In recent years, nonpracticing entities have become increasingly active at the U.S. International Trade Commission. In fact, they have been responsible for bringing about a record 32% of Section 337 Investigations in 2022. This rise can be traced back to when Congress amended Section 337 in 1988. The amendments specifically allowed intellectual property rights-holders that do not manufacture products to obtain remedies, subsequently pointing out “inventors, universities, [and] startups” as deserving NPEs.
However, the significant activity of these entities has given rise to questions and concerns among legal professionals, one of which revolves around the proposition of ITC reforms by Congress. Such a move has generated conversations as to whether this could potentially peg back the influence of NPEs.
The primary focus here is on the purpose of NPEs in the field of intellectual property rights enforcement. The original vision laid out by Congress was for entities like universities, startups, and individual inventors to leverage the mechanism provided by Section 337 as a means to defend their own intellectual property rights against potential infringers. Over time, though, it appears that some entities are exploiting this provision quite aggressively, and this has raised eyebrows.
While the specifics of the proposed ITC reforms remain under wraps, it is clear that their central thrust will be around redefining and narrowing the roles and powers of NPEs. As a consequence, this could change the legal landscape for entities resorting to Section 337 investigations for IP rights enforcement.
While it’s true that NPEs have helped create a more level playing field in terms of IP rights enforcement for smaller entities, their rise at with the ITC has not been without controversy. Proponents of the ITC reforms argue that such changes could help re-balance the playing field, particularly for manufacturers — a group often on the receiving end of Section 337 investigations.
For a more in-depth look at this issue, you can check out this article by Axinn, Veltrop & Harkrider LLP.