Markman at the ITC and Its Effect on an Investigation

Several months ago, we were struck with the question of whether, as counsel for a patent owner at the ITC, our clients’ case would benefit from a Markman hearing.  Claim construction during an ITC investigation was routinely performed as part of the evidentiary hearing in an investigation, rather than as part of earlier Markman proceedings.  This has now changed.  Recently appointed ALJs at the ITC have been trending towards conducting Markman hearings rather than pushing claim construction to the final hearing.  This new trend has resulted in additional litigation strategy considerations at the ITC, regarding whether Markman hearings are beneficial, or detrimental, and what affect the increase in Markman hearings have on investigations.

Claim construction will occur at some point in any patent-based ITC investigation.  From a patent owner’s perspective, the question is whether having a Markman hearing at the ITC will be helpful.  A negative claim construction order, especially early in the investigation, may imperil the ability to reach the evidentiary hearing as an adverse ruling could result in summary determination.  In contrast, a favorable claim construction order could result in added pressure for settlement.

At the district court Markman hearings are generally held as a matter of course as part of the case schedule.  As noted above, until recently Markman hearings at the ITC were outliers rather than the norm.  Today, five out of six ITC ALJs conduct Markman hearings at least in some instances, and at least three of those ALJs now conduct a Markman in essentially every investigation they preside over.  As a result, the chances of having a Markman in an ITC investigation have gone up dramatically in recent years.

The ITC currently has six ALJs on staff: Bullock, Essex, Pender, Shaw, Lord, and McNamara.  According to our review of EDIS (the ITC filing system), since October 25, 2010, only ALJ Shaw has not held a Markman hearing.  ALJ Essex conducts them sporadically and will entertain requests for a Markman by the parties.  As a result, since 2010 ALJ Essex has only held four Markman hearings.  ALJs Bullock, Pender, Lord, and McNamara, appear to now conduct Markman hearings as a matter of course in each of their investigations.  As a result, the chances of having being assigned an ALJ that will conduct a Markman have increased dramatically.  But does that have any effect on the complainant’s ability to get to the hearing and reach favorable outcomes?

Since October 25, 2010 (as of September 8, 2016), ALJs at the ITC have conducted 67 Markman hearings.  Of the 67 investigations that held a Markman hearing, 49 investigations held a full evidentiary hearing, 8 are still pending and waiting for an evidentiary hearing, and 9 were terminated without an evidentiary hearing (either through settlement or termination).  If we remove the 8 investigations still pending, only 15% of investigations (9 out of 57) where a Markman hearing was conducted did not go to the full evidentiary hearing.

These numbers tell us that while whether a Markman hearing is held certainly effects case strategy and resource allocation, the fact that a Markman occurs does not appear to drive either early termination or settlement in the majority of cases.  This may be because in investigations where a Markman has been held the claim construction order comes out too close to the evidentiary hearing to either conserve party resources or encourage settlement.  Of course, there are benefits to holding a Markman hearing at the ITC, such as assisting the ALJ in understanding the facts of the case, forcing the parties to narrow the investigation early on, and helping parties to focus on arguments and theories that are the most important.

The earlier in an investigation a Markman hearing is held the more likely the claim construction order can drive early resolution.  For example, in investigation 337-TA-984 ALJ Pender issued a claim construction order favorable to the complainant on July 15, 2016, from a Markman that was held on June 20, 2016.  The hearing was not scheduled until the end of September, which allowed the parties to reach a resolution by the end of July, a mere two weeks after the claim construction order came out.  This is an example of where an earlier claim construction order was successful in facilitating early resolution of a case.

As a patent owner, a benefit of the ITC over district court, in addition to the fast pace the ITC provides in comparison to the district court, is that a Markman hearing will not negatively affect a patent owner’s ability to reach the evidentiary hearing and get your day in court.

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