Podcast: Talkin’ Trade: Who’s Adjudicating Section 337 Investigations?
Ropes & Gray’s podcast series Talkin’ Trade explores the world of Section 337 unfair import investigations at the U.S. International Trade Commission. One way in which ITC Section 337 investigations differ from district court litigation is that the day-to-day activities of ITC actions are overseen not by an Article III judge, but by one of six administrative law judges. In this episode, Ropes & Gray IP attorneys Matt Rizzolo, Matt Shapiro, Brendan McLaughlin, and Mike Morales delve into the role and responsibilities these ALJs play in managing a fast-paced Section 337 proceeding, including how the individual ALJs may differ in presiding over their particular cases.
Matt Rizzolo: Hello, everyone. Welcome back to Talkin' Trade, a podcast where we explore the ins and outs of Section 337 investigations at the U.S. International Trade Commission. I'm Matt Rizzolo, and with me today are my fellow Ropes & Gray IP attorneys, Matt Shapiro, Brendan McLaughlin, and Mike Morales. Glad to have everyone here. They say "misery loves company," so with Mike here today, it's nice to be joined by a fellow Jets fan. In previous episodes, we've generally focused on various aspects of litigating before the ITC, but we haven't really discussed the decision-makers themselves in Section 337 investigations—those being the administrative law judges, and ultimately, the Commissioners. Today, we'll talk a bit about the ALJs: who they are, how they're appointed, and what their specific role is in presiding over Section 337 investigations. But before we get to that, Brendan, what's new at the Commission?
Brendan McLaughlin: Thanks, Matt. After a spate of new complaint activity in late September, fall's been a bit slower at the Commission—October and the first half of November brought only two new Section 337 complaints, but the Commission did institute four new investigations. The Commission also issued four final determinations as well as a couple of noteworthy opinions. In the -1166 investigation (Certain Foodservice Equipment), the Commission affirmed the ALJ's finding of no violation with respect to an asserted trade secret based on the complainant's failure to satisfy the domestic industry requirement. And in the -1167 investigation (Certain Laparoscopic Surgical Staplers), the Commission found a violation of Section 337 based on patent infringement, but suspended the enforcement of its remedial orders, pending final appeal of prior PTAB final written decision, which found the asserted claims unpatentable. This is yet another example of the Commission's consistent practice in this realm. In the -1186 investigation (Certain Balanced Armature Devices), the Commission found a violation based on trade secret misappropriation and issued a rare general exclusion order, barring the importation of certain balanced armature devices for 26 years. Note that this case involved the finding of spoliation and a sanction of a default judgment, which clearly played a role in the strong remedy. And in the -1200 investigation, (Certain Electronic Devices, Including Streaming Players, Televisions, Set Top Boxes, and Remote Controllers), the Commission found a violation of Section 337 based on patent infringement and issued a limited exclusion order and cease and desist order, rejecting the complainant's plight for a bond. These orders do not include an adjudicated design-around product, found not to infringe the only live patent in the case.
Matt Rizzolo: Thanks, Brendan. I also want to touch quickly on the Commission's split opinion in the -1196 investigation, which was Certain In Vitro Fertilization Products. There, the Commission vacated the ALJ's summary determination order, which had found a violation of Section 337. In particular, the majority vacated the orders, finding that the complainant satisfied the domestic industry requirement under Section 337(a)(3)(C). The Commission found that many of the complainant's investments were those of a "mere importer," and don't qualify as appropriate domestic industry investments under the statute. So, similar to what the Commission did in the -1166 investigation that you just mentioned, the majority here went line-by-line through each category of investments, discounting some categories, and in the end concluded that the value of those expenditures that did qualify was not “sufficiently substantial to satisfy” the statute. Two Commissioners dissented and rejected the majority's line-by-line approach, and instead advocated for a more holistic consideration of the domestic activities. In -1196, it's noteworthy: we don't see a divide amongst Commissioners like we do in this case very often—this isn't the Supreme Court. But the issue of what categories appropriately count for domestic industry investments, in both patent and non-patent cases, is one that has been a hot topic of contention among the Commissioners, so we'll continue to monitor to see how the Commission develops this so-called "mere importer test" over the coming months.
