337 Quarterly Insider Q3 2019 October 04, 2019

Goodwin's 337 Newsletter -- Reporting on Q3 2019

This issue provides Goodwin’s insights into the comings and goings in the Section 337 world in the third quarter 2019. With the growing importance of cross-border trade issues, the ITC continues to be a vital battle ground for companies seeking to stop alleged unfair competition. In this Newsletter, Goodwin uses its unique ITC expertise to keep you up to date on everything that happened at the ITC last quarter and we also add our insights to assist you in practicing at the ITC going forward.

In addition to our newsletter covering current events, we also publish an ITC Primer providing a high level end-to-end overview of Section 337 Investigations. The Primer is available here in English and Chinese.

We also are in the middle of a three-part detailed webinar series covering various aspects of Section 337 Investigations. Part 1 which provided a complete overview of Section 337 Investigations aired last month and is available here. Part 2 and 3 are forthcoming in October and November. These follow-up portions will respectively take granular dives into unique FRAND issues that arise in litigating SEPs at the ITC and understanding post-remedy issues.

In This Issue

The third quarter included no seismic shifts in policy or any earth-shattering legal interpretations. No matter, it was still an interesting quarter considering the amount of decisions that continue to come out of the hard working ALJs and a generally busy Commission. One trend we continue to watch is the appeal of the ITC to life sciences companies. In calendar year 2019 there have already been seven new life sciences cases instituted (Inv. Nos. 337-TA-1144, -1145, -1146, 1147, 1153, 1167, and 1175). By our count, this is the most life sciences cases in a year the Commission has ever seen. Too early to tell whether this uptick will carry forward, but with a Delaware docket that continues to be overcrowded, chances are good that life sciences momentum at the ITC will continue to pick up.

Goodwin Insights

The third quarter included no seismic shifts in policy or any earth-shattering legal interpretations. No matter, it was still an interesting quarter considering the amount of decisions that continue to come out of the hard working ALJs and a generally busy Commission. One trend we continue to watch is the appeal of the ITC to life sciences companies. In calendar year 2019 there have already been seven new life sciences cases instituted (Inv. Nos. 337-TA-1144, -1145, -1146, 1147, 1153, 1167, and 1175). By our count, this is the most life sciences cases in a year the Commission has ever seen. Too early to tell whether this uptick will carry forward, but with a Delaware docket that continues to be overcrowded, chances are good that life sciences momentum at the ITC will continue to pick up.

Interestingly, three of these new life sciences cases involve trade secrets and they are not the only trade secrets cases on-going at the Commission. We have seen trade secrets’ cases grow in number across the country and the ITC is seeing the same increase. As the Commission’s trade secret precedent is relatively light, it will be interesting to see how this trend plays out and what type of guidance the ALJs and Commission put out as these cases reach their later stages.

On a more general level, Section 337 filings were numerous in the beginning of the quarter, but have tapered off somewhat in the last few weeks. With that said, the Commission continues to be very busy this year and if the averages from the previous three quarters continue 2019 will see more institutions than it did in 2018.

The ITC’s appeal continues among non-practicing entities. Particularly, more and more companies that license their IP are relying on the domestic expenditures of their licensees to show a domestic industry. We expect that this trend will continue going forward.

In one notable opinion, the ITC reminded us that activities relied upon for domestic industry ought to have taken place before the complaint is filed. The relevant date to determine domestic industry remains the filing date of the complaint. As the Commission explained it “will consider post-complaint evidence regarding domestic industry only in very specific circumstances,” giving as an example “when a significant and unusual development has occurred after the complaint has been filed.” Unsubstantiated assertion of “explosive growth” projections will not suffice.

Another particularly interesting fact pattern came in an investigation where the respondents attempted to subpoena the Commission itself. The respondents sought discovery from the Commission on past transcripts and information that was arguably not available outside the Commission’s possession. The request was ultimately struck down by the ALJ on the grounds that it was not adequately shown that relevant third parties did not object to the Commission turning over the discovery. It is a rare circumstance where such a subpoena could become relevant and necessary, but it is interesting nonetheless.

Most Impactful Commission Decisions

Commission Modifies ALJ’s Claim Construction and Consequently Reverses Findings of Patent Validity and Infringement

In the Matter of CERTAIN ELECTRICAL CONNECTORS, COMPONENTS THEREOF, AND PRODUCTS CONTAINING THE SAME, Inv. No. 337-TA-1043, Commission Opinion (Feb. 11, 2019)

Before: Commission Opinion (ID issued by Chief Judge Bullock)

Practice Tips and Insights:

In advancing claim construction arguments before the Commission, as elsewhere, it is important to tie the construction to intrinsic evidence (the claims, the specification, and the prosecution history) rather than relying on expert testimony. Expert testimony which has the effect of reading limitations into the claims which are not disclosed in the specification may be particularly disfavored.

Holding and Status:

The Commission found no violation of Section 337 because the accused products were non-infringing and the asserted claims were invalid as anticipated.

Case Background:

Complainant J.S.T. Corporation (“JST”) alleged violations of Section 337 by the importation and sale of electrical connectors alleged to infringe the asserted patent. The asserted patent covered a “tine plate” (i.e., a nonconductive protective covering for the tines of an electrical connector) which had a particular number of holes in it and was meant to prevent problems related to thermal expansion of tine plates which were known in the prior art. The Commission construed the claims to require that the tine plate have elongated holes on the edges, reversing the ALJ’s construction allowing non-elongated holes to come between the edges of the tine plate and the elongated holes. Consequently, it reversed the ALJ’s finding of infringement, because the accused products had non-elongated holes on the edges. The Commission also found that the patent was anticipated, again reversing the ALJ.

Notable Disputed Issues and Related Points of Law:

Claim Construction: The only asserted independent claim required that the tine plate “include first holes that each respectively have an elongated hole shape” and that “the first holes are provided in end regions of the tine plate proximate to two opposite ends of the tine plate in the longitudinal direction . . . .” The Commission had previously construed “proximate to two ends” to mean “adjacent to the two opposite ends of the tine plate in the substantially longitudinal direction.” On remand, the ALJ held that this construction did not require that “the first (elongated) holes must be next to the ends of the tine plate, with no other holes in between them and the ends.” The Commission reversed because the specification (1) emphasized the importance of placing the elongated holes on the edges of the tine plate in order to maximize reduction in thermal cracking without compromising the strength of the plate; (2) explained that temperature variation (and thus the threat of thermal cracking) was greatest at the longitudinal ends; (3) described “the present invention” as having holes at the longitudinal ends; and (4) disclosed three embodiments with elongated holes at the longitudinal ends. The Commission also found that, during prosecution, the applicant traversed a rejection for anticipation by arguing that the invention’s elongated holes, when placed along the longitudinal edges of the tine plate, prevented thermal cracking without weakening the tine plate.

Claim Construction/Expert Testimony: Complainant argued that a POSA would understand the term “contact leg” to exclude “grounding legs,” presenting expert testimony that contact legs form a connective path between two components, whereas grounding legs do not create such connective paths. The Commission rejected this argument because the specification repeatedly referred to contact legs without drawing this distinction, and did not disclose grounding legs as a separate feature. Complainant’s expert testimony was unsupported by any language in the patent or prosecution history, and would have the effect of reading multiple limitations into the claims: “it [would add] signal-path, metallic-shield, and male-and-female-connector requirements that the specification does not disclose or even suggest.” Op. at 44.

Clear and Convincing Evidence: The Commission rejected as “unreasonable” the Complainant’s argument that “a respondent must ‘guarantee’ that the evidence is ‘free of errors and defects’ to be clear and convincing.” Op. at 39.

Commission Modifies Claim Construction, Rejecting Parties’ Proposed Constructions

In the Matter of CERTAIN SEMICONDUCTOR DEVICES AND CONSUMER AUDIOVISUAL PRODUCTS CONTAINING THE SAME, Inv. No. 337-TA-1047, Commission Opinion (Sep. 11, 2019)

Before: Commission Opinion (ID issued by ALJ Shaw)

Practice Tips and Insights:

The Commission may be willing to modify an ID’s claim construction and instead of adopting either of the parties’ proposed constructions, provide its own construction. The Commission may also be willing to evaluate evidence of infringement, invalidity, and technical domestic industry presented during the hearing in view of a new claim construction, rather than remanding. A party bearing the burden of proof on an issue should anticipate that the Commission may modify a questionable claim construction and either develop the evidentiary record accordingly or seek remand to the ALJ following Commission review.

Holding and Status:

The Commission found no violation of Section 337.

Case Background:

Broadcom filed a complaint alleging a violation of Section 337 by Sigma Designs, Inc., Vizio, Inc., and various other respondents based on infringement of five of its utility patents. At the time of the hearing, all respondents other than Sigma and Vizio had been terminated from the investigation and Broadcom had withdrawn its complaint as to two of its patents. At issue at the hearing was whether Sigma violated Section 337 by importing or selling system-on-a-chip (“SoC”) products and whether Vizio violated Section 337 by importing or selling downstream products incorporating Sigma’s SoCs.

Following the hearing, ALJ Shaw issued a final initial determination finding no violation of Section 337 by either Sigma or Vizio. ALJ Shaw concluded that Broadcom did not meet its burden to show infringement of any of the asserted claims of its three patents: the ’844 patent, the ’104 patent, and the ’059 patent. ALJ Shaw additionally concluded that Broadcom failed to satisfy the technical prong of the domestic industry requirement for the ’104 patent and that the ’844 patent was invalid as anticipated.

The Commission determined to review the ID in part, including with respect to certain constructions of terms from the ’844 and ’104 patents. The Commission determined not to review ALJ Shaw’s finding of no violation with respect to the ’059 patent.

Notable Disputed Issues and Related Points of Law:

Claim Construction: The Commission modified a construction of a term in the ’844 patent—“a processor adapted to control a decoding process”—and adopted a middle-ground between the term’s plain and ordinary meaning urged by Broadcom and a narrow construction urged by respondents. Notably, ALJ Shaw’s ground rules do not provide for a discrete claim construction proceeding, leaving the parties to seek constructions at the hearing phase. Based on the arguments submitted at the hearing phase, the ID sided with respondents, construing the disputed term narrowly to mean “a core decoder processor designed to orchestrate coding for each pipeline stage.”

On review, the Commission found the ID’s construction unsupported, as the ID relied primarily on a passage of the specification describing how the claimed invention “typically” works. The Commission, however, declined to limit the claims according to how the invention “typically” works. The Commission also rejected Broadcom’s proposed plain and ordinary meaning, finding that it would ensnare disclaimed prior art.

Agreeing with neither Broadcom nor the respondents, the Commission provided its own construction of the term: “a core processor adapted to control a decoding process according to a processing pipeline.” The Commission relied in significant part on repetitive and consistent references in the specification to a “core processor” and “pipeline” when describing the the claimed decoding process of the invention.

Infringement: Applying its modified construction, the Commission found that Broadcom failed to prove the accused products satisfied the limitation “a processor adapted to control a decoding process.” The Commission noted that in its initial pre-hearing brief, Broadcom argued that the accused products control was a “single-stage decoding pipeline.” The Commission, however, found that a pipeline requires multiple stages and the accused single-stage process therefore could not be a pipeline and could not satisfy the claim limitation. Broadcom’s argument had essentially precluded it from proving infringement under the Commission’s modified construction.

Invalidity: The Commission further found that the respondents satisfied their burden to prove the asserted claims of the ’844 patent were anticipated. At issue on review was whether the anticipating reference disclosed the limitation “adapted to perform a decoding function on a digital media stream.” The Commission did not find Broadcom’s expert’s testimony persuasive. Broadcom’s expert argued that the prior art’s disclosure of parsing data into video and audio components was not “a decoding process” as the term was used in the ’844 patent. But Broadcom’s expert did not testify that a person of ordinary skill would understand “a decoding process” to exclude parsing. The Commission declined to afford the expert’s testimony significant weight, concluding it amounted to an untimely attempt to construe the term.

