The US government has finally worked out that the power of the International Trade Commission to stop trade shipments is causing too much trouble in trademark trolling disputes.
The International Trade Commission was created to protect US companies from unfair foreign competition but it is proving an attractive venue for the high-tech patent wars over smartphones, chips and Blu-Ray devices becauseit is the best way to ban imports that infringe patents.
According to Reuters, the House of Representatives Judiciary Committee, in a hearing on Wednesday, heard how the system was being used to squeese cash out of companies because a mere threat of a sales ban is a potent reason to settle.
District courts have to meet a higher standard to ban infringing products, other than the Republic of Texas, of course.
The hearing is the second to discuss the ITC in a week. The Senate Judiciary Committee was to discuss whether companies should ask for sales bans because they infringed patents seen as “essential” to a product.
Yesterday’s hearing focused more on patent trolls. It is starting to look like there is a consensus in Washington to tackle the trolls.
A California Republican Darrell Issa said that it was silly that the system allowed everyone to be sued twice. Zoe Lofgren, a California Democrat said that the industry was being shaken down through the ITC.
Ford Global Technologies and Cisco Systems told lawmakers that an ITC case, and the related threat of an import ban, cost companies millions to fight off.
Neal Rubin, vice president of litigation for Cisco, said that it doubles or triples its costs to fight in a district court and the ITC.
Bert Foer, president of the American Antitrust Institute testified that the only way to deal with the problem is to take up the issue of standard essential patents.
Different groups have varying rules governing the obligations of companies that hold patents essential to a standard. Most require broad licensing at reasonable rates and there has been talk of requiring holders to agree to give up the right to seek exclusion orders.