ITC 337 Quarterly Insider Q4 2019 January 27, 2020

Goodwin's 337 Newsletter -- Reporting on Q4 2019

Goodwin’s Section 337 Quarterly Insider is now published for the fourth quarter 2019.  Please find a unique take on everything that happened at the ITC last quarter below. 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.

In 2019 we also put together a three part webinar series. The webinar series covered an ITC Primer (Part 1), SEPs (Part 2), and the post-remedy landscape (Part 3). All three are now available for easy on-demand viewing here. Given the feedback on those webinars, we plan to continue that webinar series in 2020. Additional details will be available soon, but during 2020 we plan to take deep dives into at least four distinct issues, including litigating non-patent cases at the ITC and NPE disputes before the commission.

In This Issue

Year’s end is all about the statistics. So, what did the Q4 ITC numbers show? The numbers showed an uptick in life sciences investigations, and an increase in non-practicing entity cases, as well as non-patent cases. We provide a detailed breakdown of the fiscal year stats here. Finally, new filings were down in the final quarter, with only one 337 complaint filed in December.

In terms of substantive developments, the burden for obtaining a general exclusion order may be lowering. At the very least, we were reminded that GEO’s are alive and well at the ITC. Particularly, in the 1121 Investigation, the Commission affirmed a GEO even though large-scale suppliers, who were never discussed during the investigation, could potentially be implicated by the now issued GEO. Although this was not a break from precedent, the decision shows that complainants can prove likelihood of circumvention by focusing on a subset of companies that import the targeted products. So, anytime a new complainant seeks a GEO, companies with products potentially falling within the scope of the investigation should seriously consider intervening. Afterall, it is better to be an active participant than a passive observer on the sidelines, if a company is to influence the outcome of an investigation at all.

Another notable issue during the last quarter arose in Certain Exogenous Beta-Hydroxybutyrate Nutraceutical Products (DN: 3400). There the basis of the complaint was an allegation of antitrust violations. But the commission denied institution because the complainant failed to allege an actual or threatened antitrust injury. This is the same issue that arose in the Certain Carbon and Allow Steel Products (Inv. No. 337-TA-1002) where the Commission heard oral arguments and found that Section 337 requires the complainant to separately plead antitrust injury to have standing. The 1002 holding was never appealed to the Federal Circuit. But the complainant in DN 3400 has filed a notice of appeal. A reversal by the Federal Circuit might open the floodgates to more antitrust actions at the ITC.

Goodwin Insights

Year’s end is all about the statistics. So, what did the Q4 ITC numbers show? The numbers showed an uptick in life sciences investigations, and an increase in non-practicing entity cases, as well as non-patent cases. We provide a detailed breakdown of the fiscal year stats here. Finally, new filings were down in the final quarter, with only one 337 complaint filed in December.

In terms of substantive developments, the burden for obtaining a general exclusion order may be lowering. At the very least, we were reminded that GEO’s are alive and well at the ITC. Particularly, in the 1121 Investigation, the Commission affirmed a GEO even though large-scale suppliers, who were never discussed during the investigation, could potentially be implicated by the now issued GEO. Although this was not a break from precedent, the decision shows that complainants can prove likelihood of circumvention by focusing on a subset of companies that import the targeted products. So, anytime a new complainant seeks a GEO, companies with products potentially falling within the scope of the investigation should seriously consider intervening. Afterall, it is better to be an active participant than a passive observer on the sidelines, if a company is to influence the outcome of an investigation at all.

Another notable issue during the last quarter arose in Certain Exogenous Beta-Hydroxybutyrate Nutraceutical Products (DN: 3400). There the basis of the complaint was an allegation of antitrust violations. But the commission denied institution because the complainant failed to allege an actual or threatened antitrust injury. This is the same issue that arose in the Certain Carbon and Allow Steel Products (Inv. No. 337-TA-1002) where the Commission heard oral arguments and found that Section 337 requires the complainant to separately plead antitrust injury to have standing. The 1002 holding was never appealed to the Federal Circuit. But the complainant in DN 3400 has filed a notice of appeal. A reversal by the Federal Circuit might open the floodgates to more antitrust actions at the ITC.

