The big patent news this holiday season involves a purported ban on the new Apple Watch. In October 2023, the International Trade Commission (the “ITC”) ruled that the blood oxygen monitoring features in these devices infringed a patent from Masimo, a medical device company. (Inv. No. 337-TA-1266). In response, Apple has announced that it will stop selling the affected watches at its stores and online effective December 24, 2023. This ruling will impact Apple’s watch sales, which news outlets report to be an estimated $16 billion dollar industry. Why then do the headlines on this story notably lack the large damage awards one would typically see in a finding of patent infringement? The answer highlights some of the pros and cons of using the ITC to enforce patents over federal district courts.

The ITC is a quasi-judicial federal agency with broad investigative responsibilities on matters of international trade. An increasingly popular function of the ITC is serving as an alternate forum to litigate intellectual property disputes arising under Section 337 of the Tariff Act of 1930, as amended (19 U.S.C. § 1337), commonly referred to as a “Section 337 investigation.” Section 337 vests the ITC with authority to investigate and issue decisions involving importation of articles that constitute unfair competition, which includes the importation of articles infringing on a valid patent, trademark, or copyright.

The ITC provides a lot of practical benefits over a traditional district court litigation. Section 337 investigations are assigned to an Administrative Law Judge (“ALJ”) that oversees the entirety of the proceeding, beginning once the ITC’s investigation begins. Compared to district court litigation, which can (and often does) drag on for years, a trial-like hearing in ITC proceedings generally occurs within one year from the IP owner’s complaint of unfair competition. Indeed, here, Masimo obtained the ultimate ban in less than two years from instituting the proceeding. And it did so in front of administrative law judges and not a lay jury which is likely to have some semblance of bias for Apple and its products. This has saved Masimo a lot of time and resources.

However, the ITC is very limited in the types of relief it can grant. The headlines on the Apple Watch ban notably lack any discussion about damages because the ITC has no authority to award damages for infringement. The ITC only has the power to grant injunctive relief, generally in the form of an Exclusion Order that prohibits the importation of infringing goods into the United States. Specifically, the ITC has no jurisdiction over products that are already in the United States. Only a U.S. District court can enjoin the sale of goods within the United States. As such, the ban does not prevent Apple or its suppliers from continuing to sell products that have already been imported into or otherwise are manufactured in the U.S.

If the Final Determination includes a finding of infringement, like it did against Apple, the ITC has the power to issue an Exclusion Order, either Limited (“LEO”) or General (“GEO”). A LEO excludes the importation of infringing goods by the infringing party named in the Section 337 investigation. A GEO, however, provides for the widespread exclusion of the importation of infringing goods regardless of the importing party’s identity or involvement in the Section 337 investigation. The orders are provided to U.S. Customs and Border Protection (i.e., “Customs”), which is tasked with the enforcement of these Exclusion Orders and preventing the importation of infringing goods into the U.S. Exclusion Orders are prospective in nature, however, and do not impact the use or sale of goods that are already in the United States.

Finally, because the ITC is part of the executive branch, the U.S. President has the power to disapprove a ban. The President has 60 days from the order to review and effectively veto the order. While this veto power has only been used five times in the history of the ITC, it was last used in 2013 when President Obama overturned a ban related to the Apple iPhone. (Inv. No. 337-TA-794). If the President does not veto the ban, it will be finalized, and Apple will be entitled to appeal the determination to the Federal Circuit.