ITC Patent Infringement Litigation by JBS Hair Inc.

On September 4, 2024, the U.S. International Trade Commission (ITC) announced the institution of a patent infringement investigation for “certain pre-stretched braided hair and packaging.” It was triggered by a complaint filed on August 2, 2024, by hair product manufacturer JBS Hair Inc. alleging that three of its patents were infringed. The ITC will investigate the patent infringement claims, and 30 other hair product companies are named as participants. While the outcome of this case is difficult to predict at this early stage, it is important to understand exactly what JBS Hair’s patent claims are and how the ITC proceedings would typically go, as the outcome could substantially impact the U.S. hair industry.

What is ITC? A key organization for trade and intellectual property protection

The U.S. International Trade Commission (ITC) specializes in identifying unfair practices related to the imported goods in the U.S. market. One of these, commonly referred to as a “Section 337 investigation,” is based on the Section 337 of the U.S. Tariff Act of 1930.

The section provides two circumstances when an ITC investigation can be instituted. First, it is triggered when there is an unfair practice in the importation or sale of the imported goods that injures or threatens to injure the U.S. domestic market. Second, it regulates the importation and sale of goods that infringe on intellectual property (IP), regardless of whether they caused harm or not.

The JBS Hair filed a complaint requesting an IP infringement investigation under Section 337, in which JBS Hair alleged that its patents were infringed and asked the ITC to investigate to prevent the importation and sale of the braided hair products in question.

1) What are the patents at issue?

JBS Hair’s patents are related to synthetic hair and packaging methods.

1. Patent 10786026 (Granted on September 29, 2020)

    – Filing date: December 15, 2016

    – What is the patent about? Synthetic hair for braiding in different lengths packaged together. It describes the process of arranging different lengths of hair together and folding them in a specific way to secure them.

2. Patent 10945478 (Granted on March 16, 2021)

    – Filing date: August 13, 2020

    – What is the patent about? Similar to the first patent, it covers synthetic braiding hair, but focuses more on packaging. It gathers bundles of hair of varying lengths together, secure the center, and fold and wrap them to prevent tangles. The natural curve of the hair tip is designed to allow the purchases to use the product right out of the box.

3. Patent 10980301 (Granted on April 20, 2021)

    – Filing date: August 13, 2020

    – What is the patent about? Technical improvements that extend the concepts of the previous patent. In particular, it covers the subsequent technical steps to ensure that synthetic braiding hair remains tangle-free after long-term storage.

4. Some of the illustrations used in patent applications

Figure 1: Synthetic hair in four different lengths. The first bundle is the longest, and gets progressively shorter from there.

Figure 2: Four bundles of hair are combined into one. This is followed by a process called “hackling,” which uses metal or plastic pins to evenly distribute the hair.

Figure 3: Demonstration of how to secure the braiding hair at the middle, folding in half with a device to hold it in place.

Figure 4: braiding hair in the folded state. Hair of different lengths will naturally fall down, creating a rounded shape with a longer center and shorter edges, as shown.

Figure 5: Folded braiding hair attached to the backboard. Part of the backboard is hidden and part is visible to the user.

Figure 6: An illustration detailing the state of the packaging. The rounded outer part is exposed downward, making it easier for consumers to recognize that the hair is composed of different lengths.

Figure 7: A schematic illustration of how to pack braiding hair.

Figure 8: Another example of four bundles of synthetic braiding hair in two different lengths. The first and second bundles are of the same short length, and the third and fourth bundles are of the same long length.

Figure 9: Illustrates the process of placing four bundles of hair around a central axis, distributing them evenly through the hackling process, and completing them into a braiding hair product.

Figure 10: Shows an existing braiding hair package with all hairs cut to the same length and aligned flat. Stylists or consumers had to manually trim hair before styling to create natural looking volume.

2) Characteristics of ITC litigation

Fast-paced, professional, and unique structure

    – While similar to litigation in federal court applying patent law, ITC cases are characterized by a high level of intellectual property specialization and a fast-paced process.

    – Another important distinction is that there is no jury in an ITC case. In federal court, jurors’ personal feelings and other factors can often make them less predictable, while ITC cases are easier to keep objectivity in technical judgments.

    – Participants have a different composition. Unlike a lawsuit, which consists of plaintiff and defendant, an ITC case involves an independent investigator called a Commission Investigative Attorney in addition to the parties. The Commission Investigative Attorneys investigate objective facts independent of the parties and weigh in on the verdict.

    – An import exclusion order can be issued against an infringing product, which prohibits the importation of the product into the United States. The order is placed against infringing products originating from multiple sources, forgoing multiple lawsuits filed against infringing companies.

3) Litigation Process and Points

The ITC litigation process, step by step

Discovery is key

JBS Hair’s ongoing ITC case has entered a crucial third phase: Fact Discovery. This is a critical juncture that can determine the course of a case. It’s a process where each party is ordered to disclose relevant documents, materials, and more, which can play a big role in uncovering the truth of the case. Litigants must respond carefully and present evidence in good faith. If evidence is found to have been intentionally concealed or destroyed, it can lead to immediate judgment against the party. In 2019, in a battery litigation between LG Energy Solutions and SK Innovation, the ITC determined that SK Innovation had destroyed evidence, resulting in a default judgment against SK Innovation.

Key points in ITC litigation

At the heart of an ITC case is a determination of patent infringement. The outcome is clear: whether infringement is found or not. If the likelihood of infringement is 51%, infringement is found, and conversely, if the likelihood is 49%, no infringement is found. In other words, the ITC does not require the “beyond a reasonable doubt” standard of proof typically used in criminal cases. A judge may rule in favor of the defendant if the defendant’s argument is even slightly more credible than the plaintiff’s. As a result, even minor facts can have a significant impact on the outcome of the case. The long-standing industry practice of a particular technology or product can be a factor in determining the flow, tone, and gravity of the administrative proceeding, while the determination of infringement is ultimately based on a thorough factual investigation and expert analysis.

If infringement is found, the ITC’s decision can be viewed as twofold. The first is an exclusion order, which is a total ban on importation, and the second is a cease and desist order. Once such an order is issued, the product can no longer be sold or distributed in the U.S.

Another important point is settlement. ITC cases can be settled at any time. The weight of the plaintiff’s claim is important in this process. If the plaintiff is more likely to win, they will naturally have more leverage in the settlement amount or terms. On the other hand, if the likelihood of winning is uncertain, the settlement terms may be weaker. Companies usually try to settle before the Initial Determination is made, but sometimes cases go all the way to the end. In fact, the ITC case between Daewoong Pharmaceutical and Medytox over a strain of Botox reached a settlement after it went through presidential review and was on the verge of appeal, which is the final stage. As you can see, the nuances of infringement determinations and settlement strategies are critical in ITC cases.