Protectionists vs. Patent Trolls

The United States International Trade Commission’s patent enforcement activities are under fire from two camps concerned about the agency’s excessive remedies for patent infringement.  In Tuesday’s Wall Street Journal, former commissioner Charlotte Lane lamented that the agency has become the “International Trolling Commission” where rent-seeking patent trolls can harass innovative U.S. companies. 

On the same day, the U.S. Trade Representative refused to veto an ITC import ban on certain Samsung smart phones, even though the administration recently vetoed a similar ban against Apple. The difference between the cases hinged on the ITC’s excessive enforcement of Samsung’s standard-essential patents. The veto may have looked like favoritism, but it was really about correcting the agency’s bad patent policy.

The good news is that momentum is gaining for significant reform of the ITC’s role in the patent system. Some good ideas for reform include ending ITC patent jurisdiction entirely, limiting the agency to enforcement of district court awards, or most likely, better aligning the ITC’s remedies for patent infringement with federal district courts.   

Unfortunately, even while condemning its consequences, commentators and industry representatives calling for reform are willing to gloss over, or even defend, the nefariously protectionist purpose of the ITC’s patent jurisdiction. Why should we have a trade agency litigating patent disputes? After condemning the patent troll phenomenon, Commissioner Lane comments:

Equally troubling is how the taxpayer-funded ITC has drifted from its mission to protect domestic industries. The sometimes foreign-based patent trolls now use the ITC to attack the very companies the agency was created to defend. We’re paying money to benefit entities that are little more than modern-day buccaneers raiding domestic businesses.

Her proposal to address this problem is to impose a more stringent domestic industry requirement for any plaintiff seeking relief at the ITC. Requiring petitioners to make or sell products that utilize the invention in the United States would certainly reduce the ITC’s appeal for patent trolls, who by definition don’t use the patented technology themselves. But do we really want to refocus the ITC’s activities in this way?

Defending domestic businesses from their competitors who manufacture abroad is the heart and soul of protectionism. Reducing the ITC’s patent enforcement activities to serve protectionist ends won’t somehow justify the disruption caused by having two duplicative venues to pursue patent litigation. On the contrary, the mere existence of a domestic industry requirement to enforce patent rights demonstrates how the ITC’s power to ban imports functions more as a protectionist trade remedy than as a legitimate component of the U.S. patent system.

We don’t need to save the ITC’s protectionist mission by fixing its harmful patent policies. We need to save the patent system from the ITC’s protectionist mission. Though meager in light of the problems it causes, scaling back the agency’s excessive and inappropriate remedies would be a good reform.  Improving the agency’s ability to protect domestic industry would not.