Commission Issues Limited Exclusion Order And Cease And Desist Orders

In the Matter of CERTAIN ROAD MILLING MACHINES AND COMPONENTS THEREOF, Inv. No. 337-TA-1067, Commission Opinion (August 7, 2019)

Before: Commission Opinion (ID issued by Judge Shaw)

Practice Tips and Insights:

Shifting production of infringing products to the United States will not avoid the issuance of a limited exclusion order due to the possibility that the respondent may resume importation at a later date. Further, the Commission appeared to indicate a party seeking to avoid a cease and desist order needs to show no commercially significant inventory at any time during fact discovery. Indeed, one Commissioner indicated that a CDO should issue upon a showing of some inventory and that there is no need to show that it is commercially significant.

Holding and Status:

The Commission issued a limited exclusion order and cease and desist orders that extended to all present and future infringing products. The Commission further provided a limited exception for service and repair of previously sold products to minimize harm to third parties.

Case Background:

The Commission found that Caterpillar violated Section 337 based upon its importation of three products that infringed two of Wirtgen’s patents. Accordingly, the Commission turned to the issue of what, if any, remedy was appropriate.

Notable Disputed Issues and Related Points of Law:

Appropriate scope of exclusion order and cease and desist order: Caterpillar argued that neither a limited exclusion order nor a cease and desist order were appropriate because by the end of the investigation it had no meaningful inventory of imported goods and it had shifted manufacture to the United States. Caterpillar also argued that Wirtgen failed to establish which affiliate held title to the inventory earlier in the investigation. Wirtgen argued that having shown importation and a commercially significant inventory during the investigation, both an exclusion order and cease and desist order were appropriate. The Commission held that both an exclusion order and a cease and desist order were appropriate because Caterpillar had imported infringing products and had maintained a commercially significant inventory of those products during the investigation. One commissioner indicated that a cease and desist order was appropriate based upon the existence of any inventory and that there should be no need to prove that the inventory was commercially significant. Regarding the exclusion order, the Commission reasoned that simply because Caterpillar had shifted the location of production during the investigation, there would be nothing to prevent Caterpillar from shifting production back overseas after the conclusion of the investigation in the absence of an exclusion order. Moreover, the existence of other non-adjudicated products did not justify limiting the exclusion order to products found to infringe. Instead, the Commission found that a certification provision should be available to allow Caterpillar to certify when it imported noninfringing products. Further, to minimize the impact of the issued remedy upon third parties, the Commission included an exemption for service and repair of previously sold products. However, the Commission declined to issue an exception for components or for product already in transit.

Commission Finds Evidence of Domestic Industry Insufficient and Thus, No Violation of Section 337 Despite Finding Some Patent Claims Infringed

In the Matter of CERTAIN THERMOPLASTIC-ENCAPSULATED ELECTRIC MOTORS, COMPONENTS THEREOF, AND PRODUCTS AND VEHICLES CONTAINING SAME ii, Inv. No. 337-TA-1073, Commission Opinion (Aug. 12, 2019)

Before: Commission Opinion (ID issued by Chief Judge Bullock)

Practice Tips and Insights:

To prove a section 337 violation, a Complainant must demonstrate the existence of a domestic industry as of the time the complaint is filed, and cannot rely on post-filing evidence of domestic industry absent a showing that a “significant and unusual development” later occurred. Complainant’s evidence of only 70 production samples that did not practice the asserted patents failed to meet this standard, and Complaint failed to meet the standard through use of alleged “explosive growth projections.”

Holding and Status:

The Commission found no violation of Section 337 as to asserted U.S. Patent Nos. 7,683,509 and 7,928,348.

Case Background:

The Complainant, Intellectual Ventures II LLC (“IVII”), filed a complaint against a number of automobile makers and suppliers including Aisin Seiki Co., Ltd. of Aichi, Japan (“Aisin”); Bayerische Motoren Werke AG of Munich, Germany (“BMW”); Denso Corporation of Aichi, Japan (“Denso”); Honda Motor Co., Ltd. of Tokyo, Japan (“Honda”); Mitsuba Corporation of Gunma, Japan (“Mitsuba”); Nidec Corporation of Kyoto, Japan (“Nidec”); and Toyota Motor Corporation of Aichi Prefecture, Japan (“Toyota”), claiming that they violated Section 337 by importing certain electric motors encapsulated in thermoplastic material that allegedly infringed a number of IVII patents. The Commission previously terminated the investigation with respect to respondents BMW, Denso, Mitsuba and Nidec, as well as with respect to three of the asserted patents. The remaining respondents were Aisin, Honda and Toyota, alleged to infringe U.S. Patent Nos. 7,683,509 and 7,928,348.

The asserted patents relate to thermoplastic encapsulation of electric motors. Both patents are directed to electromagnetic devices with heat exchange mechanisms, and in particular, motors and other devices that are cooled by a fluid coolant and encapsulated by injection-molded thermoplastic. The devices can be used in various products, such as hybrid electric vehicles.

After construing the claims following a separate claims construction hearing, the ALJ conducted an evidentiary hearing and in his ID found no violation of section 337 with respect to the ’509 or ’348 patents. Infringement was found regarding claims 14 and 15 of the ’509 patent, but the ID found that IVII failed to satisfy the domestic industry requirement as to both patents. In addition, the ID found no infringement of claims 24-27 of the ’348 patent.

After the parties filed petitions for review, respondents notified the Commission that the Patent Trial and Appeal Board (“PTAB”) issued four final written decisions finding that every claim asserted against respondents is unpatentable in light of the prior art.

The Commission affirmed and adopted the ID’s findings that IVII failed to demonstrate that a domestic industry exists or is in the process of being established. In particular, IVII failed to establish that articles practice the asserted patent claims or that its investments and activities with respect to the articles were sufficient to meet the domestic industry requirement. Having reached a decision on domestic industry, the Commission declined to address infringement and invalidity.

Notable Disputed Issues and Related Points of Law:

Proof Necessary to Show Domestic Industry: The Commission first noted that the domestic industry requirement is set forth by statute, citing 19 U.S.C. § 1337(a)(2)-(3). Next, the Commission observed that the relevant date to determine domestic industry is the filing date of the complaint, citing Motiva, LLC v. ITC, 716 F.3d 596, 601 n.6 (Fed. Cir. 2013) and Certain Video Game Systems and Controllers, Inv. No. 337-TA-743, Comm’n Op. at 5 (Jan. 20, 2012), aff’d sub nom. Motiva. The Commission explained that it “will consider post-complaint evidence regarding domestic industry only in very specific circumstances,” giving as an example “when a significant and unusual development has occurred after the complaint has been filed.” Certain Collapsible Sockets for Mobile Electronic Devices and Components Thereof, Inv. No. 337-TA-1056, Comm’n Op. at 15 n.10 (July 9, 2018).

Complainant Failed to Prove Domestic Industry: IVII failed, however, to present pre-filing evidence of domestic industry, and failed to persuade the Commission that post-filing developments were of sufficient substantiality to meet the “significant and unusual developments” test. The Commission found that IVII could not rely on its licensee’s investments because IVII “did not demonstrate that those [products] practice the asserted patents.” Furthermore, IVII failed to demonstrate that the “small number of products produced,” assuming arguendo they practiced the patents, constituted a significant and unusual development.

IVII sought to overcome these shortcomings by resort to asserted “explosive growth” projections. The Commission rejected this approach, pointing to the fact that IVII could identify only 70 units, provided as samples to “a handful of Indian, African, and Chinese utilities.” The Commission concluded that IVII “has not established that whatever actual sales there may have been, if any, are more than de minimus.”

The CommissIon concluded also that the sample pumps relied on to support the domestic industry requirement did not, at the time of the complaint, practice the claimed inventions. In particular, the Commission found that the sample products lacked a key claim element, the “monolithic body of injection molded thermoplastic material substantially encapsulating the at least one conductor” recited by the claims.

Commission Finds Conclusory Expert Testimony Insufficient to Establish Representativeness and Means-Plus-Function Limitations “Sharply” Limited to Structure Disclosed in Specification

In the Matter of CERTAIN LED LIGHTING DEVICES, LED POWER SUPPLIES, AND COMPONENTS THEREOF, Inv. No. 337-TA-1081, Commission Opinion (July 23, 2019)

Before: Commission Opinion (ID issued by Administrative Law Judge Dee Lord)

Practice Tips and Insights:

To prove representativeness at the Commission, Complainant cannot rely on conclusory testimony of its expert that the represented products are “essentially the same” or “similar” in structure or function to the representative products. Further, the Commission found that to meet a means-plus-function limitation, the structure of the accused product must be identical to that disclosed in the patent. Finally, the Commission found that conclusory and unsupported expert testimony is insufficient to establish infringement.

Notably, this is an example of a case where the Commission found no violation for respondents that went through trial, but instituted a remedy against a defaulting respondent.

Holding and Status:

The Commission found no violation of Section 337 as to any asserted claims except as to the defaulting Respondent.

Case Background:

The Complainants, Philips Lighting North America and Philips Lighting Holding B.V., filed a complaint against Respondents Feit Electric Company, Inc. and Feit Electric Company, Inc. (China) (collectively “Feit”); Lowe’s Companies, Inc. and L G Sourcing, Inc. (collectively, “Lowes”); MSi Lighting, Inc.; Satco Products, Inc.; Topaz Lighting Corp.; Wangs Alliance Corporation d/b/a WAC Lighting Co. and WAC Lighting (Shanghai) Co. Ltd. (collectively, “WAC”) claiming Respondents violated Section 337 by importing certain LED lighting devices, power supplies, and components thereof that allegedly infringed five Philips patents. MSi was found to be in default for failure to respond. The investigation was terminated as to Topaz and WAC after they entered into settlement agreements with Complainants. The claims related to two of the patents were withdrawn and the case proceeded with regard to the ’399 and ’559 patents as to all Respondents and the ’554 patent as to Lowe’s. The ALJ issued a summary determination that Complainants’ eW Cove Powercore device satisfied the technical prong of the domestic industry requirement as to the ’554 patent. The ID found, inter alia, that Complainants failed to demonstrate infringement of any asserted claim of the ’559 patent and that Complainants had also failed to demonstrate that Lowe’s imported or sold any product that infringed the ’554 patent. The ID further found no infringement for asserted claims 34 and 35 of the ’399 patent, but did find a violation of section 337 with respect to other asserted claims of the ’399 patent. The ID also found that no claim was shown to be invalid.

The Commission determined not to review the ID with respect to the finding of no violation of section 337 with respect to the ’559 and ’554 patents. The Commission determined to review the ID’s findings as to: 1) the ’399 “controller” and “adjustment circuit” limitations; 2) whether products are representative of other products with respect to infringement findings for claims 17-19 of the ’339 patent and claims 6 and 12 of the ’559 patent; and 3) the findings on the economic prong of the domestic industry requirement. The Commission solicited further briefing from the parties as to the first issue and also solicited briefing from the parties and members of the public on remedy, the public interest, and bonding.

Notable Disputed Issues and Related Points of Law:

Proof Necessary to Establish Product Representativeness: Complainants asserted the ’399 patent against 239 accused products and the ’559 patent against 42 accused products. In order to establish infringement, Complainants analyzed 12 representative products for the ’399 patent and eight for the ’559 patent, arguing that the same infringement analysis should apply to the remaining accused products for each patent. The Final ID found that Complainants satisfied their burden to show that the infringement analysis for the representative products also applied to the represented products as to and claims 17-19 of the ’399 patent and the asserted claims of the ’559 patent, despite no finding of infringement as to the ’559 patent.

In its attempt to establish representativeness for the ’399 patent, Complainants relied on expert testimony that the represented products “contained the same kinds of infringing components and exhibited the same infringing behaviors as the representative products.” The Commission reversed the Final ID’s finding of representativeness, characterizing the expert testimony as “conclusory and insufficient to establish representativeness.” The Commission criticized the expert’s correlation charts, which merely compiled “model numbers and exhibit numbers for circuit diagrams into a chart” as insufficient and noted that the correlation charts actually weighed against a finding of representativeness by demonstrating the differences in components between the products.