Most Impactful Commission Decisions

Commission Determines Prosecution History Estoppel Prevents Finding of Infringement Under Doctrine of Equivalents

In the Matter of CERTAIN INTRAORAL SCANNERS AND RELATED HARDWARE AND SOFTWARE, Inv. No. 337-TA-1091, Commission Opinion (Dec. 19, 2019)

Before: Commission Opinion (ID issued by Judge Cheney)

Practice Tips and Insights:

The Commission will not find a violation if an asserted patent is set to expire before the target date of the investigation. Further, the Commission applies the doctrine of prosecution history estoppel equally to both technical prong and infringement determinations.

Holding and Status:

The Commission affirmed the ALJ’s initial determination, on modified grounds, that there was no violation of Section 337.

Case Background:

The Complainant, Align Technology, Inc., filed a complaint against Respondents 3Shape A/S, 3Shape Trios A/S, and 3Shape Inc., claiming Respondents violated Section 337 by importing certain intraoral scanners and related hardware and software that allegedly infringed six Align patents. Judge Cheney found no violation with respect to two of the patents because they expired prior to the original target date of the investigation. He also found that although the respondents infringed three of the patents, those patents were invalid (two for lack of written description and one as obvious). Judge Cheney further found the technical prong of the domestic industry requirement was not met for those patents. For the final patent, Judge Cheney found that although the technical prong was met, the patent was not infringed.

Notable Disputed Issues and Related Points of Law:

“Comprising” Requires All Elements to Be Physically Included:

Initially, the Commission agreed with Judge Cheney that the term “processor” in the asserted claims did not invoke 112, ¶ 6. The Commission also found that the processor claimed in three of the asserted patents must be physically enclosed in the claimed hand-held device. Specifically, the patents claim a hand-held device “comprising” a number of elements, including a processor. Align argued that the processor need not be physically incorporated on the device as long as it was connected to the device. The Commission disagreed, relying on the accepted definition of comprising as “including but not limited to.” Because the specification did not disclose a processor incorporated in a hand-held device, the Commission affirmed that two of the asserted patents lack written description.

Infringement Under Doctrine of Equivalents Barred by Prosecution History Estoppel:

The Commission agreed with Judge Cheney’s finding that the claim requirement of a hand-held device with a processor configured to associate depth and color information was a narrowing amendment made during prosecution to overcome a prior art rejection. The Commission found that the patentee’s “boilerplate” remark during prosecution that the amendment was not narrowing was not persuasive, particularly given that the amendment was made specifically to overcome a prior art rejection. Because the domestic industry products were found to not literally practice for lack of a processor, and the Commission determined the doctrine of equivalents did not apply, the Commission affirmed that Align did not meet the domestic industry requirement.

Commission Finds No Section 337 Violation By the Respondents

In the Matter of CERTAIN subsea telecommunications systems and components thereof, Inv. No. 337-TA-1098, Commission Opinion (Oct. 21, 2019)

Before: Commission Opinion (ID issued by ALJ Cheney)

Practice Tips and Insights:

Parties risk waiving arguments not properly raised in the proceedings before the ALJ, in the petition for review, and in response to the Commission’s notice.

Holding and Status:

The Commission found no violation of Section 337, after modifying Judge Cheney’s findings to incorporate a broader construction of a means plus function term.

Case Background:

The Complainants, (collectively “Xtera”), filed a complaint against Respondents (collectively “Nokia” and “NEC”), claiming Nokia violated Section 337 by importing certain subsea fiber optic communications products that allegedly infringed five Xtera patents. The post-hearing ID focused on only one asserted patent. In the ID, Judge Cheney found that the accused products did not infringe, the asserted patent was invalid, and that Xtera failed to establish a domestic industry. The Commission determined to review the ID’s findings as to the asserted patent and not to review the remainder of the ID.

