Alert June 27, 2013

Process Claims in District Court and the ITC: The Hints from Sucralose


When a patent holder seeks redress against an imported product made by using a patented process in a foreign country, it must consider whether to bring a claim in federal district court or the International Trade Commission. One factor the patent holder should consider is to what extent the infringer may invoke the defenses enumerated in 35 U.S.C. § 271(g). Those defenses are available only in a federal court action, although recent case law has opened the door to similar defenses in ITC proceedings.

Your company holds U.S. patents that protect a process for making solar panels. Your company has just discovered that another company is practicing your patented process in Singapore and is importing the solar panels into the United States. Can you obtain damages from the infringing importer?  Yes.

According to the patent statute, an importer of products made outside of the United States by a process that is patented in the United States may be liable for infringement. 35 U.S.C. §271(g). Infringement allegations under this statute are adjudicated in federal district court. Can you stop the infringing importations?  The answer is also yes according to the trade statute, which states that the importation of articles made by a process covered by the claims of a U.S. patent is unlawful. 19 U.S.C. §1337(a)(1)(B)(ii). Allegations of violations of the trade statute are adjudicated in the International Trade Commission (“ITC”).

A patentee therefore has a choice of where to file an infringement case for product by process claims. Is it better to file your case in district court or in the ITC?  Many different factors should be considered, and in some instances a complaint alleging infringement of process claims should probably be filed in both jurisdictions.

One important factor to consider is whether the infringing importer will likely defend against the allegations in the complaint with evidence that the imported product is materially changed by subsequent processes. Also worth considering is whether the product manufactured by the patented process is a trivial and nonessential component of the product that is actually imported into the United States.

Product by Process Claims in District Court versus the ITC

Both the ITC and district court are suitable for asserting process patent claims against an infringing importer. However, in district court, the infringing importer can allege the defenses enunciated in section 271(g) of the patent statute, namely:  (i) “[the imported product] is materially changed by subsequent processes” or (ii) “[the product made by the patented process] becomes a trivial and nonessential component of another product.”

The first defense applies when a manufactured product is produced by the patented process but additional process steps are performed that materially change the product from the product that would have been produced by practicing the patented process. The second defense applies when a product is manufactured by the patented process but the manufactured product is incorporated into a downstream product that renders the manufactured product a nonessential component of the downstream product. These defenses are known as the section 271(g) defenses and are only available to an accused infringing importer in district court; these defenses are not available in the ITC. The Federal Circuit in Kinik Co. v. Int’l Trade Commission, 362 F.3d 1359 (Fed. Cir. 2004), found that the accused infringer could not rely on the section 271(g) defenses in the ITC.

As background, in Kinik, the imported product was an abrasive material and the claimed process required several steps, including a sintering step. The respondent, Kinik, argued at the ITC and to the Federal Circuit that its imported abrasive material did not infringe the claimed process because it performed an additional blazing process that heated at a higher temperature for a longer period of time than the sintering step in the claims. Relying on the section 271(g) defense from the patent statute, Kinik argued that the additional blazing step imparted a material change to the imported product.

Both the ITC and the Federal Circuit ruled, however, that the section 271(g) defenses are exclusive to the patent statute and these defenses are not applicable when applying the trade statute in an ITC proceeding. The appellate court emphasized that Congress explicitly proclaimed when enacting section 271(g) that this section was “for purposes of this title” and the defenses would have no effect on any other statute. Furthermore, both the ITC and the Federal Circuit agreed that the legislative history of both the patent and trade statutes and precedent made it clear that there was a distinction between the patent and trade statutes.

Related Defenses Under Sucralose

It seems that this would be the end of the story – because there are no section 271(g) defenses in the ITC, a patentee should bring its patent infringement case with this fact pattern to that forum. But there is more. A few years after the Kinik decision, the section 271(g) defenses issue resurfaced at the ITC in Certain Sucralose, Sweeteners Containing Sucralose, and Related Intermediate Compounds Thereof, Inv. No. 337-TA-604, Comm’n Op. (Apr. 29, 2009). This time, the ITC shed light on a possible defense that resembled the section 271(g) defenses without implicating the patent statute.

In Sucralose, three patents were at issue, two of which covered a process for making an intermediate compound of sucralose and the other which covered a process for recovering a tin catalyst used in the process for making the intermediate sucralose compound.

With respect to the two patents directed to the intermediate compound, the importer of the sucralose product argued that:

  • the imported article was not the intermediate compound covered by the asserted patents.
  • in order to produce the actual imported sucralose sweetener, additional process steps were performed subsequent to the patented process steps for producing the intermediate compound.
  • with respect to the catalyst recovery patent, the imported sucralose did not contain the tin catalyst and that the tin catalyst itself was not imported.

The Administrative Law Judge (“ALJ”) and the Commission agreed that — although there was subsequent processing after the patented process steps were performed to produce the intermediate compound — there was a sufficient close interdependence between the patented processes and the production of sucralose.”  The Commission focused on factors such as: (i) the proximity of the intermediate compound and the final imported product (sucralose) in the process chain for producing sucralose; (ii) whether the intermediate compounds had any alternate uses other than being used in the production of sucralose; and (iii) the purpose of the patent.

With respect to the catalyst recovery patent, the ALJ and Commission determined that the claims covering the process of removing and recycling the tin catalyst from the process of making the intermediate compound were not contemplated by the trade statute under section 1337(a)(1)(B)(ii); because the tin catalyst was neither a precursor of sucralose nor the imported article, there was no “close interdependence between the patented process and the production of sucralose.”  The ITC noted that the catalyst, once recycled, could have been used for other processes not related to the production of sucralose.

The ITC’s reasoning for finding a sufficient “close interdependence” with respect to the intermediate patent claims and the imported sucralose — and not finding a “close interdependence” with respect to the catalyst patent claims and the imported sucralose — is analogous to the section 271(g) defenses which the Federal Circuit held were unavailable in Kinik. However, the Commission’s reasoning is carefully articulated to implicate the reach of the trade statute and not imply that section 271(g) directly applies in the ITC. Ultimately, the ITC determined that the patentee failed to prove all elements of the intermediate process claims and did not find a violation against the participating respondents.

From Sucralose we learn that the Commission will consider subsequent processing as an answer to a charge of importation of a product made by a patented process. What is unclear, however, is the precise extent to which subsequent processing will be a viable defense. The Commission found that the Federal Circuit in Kinik did not resolve the issue of the extent of subsequent processing, stating “there remains the distinct question of the extent to which the statutory language ‘articles . . . made . . . under, or by means of, a patented process’ encompasses articles that are further processed prior to importation.”  Thus, whether a “section 271(g)-ish defense” applies in the ITC and to what extent is still an open question.

The Practice Tip

Sucralose and Kinik are important decisions for a patentee to consider in deciding which jurisdiction is best for asserting process claims; these decisions also inform an ITC respondent of viable defenses. If your company decides to assert process patents to protect its solar panel industry in the United States, as in the example above, then the ITC may be the best place to do so. The accused importer will not be able to explicitly rely on the section 271(g) defenses. Thus, subsequent processing that does not remove the product from the reach of the trade statute will still be actionable in the ITC. The accused importer will have a harder time establishing that subsequent processing of the imported article is to such an extent that the article is no longer within the jurisdiction of the Commission under section 1337(a)(1)(B)(ii).