Similarly for the ’559 patent, Complainants relied on expert testimony which the Commission deemed conclusory and insufficient to establish representativeness.The expert cited no evidence in support of his conclusion that all of the accused products operated in a similar manner and also failed to demonstrate that all of the accused products shared the same structures and functionality, but merely made conclusory statements that the accused products were similar or used similar functionality.

Requirement for Meeting Means Plus Function Limitations: The Commission also reversed the ALJ’s finding that Complainants had shown infringement of the “controller” limitation in claims 7 and 8 and the “adjustment circuit” limitation in claims 17-19 of the ’399 patent. The ALJ found that “controller” limitations in claims 7 and 8 of the ’399 patent are means-plus-function terms and determined that the structure was disclosed in Figures 5 and 7 of the specification. The Commission found that Complainants failed to establish that the accused products had an identical or equivalent structure to that disclosed in the specification. In fact, the evidence established that the components of certain accused products were connected in a different manner than that disclosed and, therefore, could not have an identical structure, as required under 112 ¶ 6. The Commission also found that Complainants failed to establish that the structure performs the four functions recited in the claim. As to the “adjustment circuit” limitation in claims 17-19, Complainants relied exclusively on expert testimony, which the Commission characterized as “unexplained lists of components, unsupported conclusions, and irrelevant testimony.”

As to whether Complainants satisfied the economic prong of the domestic industry requirement, the Commission took no position because Complainants failed to prove infringement. As to the defaulting respondent MSi, the Commission presumed, as required by section 337(g)(1), that the allegations against the defaulting respondent are true, including as to the economic prong of the domestic industry requirement.

Commission Finds One Claim of One Patent Valid and Infringed After Finding the Other Claims Invalid as Obviousness And the Second Patent Invalid for Claiming Unpatentable Subject Matter

In the Matter of CERTAIN ROAD CONSTRUCTION MACHINES AND COMPONENTS THEREOF, Inv. No. 337-TA-1088, Commission Opinion (July 15, 2019)

Before: Commission Opinion (ID issued by Judge Lord)

Practice Tips and Insights:

The Commission, like other forums, continues to struggle with the proper framework for analyzing whether a patent claims unpatentable subject matter as shown by the split decision whether Caterpillar’s ’871 patent was invalid under section 101. Are claims directed to an automated paving machine claiming abstract ideas because they are directed to the conventional automation of generic equipment or is the validity of such claims better suited to an obviousness analysis? Given fundamental disagreements being voiced in multiple forums, the only safe course is to pursue both theories, particularly given the willingness of certain forums to still hear section 101 challenges earlier than other invalidity challenges.

The Commission’s finding that Claim 19 of the ’693 patent was not obvious depended upon the narrow interpretation of the claim limitation “a retracted position relative to said frame” and the finding that respondents had failed to show a motivation to combine or an reasonable expectation of success in combing the prior art in question. The claim construction was based primarily upon the specification and file history while the finding regarding motivation was based upon shortcomings found in respondents’ technical expert.

Holding and Status:

The Commission found the Wirtgen respondents violated section 337 based upon infringement of claim 19 of U.S. Patent No. 7,140,693 owned by Caterpillar, but that the other asserted claims were invalid as obviousness. The Commission also found U.S. Patent No. 9,045,871 was invalid for being directed to ineligible subject matter.

Case Background:

The 1088 investigation was based upon a complaint filed by Caterpillar alleging that Wirtgen violated Section 337 based upon the importation and sale of multiple paving machines that allegedly infringed three Caterpillar patents. During the investigation, Caterpillar withdrew the ’419 patent and the ALJ granted summary determination that the asserted claims of the ’871 patent were invalid under Section 101. A hearing was held regarding the allegations based on the ’693 patent and the ALJ issued a final initial determination that all of the asserted claims of the ’693 patent were obvious, except claim 19, which the ALJ found Wirtgen infringed.

Notable Disputed Issues and Related Points of Law:

Whether claims directed to the automation of a paving machine violate section 101: Wirtgen moved for summary determination that the claims of the ’871 patent were invalid as directed to ineligible subject matter because they were directed to an abstract idea in that they pertained to an automated paving machine and the supposed point of novelty pertained to the conventional idea of automating a generic paving machine. Caterpillar countered that the claims pertained to a concrete paving machine that had automated features. The majority found that the ’871 patent impermissibly claimed a generic paving machine that was automated using generic electronics used in a conventional manner. The majority opinion found that the abstract idea Commissioner Schmidtlein dissented, noting that the claims pertained to a concrete device with specific features.

To what degree must the specification and file history limit the claim to justify a narrow interpretation of the claim language: Caterpillar argued that both the description in the specification and the statements made in the prosecution history made clear that the “retracted” language of the limitation indicated that wheels being in a retracted position relative to the frame meant that the wheels must be within the frame. In this regard, Caterpillar pointed to language from the specification that indicated that the paving machine could pave flush with a wall when the wheels were in a retracted position. Similarly, Caterpillar pointed to arguments in the file history that distinguished prior art with wheels parallel to the frame rather than inside the frame. While Wirtgen pointed to arguments in the file history regarding prior art, the Commission found that those arguments did not pertain to the limitation in question and therefore adopted Caterpillar’s construction. Based on this interpretation, the Commission found that Wirtgen’s primary reference failed to disclose this limitation.

What evidence is needed to show a motivation to combine and a reasonable expectation of success: In asserted that claim 19 was obvious in view of the prior art, Wirtgen asserted a combination of three references and presented the testimony of its technical expert that one would be motivated to combine the teaching of one reference regarding the retractability of the rear wheels with the teachings of the other prior art. Caterpillar, however, pointed out that the reference in question did not teach retractability of the front wheels and that the teaching of nonretractable front wheels taught away the combination in question. The Commission sided with Caterpillar, finding that Wirtgen’s expert’s testimony was impermissibly conclusory and failed to address the contrary testimony that the reference taught away and failed to explain how one would have a reasonable expectation of success in combining the references.

Commission Issues a General Exclusion Order With Respect to Products Covered By The Asserted Patent

In the Matter of CERTAIN self-anchoring beverage containers, Inv. No. 337-TA-1092, Commission Opinion (July 24, 2019)

Before: Commission Opinion (ID issued by Chief Judge Bullock)

Practice Tips and Insights:

This Investigation started with a complaint identifying eight respondents but eventually continued with only two respondents who defaulted. The Commission nonetheless issued a general exclusion order (GEO). The takeaway from this case is that even when there are only a few remaining defaulting respondents, Complainants should consider requesting a GEO, if they are able to build a compelling case with evidence and arguments to show likely circumvention of a limited exclusion order, a widespread pattern of violation, and difficulty in identifying the source of infringing products. While a limited exclusion order may be the remedy of choice in most cases, the Commission could issue a GEO under appropriate circumstances.

Holding and Status:

The Commission issued a general exclusion order and set bond of 100 percent of the entered value of infringing articles imported during the period of Presidential review.

Case Background:

The 1092 Investigation was based on alleged infringement of a patent related to an improved beverage container that resisted tipping and thus helped prevent the resulting spillage. The Complainants initially filed a complaint against eight respondents. Out of the eight respondents, six were terminated, and the remaining two – an Ukrainian and a Chinese company – were found to be in default. As a result, arguments and evidence regarding infringement and domestic industry were largely undisputed.

The ALJ issued an ID, granting Complainants’ motion for summary determination. The ALJ found the importation requirement to be satisfied as to each defaulting respondent, found that the accused products of each defaulting respondent infringe the asserted patent, and found that the Complainants satisfied the domestic industry requirement. The ALJ recommended issuance of a general exclusion order.

The Commission determined to review in part the ID granting summary determination of a section 337 violation. Specifically, the Commission determined to review: (1) the ID’s findings on infringement to correct typographical errors and to strike a sentence; (2) the ID’s findings on importation, and on review, affirmed, on modified grounds, the ID’s finding on importation as to one of the defaulting respondents and took no position as to the second defaulting respondent; and (3) the ID’s findings on the economic prong of the domestic industry, and on review, affirmed the ID’s finding of the existence of a domestic industry under subsection 337(a)(3)(B), which relates to significant employment of labor or capital, and took no position on whether a domestic industry exists under subsections 337(a)(3)(A), which relates to significant investment in plant and equipment, or 337(a)(3)(C), which relates to substantial investment in its exploitation including engineering, research and development, or licensing. Accordingly, the Commission found a violation of section 337 as to one defaulting respondent, but not as to the second defaulting respondent. The Commission requested briefing on the issues of remedy, the public interest, and bonding. After considering the record, the Commission ultimately determined to issue a general exclusion order.

Notable Issues and Related Points of Law:

Economic Prong of the Domestic Industry: The Commission found the record evidence supporting the ID’s findings on the amounts of investments in employment of labor and capital allocated to the asserted patent, which is needed to establish the economic prong of the domestic industry under subsection 337(a)(3)(B). While noting that the ID did not detail its reasoning on why such amounts were significant, after reviewing the record, the Commission nonetheless found the relevant investments to be significant. The ID noted the Complainants’ investment of approximately $10,000 a month in rent for a local plant and around $200,000 in equipment. The ID also included a summary table of Complainants’ investments in the design, development, finishing, and customer support of the relevant products, all of which occurred at the local facility. Given this facility was also used for distribution and sales of other products, the ID’s summary table allocated 70 percent of the rent and equipment to the practice of the asserted patent based on percentage of sales of products covered by the asserted patent. The only activity done overseas was the plastic molding. The evidence indicated that the value added in the United States was at least 60 percent. The evidence also showed that the amount of investments in labor and capital was about 9 percent of the annual sales of the domestic industry product, which ranged about 5-6 million dollars annually. The ID also found that the Complainants had invested an additional $5,200 in certain 3D-printing equipment dedicated solely to products covered by the asserted patent. The ID’s summary table included $350,000 identified as R&D salaries, of which 70 percent was allocated to practice the asserted patent.

General Exclusion Order: The Commission concluded that the evidence supported the IDs findings that a general exclusion order was necessary to prevent circumvention of a limited exclusion order. The record evidence showed the following: site visits to the addresses for certain respondents revealed no evidence of the companies at the listed addresses, and the accused products were shipped into the country under false and misleading labels, i.e., basically anonymous sales through online portals. There was also evidence of widespread pattern of violation and the difficulty of identifying the source of the infringing products. The ID found that in addition to the defaulting respondents, numerous other sources of infringing self-anchoring beverage containers were available for purchase online. As to the difficulty of identifying the source of the infringing products, the ID noted evidence showing that the products were often sold under different names and anonymously through online portals.

Public Interest: The Commission found that the statutory public interest factors do not preclude issuance of a general exclusion order. The record showed no evidence that the products at issue, self-anchoring beverage containers for consumers to avoid spilling liquids, raise public health and welfare concerns. Other types of competing beverage containers were available, and there was evidence in the record showing that Complainants were in the process of expanding their production facilities. Further, the record indicated that consumers would benefit from the removal of confusing counterfeit products from the marketplace.

Bonding: The Commission determined to set the bond during the period of Presidential review at 100 percent of the entered value of the infringing products. Ordinarily, the Commission sets the bond during the period of Presidential review based on the price differential between the domestic and the infringing products or based on a reasonable royalty. But the Commission found that the defaulting respondents’ failure to appear and participate in the investigation prevented the Commission from determining a price differential or a reasonable royalty.