Let's turn to our main topic for today: a deeper dive into the administrative law judges. Matt, can you start by explaining what these ALJs do and how they're appointed?
Matt Shapiro: Sure—thanks, Matt. Once an investigation is instituted by the Commission, it is assigned to the chief ALJ, who then decides whether to take the investigation himself or assign it to another ALJ. Once assigned, the ALJ acts in a role that's similar to a district court judge, by presiding over all aspects of the Section 337 investigation, through discovery, the evidentiary hearing, and culminating with a “final initial determination”—that’s the ALJ's decision on the merits of the case, which is based on the consideration of the evidence and arguments that are set forth by the parties. The ALJ also issues a “recommended determination” to the Commission on two issues: remedy and bonding. While the ALJs perform a role that's similar to district court judges, unlike district court judges, the ALJs do not have life tenure. And because their decisions are subject to review by the full Commission, they do not go through the onerous presidential appointment and Senate confirmation process like district court judges. Instead, the Chairman of the Commission has the authority to appoint ALJs, unless a majority of the Commissioners vote to disprove the appointment—but no such vote has been initiated in recent history. As we explained in our last episode, the Commission generally seeks to appoint ALJs with prior experience as an ALJ with another federal agency, and preferably with some IP law experience. But for the last ALJ opening, the Commission cast a wider net and solicited applications from those with at least 10 years of IP litigation experience.
Mike Morales: I think that that's a good place to start, with a quick summary of each ALJ's background. The Commission recently filled a vacancy left by Judge Dee Lord's retirement earlier this year by hiring Judge Monica V. Bhattacharyya. Judge Bhattacharyya's background is unique: she has worked as an IP litigator for over two decades, some of which were in private practice at several law firms, and has extensive experience with the ITC and Section 337 investigations. While she has no prior experience as an ALJ, she comes to the bench from the ITC's Office of Unfair Import Investigations, where she regularly appeared in Section 337 investigations, as an independent party representing the public interest of the United States. She is well known to and highly regarded by many in the ITC bar, and is in fact the first ITC ALJ to have worked at OUII. With this background, Judge Bhattacharyya will likely bring a new, interesting perspective to the bench, and her appointment fills the ITC with six ALJs and will help the Commission to manage its very busy docket.
All of the other ALJs have multiple years of ITC ALJ experience, and in fact worked as ALJs at other agencies prior to being appointed to the ITC bench. Chief Judge Charles Bullock has nearly 20 years of ALJ experience at the ITC alone, and nearly 10 years as the chief ALJ. Judge David Shaw, the next most senior ALJ, has nearly 20 years of service at the ITC, including attorney-advisor experience in the ITC's Office of Administrative Law Judges for 13 of those years. Judge MaryJoan McNamara joined the ITC in 2015, and before becoming an ALJ, she was a trial and appellate lawyer in private practice and served as a consultant to the United States Department of State. Judge Clark Cheney, who joined the ITC in 2018, was an attorney-advisor at the ITC, clerked for Judge Bryson of the Federal Circuit, and had a stint in private practice, working on IP litigation matters. A bit of interesting trivia: Judge Cheney argued the famous Suprema v. ITC case on behalf of the Commission at the Federal Circuit. And last but not least, before he joined the Commission in 2019, Judge Cameron Elliot was an ALJ at the SEC and also had stints in private practice, as an assistant to the U.S. Attorney, as a law clerk for a district court judge, and served in the United States Navy. Thank you for your service, Judge Elliot.
