    Mr. Jeffries. My time is expired.
    Mr. Issa. I would allow the gentlelady. She actually is 
chomping at the bit. I need to make sure she gets the 
opportunity. Please.
    Ms. Okun. Just quick. With respect to if you turn--if you 
use public interest to deny relief in the very beginning I 
think the problem with that is the case that walks in the door 
with the number of patents asserted, the number of respondents, 
often is very unlike the case at the end that the Commission is 
actually considering. It is much narrowed, as happens in 
District Court in other litigation. People settle out.
    The other thing, and I had this in my written testimony and 
I will refer it to you, which is because of the moving-up when 
public interest can be considered in particular cases of 
administrative law judges, you see settlements where an 
administrative law judge has recommended there be no relief and 
parties settle out and realize they are not going to make it.
    Mr. Jeffries. Thank you. I yield back.
    Mr. Issa. Thank you. We now recognize--oh, I now ask 
unanimous consent that a letter dated April 14, 2016, to Mr. 
Blake Farenthold from a long list of supporters of H.R. 4829 be 
placed in the record. Without objection, so ordered.
    [The information referred to follows:]
    
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                               __________
                               
    Mr. Issa. We now recognize the gentlelady from California, 
Ms. Lofgren.
    Ms. Lofgren. Thank you, Mr. Chairman, and thanks for this 
hearing and to each one of the witnesses for their useful 
testimony in making the issues before us very clear. I will be 
honest. The current jurisdiction of the ITC does seem at odds 
with manufacturing practices. I mean, if you have an American 
company that does some of its manufacturing overseas, it is 
still an American company, and that is frequently the case. So 
I am just not seeing what the value added is to have dual 
jurisdiction. And I think the idea that if you filed or you 
could have filed as an exclusion of jurisdiction makes a lot of 
sense to me.
    I also think in terms of, you know, I do not think eBay got 
enough credit for what it did. I mean, eBay is a company in my 
district and they spent a lot of money and a lot of time 
pursuing a case they could have settled and successfully, and 
it did a world of good for the whole technology sector because 
prior to eBay, it was extortion time. And that potential for 
extortion exists, I think, in the ITC. That does not mean the 
Commissioners even see it because it is happening before it 
gets to you. So that is an additional reason not to undercut 
what the Supreme Court did. And I think we have got that 
situation now.
    But I want to talk about another issue, and it relates to 
copyright. It is been reported last year that some copyright 
holders were considering using the FTC to force IS Internet 
service providers to block allegedly-infringing websites. Now 
this was a proposal that would trample the safe harbor 
protections in the DMCA. But it also was a remedy that Congress 
rejected in the Stop Online Piracy Act.
    And I am sure all of us who were in Congress at that time 
remember the complete meltdown in the Congress. The phones were 
off the hook. We got seven million emails in an hour, and the 
country was up in arms about it. So, I understand that the 
Federal Circuit Court overturned the ITC decision. They have 
just rejected en banc a rehearing.
    But I am wondering if we ought to make it very clear to the 
ITC that they do not have jurisdiction over digital 
transmissions to avoid--I mean, the fact that they would do 
something like that is shocking to me. And, you know, for the 
survivors of the SOPA markup here, and I am sure the Chairman 
recalls it very well, we do not want to get in that environment 
again. Dr. Morton, I mean you are nodding your head, what--do 
you have a comment--anybody who wants to comment on that I 
would welcome the----
    Ms. Scott Morton. Yeah, I generally agree with you. I do 
not see the reason for the ITC to go in this direction. I 
wanted to make one other comment that is a little bit related 
to your first point, which is I think there is been some 
attention in this hearing to NPEs. And that is a narrow 
definition. That is a definition that is a party that does not 
make anything. Suppose you change the process at the ITC to 
make it hard for NPEs. What would they do? They would sell 
their patents to somebody who makes something.