Most Impactful ALJ Decisions

Judge Lord Finds Violation Based on Three Asserted Patents; Respondents Failed to Prove Its Obviousness, Inventorship and Ownership Defenses

In the Matter of CERTAIN MICROFLUIDIC SYSTEMS AND COMPONENTS THEREOF AND PRODUCTS CONTAINING SAME, Inv. No. 337-TA-1100, Initial Determination (July 12, 2019)

Before: ALJ Lord

Practice Tips and Insights:

This case included a lot of arguments from both parties.  It is unclear whether it affected the outcome, but it is a reminder that the ALJs often caution against raising too many arguments so that there is sufficient trial time allotted to your strongest claims or defenses.

Holding and Status:

In her final initial determination, ALJ Lord found a violation of section 337 by reason of infringement of certain claims of three of the four asserted patents related to sample preparation methods in the analysis of biological materials.  The initial determination finds that Respondent failed to prove invalidity of the asserted claims and failed to prove its defenses related to improper inventorship and ownership of the asserted patents.

Case Background:

The 1100 Investigation is based on a complaint filed by 1OX Genomics, Inc. ("l0X") against Bio-Rad Laboratories, Inc. ("Bio-Rad") alleging infringement of certain claims of U.S. Patent No. 9,644,204 ("the '204 Patent"), U.S. Patent No. 9,689,024 ("the '024 Patent"), U.S. Patent No. 9,695,468 ("the '468 Patent"), and U.S. Patent No. 9,856,530 ("the '530 Patent"). The patents relate generally to sample preparation methods using microcapsules in the analysis of biological materials, such as sequencing nucleic acids.   The products at issue are microfluidic cartridges, droplet generation instruments, and assays used in single-cell sequencing.

Bio-Rad asserted standard defenses of non-infringement, invalidity, and no domestic industry.  It also asserted that one of its scientists was improperly omitted as a co-inventor on the asserted patents.  Bio-Rad also claimed ownership in the asserted patents because the inventions claimed in those patents "built off of the fundamental work” that the named inventors and others did when they were working together at BioRad and a predecessor company called Quanta/Life.

Notable Disputed Issues and Related Points of Law: 

Infringement and DOE:  

The Initial determination finds that 10X proved direct, induced and contributory infringement of several asserted claims of the 024 Patent, and the ‘468 Patent and direct and induced infringement of several asserted claims of the ‘530 Patent.  With regard to the ‘204 patent, the ALJ found that the accused products do not literally infringe the asserted claims because they do not have the claimed stimulus "selected from the group consisting of a change in pH, a change in ion concentration, reduction of disulfide bonds, and combinations thereof." The ALJ found that the recited stimuli form a "Markush group" and that the group is limited to (1) one of the recited stimuli or (2) a combination of the recited stimuli.  It does not encompass a combination of a recited stimulus and an unrecited stimulus. 

The ALJ also found that 10X was estopped from relying on DOE to satisfy this limitation due to some narrowing amendments made during prosecution.  The ALJ, citing Festo Corp. v. Shoketsu Kinzoku Kogyo Kabuskiki Co., Ltd., 344 F.3d 1359, 1369-70 (Fed. Cir. 2003), found that the applicants' narrowing amendment triggers the presumption that 1OX is estopped from relying on the DOE to show that accused products satisfy the stimulus limitation. She also rejected l0X’s attempt to rebut the presumption by arguing that the narrowing amendment was merely tangential to the alleged equivalent. 

Obviousness (motivation to combine):  Respondents put forth numerous obviousness combinations against all of the asserted patents.  For each, ALJ Lord also found that the respondents’ burden for motivation and a reasonable likelihood of success was not met.  For example, Judge Lord found that for certain combinations, Bio-Rad’s expert had offered only conclusory opinions regarding the motivations of one of ordinary skill in the art to combine the references and failed to cite any evidence indicating a need or desire to implement a particular microfluidic process in place of the one disclosed in the primary reference that was missing that claim element.  Accordingly, Bio-Rad failed to carry its burden to show obviousness.

Inventorship:  Two of the named inventors of the asserted patents were former employees of Respondent Bio-Rad and a predecessor company called Quanta/Life.  The two named inventors resigned from Bio-Rad in April 2012 and founded 10X three months later.  The first provisional application for the asserted patents was filed in August 2012.  Bio-Rad asserted that a third scientist at Bio-Rad, Dr. Nicholas Heredia, was improperly omitted as a co-inventor on the asserted patents.  Bio-Rad asserted that the named inventors built off of the fundamental solution that Dr. Heredia helped them come up with when they were working together. ALJ Lord noted that "'[t]he inventors as named in an issued patent are presumed to be correct" and that proof of joint inventorship requires clear and convincing evidence.  She then found that Bio-Rad (1) did not provide sufficient evidence to establish that Dr. Heredia collaborated with others to develop the technology in the asserted patents, (2) did not provide “clear and convincing evidence that Dr. Heredia's conception contributed at all, much less in a qualitative way, to the invention claimed in the asserted patents” and (3) did not show sufficient evidence of a significant contribution by Dr. Heredia.  The ALJ also found that “Dr. Heredia' s testimony at hearing had evolved significantly from the testimony he gave at his deposition” and that his “credibility suffers as a result.” 

Ownership: Bio-Rad also claimed ownership of each of the asserted patents based on the assertion that the idea embodied in the asserted patents was conceived by the named inventors during the period in which they were employed by Quanta/Life and Bio-Rad.  The ALJ found that this claim arises out of the named inventors employment contract which should be construed under state law (here, the law of California). Although lOX conceded that Bio-RAd owns many ideas conceived by the named inventors, it argued that it does not own the idea for the specific arrangement of elements claimed in the asserted patents and that Bio-Rad did not provide sufficient evidence to show that that idea was conceived during the period of employment.  ALJ Lord agreed, finding that the applicable employment contracts contained no provision governing future inventions that are based on or developed from work clone during employment. To the contrary, she found that the plain, unambiguous contract language pertains only to ideas actually conceived during the employment period.  Because Bio-Rad failed to present any direct evidence that the actual inventive idea embodied in the asserted patents was first conceived at Quanta/Life or Bio-Rad, as required by the contracts, ALJ Lord rejected its ownership defense.

Entering Into Overbroad Stipulations Streamlined Issues to Be Heard at the Evidentiary Hearing, but Lessened the Burden of Complainant in Having to Prove Infringement and Satisfaction of the Domestic Industry

In the Matter of CERTAIN BLOOD CHOLESTEROL TESTING STRIPS AND ASSOCIATED SYSTEMS CONTAINING THE SAME, Inv. No. 337-TA-1116, Initial Determination (June 4, 2019)

Before:  ALJ Cheney

Practice Tips and Insights:

The parties entered into two sets of stipulations.  For example, the parties stipulated that use of the accused products according to the instructions provided with them satisfied certain limitations of the claims and that any infringement determination would also govern for domestic industry purposes.  Given the ALJ’s heavy reliance on these stipulations in reaching his determination, it may be advisable to avoid stipulations with respect to infringement and domestic industry when those issues are challenged.  In this case, these stipulations were essentially tied to each other and ultimately made the complainant’s job easier—the complainant was not tasked with the burden of proving infringement as to certain claim elements.

Holding and Status:

The ALJ determined that a violation of Section 337 had occurred with respect to two of the asserted patents.  Both sides have submitted Petitions for Commission Review.  The Commission has determined to review the final ID in part: (1) whether respondent’s use of the accused products in the U.S. constitutes a violation of 19 U.S.C. 1337(a)(1)(B)(i); (2) the final ID’s construction of “reacting HDL…without precipitating said one or more non-selected analytes” in one of the asserted patents, as well as related findings on infringement, the domestic industry, and invalidity; and (3) the final ID’s finding that all of the asserted claims of one of the asserted patents are not shown to be invalid for a lack of enablement.  The Commission also requested briefing on issues related to infringement, claim construction, and enablement.  Both sides have submitted briefs in response to the Commission’s determination to review the final ID in part.

Case Background:

The 1116 Investigation is based on alleged patent infringement of three patents related to blood cholesterol testing strip systems.  During the investigation, the ALJ granted an unopposed motion by the complainant for summary determination that it has satisfied the economic prong of the domestic industry requirement.  The issues for the evidentiary hearing were streamlined:  the complainant filed several unopposed motions for termination of the investigation with respect to multiple claims and the parties entered into two sets of stipulations.

Notable Disputed Issues and Related Points of Law:

Level of ordinary skill in the art in construing claim terms:  The ALJ noted that although minor differences in the level of skill were proposed through the parties’ experts, there was no argument presented that the understanding of any claim term (the parties contended that eight claim terms required construction) turned on the level of skill of the artisan interpreting the term.  The ALJ found the dispute about the appropriate level skill moot. 

Noninfringement (flawed evidence):  Although some claim climitations were stipulated to as being infringing, others were challenged.  The respondent, through their expert, played a time-lapse video to show that the accused devices permit substantial migration of the fluid.  ALJ Cheney watched the video and did not observe substantial lateral migration of the sample fluid.  According to ALJ Cheney, the video showed flow of the fluid vertically downward in the test sack.  It is unclear why respondent played this time-lapse video if it clearly showed the absence of lateral migration of fluid.  Additionally, another flaw in respondent’s evidence was the testing involved atypical fluid sample sizes that the ALJ did not find probative of the question of whether a person following instructions for normal use of the accused product would infringe the claims.

Obviousness (motivation to combine):  The ALJ identified several problems with respondent’s motivation to combine argument.  First, respondent did not address the scope and content of a reference in the combination and instead, focused only on certain teachings.  The ALJ, citing to Federal Circuit precendent, noted that it was improper for respondent “to pick and choose from any one reference.”  Second, respondent did not explain why a skilled artisan would combine two of the reference in light of the fact that these references provided somewhat conflicting teachings.  Moreover, the ALJ noted that the “record contains no answer” as to the motivation to combine.

Validity (enablement):  Respondent argued that certain of the asserted claims are not enabled because the specification “offers no proof that separation actually occurs without precipitation, or guidance on how to achieve that result…”  The ALJ did not find respondent’s argument persuasive.  In reaching his determination that respondent had failed to prove by clear and convincing evidence that the claims are invalid for lack of enablement, the ALJ found more persuasive complainant’s lab testing to show no undue experimentation and took into consideration that the claimed invention has been implemented by both parties, which further suggests the claims are enabled.

In Action Against Defaulted or Non-Appearing Parties, GEOs and Cease-and-Desist Orders on Some, But Not All, Claims

In the Matter of CERTAIN EARPIECE DEVICES AND COMPONENTS THEREOF, Inv. No. 337-TA-1121, Initial Determination (Jun. 28, 2019)

Before: ALJ Shaw

Practice Tips and Insights:

After settling other claims, Complainant Bose Corporation (“Bose”) sought relief against eight defaulting or non-appearing parties in the form of General Exclusion Orders (“GEO”) and cease and desist orders.  The ALJ found that a GEO was appropriate as to five of the six asserted patents, and that cease-and-desist orders should issue against the five domestic respondents, but not against the three foreign respondents.  Complainants should consider seeking GEOs in cases involving multiple defaulting or non-appearing respondents.  However, complainants should not presume that the ITC will automatically grant requested relief (whether in the form of a GEO or more limited order) against a defaulted party—complainants must still offer “substantial, reliable, and probative evidence” against defaulted parties.  

Holding and Status:

All six patents, and all but one asserted claim, were found to be infringed.  Although no petitions for review were filed, on August 20, 2019, the Commission gave notice of its intent to review the ALJ’s decision.

Case Background:

Fourteen entities were named respondents in a Section 337 investigation into infringement of Bose’s “StayHear® Patents.”  These patents generally claim earbuds with particular structures allowing them to remain stably and comfortably in a user’s ear.  The respondents were generally small entities which sold earbuds or related products alleged to infringe the StayHear® Patents.  The respondents used shippers such as FedEx to ship their products directly to consumers in the United States.  Six respondents settled, and the remaining eight failed to appear.  Bose moved for entry of default as to five of the remaining respondents prior to moving for summary determination.  On summary determination, the ALJ found infringement of all but one of the asserted claims and ordered relief against each of the remaining respondents.. 