Notable Disputed Issues and Related Points of Law:

Xtera Waived Certain Arguments Regarding Infringement: At the outset, considering the specification and expert testimony, the Commission adopted a broader construction of a means plus function limitation compared to the ID. Nevertheless, even under this broader construction, the Commission concluded Xtera did not show infringement of the asserted claims. Importantly, the Commission noted that “Xtera’s failure to petition for review of the ID’s constructions of [certain claim terms was] . . . fatal to Xtera’s infringement position.” Xtera had “waived any challenge to these constructions” and its infringement theory “necessarily fail[ed].” The Commission also noted that Xtera had “waived its doctrine of equivalents argument before the Commission by not raising it in its petition for review and in response to the Commission’s notice.”

Xtera Waived Certain Arguments Regarding Invalidity: The Commission found Xtera had failed to show clear error in ID’s findings and thus affirmed and adopted the ID’s analysis that a certain prior art anticipated the claims of the asserted patent. Notably, “Xtera argued for the first time that the ID improperly relied on disclosures from multiple embodiments in [the Prior Art].” Because Xtera had not raised “this argument in its pre-hearing and post-hearing briefs,” the Commission deemed this argument waived.

Xtera Waived Certain Arguments Regarding Domestic Industry: The Commission concluded that Xtera failed to show domestic industry and the ID properly found Xtera’s alleged economic prong evidence improperly included investments and activities in articles not protected by the asserted patent. ;In the Commission’s view, the ID appropriately determined Xtera’s belated allocation of its investments and activities, which Xtera raised for the first time in its post-hearing brief, had been waived and lacked the support of substantial evidence.

Commission Finds No Infringement of Asserted Means-Plus-Function Claims By Nintendo Switch Consoles

In the Matter of CERTAIN PORTABLE GAMING CONSOLE SYSTEMS WITH ATTACHABLE HANDHELD CONTROLLERS AND COMPONENTS THEREOF, Inv. No. 337-TA-1111, Commission Opinion (Oct. 1, 2019)

Before: Commission Opinion (ID issued by ALJ Shaw)

Practice Tips and Insights:

Even for claim limitations that do not use the word “means,” the Commission will find that § 112(f) applies where an accused infringer can demonstrate that a limitation recites a function without reciting sufficient structure to perform the function. Complainant cannot avoid treatment under § 112(f) with expert testimony that the claimed structure can be anything that performs the recited function.

Holding and Status:

The Commission affirmed the ID’s finding that no violation of Section 337 occurred.

Case Background:

The Complainant, Gamevice, Inc., filed a complaint against Nintendo Co., Ltd. of Kyoto, Japan and its US subsidiary, claiming Nintendo violated Section 337 by importing Nintendo Switch Consoles and Nintendo Joy-Con Controllers that allegedly infringed certain claims of two Gamevice patents. Judge Shaw issued a Markman order construing three terms of the asserted claims as means-plus-function limitations under § 112(f) and thus, either required a specific structure disclosed in the specification or lacked a corresponding structure altogether. The parties stipulated that under Judge Shaw’s constructions, Nintendo’s products did not infringe the asserted claims. Consequently, judge Shaw granted Nintendo’s summary determination motion for noninfringement in the ID. Judge Shaw further found the claims for which no corresponding structure was disclosed in the specifications invalid due to indefiniteness.

The Commission determined to review the ID in its entirety.

Notable Disputed Issues and Related Points of Law:

Means-Plus-Function Treatment: Gamevice argued that the terms “fastening mechanism,” “pair of modules,” and “retention member” all recited sufficient structure to avoid treatment under § 112(f). In support of its arguments, Gamevice submitted testimony of a technical expert that a POSA would understand the structure of those claim limitations to be sufficiently definite. For “fastening mechanism” and “retention member,” the Commission found the expert’s position would essentially allow any structure that performed the claimed function (fasten or retain) to be considered the corresponding structure. The Commission accordingly rejected Gamevice’s arguments that those limitations recited sufficiently definite structure. The Commission also rejected Gamevice’s argument regarding the limitation requiring “pair of modules,” concluding that Gamevice’s expert conflated the “pair of modules” with “control modules,” which the specification taught were different components.

