Patent Holdup, the ITC, and the Public Interest

Colleen V. Chien, Santa Clara University - School of Law, and Mark A. Lemley, Stanford Law School

8/26/2015
(Original Publish Date: 7/2/2012)

Because the ITC can’t award damages, it has granted injunctions as a matter of course. But as we suggest in this paper, the Commission has more power to adjust the remedy it grants than previously recognized. We think it should use that flexibility to limit exclusion orders when competitive conditions demand it. A PAE may not be any more justified to receive an exclusion order from the ITC under its public interest analysis than to receive an injunction from a district court applying eBay. Even practicing entities should be denied the power to exclude in some circumstances, for example when the patents are standards-essential and/or encumbered by a RAND license, there is no evidence of bad faith, and the patentee can seek damages in the district court. When exclusion orders are issued, delays in their implementation and grandfathering in existing products can reduce holdup. Bond and penalty provisions could be used to ensure that patentees are compensated for ongoing infringement during these transition periods. Using its discretion wisely, the ITC can administer the statute to fairly and efficiently give patentees their due while minimizing harm to the public interest.