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Reform or Abolition? A Comment on Colleen V. Chien & Mark A. Lemley, Patent Holdup, the ITC, and the Public Interest

Colleen Chien and Mark Lemley’s paper, Patent Holdup, the ITC, and the Public Interest, proposes three principal reforms to the manner in which the International Trade Commission (hereinafter, the “ITC” or “the Commission”) should exercise its discretion in awarding exclusion orders against the importation of patent-infringing goods: first, the ITC should sometimes soften the impact of an exclusion order by “grandfathering in existing models or units” that contain an infringing component; second, the Commission should sometimes delay entry of an exclusion order to enable defendants to design around the patent in suit; and third, the Commission should sometimes stay its orders on condition that the defendant pay a “comparably higher bond,” in effect, “a payment of an ongoing royalty” during the period of the stay. I find no fault with any of these proposals, all of which appear to me to be both sensible and feasible; the ITC could simply adopt these measures without a statutory amendment and without invoking the more radical step of denying exclusion orders altogether, on public interest grounds, in a wide swath of cases. Nevertheless, I remain unconvinced that mere reform measures are sufficient to alleviate the core problem—namely, that the ITC lacks any compelling justification for its continued existence. I thus find myself (somewhat to my surprise) largely in agreement with the “abolitionist” views expressed by K. William Watson in a 2012 policy paper published by the libertarian Cato Institute. In the paragraphs that follow, I first recap the role that ITC proceedings have come to play in U.S. patent infringement litigation, and compare the ITC procedure with both civil actions for patent infringement in the U.S. district courts and with the so-called “border measures” available in some other countries for the exclusion of patent-infringing goods. Second, I explain why the reforms proposed by Chien and Lemley would improve the current state of affairs, but also why I think more radical surgery would be desirable.

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