Matt Rizzolo: Great—thanks, Mike. And a further bit of trivia: Judge Elliot's appointment to the SEC was the subject of a very important Supreme Court Appointments Clause case a few years ago, Lucia v. SEC. Now, we just discussed the ALJs' wide range of various experiences, and I think it's interesting to see how each of them differs in their handling of their respective caseloads. Because Section 337 investigations move very quickly, the ALJs play a major role in keeping their cases on track. Each ALJ has his or her own ground rules, which are issued as an order at the very beginning of each case. These ground rules lay out all of the rules that the parties must follow when litigating the investigation—they range from covering page limits on motions, to mandatory settlement conferences and mediations, to trial decorum and exhibited missions. You could think of these ground rules as the ITC's hybrid between a court's local rules and a set of standing orders that are issued by a district court judge. We turn now to some of the differences between each of the ALJs' ground rules. Brendan, why don't you kick us off with how the ALJs handle witness testimony at trial?
Brendan McLaughlin: There are essentially two camps when it comes to direct witness testimony—those ALJs who use written witness statements prepared ahead of time and those who prefer to hear live direct testimony. Historically at the ITC, it was common to use written witness statements, which are written versions of the witness' testimony. These are typically in a question-and-answer format, with the questions from counsel and the answers from the witness, signed by the witness. These witness statements are served on a party in advance of the hearing when the direct exhibits are served. While the witness does not read the statement into the record, the witness must be available for live cross-examination on the witness stand. Given this historical practice, it's no surprise that the more senior judges, including Chief ALJ Bullock and ALJ Shaw, require parties to use witness statements for direct examinations, except for adverse witnesses. In the second camp, the other four ALJs prefer that all witnesses testify live for his or her direct examination. This is much more traditional like district court litigation.
Matt Rizzolo: Yes, that's right. We're seeing a trend away from witness statements and toward live witness testimony at the ITC. And these are obviously vastly different practices, each having their own advantages and disadvantages. Witness statements typically make the hearing much more efficient, and I think that's part of the reason why they were embraced for so long. Each non-adverse witness essentially skips direct examination and moves right into cross, but a drawback of this is that the witness needs to be prepared to testify on tough issues right away—there isn't a direct examination to get them used to testifying at trial, the cadence, etc., and they can be put on the spot at the outset. And it's interesting, a judge's first impression of your witness is often with him or her getting grilled by the opposing attorney on cross-examination. So, now that we've dabbled a bit in some hearing-specific differences, Mike, can we take a step back and you dive into some of the differences in the ALJs' pre-hearing practices?
Mike Morales: Absolutely. The ALJs' practices vary widely when it comes to various pre-hearing events, including motion practice, discovery disputes, and settlement conferences.
Matt Rizzolo: How do ALJs differ on motion practice?
Mike Morales: For summary determination, which is the ITC's version of summary judgment, Chief Judge Bullock and Judges Cheney and McNamara require a separate statement or chart of undisputed material facts while the other ALJs do not. Some ALJs, such as Judge Cheney, use word counts instead of page limits on briefs, and this practice aligns with the practices of many appellate courts. In terms of reply briefs, all ALJs besides Judge Bhattacharyya do not grant them as a matter of right.
Matt Rizzolo: That often comes as surprise to folks in the ITC, that they don't get reply briefs as a matter of right. How about discovery disputes—how do the ALJs differ in handling those?
Mike Morales: Some ALJs, like Elliot and Bhattacharyya, require that the parties first meet-and-confer to attempt to resolve the issues, and once at an impasse, to reach out to the attorney-advisor to schedule a teleconference with the ALJ. After that is scheduled, the party requesting the conference to file the motion to compel must submit a written explanation of no more than three pages. Each of the other parties can then file their own explanations about the dispute. During these discovery teleconferences, the ALJ may resolve the dispute or may order further briefing from the parties. ALJ McNamara has a similar mechanism, but since she requires case management conferences, these disputes can be dealt with there, as well. ALJ Cheney has a monthly video conference with the parties to handle discovery disputes, and the parties jointly submit a proposed agenda for the video conference, but must meet-and-confer on the issues before raising them with the judge.