    Ms. Lofgren. Sure. NPE is a verb, not a noun.
    Ms. Scott Morton. Yeah, right.
    Ms. Lofgren. Right?
    Ms. Scott Morton. And so what we are really worried about 
is patent assertion.
    Ms. Lofgren. Right.
    Ms. Scott Morton. Patent assertion for more than the patent 
is worth, whoever owns it.
    Ms. Lofgren. I agree.
    Ms. Scott Morton. And if you went and used that definition 
with the ITC docket, you would get a very large number.
    Ms. Lofgren. But I think it is simple just to say what 
value does the duplication provide? I mean, we have a general 
bias against forum shopping and that is really what this is.
    Mr. Thorne. Can I jump in on the copyright question?
    Ms. Lofgren. Sure.
    Mr. Thorne. Let me disclose first that I represented the 
Internet Association in the case you refer to----
    Ms. Lofgren. I did not know that.
    Mr. Thorne [continuing]. In the Federal Circuit. And the 
Internet Association was extremely concerned that the way the 
Internet works it slashes back and forth across the borders. At 
any given time of day you may be served out of Europe or Asia, 
and there is no way to easily distinguish a particular 
transmission that might be accused as infringing. The benefit 
of the ITC--I want to give to credit occasionally of having 
customs police at the borders is irrelevant to the Internet.
    Ms. Lofgren. Correct.
    Mr. Thorne. The ITC admitted that their exclusion order 
remedy could not apply in that case and therefore they fell 
back to what was supposed to be a softer secondary remedy, the 
cease and desist order. The Federal circuit got that decision 
right. I understand the ITC is at a decision point as of today 
whether they should ask the Supreme Court to review the case. 
And that would be the first Supreme Court review of an ITC case 
in a context where the ITC really does not have a role.
    Ms. Lofgren. Well, I just think the whole adventure into 
this area is very troubling to me. And, Mr. Chairman, I think 
we ought to talk about whether we should make it clear that we 
do not want the Commission to do what Congress decided not to 
do and at least as a possibility. And I see my time is expired 
so I yield.
    Mr. Issa. Would the gentlelady yield for a----
    Ms. Lofgren. I would yield, of course.
    Mr. Issa. I share with you that feeling that if we are 
going to have multiple places in which people can seek 
jurisdiction, and particularly in an Internet age, we have to 
figure out both the cost to the Federal Government of entities 
being in multiple areas, the cost to defendants who may find 
themselves unreasonably in two places.
    But I think the last one was the point that you were 
bringing, too, which was the original intent of the ITC was to 
act against foreign entities. And, you know, you and I saw in 
SOPA that often it was a domestic entity that was a target and 
a foreign entity that was somewhat involved. We do need to 
recognize that Article III is the right place for domestic 
entities, and the ITC may have a role in exclusively foreign 
entities, and I look forward to working with the gentlelady. 
And I think you have hit exactly on the role of, how do we 
divide the difference between trade, which is foreign entities, 
and the Article III courts we oversee for domestic.
    Ms. Lofgren. Thank you, Mr. Chairman, I yield back.
    Mr. Issa. Thank you very much. We now recognize with great 
pleasure the Ranking Member of the full Committee, Mr. Conyers.
    Mr. Conyers. Thank you, Mr. Chairman. And I apologize for 
having to remove myself. I hope this is something that has not 
been answered already, but I would like to know from anyone 
that would care to assist in this question, is there data 
indicating whether the number of patent assertion entities that 
have filed cases at the ITC is going up or down since our 
hearing in this Committee about 3 years ago?
    Mr. Thorne. I can quickly answer that.
    Mr. Conyers. Please.
    Mr. Thorne. In my written testimony, the number of 
companies sued by NPEs hit a high point in 2012, of 54 percent 
of the companies sued that year. In the last 3 years, 2013, 
2014, 2015, the number of NPE-sued companies is now down to a 
quarter of the docket. So 75 percent are not sued by NPEs, but 
a quarter still are.
    Ms. Scott Morton. But an NPE is not the same as a PAE, 
okay? And a non-practicing entity does not sell anything that 
is a widget. It just sells intellectual property. A patent 
assertion entity might be asserting patents and also have other 
