Patent Holders Getting US Agency To Ban Foreign Products From The Market

from the this-is-good-for-innovation? dept

Wed, Aug 23rd 2006 2:02pm — Mike Masnick

Just last month, the Supreme Court made an important ruling noting that courts shouldn't rush to put an injunction on companies found guilty of patent infringement, pointing out that monetary damages could often be more appropriate. As we noted at the time, this made sense, as often the patent only covered a small portion of the product, and banning it completely was both unfair and bad for innovation and the economy. Of course, leave it to the lawyers to find the loopholes. It seems that this ruling has stepped up efforts (most notably among a bunch of wireless technology patent disputes) to make use of a little known aspect of U.S. trade law. It turns out that the International Trade Commission (ITC) was given the ability to ban the import of products it deems violate a patent -- effectively creating an injunction for "unfair trade practices" rather than patent infringement. Where this gets really questionable is that this ruling is made entirely without regard to other questions concerning the patent. That is, it doesn't take into account either the actual lawsuits involving those patents or reviews going on at the patent office. In other words, rather than waiting for a court case and all the various appeals, companies can just file a claim with the ITC and hope they decide to flat out ban their competitors' products before any court decision is actually made. It's yet another example of patents being used in a protectionist manner to hold back competition and innovation, rather than encourage it.

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8 Comments

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rijit (profile), 23 Aug 2006 @ 2:11pm

eh.
Sigh, yet another way for companies to stifle competition.
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rijit (profile), 23 Aug 2006 @ 2:15pm

Doh!
Sigh, yet another way for companies to stifle competition. You would think the government would learn a thing or two. But, we are speaking of the government so it goes without saying, more of the same.
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Sanguine Dream, 23 Aug 2006 @ 2:26pm

Defensive my ass

It's yet another example of patents being used in a protectionist manner to hold back competition and innovation, rather than encourage it.

Thats not defensive. Defensive would be if they genuinely thought their patent was being infringed upon. This is down right offensive. Using lawsuits based on loopholes to crush comtetitors. If I come up with any ideas I'll just keep them to myself until this patent nonsense is cleared up. I'd rather take a chance on some else patenting it first than to risk a territorial pissing match with a competitor.
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Anonymous Coward, 23 Aug 2006 @ 2:55pm

"Sigh, yet another way for companies to stifle competition. You would think the government would learn a thing or two. But, we are speaking of the government so it goes without saying, more of the same."

You forget the American governement is now owned by corporate america.
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Anonymous Coward, 23 Aug 2006 @ 5:53pm

Re:
As an american, it is sad but true.
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ITC Practitioner, 24 Aug 2006 @ 6:13am

Actually, Mike, you are wrong. If the patent is under review, the Commission may decide not to institute the investigation or the Judge may decided to stay the investigation pending the outcome of the re-exam at the USPTO. Further, if, during the pendency of an ITC investigation, a ruling is issued from a district court or the Court of Appeals for the Federal Circuit, interpreting the claims of the patent at issue, the ITC is bound by that claim interpretation/decision. Get your facts straight.
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Mike (profile), 24 Aug 2006 @ 10:22am

Re:
Not quite. As you state, they "may" stay pending the outcome, but they may not. At the same time, the point of the article is that patent holders are clearly banking on having the ITC make their decision well before the courts decide. Sure, ITC is bound by a CAFC decision, but it takes a long time to get a CAFC decision. Prior to that, the patent holder can use an ITC decision to force a settlement that would end any lawsuit anyway.
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Blissex, 25 Aug 2006 @ 3:28am

That is how it is meant to work
But this is exactly how the patent system is meant to work: the current system was designed as a way to protect large american corporations from foreign competition.

When Japanese competition seemed reducing the profits of american companies Congress expanded considerably the scope of the patent system and weakened examination (by making the income of the USPTO solely dependent on patent fees); the idea was that american companies would be issued trivial patents locking up just about everything they could imagine, and this would keep out japanese imports in a way that breached the spirit but not the letter of various trade treaties the USA had created.

What actually happened is that japanese companies were been fully aware of the plan, and they have been getting lots and lots of trivial patents in the USA too, and they use these to keep out of the USA cheap Korean and Taiwanese and Chinese products unless they are paid a cut.

Indeed many of the cases before the FTC are opened by japanese companies, or the USA branches of a Japanese company, not USA companies.

So instead of just protecting USA corporate profits from cheaper japanese competition, the patent system also protects japanese corporate profits from cheaper chinese competition.

Enough USA companies though make an easy living via trivial patents that their lobbying and japanese lobbying make the patent system unreformable.
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