Matt Rizzolo: I can speak from experience that the monthly video conference with ALJ Cheney really does serve to keep the parties on track—it’s a very useful check-in procedure. Now, you also mentioned settlement conferences?
Mike Morales: Yes, so some ALJs mandate settlement conferences and mediation sessions. Chief ALJ Bullock requires at the outset of the case that the parties engage in a settlement conference and submit a joint report about the conference. He also requires that the parties engage in a one-day mediation session with a joint report submitted after that, as well. He requires another settlement conference right after summary determination motions are filed, again, with a joint report to be submitted. ALJ Shaw's approach is similar, with two settlement conferences, although his ground rules do not indicate when these need to occur. He also makes the mediation process optional. ALJ McNamara takes a similar approach with one settlement conference after infringement and invalidity contentions are served, but does not require mediation. ALJ Cheney does not require settlement conferences, although he does require a one-day mediation session with a joint report to be submitted after expert discovery closes, but before summary determination motions are filed. And then there's ALJs Elliot and Bhattacharyya, that take vastly different approaches from them all, requiring neither settlement conferences nor mediation.
Matt Rizzolo: It really does seem to be all over the place. And I know that several ALJs will also tweak their ground rules occasionally, including in the middle of an investigation, so it really keeps us practitioners on our toes. Let's turn back to some trial-related practices. Matt, how do the ALJs handle admission of exhibits?
Matt Shapiro: Like witness testimony, the ALJs generally fall into one of two camps on how exhibits are admitted into evidence. The first approach is admitting into evidence only those exhibits sponsored by a testifying witness, typically after the witness is finished testifying. This traditional approach is exemplified by Chief ALJ Bullock’s and ALJ Bhattacharyya's ground rules. ALJs Shaw, McNamara, and Cheney take a similar approach, as well. Note that these ALJs also require the parties to file in advance of a hearing high-priority objections, or HPOs, to exhibits that should not be admitted. The HPOs are brief, perhaps paragraph-long arguments, identifying the basis for the objection, and the ALJs then resolve the HPOs prior to the hearing. And while we're talking about sponsoring witnesses, they're generally required, but the parties may move to admit certain exhibits, such as patents and file wrappers, without a sponsoring witness in advance of the hearing. Now, ALJ Elliot's practice, on the other hand, is an outlier. He prefers to admit all non-objected exhibits on a party's exhibit list at the pre-hearing conference, whether they have a sponsoring witness or not. Most objections are resolved at the pre-hearing conference, though any exhibits that cannot be decided upon at the pre-hearing conference may be deferred to later in the hearing and dealt with when a party attempts to use them. While ALJ Elliot does not expressly require the parties to file HPOs for exhibits, in cases where there are several disputed exhibits, it might be worth requesting HPO briefings, so that the pre-hearing conference is not entirely consumed with specific exhibit objections and things of that nature.
Matt Rizzolo: Agreed—that’s a good practice tip. ALJ Elliot's approach is very different. It allows for exhibits that aren't even used at the hearing to be admitted, and then used in post-hearing briefing. So, parties who are litigating before him will want to be particularly careful with their exhibit lists, as those exhibits will be admitted into the record, and you might be surprised with what might be cited in post-hearing briefing, even if you didn't see it at the hearing.
Let's change gears a bit to ALJ oversight. Some of the ALJs like to have a more hands-on approach to managing their cases, while others might be more hands-off and leave it up to the parties to be reasonable and work through issues themselves?
Brendan McLaughlin: Yes, that's right. Chief ALJ Bullock, for example, takes a more hands-on approach. As previously discussed, he requires settlement conferences and mediation sessions, urging the parties to resolve the case before a trial. He also requires that the parties submit reports after each discovery committee meeting, which is held every two weeks. It seems like he wants to know what the issues are between the parties, or at least have a paper trail in case an issue arises at some point in the future. As mentioned, ALJ Cheney has a similar practice, where he sets up a monthly video conference with the parties to discuss discovery disputes. The other ALJs seem to take a more hands-off approach and let the parties deal with issues themselves, bringing it to the ALJ's attention only if the need arises. Chief ALJ Bullock also requires that the parties submit the time left in the hearing at the beginning of each day when the hearing begins, while all other ALJs do not. He definitely takes a more hands-on approach to his cases.