Notable Disputed Issues and Related Points of Law: 

GEO Necessary to Prevent Circumvention of Limited Exclusion Order (“LEO”):  The Commission may grant a GEO (which is effective even as to non-parties) when necessary to prevent circumvention of an LEO.  Bose established that a GEO was necessary on this ground due to the difficulty of obtaining information about the entities selling the infringing devices.  Many of the companies used false or non-existent addresses, and some respondents were difficult to serve due to misleading or inaccurate addresses on their websites or seller profiles.  Bose showed that the companies were able to use foreign factories to manufacture their products, making the ultimate source of the infringing goods unknown or difficult to identify.  Because of this ready availability of manufacturing capacity, and the ease of changing corporate names or structures, it would be easy for the respondents to evade LEOs.  As further evidence of the insufficiency of an LEO, the ALJ cited the respondents’ practice of selling small quantities of infringing products in generic  packaging with little or no description of the seller.

E-commerce and GEOs:  The ability of the infringing companies to conduct their business with minimal infrastructure appeared to weigh on the ALJ’s decision.  Some respondents conducted their business anonymously, or under multiple names, through larger e-commerce websites such as Amazon.  Bose also presented evidence that certain sellers had taken down their Amazon seller pages upon the filing of Bose’s complaint, only to continue selling infringing products under a different name.  The companies often made use of Amazon’s “Fulfillment By Amazon” program, which allows sellers to store their goods in an Amazon warehouse and then to have Amazon handle packing, shipping, and customer service.

GEOs and Defaulting Parties:  That a party defaults or otherwise declines to participate in an investigation is evidence the party would not abide by the terms of an LEO.

GEOs and Profit Margins: Where the infringing goods can be sold for a high profit (e.g., because the infringer need not recoup the cost of research and development), that provides a financial incentive to parties and non-parties to circumvent LEOs.

Indirect Infringement: The ALJ found that Bose failed to offer substantial, reliable, and probative evidence that certain defaulted or non-appearing parties indirectly infringed a claim reciting an “earphone comprising . . . an acoustic driver that converts applied audio signals to acoustic energy.”  337-TA-1121 at 50-51.  Defaulted party Misodiko marketed an “Earhooks” product which lacked an acoustic driver; Bose unsuccessfully argued that the Earhooks product indirectly infringed because it was meant to be combined with Apple Airpods, a device which does contain an acoustic driver. 

Cease-and-Desist Orders Against Defaulting Parties:  Issuance of a cease-and-desist order is typically predicated upon the existence of commercially significant inventories of infringing goods in the United States.  In the case of defaulting U.S. respondents, the Commission will typically presume that they have commercially significant inventories in the US.  But, the same presumption does not apply for defaulting foreign parties.    Here, Bose failed to show the defaulting or non-appearing foreign respondents possessed commercially significant inventories in the US, and the ALJ therefore found Bose was not entitled to cease-and-desist orders against those foreign respondents.

Validity:  Where no party challenges the validity of an asserted patent (e.g., because all parties have defaulted), the ALJ will not consider questions of validity sua sponte.

No Violation After Finding Design Patent Invalid For Lacking Written Description and Finding No Infringement, Including on the Grounds of Prosecution History Estoppel

In the Matter of CERTAIN CONVERTIBLE SOFAS AND COMPONENTS THEREOF, Inv. No. 337-TA-1122, Initial Determination (July 12, 2019)

Before: ALJ Cheney

Practice Tips and Insights:

Complainant asserted a sole design patent against respondent. Respondent was found not to infringe the design patent under the ordinary observer test applied to design patents and under the doctrine of prosecution history estoppel. The patent was also found invalid for lack of written description. As a result, there was no violation.  This case illustrates the challenges of asserting design patent infringement allegations. While the doctrine of prosecution history estoppel and the test for sufficiency of the written description are the same for design and utility patents, applying those principles may be tricky in a design patent context because drawings define the scope of protection in a design patent. Changing the lines of or cancelling design patent drawings during prosecution can change the scope of a claim and invalidate the patent for lack of written description or bar an infringement claim under the doctrine of prosecution history. It is advisable for both complainants and respondents to closely analyze the prosecution history of design patents early on to identify these issues.

Holding and Status:

Judge Cheney determined that there was no section 337 violation, after finding that the asserted design patent was invalid for lacking written description and that the respondent did not infringe the sole claim of the design patent, including on the grounds of prosecution history estoppel.

Case Background:

The 1122 Investigation was based on alleged patent infringement of one design patent (D716,576) related to an ornamental design for a sofa with an adjustable table.  The claim included nine figures.  A representative figure is shown below:

 337 Q3 2019

An exemplary photograph of accused products is shown below:

337 Q3 2019

The named respondent asserted standard defenses of non-infringement, invalidity, and no domestic industry. 

Notable Disputed Issues and Related Points of Law: 

Infringement:  Judge Cheney concluded that the complainant failed to meet its burden to prove infringement.  To show infringement of a design patent, the patentee must show that the accused product practices a design that is “substantially the same” as the patented design according to an “ordinary observer.”  Applying this standard, Judge Cheney undertook a thorough analysis, comparing various features (e.g., arm lengths, seat cushion shapes, end profiles, leg shapes, seat edge, and many other differences) of the claimed and patented designs.  Considering the design as a whole, including functional elements, which are excluded from the scope of the design claims, Judge Cheney found that the accused designs were not “substantially the same” as the claimed design. 

Non-credible witness testimony:  The complainant offered statements from its employees and a design expert that ordinary observers would likely confuse the two designs (the patented and the claimed designs).  Judge Cheney gave little weight to these statements because they appeared to be “interested persons.”  Judge Cheney noted that the complainant did not provide reliable evidence such as expert market analysis or a quantitative study of consumer confusion.  Judge Cheney also rejected other hearsay and anecdotal evidence of customer confusion as unreliable.

Prosecution History Estoppel:  Judge Cheney also concluded that the complainant was barred from asserting an infringement claim against respondent’s designs with soft top arms under the doctrine of prosecution history estoppel.  Application of the doctrine is based on a three-prong test: (1) whether there was a surrender of claim scope; (2) whether the surrender was for reasons of patentability; and (3) whether the accused design is within the scope of the surrender. Cancelling design drawings from a design patent claim during prosecution could result in prosecution history estoppel. Respondent argued that because the inventor amended their original design patent claim to eliminate sofa designs with soft top arms and left only figures showing sofas with arm caps, the complainant surrendered any claim to a sofa design with soft top arms.  Judge Cheney agreed. With respect to the first prong, because the inventors’ claim as originally filed included a soft design with soft top arms, but the issued claim did not, Judge Cheney found there was surrender of claim scope.  Judge Cheney also found that the amendments to the design patent claim was made to secure the patent, satisfying the second prong. The applicants cancelled the drawings in response to an office action rejecting the drawings on statutory grounds (Section 112). Finally, in Judge Cheney’s view, the third prong was satisfied because the accused sofas with soft tops arms were within the scope of the subject matter the inventor surrendered.

Written Description Requirement (Section 112):  Judge Cheney found that the respondent had met its burden to show that the patent is invalid for lack of written description.  In design patents, the drawings provide the written description of the invention. For a design patent claim comprising line drawings, the claimed ornamental features are depicted in full black lines (i.e., solid lines). Broken and dotted lines are generally not part of the claimed design.

The respondent argued that the design patent was invalid under Section 112 because the issued claim included new matter not present in the original application. Specifically, the respondent argued that certain solid lines appearing in issued Figures 6 through 9 were added during prosecution and included ornamental elements not apparent to one of skill in the art from the originally filed application. Analyzing the prosecution history in detail, which included 40 figures, Judge Cheney agreed.  In reaching this conclusion, Judge Cheney rejected the complainant’s argument that new matter case law applies under Section 112 only to prevent an applicant from relying on an earlier priority date, not to support a finding of invalidity.  Judge Cheney also disagreed with the complainant that new matter added to a patent claim during prosecution amounted to no more than a “procedural lapse” that has no effect on validity. Citing In re Owens, 710 F.3d 1362 (Fed. Cir. 2013) as the controlling case, which was notably absent in the complainant’s brief, Judge Cheney explained how adding lines to an existing design changes the scope of a design patent claim. In Judge Cheney’s view, while written description questions are highly fact-specific, Owens shows “how strict the written description rule can be with design patents.”  Judge Cheney was not persuaded by the complainant’s arguments that the figures filed with the original patent application provided written description support for the issued claim.  Nor was Judge Cheney persuaded by complainant’s “litigation-inspired explanations,” characterizing the inventor and expert testimony offered by the complainant as “a summary conclusion,” and noting “the record contradicts [their] conclusion.”

Portions of Expert Report Struck Because Respondent Failed to Include Invalidity Grounds in Responses to Contention Interrogatories in Violation of Ground Rule 4.4.3

In the Matter of CERTAIN CARBURETORS AND PRODUCTS CONTAINING SUCH CARBURETORS, Inv. No. 337-TA-1123, Order No. 69 Granting Complainant Walbro, LLC’s Confidential Motion to Strike Certain Portions of Amazon.com Inc.’s Opening Expert Report of James H. Lee Regarding Invalidity (July 24, 2019)

Before: ALJ Bullock

Practice Tips and Insights:

Parties should be cautious to assert each and every invalidity position or combination they may later wish to rely on in their responses to contention interrogatories because ALJs may refuse to allow a party to rely on an invalidity position that either: (1) asserts a patent alone renders an asserted claim obvious if interrogatory responses only relied on said patent in combination with others, or (2) asserts a combination of prior patents invalidates an asserted claim, where the specific combination was not alleged in contention interrogatory responses.

Holding and Status:

The Respondent’s expert could not espouse invalidity opinions in expert report that were not specifically asserted as an invalidity combination in their responses to contention interrogatories.

Case Background:

The complaint alleges violations of 337 of the Tariff Act of 1930 based on the importation into and sale in the United States of certain carburetors and products containing such carburetors, allegedly infringing patents asserted by Complainant Walbro, LLC. The Respondents in this case are: Ruixing Carburetor Manufacturing Co., Ltd., Zhejiang; Huayi Carburetor Factory; Tillotson; Fujian Hualong Carburetor Co., Ltd.; Fuding Guangda General Machinery Co., Ltd.; Wuyi Henghain Tools Co., Ltd.; Fuding Youyi Trade Co., Ltd.; Amaxon.com, Inc.; Amerisun Inc.; Ardisam, Inc.; Buffalo Corporation; Cabela’s Incorporated; Champion Power Equipment, Inc.; Feldmann Eng. & Mfg. Co., Inc.; FNA Group, Inc. FNA Group, Inc.; Frictionless World, LLC; Generac Power Systems, Inc.; Husqvarna Professional Products, Inc.; Imperial Industrial Supply Co.; KMART Corporation; Lowe’s Companies, Inc.; Mat Industries, LLC; Menards, Inc.; MTD Products Inc.; North American Tool Industries; Northern Tool & Equipment Co., Inc.; QV Tools LLC; Sears, Roebuck and Co.; Target Corporation; Techtronics Industries   Co. Ltd. Of Hong King d/b/a/ Techtronic Industries Power Equipment; The Home Depot, Inc.; Thunderbay Products; Tool Tuff Direct LLC; Tractor Supply Company; Walmart Inc.

The instant order grants Complainant’s motion to strike certain portions of Respondent Amazon.com Inc’s export report regarding invalidity.

Notable Disputed Issues and Related Points of Law: 

Disclosing Invalidity Positions (Asserting the Patent Alone): It violated Ground Rule 4.4.3 for Respondent’s expert report regarding invalidity to assert that a specific patent alone rendered an asserted patent obvious where Respondent’s answers to contention interrogatories disclosed that specific patent rendered the asserted patent obvious only in combination with other references, never alone. As a result, ALJ Bullock granted Complainant’s motion to strike the portions of the expert report that espoused invalidity positions based on patents alone that were only disclosed in combination with other references.