businesses. But I think that the--this is a narrow definition 
that Mr. Thorne is putting forward. The problem is probably 
bigger than that.
    Ms. Okun. Could I just add something on the data?
    Mr. Conyers. Yes, please do.
    Ms. Okun. Which is the International Trade Commission 
helpfully lists on its website and puts up Section 337 data, 
including the number of Section 337 investigations brought by 
NPE and they have a definition of an NPE one and two, two being 
closer to a patent assertion entity. So those numbers indicate 
that in 2015 there were two patent assertion entities, 2014, 
three, 2013, six. So again, the number has gone down and it is 
publicly-available to look at.
    Mr. Conyers. Let me just ask this question for Tom Stoll. 
In light of ITC changes made in recent years to I hope better 
define the domestic industry as it relates to NPEs and to 
implement the 100-day pilot program, do you believe additional 
reforms are necessary to combat abusive patent litigation?
    Mr. Stoll. Well, I think it is clear to everyone that 
whatever problem there was in 2011, 2012, when the number of 
filings reached their peak, when the number of NPE--if we--you 
know, using the U.S.--using the ITC's term NPE--the number of 
those filings have both gone down significantly. And I think it 
warrants a further look but maybe not legislative action at 
this point. At least, you know, let us sit back and let us 
monitor and let us see, you know, if this is going to be a 
long-term fix or not.
    The ITC has clearly proven capable of addressing these 
issues through the domestic industry requirement, through the 
pilot program, and I think what we are seeing as a result of 
that is that people are not bringing frivolous claims. And I 
really think when we talk about abuse of the patent system, we 
are talking about people bringing frivolous claims, not 
legitimate claims.
    Mr. Conyers. Any other comments on that?
    Mr. Stoll. I want to make one other point, you know, with 
this patent hold-up if I could. You know, the ITC has an EPROMs 
analysis, so that if a patented invention is just a tiny 
component of a larger product, it is one of the many factors 
that they will consider in determining, you know, which 
articles will be excluded.
    So in that case, the case involved chips, but when the ITC 
took a look at it they saw, you know, not only chips but 
circuit boards in automobiles. And they said, ``Well, we will 
exclude chips, we will exclude, you know, some of these 
computers, but we are not going to go so far as to allow this 
to extend to automobiles.'' And I think that is a reasonable 
application of their authority.
    Ms. Scott Morton. I just wanted to point out that a patent 
assertion entity seeking money for its intellectual property 
need not be a frivolous lawsuit. So I do not think that these 
parties who would like to be monetized for legitimate 
intellectual property are doing anything wrong by seeking 
monetization. I think they should seek it in Federal court so 
that they get the correct number. So it does not mean that the 
patent is frivolous or that the--or seeking of royalties is 
frivolous. Just want to make that----
    Mr. Issa. Mr. Whitaker, I know you have been trying to get 
in.
    Mr. Whitaker. Just one quick comment. One thing that has 
not been addressed here at all today is that not all exclusion 
orders, not all remedies at the ITC are the same. There are 
limited exclusion orders and general exclusion orders, limited 
being focused just on the respondents that are named, and 
general exclusion orders, directed to entities that you never 
can find, and goods that are being brought into the United 
States that we do not know their source.
    And so I think it is important that we state that context 
that the ITC has a very important role. And I know for clients 
that I have represented, that is a very important thing. And I 
think some of the statistics will bear out that as many as 40 
percent of the exclusion orders that are issued by the ITC 
actually rise to the level as being general exclusion orders.
    Mr. Conyers. Thank you, and thank you, Chairman Issa. I 
will be going over some of these comments from these very 
worthy six witnesses that we had today.
    Mr. Issa. Thank you, Mr. Conyers. I now ask unanimous 
consent that a letter from the Consumer Technology Association 
dated April 13, also to Mr. Farenthold, be placed in the record 
in support of H.R. 4829. Without objection so ordered.
    [The information referred to follows:]
    
