Tread Carefully In Discovery: Preclusion Sanctions in the ITC

Managing Intellectual Property | July.20.2015

Section 337 Investigations in the International Trade Commission (“ITC”) occur at a notoriously fast pace. One of the more significant aspects of such an abbreviated schedule is the way in which discovery is expedited. Unlike in U.S. federal district courts, where parties typically have 30 days to respond to discovery requests, parties in Section 337 Investigations must respond to discovery requests within under two weeks of service. Further, depending on the Administrative Law Judge’s  particular Ground Rules, collection, review and production of documents may occur in as little as two months. In such circumstances, parties have precious little time in which to proceed through discovery – which is often the most important phase of a case.

Further complicating matters, Administrative Law Judges are willing to grant preclusion sanctions against parties for their behavior during the discovery process – perhaps even moreso than their counterparts on the federal bench. An issue preclusion sanction results in the inability of a non-moving party to litigate the very issue at stake. The impact of an issue preclusion sanction cannot be underestimated: it can ultimately seal the case for the moving party.

One case in particular crystallizes not only the severity of issue preclusion sanctions, but also the difficulty of challenging such sanctions once they have been imposed. See In the Matter of Certain Printing and Imaging Devices & Components Thereof, Inv. No. 337-TA-690, Order No. 27 (Apr. 22, 2010). In this Section 337 Investigation, complainants Ricoh Company, Ltd., Ricoh Americas Corporation, and Ricoh Electronics, Inc. (collectively “Ricoh”) sought reconsideration of an order precluding them from relying on certain supplemental interrogatory responses.  Respondents in the investigation – Oki Data Corporation and Oki Data Americas, Inc.(collectively “Oki Data”) – moved to prevent Ricoh from relying on statements to the effect that one of the patents-in-suit had an invention date earlier than that listed on the face of the patent. The Administrative Law Judge granted the motion, finding that Ricoh had possessed the information prior to its initial response to Oki Data’s interrogatories, and as a result could have included the relevant information in its initial response. As a result, Ricoh was bound to the invention date on the face of the patent, even though there was ample evidence that the invention date was earlier.

The Administrative Law Judge denied Ricoh’s motion for reconsideration. Moreover, the ALJ had harsh words for Ricoh’s overall strategy, accusing it of engaging in tactical moves. In particular, the ALJ saw Ricoh’s behavior as an attempt to force Oki Data to prepare an invalidity defense based on an invention date that Ricoh intended to change all along.

Parties in ITC Section 337 Investigations should be careful to conscientiously and judiciously approach the discovery process. Any potential missteps that might alert an Administrative Law Judge toward untoward behavior in the course of discovery can raise the chances of potential preclusion sanctions, even if that behavior is ultimately innocent. The stakes could not be higher.

By Briggs M. Wright and Joseph A. Calvaruso

This article was originally published in Managing Intellectual Property in July 2015.