Mike Morales: I think the same goes for his trial decorum. Chief Judge Bullock has about six different ground rules directed to trial decorum, from things like courtroom attire—with men being required to wear ties—to requiring that a witness be standing while being sworn in, although this is likely being handled differently with remote hearings. But compare this with ALJ Elliot's only trial decorum rule that “no food, gum, or beverages other than bottled water will be permitted in the courtroom during trial.” Chief Judge Bullock seems to have the most explicit requirements to ensure the formality of the proceedings.
Matt Shapiro: It's also interesting to see where some of the ALJs land in terms of page limits on briefs. Chief ALJ Bullock and ALJ Cheney do not set a limit for pre-hearing briefs, and briefs can be upwards of 800 pages or so. This may seem excessive, and frankly in my opinion it is, but it does align with historical ITC practice. Having been on the drafting side of such briefs, no one benefits from preparing such a lengthy brief. Nowadays, however, this is not the norm—the ALJs set page limits for each pre-hearing brief, with most limits less than 200 pages. And then for post-hearing briefs, most ALJs will set a reasonable page limit that they determine on a case-by-case basis. ALJs McNamara and Cheney though are the exceptions. ALJ McNamara sets 100-page limit on the initial post-hearing briefs and a 50-page limit on the reply briefs. ALJ Cheney sets a 20,000-word limit on the initial and responsive post-hearing briefs from the parties.
Matt Rizzolo: One last topic before we close it out today: virtual hearings. Matt, how has the ITC been operating in a post-COVID or current-COVID world?
Matt Shapiro: At the outset of COVID, the ITC took a number of initial steps. And because of those initial steps to develop a robust platform, virtual hearings have been going really well, though unfortunately, there doesn't seem to be an end in sight for them. The ITC conducted a comprehensive investigation into various platforms and ultimately selected Webex due to its increased security and FedRAMP compliance, to ensure that confidential business information is handled appropriately. The ALJs also amended their ground rules to anticipate some of the logistical difficulties of their traditional roles. For example, many ALJs dropped their paper-copy-of-filing requirement, and the Commission rolled out a Box system for the electronic exchange in service of confidential documents. The ITC is also pushing forward with e-service of both public and confidential documents via EDIS. Overall, I think it's a credit to the Commission and the ALJs, in particular, that there didn't appear to be much of a hiccup at the ITC in terms of transitioning to remote hearings. In August 2020, all of us on this podcast were part of the first Webex remote hearing in the -1200 investigation on claim construction issues. The technology worked well from the outset, and it was interesting to have just the attorneys arguing the issues with their cameras on during the proceeding—it really allowed you to focus in on their arguments. These virtual hearings have now been used in evidentiary hearings, but parties should always plan for technical difficulties, whether it's a muted microphone, Webex freezing, or network connectivity issues causing an examining attorney to get removed from the hearing mid-sentence. But as I said, it looks like virtual hearings are here to stay, and at least in the short-term, perhaps post-pandemic, some judges will continue to use remote hearings for things like claim construction, though I expect evidentiary hearings will eventually return to in-person. Only time will tell.
Matt Rizzolo: With that, that's all the time that we have for this episode of Talkin' Trade. Thanks, everyone. Did you know you could find this and other Ropes & Gray podcasts on Apple Podcasts, Spotify, or ropesgray.com/podcasts? We appreciate the feedback from our listeners, so keep it coming. And if there's a topic you'd like to hear more about, just let us know. Until next time, I'm Matt Rizzolo, and on behalf of Matt Shapiro, Brendan McLaughlin, and Mike Morales, thank you all for listening.