    
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                               __________
                               
                               
    Mr. Issa. I am going to be very, very brief just to 
summarize what we have done, and Mr. Nadler if he wants to, 
too. Mr. Thorne, you brought up a point that I want to make 
sure I understand because you talked in terms of, if you will, 
the opportunistic nature of how you would work on either side 
of a case. Under current law--and we, of course, have limited 
jurisdiction, but we have absolute jurisdiction over the 
Federal courts--under current law, Ms. Okun clarified that the 
1988 Act specifically prohibited, as a matter of fact, 
directed, if you will, the--an Article III court to stay, and 
it effectively prohibited them from ordering the ITC to stay 
their case.
    Taking that at face value, do you think an Article III 
judge should have or does have the authority, given a--let's 
just use the example you had, which is an already royalty-based 
organization that has agreed to give one and all royalties--if 
they go to the ITC, do you believe that creates a breach of 
that agreement, and do you believe that an Article III judge 
today would have the ability to dismiss the case in that they 
are seeking a remedy--not stay the case, dismiss the case--
because they are seeking a remedy which would nullify their 
claim for dollars?
    Mr. Thorne. I believe that if a patent holder in a 
standards form--these are where competitors come together to 
collaborate--one of the rare exceptions----
    Mr. Issa. Right, and I am using that example because I 
think it is unique.
    Mr. Thorne. In that situation you make promise--I will 
enforce my patent only by asking for reasonable royalties. If 
you breach that promise by seeking an exclusion order from the 
ITC, I believe a district court has power to enjoin that breach 
and continued actions in support of that breach so that you 
could enjoin someone who had gone to the ITC.
    Now I read the statute differently than Ms. Okun. I believe 
that the ability to stay a district court decision is in the--
that that option is held by the person sued, not the patent 
holder.
    Ms. Okun. That is correct. I clarify that. It is the 
respondent under the statute who can ask for a stay and that 
was in response to, you know, amendments with the Uruguay Round 
to make our lock-in system.
    Mr. Thorne. Right.
    Mr. Issa. Okay, but I just want to make sure we got that 
one point in, because likely, anything that Mr. Nadler and Mr. 
Conyers and the rest of us would work on would be primarily 
directed toward the Article III judges and what we would guide 
them to do. Does anyone here want to bet whether or not the 
Supreme Court is going to get that case since today apparently 
is the date?
    Mr. Thorne. Well, my prediction is that if the ITC asks the 
Supreme Court to take the question, should the ITC start 
working on the Internet, I believe the Supreme Court will 
decline that invitation.
    Mr. Issa. Okay, so we not only have a prediction--we do not 
have a prediction of will they, but we have the results. Ms. 
Okun.
    Ms. Okun. Well as you said, there is just a question of 
Chevron deference in the case, as well, that may be more 
interesting to the Supreme Court.
    Mr. Issa. As a matter of fact, Justice Roberts constantly 
says that we had one hearing on Chevron, they have them every 
day. So I would not be surprised that, A, you could both be 
right in this matter. We have covered a lot of points.
    There were a number of Members who could not make it here, 
so I would ask all of you, would you be willing for the next 5 
days to take follow-up questions for the record?
    I have a yes from everybody, and I very much appreciate it.
    Do any of you need to make a--I am sorry, Mr. Nadler do you 
have any----
    Mr. Nadler. Well I just--thank you, Mr. Chairman. I just 
have a general observation. It seems to me very questionable 
why you would have--and maybe we ought to do something about 
it--why you would have a situation where one body can issue 
decrees, call them what you will, that flout the normal 
equitable considerations that an Article III court would 
impose.
    And also, the question is why you have these dual 
jurisdictions, we can at least remove a case. These are 
questions that I am going to look into further. So you should 
develop one body of case law, and enable the normal equitable 
considerations to apply because I do not see any reason, unless 
someone can show me a reason, why you have one area where 
equity does not--where the equitable principles do not apply, 
because we all agree on equitable principles, at least I always 
thought we did. Thank you.
    Mr. Issa. With that I want to thank all of you for 
participation and we stand adjourned.
    [Whereupon, at 11:55 a.m., the Subcommittee adjourned 
subject to the call of the Chair.]

                            A P P E N D I X

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               Material Submitted for the Hearing Record

          International Trade Commission 337 Statistics Report


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 Response to Questions for the Record from Deanna Tanner Okun, former 
    Chairman, International Trade Commission, and Partner, Adduci, 
                      Mastriani & Schaumberg, LLP


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    Response to Questions for the Record from John Thorne, Partner, 
           Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC


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 Response to Questions for the Record from Mark L. Whitaker, Partner, 
                        Morrison & Foerster LLP

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   Response to Questions for the Record from Fiona M. Scott Morton, 
 Theodore Nierenberg Professor of Economics, Yale School of Management

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      Response to Questions for the Record from Thomas L. Stoll, 
                     Principal, Stoll IP Consulting


                              

      Response to Questions for the Record from Dominic Bianchi, 
     General Counsel, United States International Trade Commission

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