Under President Trump, the United States has begun to take on inefficiencies and waste in the federal government. Next on the agenda should be the International Trade Commission. This little-known agency has gone rogue, allowing bad actors to misuse its powers for financial gain. Chinese firms are not letting this opportunity slip by. Reforms are urgently needed to weed out China’s interference in the U.S. economy.
The mission of the ITC is critical — it is the agency in charge of ensuring U.S. companies are treated fairly in international trade. However, entities looking to profit from their patents increasingly turn to the ITC to adjudicate patent infringement suits. This wastes the ITC’s time and allows patent trolls to thrive.
Patent trolls exist solely to weaponize and monetize acquired patent rights. Also known as non-practicing entities, they do not manufacture or sell any products and do not use the patents they hold to develop or advance technology. Instead, they aggressively litigate patent infringement suits to obtain settlements or royalty payments from companies that do. This is their business plan.
Trolls have found they can succeed more at the ITC than in federal courts, where patent infringement disputes have traditionally been resolved. The ITC adjudicates cases more quickly than the courts, putting undue pressure on defendants to settle, even if the claim is dubious because the ITC has only one penalty it can impose on a company’s infringing products — an exclusion order that bans the products from the U.S. market. The economic damage done by an exclusion order can be so extreme that even companies that have done nothing wrong will settle to avoid the possibility of receiving one.
The ITC process is not working well for the productive companies being jumped by trolls or for U.S. taxpayers. Chinese companies have figured out the game and are joining to fight U.S. companies and other foreigners. The ITC is straying dangerously far from its mandate.
One recent example of this wasteful and problematic trend is the claim advanced by the Chinese solar panel manufacturer Trina Solar. Shanghai-based Trina Solar is one of the world’s top 10 solar companies, with manufacturing plants in multiple countries. It had a small assembly facility in Texas but recently sold it to another foreign solar firm in what some industry observers think might have been a proactive move to avoid tougher sanctions on Chinese companies from the United States.
Trina Solar has a history of violating U.S. trade laws, including dumping solar panels on the U.S. market and scheming to avoid tariffs. Even worse, the company has been connected to forced labor in the Xinjiang region of China. According to the Department of Labor, thousands of Uyghurs are forced to work around the clock in desperate conditions to produce polysilicon, a vital material in solar panel production.
This is a clear violation of the Uyghur Forced Labor Prevention Act and contradicts Trump’s vision of putting tougher constraints on Chinese exports. Inexplicably, the ITC is spending time and resources considering Trina’s patent infringement claims, helping Trina keep its foreign rivals out of the U.S. market.
Trina has developed few patents. Instead, it bought a large number of them from LG last year. Like patent trolls, Trina is now asking the ITC to ban the importation of products that it alleges infringe its acquired patents. Those products are sold by Trina’s competitors, Runergy and Adani Green Energy, Chinese and Indian firms, respectively. So, the ITC is in a fight between two foreign companies. This makes no sense.
Companies like Trina Solar will continue gaming the system by misusing the ITC until reforms are put in place that make it harder for them to do so. It is beyond irony that a company that has already been found to have violated U.S. trade laws and harmed U.S. industry is asking the U.S. government to impose an exclusion on its competitors, but that’s how warped the ITC has become.
In the past, Congress has considered — but not passed — legislation that would change how the ITC reviews patent disputes. Patent owners would have to demonstrate their patent has led to the development of a product. The ITC would be required to put the public interest first and determine that an exclusion order would benefit the public, not the company alleging patent infringement.
Simple rules like this could go a long way toward reining in inappropriate patent infringement cases that waste the ITC’s time and resources and penalize productive businesses operating in America. The ITC could refocus on its core mission of protecting American companies that grow our economy from unfair competition by imported products. Patent owners could still be able to go after alleged infringers in district court, where these types of cases belong.
The Trump administration has articulated a clear vision that will protect America’s innovation ecosystem from adversaries’ manipulation. It’s time for the ITC to get in line.
