Issue Preclusion at the ITC: New Developments for Trademark-Based Claims

| Jonathan BachandSheila Swaroop

Investigations at the International Trade Commission (“ITC”) often involve intellectual property disputes that may also be the subject of parallel litigation in district court.  This parallel litigation is often stayed pending completion of the ITC investigation. 

The Federal Circuit has previously held that an ITC ruling has no preclusive effect for litigants in district court.  As a result, a determination by the ITC that a party failed to show a patent was invalid would not preclude the same party from litigating invalidity of that patent in a district court action.  Similarly, a determination of infringement by the ITC does not bind a district court in a later action.  In Tandon Corp. v. U.S. Int’l Trade Comm’n, 831 F.2d 1017, 1018 (Fed. Cir. 1987) the court held that appellate treatment of decisions of the ITC “does not estop fresh consideration by other tribunals.”  In doing so, the Federal Circuit relied on a Senate Report accompanying the Trade Act of 1974 stating:

[I]n patent-based cases, the [ITC] considers, for its own purposes under section 337, the status of imports with respect to the claims of U.S. patents.  The Commission’s findings neither purport to be, nor can they be, regarded as binding interpretations of the U.S. patent laws in particular factual contexts.  Therefore, it seems clear that any disposition of a Commission action by a Federal Court should not have a res judicata or collateral estoppel effect in cases before such courts.

Id. (quoting S.Rep. No. 1298, 93d Cong., 2d Sess. 196).  

In a May 9, 2019 decision on appeal of a trademark case from the ITC reviewing the denial of a consent order, the Federal Circuit reiterated this precedent regarding the lack of preclusive effect of ITC decisions, and explained that it applied not only to patents, but also to trademarks:

We have previously determined that “Congress did not intend decisions of the ITC on patent issues to have preclusive effect.” Tex. Instruments Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558, 1569 (Fed. Cir. 1996); see Tandon Corp. v. U.S. Int’l Trade Comm’n, 831 F.2d 1017, 1019 (Fed. Cir. 1987) (“[O]ur appellate treatment of decisions of the Commission does not estop fresh consideration by other tribunals.”). We see no reason to differentiate between the effect of the Commission’s patent-based decisions and the Commission’s decisions regarding trademarks. Because we hold that the Commission’s trademark decisions, like its patent decisions, do not have preclusive effect, we need not reach Swagway’s procedural arguments regarding its consent order motion.

Swagway v. U.S. Int’l Trade Comm’n, 923 F.3d 1349, 1357 (Fed. Cir. 2019) (footnote omitted). On August 14, 2019, the Federal Circuit modified and reissued its May 9 opinion, however, and signaled that some non-patent ITC decisions may indeed have a preclusive effect. 

The Federal Circuit’s change in position occurred after the Complainants filed a request for rehearing.  Complainants argued the Federal Circuit’s holding ignored Supreme Court precedent and the precedent of the First, Second, and Fourth Circuits, which indicated that trademark adjudications by an administrative agency should be given preclusive effect.  This precedent included B&B Hardware, Inc. v. Hargis Indus., Inc., 575 U.S. 138 (2015), in which the Supreme Court held that trademark decisions of the Trademark Trial and Appeal Board should be given preclusive effect in district court actions.  After reviewing Complainants’ petition, the Federal Circuit vacated a portion of its original opinion and reissued the opinion without the prior language regarding “preclusive effect.” Swagway v. U.S. Int’l Trade Comm’n, modified slip opinion dated August 14, 2019 at 3.

As a result, the Federal Circuit has signaled that trademark decisions from the ITC should be given preclusive effect.  An open question remains as to whether other non-patent issues litigated at the ITC also will be given preclusive effect.  Notably, B&B Hardware states that the court should “take it as given that Congress has legislated with the expectation that the principle of issue preclusion will apply, except when a statutory purpose to the contrary is evident.”  B&B Hardware, 135 S. Ct. at 1303 (emphasis added).

In view of this development, litigants at the ITC should be mindful of the difference in preclusive effect given by the Federal Circuit to patent-based claims as compared to trademark-based claims, and should consider those distinctions when developing litigation strategies for subsequent district court actions.