A Chinese Firm That Lost In U.S. Trade Court May Get A Do-Over

Forbes

a day ago

Under Secretary of Commerce and Director of the US Patent and Trademark Office Kathi Vidal speaks ... More during a visit in Beijing on April 16, 2024. (Photo by Tatan Syuflana / POOL / AFP) (Photo by TATAN SYUFLANA/POOL/AFP via Getty Images)
Very soon, the U.S. Patent and Trademark Office will decide whether to change a controversial ruling – one that risks undermining the future of American innovation.
The case involves Efficient Power Conversion Corporation, a California-based company that holds patents on core semiconductor technology. After developing and patenting this innovation under U.S. law, the company found itself undercut by a Chinese competitor, Innoscience, which began selling copycat products in the U.S. market at artificially low prices.
The American company, EPC, did exactly what innovators are supposed to do in such cases: it sought relief from the U.S. International Trade Commission, the federal agency tasked with investigating – and, when necessary, halting – unfair imports.
The ITC's process is deliberately rigorous. First, an administrative law judge conducts a full evidentiary hearing. Then the six-member Commission – three Republicans, three Democrats, all confirmed by the Senate – reviews the ruling and decides whether to affirm it. Finally, the President has 60 days to intervene if the result conflicts with broader policy interests.
In this case, every step played out in favor of EPC. The administrative law judge ruled that Innoscience had violated U.S. trade law by importing products that infringed EPC's valid patents. The Commission affirmed that finding. The White House declined to intervene. The result was a binding exclusion order, blocking the infringing Chinese products from entering the U.S. market.
But even as the ITC investigation was already well underway, a separate administrative panel – the Patent Trial and Appeal Board – decided to launch its own, duplicative review. And just weeks after the ITC's exclusion order became final, the PTAB issued a ruling that directly contradicted the ITC's carefully considered judgment. Its finding? That some of the claims of the key EPC patents were invalid and should never have been granted in the first place.
Put simply, two parts of the same government reached opposite conclusions on identical legal issues involving the same companies. Unsurprisingly, the losing Chinese company – already found to have violated U.S. trade law – is now trying to use the PTAB's ruling to overturn the ITC's order so it can resume unfair sales on the U.S. market.
PTAB was created under the 2011 America Invents Act to serve as a supposedly faster and cheaper alternative to patent litigation in other forums. Instead, it has slowed things down and added costs by being used to relitigate patent validity decisions reached by other bodies, including federal district courts and the ITC. PTAB can even agree to repeatedly review the same patent by focusing on different patent claims each time, an incredibly wasteful practice.
This is economically costly and highly inefficient, at a time when efficiency in government is a stated Administration priority. It is also highly inappropriate and leads to bad results, including weaker patents and potentially reduced innovation.
PTAB 'judges' actually are mere 'inferior' officers (government employees appointed by the Commerce Secretary and supervised by the PTO Director). In marked contrast, ITC Commissioners and federal district court judges are 'principal' officers of the United States nominated by the President and confirmed by the Senate. PTAB should not be in a position to overrule superior officers on patent questions.
There's another major issue with PTAB.
Patents, once issued are important property rights that drive innovation and thus should not be easily undone after being granted. Thus it is entirely appropriate that the ITC and federal courts can only strike down patents based on 'clear and convincing evidence,' a tough standard which means that the evidence is highly probable.
In contrast, PTAB boards can strike down patent claims based on 'the preponderance of the evidence,' a low bar (probability just above 50-50) that makes it relatively easy to 'kill' patents. Indeed, a high percentage of patent claims have been wiped out by PTAB. This has happened despite studies showing that initial patent examining is very high quality and 'that examiners are far more likely to reject patents that should have been issued than they are to issue patents that should have been rejected.'
The PTAB's interference in the EPC-Innoscience dispute was enabled by a 2022 Biden PTO policy memo that eliminated longstanding safeguards that prevented this kind of inter-agency conflict. The 2022 policy memo instructed PTAB not to deny a requested patent review when the request was based on a parallel ITC proceeding. Trump-appointed Acting PTO Director Coke Stewart rescinded the 2022 memo in February 2025, but by then the PTAB EPC case had already been instituted under the old rules. Weeks after Stewart's rescission of the Biden-era policy, in March 2025, the PTAB issued its decision, striking down an EPC patent and directly contradicting the ITC's final judgment.
Under current rules, the Director has full authority to review and overturn that decision. A formal request for Director Review is now pending. Acting Director Stewart could act decisively by reversing the PTAB's EPC ruling. That could help restore the consistency and coherence the law requires and innovators deserve.
This case is about much more than any one company or patent. It is a test of whether American agencies can act coherently – and whether we will allow foreign companies to exploit internal contradictions in our legal system.
The ITC plays a critical role in protecting American innovation. It remains one of the few venues where U.S. companies can obtain timely, enforceable relief against unfair foreign competition. Without it, these cases drag on for years while patent-infringing products, often subsidized by foreign governments, flood American markets.
The facts here are clear: An American company proved its case through proper legal channels and won. Then, at the eleventh hour, a separate agency claimed the patents never should have existed – even though the matter had already been fully tried before the ITC, with live witnesses, fact discovery, and a complete evidentiary record.
The PTO still has a chance to restore order. Swift action overturning the PTAB's ruling would send the clearest possible message: final decisions by the U.S. government – reached through proper legal process and presidential review – cannot be casually undone by conflicting bureaucratic panels.
The PTO's decision in this case will send an important signal about the Trump administration's commitment to eliminating bureaucratic barriers that stifle patent-driven American innovation.