Disclosing Invalidity Positions (Asserting Specific Combinations): Similarly, it violated Ground Rule 4.4.3 for Respondent’s expert report to assert a specific combination of two patents rendered an asserted patent invalid when Respondent’s responses to contention interrogatories asserted invalidity based on the patent at issue in combination with other references. ALJ Bullock “requires parties to specifically assert an invalidity combination in their responses to contention interrogatories in order to pursue the combination at a later time.” Accordingly, ALJ Bullock also struck the portions of Respondent’s expert report espousing invalidity positions based on specific combinations not previously asserted.

Timing of Motion: Respondent Amazon, Inc. argued that Walbro had waited too long to file its motion and that the motion should be denied because Walbro’s expert had the opportunity to address the invalidity arguments. ALJ Bullock summarily dismissed these arguments. 

Petitioner Failed to Satisfy Economic Prong of the Domestic Industry Requirement for Failure to Show Significant or Substantial Labor or Capital Investments

In the Matter of CERTAIN CARBURETORS AND PRODUCTS CONTAINING SUCH CARBURETORS, Inv. No. 337-TA-1123, Order No. 77 Initial Determination Granting Respondents’ Motion for Summary Determination (Aug. 12, 2019)

Before: ALJ Bullock

Practice Tips and Insights:

This opinion underscores the importance of contextualizing the investments made to meet the economic prong of the domestic industry requirements.  Seemingly high values for investments in labor and capital are not in themselves sufficient to show significant or substantial investments; all figures are contextualized by domestic and worldwide revenue.  Further, courts may not find the need to proceed to the calculations for a domestic industry analysis if the matter may be disposed of through the economic prong analysis alone.

Holding and Status:

The Petitioner failed to satisfy the economic prong of the domestic industry requirement. The procedural schedule was stayed pending review of the Initial Determination.

Case Background:

The complaint alleges violations of section 337 of the Tariff Act of 1930 based on importation into the United States of certain carburetors and products containing such carburetors, allegedly infringing patents asserted by Complainant Walbro, LLC (“Walbro”).  The Respondents in this case are Amazon.com, Inc., Cabela's LLC, Lowe's Companies, Inc., Menard, Inc., Techtronic Industries Co. Ltd., The Home Depot, Inc., Thunderbay Products, Tractor Supply Company, Walmart, Inc., and Zhejiang Ruixing Carburetor Manufacturing Co., Ltd. (collectively, "Respondents").

Notable Disputed Issues and Related Points of Law: 

Necessity of Reaching Domestic Industry Analysis: As an initial issue, the ALJ noted the Respondents disputed the Petitioner’s domestic industry analysis (including faulty calculations of sales, employees, relevant equipment/facilities, and nexus to the asserted patents) but for summary determination purposes the ALJ assumed these calculations were correct and proceeded to the domestic industry investment requirements.

Economic Prong – Quantitative Analysis: The ALJ rejected the argument that the Petitioner’s domestic investments were large in absolute terms, explaining that the context remains essential and that larger companies are expected to invest larger dollar amounts to be deemed “significant” or “substantial.” While the opinion redacted the figures, U.S. investments compared to U.S. sales appeared to be less than 5% of all sales of carburetor products, and Petitioner pointed to no authority finding this to be substantial or significant. While domestic investments in labor and capital for one of the patents compared to US sales reached thresholds the Commission had previously found significant, the US sales were minimal compared to worldwide sales, which rendered the domestic investments negligible.

Economic Prong – Qualitative Analysis: The ALJ pointed out that the Federal Circuit has held that qualitative factors cannot overcome a quantitative data that indicated insufficient investment and employment.

ALJ McNamara Recommends General Exclusion Order for Infringing Wall Socket Cover Plates Sold Online

In the Matter of CERTAIN POWERED COVER PLATES, Inv. No. 337-TA-1124, Initial Determination (Aug. 12, 2019)

Before: ALJ McNamara

Practice Tips and Insights:

ALJ McNamara’s initial determination in the 1124 investigation is another recent example of an ITC complainant successfully making its case for a general exclusion order for infringing products sold in online marketplaces such as Alibaba, Amazon, eBay, and Jet.  The ITC continues to be a significant forum for IP holders facing the proverbial whack-a-mole problem—i.e. numerous and often unidentifiable entities importing infringing products into the United States.  Complainants seeking a general exclusion order to combat the whack-a-mole problem continue to have success when they can present extensive evidence of a widespread violation, the difficulty of identifying the source of infringing products, and the ease with which new entities could become infringers to circumvent any limited exclusion order.

Holding and Status:

ALJ McNamara found that two participating respondents and four defaulting respondents violated section 337 by infringing various claims of the asserted patents.  The ALJ recommended that a general exclusion order and cease and desist orders issue. The two participating respondents have petitioned for Commission review.

Case Background:

The 1124 Investigation is based on complaint filed by SnapRays, LLC d/b/a/ SnapPower (SnapPower) for alleged infringement of three utility patents and one design patent, all related to powered electrical outlet cover plates.  Two named respondents, Shenzhen Vistek Technology Co. (Vistek) and Enstant Technology Co., Ltd. (Enstant), participated in the evidentiary hearing.  Eleven other named respondents either defaulted, were terminated because of settlement, or were unserved.

Vistek and Enstant stipulated to importation and the ALJ ruled on summary determination that the defaulting respondents also satisfied the importation requirement. The ALJ further ruled on summary determination that Vistek, Enstant, and the defaulting respondents infringed, and that SnapPower satisfied the technical prong for domestic industry.

Vistek and Enstant argued that the asserted claims were invalid and that SnapPower failed to satisfy the economic prong for domestic industry.

Notable Disputed Issues and Related Points of Law: 

Prior art:  Enstant and Vistek argued that the claims asserted against them were invalid over a combination of references including a U.S. provisional patent application.  The ALJ found that Enstant and Vistek failed to establish that the provisional application was prior art under 35 U.S.C. 102(e).  Applying established Federal Circuit law, the ALJ held that a provisional application cannot be prior art unless it “provides written description support pursuant to 35 U.S.C. § l12 for the claims of an issued U.S. patent that claims priority to that provisional.”  ALJ McNamara found that Enstant and Vistek failed to present expert testimony or other evidence that the provisional application supported claims of an issued patent that claimed priority to the provisional.  Moreover, Enstant’s and Vistek’s expert underscored the failure of proof by admitting he had not even read the claims of the issued patent.

Motivation to Combine:  The ALJ also found that Enstant and Vistek failed to establish that there would be any reason to combine their selected prior art references.  Enstant’s and Vistek’s expert testified that a person of ordinary skill would have been motivated to combine the prior art references to incorporate additional safety features into a cover plate.  ALJ McNamara reasoned, however, that “‘safety’ . . . is a generic concept, and not a specific rationale or motivation” to combine.  ALJ McNamara also faulted respondents’ expert for applying impermissible hindsight to form his opinion, because he provided no reason why a person of skill would have identified the prior art references other than that counsel had selected them.

Economic prong of domestic industry:  ALJ McNamara found that SnapPower satisfied the economic prong of the domestic industry requirement, including by making “significant investment in plant and equipment.”  As evidence of its investment, SnapPower submitted all of its expenditures on U.S. facilities, equipment, tools, and software.  Enstant and Vistek argued that SnapPower failed to differentiate between its departments in its analysis, thereby including expenditures for departments such as sales and marketing that should not count toward domestic industry.  ALJ McNamara concluded, however, that because SnapPower was a startup and evidence showed its employees wore multiple hats, sometimes assisting with tasks like product assembly and product testing, all SnapPower’s plant and equipment expenditures indeed counted toward domestic industry.

Scope of exclusion order:  ALJ McNamara recommended the Commission enter a general exclusion order at least for the defaulting respondents, if not also for Enstant and Vistek.  SnapPower successfully showed a widespread violation of its patents, submitting evidence of infringing products it found on Alibaba, Amazon, eBay, Jet, and other online marketplaces.  SnapPower also submitted evidence that certain manufacturers, including unserved respondents, were the source of infringing products for various downstream entities including Enstant, Vistek, and other defaulting respondents. Additionally, SnapPower’s evidence showed that multiple sellers “brazenly copied” its marketing materials which included images of SnapPower’s founders, their homes, and even one of a SnapPower investor’s daughter.

ALJ McNamara also found that SnapPower established the difficulty of identifying the source of infringing products.  SnapPower submitted evidence that it hired a contractor to scrape internet listings and the scraping generated 2,918 listings of products that “directly copied SnapPower’s products.”  Moreover, SnapPower’s evidence showed that it purchased and analyzed more than 100 infringing products from marketplace websites.  The products SnapPower ordered would frequently have multiple company names associated with them, making it impossible for SnapPower to determine the true origin.

ALJ McNamara further found that SnapPower established that circumvention of any exclusion order would occur unless a general exclusion order issued, concluding that SnapPower “made a virtually unassailable argument” that additional infringers would enter the market should a remedy be limited to a limited exclusion order.  SnapPower’s evidence showed that entities selling infringing products online could easily create new virtual seller accounts in the marketplace and that manufacturers hide behind various distributors so they can continue to sell products even if one or more distributors are stopped.  The evidence also showed that it would be easy to enter the market as either a reseller or even a manufacturer, because barriers to entry for manufacturing were so low, requiring only a minimal amount of injection molding equipment.

Expert Testimony Struck Where Expert Offers Opinions Outside the Scope of His Expertise

In the Matter of CERTAIN BEVERAGE DISPENSING SYSTEMS AND COMPONENTS THEREOF, Inv. No. 337-TA-1130, Order No. 22 Denying Respondents’ Motion to Strike Testimony No. 1130-016, Granting Respondent’s Motion to Strike Testimony No. 1130-017 (Aug. 26, 2019)

Before: ALJ McNamara

Practice Tips and Insights:

The expert in this case was allowed to testify on matters within the scope of his expert report, where the report even briefly described expertise relevant to the challenged testimony.  However, where expert sought to testify on European patent law, an area he claimed expertise in based on very limited experiences, the motion to strike was granted. Litigants should take care to ensure that relevant experience is included in their export’s reports on any issue they may later seek to opine on, and refrain from offering expert testimony on the basis of events tangential to expert’s main focus or based on experiences remote in time.  Additionally, litigants should be mindful that if they fail to object to an expert being accepted, the ALJ may later take the lack of objection into consideration when ruling on motions to strike.

Holding and Status:

Complainants’ expert on patent prosecution had some of his trial testimony stricken, while other challenged testimony was not stricken.  The Respondent’s Motion to Strike testimony as outside the scope of expert’s report was denied where challenged testimony was encompassed within expert’s competence and Respondent’s Motion to Strike testimony as outside the scope of expert’s expertise was granted where expert offered testimony outside the scope of the expertise for which he was accepted by the ALJ. Additionally, orders issued during the oral hearing were granted in a portion of the order partially redacted.

Case Background:

The complaint alleges violations of section 337 of the Tariff Act of 1930 based on importation into the United States of certain beverage dispensing systems and components thereof, allegedly infringing patents asserted by Complainants Heineken International B.V., Heineken Supply Chain B.V., and Heineken USA.  The Respondents are Anheuser-Busch InBev S.A., InBev Belgium N.V., and Anheuser-Busch, LLC.

Notable Disputed Issues and Related Points of Law: 

Motion to Strike (Outside Scope of Expert’s Report): The challenged testimony of Complainants’ expert regarding post-grant proceedings was permissibly within the scope of expert’s report, where expert was admitted as an expert “in practice and procedure at the USPTO.” In reaching this conclusion, the ALJ considered that the expert’s report included a description of the expert’s expertise, even if cursory, as including post-grant proceedings. Moreover, the ALJ considered that following a brief voir dire when Complainants’ counsel offered the expert as an expert “in practice and procedure at the USPTO,” Respondent’s counsel failed to object. Additionally, the ALJ was unpersuaded that the expert was impermissibly relying on “personal” rather than “professional” experience with post-grant proceedings. ALJ McNamara remarked that seems “apparent that any expert acquires expertise as a result of professional, personal experience.

