Do you think the bankruptcy judge was correct?
The federal court from the Eastern District of Virginia did not in ITC v. Jaffe, a decision rendered on June 28, 2010. The court concluded that the bankruptcy judge made a mistake. The automatic stay in bankruptcy could not prevent the ITC from continuing to investigate the bankrupt debtor. While the patent owner filed the complaint with the ITC, it was the ITC that initiated the investigation pursuant to its police and regulatory power. That the patent holder stood to inherit the bond posted by the infringing importer did not mean the patent holder was a creditor, the court reasoned.
The lesson is that bankruptcy can give companies and individuals valuable breathing room and keep bill collectors at bay, but it does not prevent the ITC from investigating whether the bankrupt debtor is violating someone’s intellectual property rights and it does not prevent CBP from excluding the debtor’s infringing merchandise.