Motion to Strike (Outside Scope of Expertise – European Patent Proceedings): Respondent’s motion to strike certain portions of the expert’s testimony related to European patent proceedings was granted. Importantly, the expert was not offered as an expert on this topic; rather he was proffered only as an expert in practice and procedure at the USPTO.  Complainant’s sought to support the challenged testimony, by relying on the expert’s prior experiences including: (1) personally attending a trial in Europe applying European patentability standard to a U.K. patent which occurred over 20 years ago, and (2) work coordinating with foreign patent counsel when U.S. clients wanted to obtain patents in Europe.  Because the expert was not a European patent attorney, nor an agent of one, and because his experience on the subject was so limited, the ALJ granted Respondent’s motion to strike the testimony concerning the European Patent Office and differences between U.S. and European patent examination proceedings.

Motion to Strike (Outside Scope of Expertise – Claim Scope): Similarly, Respondent’s motion to strike certain testimony concerning claim scope and technical claim differences was granted. In reaching this decision, the ALJ rejected Complainant’s arguments that the testimony was permissible as the expert relied on facts in file histories which were in evidence, and because the expert relied on the expertise of another technical expert. Because the expert was not proffered as a technical expert, nor qualified to be one, he could not rely on contested facts in evidence, or the expertise of another individual to offer opinions outside the scope of his personal expertise.

Allegations of Inequitable Conduct Stricken for Failure to Sufficiently Plead Materiality, Knowledge, and Intent by Only Citing a Large Number of References Disclosed to Examiner and Failure to Disclose a Single Reference

In the Matter of CERTAIN CARTRIDGES FOR ELECTRONIC NICOTINE DELIVERY SYSTEMS AND COMPONENTS THEREOF, Inv. No. 337-TA-1141, Order No. 36 Granting-In-Part and Denying-in-Part Respondents’ Motions for Leave to File Amended Answers and Affirmative Defenses; Striking Affirmative Defenses of Inequitable Conduct (Aug. 1, 2019)

Before: ALJ Lord

Practice Tips and Insights:

Respondents alleging inequitable conduct must be mindful of the requirements to plead with particularity, and address all elements of the inequitable conduct standard, and courts are not likely to tolerate inference upon inference to meet the pleading requirements.

Holding and Status:

The Complainant did not oppose the amendment of the answers and affirmative defenses outside of affirmative defense of inequitable conduct, so leave to amend was granted, but the affirmative defense of inequitable conduct was stricken for failure to sufficiently plead.

Case Background:

The complaint alleges violations of section 337 of the Tariff Act of 1930 based on importation into the United States of certain cartridges for electronic nicotine delivery systems and components thereof, allegedly infringing patents asserted by Complainant Juul Labs Inc. The Respondents involved in this order are Vapor 4 Life Holdings, Inc., Vaportronix, LLC, and Twist Vapor Franchising, LLC.

Notable Disputed Issues and Related Points of Law: 

Pleading Materiality for Inequitable Conduct: While the Respondents pleaded that the patentee had interfered with the examination of the patents at issue by disclosing a large number of reference (4,000 references including an estimated 2,000 prior art references), Judge Lord pointed out that Respondents had not alleged that the patents would not have issued but for the conduct of Juul’s attorney. While Respondents alleged one reference was withheld from the examiner, the examiner ultimately did review this reference, so that reference could not have been material to patentability. Judge Lord rejected the “but for” allegations raised in Respondents’ reply briefs based on prior art references not included in their amended complaints, which Judge Lord found untimely and at any rate could not surmount the failure to allege knowledge and intent.  Judge Lord also clarified that she was not aware of any precedent establishing a bad faith inference based on the disclosure of a large number of references.

Pleading Knowledge and Intent for Inequitable Conduct: The Respondents’ allegations of intent were based solely on Juul’s attorney’s knowledge of the USPTO patent prosecution guidelines and his knowledge of other patent applications by the author of the allegedly withheld reference. Respondents pointed to pleadings in another case, Certain Microfluidic Systems and Components Thereof and Products Containing Same that included allegations of failure to disclose a prior art reference with the same inventors as other prior art disclosed during prosecution, but Judge Lord pointed out those pleadings were stricken for failure to create a reasonable inference of knowledge of other prior art. And Respondents had not cited any authority for inferring specific intent simply from disclosure of a large number of prior art references.

Renewed Leave to Apply For a Subpoena Denied Because the Danger of Improper Disclosure of CBI Outweighs the Potential Value of the Discovery Sought and the Potential Prejudice to Respondents

In the Matter of CERTAIN INTEGRATED CIRCUITS AND PRODUCTS CONTAINING THE SAME, Inv. No. 337-TA-1148, Order No. 25: Denying Renewed Motion For Leave To Apply For A Aubpoena (Aug. 8, 2019)

Before: ALJ Elliot

Practice Tips and Insights:

Litigants who seek discovery of CBI covered by protective orders from other investigations must clearly obtain the consent of all suppliers of CBI from the other investigation. 

Holding and Status:

In light of the potential danger of improper disclosure of CBI from an earlier investigation, renewed motion for leave for a subpoena was denied. 

Case Background:

The respondents sought CBI information, including certain hearing transcripts and briefs from a prior investigation. The ALJ denied the request noting the respondents’ failure to show why the protective order from the earlier investigation did not bar the Commission from producing the requested information.  Regardless, the ALJ invited a renewed motion, so long as the respondents satisfactorily address the conflict between the production of the information at issue and the governing protective order. 

Notable Disputed Issues and Related Points of Law: 

Overcoming the reach of a protective order to gain discovery of CBI: In their renewed motion to obtain CBI documents from a prior investigation, the respondents contended that they had received consents from the various parties to the earlier investigation sufficient to “resolve any concern over the production of third-party CBI that might be present in the requested material.” The ALJ disagreed for two reasons.  First, the ALJ stated that it was necessary for the respondents to clarify how they received consents from all necessary parties to the earlier investigation.  But the renewed motion failed to do so.  The ALJ found the respondents’ showing that they had identified the universe of all suppliers of CBI to be “conclusory.”  Second, the ALJ was convinced by the Staff’s opposition, detailing that at least two of the CBI suppliers from the earlier case had in fact not provided the requisite consent.   Importantly, the respondents admitted that as to one of the CBI suppliers, the Pantech parties, the respondents had not obtained any such consent.  Instead, the respondents moving papers stated that “as noted below … the requested material do not contain Pantech CBI.”  But the ALJ was “unable to find in Respondents’ filings where this important fact is ‘noted.’”

In the end, although the prior testimony sought by the respondents had the potential of being admissible as impeachment evidence, and denial of the discovery had the potential to prejudice the respondents, these “speculative” concerns “must be balanced against the clear and distinct likelihood that even a minor slip-up in disclosure of CBI will also undermine the integrity of … all Commission investigations.”

ALJ Orders Party to Un-redact Names in Technical Documents, Rejecting Argument That the Redactions Were Necessary to Comply with European and Korean Privacy Laws

In the Matter of CERTAIN PHOTOVOLTAIC CELLS AND PRODUCTS CONTAINING SAME, Inv. No. 337-TA-1151, Order No. 11 Granting Motion to Compel (Jul. 10, 2019)

Before: ALJ McNamara

Practice Tips and Insights:

The Complainant in this case cannot redact names of certain individuals in its document production because that information is relevant for the Respondent to prepare for depositions and to determine whom else it should seek to depose.  The Protective Order, agreed upon by both parties, addressed foreign data privacy laws, but did not allow for the redaction of personal information.  Litigants, especially foreign litigants, should review privacy laws from all possibly implicated countries and address concerns regarding compliance with those foreign privacy laws preemptively in the Protective Order.  Additionally, litigants should be mindful about relying upon foreign privacy laws to withhold relevant discovery in an investigation.

Holding and Status:

The Complainant must reproduce unredacted copies of all documents that contain redacted names.

Case Background:

The Complainant, Hanwha, filed a complaint against LONGi, claiming LONGi violated Section 337 by importing certain solar cells that allegedly infringe Hanwha’s patents.  In response to discovery requests directed to Hanwha’s alleged domestic industry (“DI”) products, Hanwha produced technical documents from South Korea and Europe, which redacted names of, inter alia,  authors of publications about solar cell design, authors/presenters of internal presentations about the DI products, and persons in charge of testing the DI products.  Hanwha argued that the redactions were necessary to comply with the European General Data Protection Regulation “GPDR” and South Korea’s Personal Information Protection Act “PIPA,” both of which have strict requirements concerning the release of personal information.  LONGi moved to compel Hanwha to reproduce the technical documents removing the redactions of certain names.  The instant order grants the motion to compel.

Notable Disputed Issues and Related Points of Law: 

Protective Order Did Not Allow Redactions: Both parties agreed to resolve purported requirements of foreign data privacy laws by amending the Protective Order (“PO”) to include personal information subject to privacy laws of “Korea, Singapore, the European Union, Malaysia, China, and California” explicitly within the definition of confidential business information.  Under the PO, relevant personal information could therefore not be redacted.  Indeed, Hanwha, during negotiations of the PO, withdrew its proposal—“All Personal Data not strictly necessary in relation to the Investigation may be permanently redacted by the producing party prior to production of the redacted document.”—that would have allowed such redactions.  Consequently, the ALJ held it was improper for Hanwha to impede discovery by redacting the names.

Complainant Cannot File in the ITC and Then Refuse to Abide by the ITC Rules and U.S. Laws: ALJ McNamara emphasized that because Hanwha chose to bring this action in the ITC to avail itself of the ITC’s potential remedies, it must have had knowledge of the scope of the ITC’s jurisdiction.  Therefore, it was particularly egregious for Hanwha, as the Complainant, to then rely up on foreign privacy laws as a basis for not producing relevant information about its alleged DI products. 

The Foreign Privacy Laws of Europe and Korea Do Not Prevent the Requested Disclosure: With regard to Europe’s GPDR, ALJ McNamara noted that it includes an expression provision that allowed disclosure if it “is necessary for the establishment, exercise or defence of legal claims.”  In fact, Hanwha’s expert admitted that such disclosure was allowed in the context of litigation proceedings.  With regard to South Korea’s PIPA, ALJ McNamara noted that it also includes a provision that allowed disclosure “when other laws contains specific provisions allowing for such use or transfer.”  ALJ McNamara rejected Hanwha’s argument that the phrase “other laws” is restricted to only other South Korean domestic law, giving “little, if any weight” to Hanwha’s “expert” declaration and questioning “why he should be regarded as an ‘expert.’”

The Principle of Comity Supports Disclosure: Even if the foreign privacy laws prevented the requested disclosure, the principle of comity weighs in favor of requiring Hanwha to disclose the requested names in the investigation.  In cases where a party refuses to disclose information based upon a foreign blocking statute, U.S. courts typically apply a balancing test using the five Aerospatiale factors, which are: (1) the importance of the documents to the investigation or litigation; (2) the specificity of the request; (3) the physical place of origin of information; (4) the availability of alternate means of finding the information; and (5) the impact of noncompliance on the interests of the United States versus the impact of compliance on the interests of the foreign state.  Here, all factors weigh in favor of LONGi’s motion to compel except possibly the third factor, which “may” be in favor of Hanwha; however, because those documents relate to Hanwha’s alleged DI products, those documents can be considered domestic regardless of origin, so even the third factor weighs against Hanwha.  Moreover, at least one district court (Northern District of California) recently determined, after performing an international comity analysis under Aerospatiale, that personal information should be produced despite the privacy requirements of the GPDR and PIPA—the same foreign laws at issue in this case.  

Complainants Must Identify Asserted Trade Secrets With Sufficient Particularity   

In the Matter of CERTAIN BONE CEMENTS, COMPONENTS THEREOF AND PRODUCTS CONTAINING THE SAME, Inv. No. 337-TA-1153, Order No. 23 Granting-In-Part Motion to Compel (Aug. 14, 2019)

Before: ALJ Elliot

Practice Tips and Insights:

Claimants, in their identification of trade secrets filing, recited ninety-four detailed items, but the ALJ held that some of recited trade secrets were not identified with sufficient particularity.  Litigants should not embed additional trade secrets in footnotes, but instead should incorporate all asserted trade secrets in the body of the trade secret identification.  Additionally, litigants should only identify trade secrets that are relevant, non-duplicative, and pertain to the accused products.  Moreover, Litigants should be mindful of identifying as trade secrets entire documents written in a foreign language.

Holding and Status:

Complainant must file a revised identification of trade secrets to correct the noted issues.

Case Background:

Complainants Heraeus assert misappropriation of trade secrets by Respondents Zimmer Biomet for two accused Zimmer Biomet bone cement products based on or derived from a particular Heraeus product, PALACOS.  In their Final Identification of All Trade Secret Allegations, Complainants asserted four broad categories of trade secrets covering specifications, recipes, and raw materials, and ninety-four detailed items.

The instant order grants-in-part a motion to compel to identify the asserted trade secrets with more particularity.

Notable Disputed Issues and Related Points of Law: 

Embedding Trade Secrets in Footnotes is Improper: A number of the trade secrets improperly included “additional trade secret specifications” embedded in footnotes, creating ambiguity on the complete set of asserted trade secrets.  Therefore, the ALJ ordered that all additional trade secrets located in the footnotes must be enumerated in the body of the trade secret identification.

Identification of “Compilations” is Proper: The ALJ rejected Respondents’ objection to Complainants’ use of “compilations,” which are confidential combinations of individually public facts, because such “compilations” are protectable as trade secrets.

Trade Secrets Must Be Relevant, Non-Duplicative, and Pertain to the Accused Products: The ALJ held that some of the identified trade secrets were overbroad for three reasons.  First, the identified specifications were over forty pages long and whose relevance was not clear.  Second, the identified specifications included other already identified trade secrets, so they were duplicative.  Third, some of the specifications did not pertain to PALACOS, the bone cement that forms the basis of the accused misappropriation, but to other bone cements not implicated in the investigation. 

Incorporation by Reference is Not Preferred:  Although not raised by Respondents or Staff, the ALJ was troubled by the identification of entire documents in German as trade secrets.  The better practice, as noted by the ALJ, is to identify a trade secret wholly in English using plain language.

Federal Circuit Decisions And Arguments

Split Panel Upholds Commission’s Issuance of a Remedy in Genetically Modified E. Coli Battle

Ajinomoto Co., Inc. v. Int’l Trade Comm’n, No. 2018-1590, 2018-1629 (Fed. Cir. Aug. 6, 2019) (on appeal from Inv. Nos. 337-TA-1005)

Before: Federal Circuit (Dyk, Moore, Taranto) (Dyk dissented-in-part)

Practice Tips and Insights:

This was a fairly standard appeal arguing that the asserted patent claim was not infringed and that it lacked written description.  It involved issues of claim construction, doctrine of equivalents, invalidity, and various CAFC doctrines that underlie each of those higher-level issues.  The decision is broken up into numerous (ten) sub-parts indicating the panel was looking at the case from a number of angles.  In the end, all issues went in favor of the appellee and it could be a good reminder that Appellate Judges often caution parties against appealing too many issues.

Holding and Status:

The Federal Circuit affirmed the Commission’s decision that the asserted patent claim is infringed and that claim is not invalid.

Case Background:

Ajinomoto Co., Inc. and Ajinomoto Heartland Inc. filed a Section 337 complaint against CJ CheilJedang Corp., CJ America, Inc., and PT CheilJedang Indonesia in May 2016.  The complaint asserted that CJ used several strains of Escherichia coli bacteria to produce L-tryptophan products and then imported those L-tryptophan products into the United States.

The asserted patent covered the process that CJ performed prior to importation.  The ALJ issued a final determination in August 2017 finding that there was no infringement and that the asserted claim was invalid for lack of written description.  The Commission, however, disagreed and found that certain CJ strains were infringing and that the asserted claim did satisfy the written description requirement.

The Federal Circuit Panel agreed with the Commission.  The Commission’s decision was affirmed.

Notable Disputed Issues and Related Points of Law: 

Infringement/claim construction:  To reach its infringement decision, the Panel applied what it considered to be plain meaning for the claim phrase “replacing the native promoter . . . with a more potent promoter.”  CJ asserted that the plain meaning definition was improper due to prosecution history disclaimer, but the Panel disagreed.  In disagreeing, the Panel reiterated that, in assessing disclaimer in the context of claim construction, “the question is what a person of ordinary skill would understand the patentee to have disclaimed during prosecution, not what a person of ordinary skill would think the patentee needed to disclaim during prosecution.”

Infringement/Doctrine of Equivalents:  Another notable non-infringement defense related to CJ’s argument that prosecution history estoppel prevented a DOE holding against certain accused products.  Although there was a relevant prosecution amendment, Ajinomoto successfully argued that the relevant portion of the amendment was subject to the “tangential relation” exception to prosecution history estoppel.  In other words, the Panel found that the amendment CJ alleged gave rise to prosecution history estoppel was actually tangential to the asserted equivalent. 

Written Description Requirement: The written description dispute boiled down to whether there were sufficient species disclosures in the specification to have adequately disclosed a broader genus.  The Panel determined that the specification had sufficient disclosure.  In making this finding, the Panel highlighted that “the written-description requirement will necessarily vary depending on the context, considering such facts as “the existing knowledge in the particular field, the extent and content of the prior art, the maturity of the science or technology, and the predictability of the aspect at issue.”  Moreover, the Panel explained that “a patentee may rely on information that is well-known in the art for purposes of meeting the written description requirement, because the specification is viewed from the perspective of one of skill in the relevant art.”

Based on these underlying principles, the Panel concluded that “adequate written description does not require a perfect correspondence between the members of the genus and the asserted common structural feature; for a functionally defined genus like the one at issue here, we have spoken more modestly of a correlation between structure and function.”  The Panel also held that CJ’s cited cases were inapposite and the disclosure was, therefore, adequate.

Federal Circuit Affirms that Asserted Patent is Not Invalid and Not Indefinite

Guangdong Alison Hi-Tech Co. v. Int’l Trade Comm’n, No. 2018-2042 (Fed. Cir. Aug. 27, 2019) (on appeal from Inv. Nos. 337-TA-1003)

Before: Federal Circuit (Hughes, Stoll, and Wallach)

Practice Tips and Insights:

Although it did not appear to play a major role in the appeal, the Federal Circuit reminded us that arguments not presented to the Commission are waived and cannot be raised at the Federal Circuit level.  Additionally, there was a substantial discussion about indefiniteness with respect to a term of degree.  The opinion demonstrates that patent claim terms of degree are not per se indefinite and are, indeed, not indefinite if the patent discloses some objective boundaries for the term of degree.  Likewise, extrinsic evidence can be helpful in understanding terms of degree and determining whether they are indefinite.

Holding and Status:

The Federal Circuit affirmed the Commission’s decision that a certain claim limitation was not indefinite and that the asserted patent was not invalid as anticipated.

Case Background:

Aspen Aerogels filed a Section 337 complaint in 2016 alleging that Guangdong Alison Hi-Tech infringed an asserted patent related to aerogel insulation materials.  In September 2017, the ALJ determined that Alison had violated Section 337 and recommended an exclusion order.  Alison filed a petition for review with the Commission, but the Commission agreed with the ALJ.  Thus, in February 2018, a limited exclusion order was entered.

Notable Disputed Issues and Related Points of Law: 

Standard of Review:  Perhaps because it affected the Panel’s view on anticipation, the Panel laid out the Federal Circuit’s standard for reviewing ITC decisions nicely.  Particularly, the opinion explains that the Commission’s factual findings are reviewed for “substantial evidence” while legal holdings are reviewed, not surprisingly, de novo.  A finding is supported by substantial evidence “if a reasonable mind might accept a particular evidentiary record as adequate to support a conclusion.” 

Indefiniteness:  A majority of the opinion analyzes Alison’s arguments that the claim phrase “lofty…batting” was indefinite.  The Federal Circuit acknowledged that this term was one of degree that did not include numerical precision.  However, the Federal Circuit reiterated that this is not problematic.  Particularly, the panel explained that a term is not indefinite if it informs those of skill in the art with reasonable certainty as to its meaning.  With respect to “reasonable certainty,” the opinion clarifies that is a “delicate balance between the inherent limitations of language and providing clear notice of what is claimed.”  Quoting its own precedent, the Panel even acknowledged that “some modicum of uncertainty is the price of ensuring the appropriate incentives for innovation.”  When it comes to terms of degree, like the one here, the opinion clarifies that the specification provides objective boundaries to those of skill in the art, then the term is not indefinite

As to the term “lofty…batting” the Panel found that the specification was “replete with examples and metrics that further inform [its] meaning.”  Notably, the panel also looked to extrinsic evidence to help understand how a person of skill in the art would understand the term.  Thus, it was not shown to be indefinite.  Notably, Alison raised two arguments on appeal that the panel addressed, but also noted were waived because they were not raised at the Commission level.  See 19 C.F.R. § 210.43(b)(2).

Anticipation: The Panel analyzed whether a prior art reference was anticipatory.  Particularly, Alison argued that a reference cited in and distinguished by the asserted patent inherently disclosed the “lofty…batting” limitation.  The Panel emphasized that “arguments and references already considered by the Patent Office may carry less weight with the fact finder.”  Additionally, the Panel deferred to the factual findings of the Commission under the substantial evidence standard because “anticipation is a question of fact that we review for substantial evidence.”  The Commission’s finding that the patent was not anticipated was affirmed.

Modifying a Prior Ruling on The Preclusive Effect of Commission Trademark Rulings

Swagway, LLC v. Int’l Trade Comm’n, No. 2018-1672, (Fed. Cir. Aug. 14, 2019) (on appeal from Inv. Nos. 337-TA-1007 and 337-TA-1021) (Modifying Opinion from May 9, 2019)

Before: Federal Circuit (Clevenger, Dyk, Mayer)

Modifying Opinion:

In our Q2 Newsletter we reported on the May 9, 2019 ruling from the CAFC that potentially confused the framework for analyzing whether ITC trademark rulings have preclusive effect in District Court.  That opinion has now been modified to particular remove reference to statements related to ITC trademark rulings not having preclusive effect at the District Court.  Thus, it is likely that such trademark rulings should be preclusive though the Panel decision here did not update the opinion in a way that addresses the issue.  Instead, the opinion balanced the relavant interests and found that it was within the ALJ’s discretion to not rule on a consent order motion to terminate that Swagway filed on the eve of trial.

Administrative Updates

There were no major rule changes or other meaningful administrative shakeups at the ITC in the second quarter.

By the Numbers

The Quarterly Numbers

Event Amount
New Institutions 12 (1167-1178)
ALJ Initial Determinations 11 (1116, 1100, 1122, 1091, 1126, 1124, 1120, 1130, 1125)
Holdings of No Violation in ID 3 (1122, 1091, 1110)
Holdings of Violation in ID 8 (1116, 1100, 1126, 1124, 1121, 110, 1130, 1125)
Commission Opinions (reviewing IDs) 6 (1107, 1073, 1081, 1090, 1043, 1047)
Holdings of No Violation by Commission 5 (1073, 1081, 1090, 1043, 1047)
Holdings of Violation by Commission 1 (1107)
Exclusion Orders 3 (1117, 1067, 1107)

 

 

 

 

 

 

 

 

The Trends

Instituted Investigations

337 Q3 2019

The Merits by ID

337 Q3 2019

Commission Review

337 Q3 2019

Commission Review - Remedy v. No Remedy

337 Q3 2019

Comparative Success Rates—current through previous quarter

337 Q3 2019