Commission Remands Certain Domestic Industry Issue Even Though Respondents Defaulted

In the Matter of certain earpiece devices and components thereof, Inv. No. 337-TA-1121, Commission Opinion (Nov. 8, 2019)

Before: Commission Opinion (ID issued by ALJ Shaw)

Practice Tips and Insights:

This case shows the importance of allocating investments when trying to prove a domestic industry. Although the Commission ultimately affirmed that a GEO and LEO should issue, the Commission found that the complainant failed to properly allocate its alleged investments related to one of the asserted patents. Complainants should be careful not to aggregate expenditures without allocation when proposed domestic industry products are not uniform across the asserted patents.

Additionally, a third party voiced concern that the eventually-issued GEO could be used against major manufacturers not named in the complaint. The Commission found that it was not necessary for the complainant to name all known manufacturers in its complaint. Accordingly, interested non parties should closely monitor investigations and consider intervention when they fear their products could be implicated if a remedial order issues.

Holding and Status:

The Commission affirmed judge Shaw’s finding of a violation, but remanded for further findings on a domestic industry issue. The Commission issued a General Exclusion Order, Limited Exclusion Orders, and certain Cease and Desist Orders.

Case Background:

The Complainant, Bose, sued certain respondents for infringing six patents related to earpiece devices. There were fourteen named respondents. Some of the named respondents settled, five respondents were found in default and three other respondents simply did not participate. After a motion for summary determination, Judge Shaw recommended a finding of violation with respect to all six patents. Judge Shaw then recommended a General Exclusion Order and Limited Exclusion Orders. Finally, Judge Shaw also recommended cease and desist orders against the domestic respondents, but not the foreign respondents because there is no presumption of a commercially significant inventory in the U.S. for foreign respondents.

Notable Disputed Issues and Related Points of Law:

Economic Prong: One of the asserted patents included a different subset of domestic industry products than the other five. Nevertheless, Bose aggregated its expenditures across all patents. The Commission found this was inadequate to prove the economic prong. Bose also attempted to put in a new declaration showing an allocation, but the Commission would not consider it because it was not part of the record evidence. Additionally, the Commission found that even if the declaration was considered, it provided no basis to show “how [the activities] are significant or substantial in any appropriate context of Bose’s operations, the marketplace, or the industry in question.” The decision was remanded and Bose was offered the opportunity to supplement its record if it chose to continue pursuing its domestic industry on the particular patent.

General Exclusion Order: The Commission found that four factors supported granting a GEO to prevent circumvention: (1) anonymity of doing business over the internet, (2) respondents with faulty addresses, (3) proof of rebranding, and (4) generic packaging.

Interestingly, a third party submitted a public interest statement asserting that the complainant had intentionally left major manufacturers out of the complaint and, therefore, it was against the public interest to issue a GEO that could affect major manufacturers that the complainant was aware of. The Commission disagreed and noted that “[n]either the statute nor the Commission’s Rules require a complainant seeking a GEO to name all known manufacturers, importers, or sellers of the accused products in its complaint.”

Cease and Desist: For CDO, the Commission reiterated that domestic defaulting respondents have an assumption of commercially significant inventory. Foreign respondents, however, do not share the same fate.

Commission Declines to Consider Qualitative Evidence in Support of Economic Prong Where Quantitative Evidence Deemed Insubstantial and Insignificant

In the Matter of CERTAIN CARBURETORS AND PRODUCTS CONTAINING SUCH CARBURETORS, Inv. No. 337-TA-1123, Commission Opinion (Oct. 28, 2019)

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

Practice Tips and Insights:

To meet the economic prong of the domestic industry requirement, Complainant must present evidence regarding the relative importance of domestic activities, consider the context of the operations, marketplace, and industry, and cannot simply rely on the absolute values of investments.Furthermore, where Complainant’s quantitative evidence of investment is insignificant and insubstantial, qualitative evidence will not be considered.  Finally, there is no threshold percentage for sales that will qualify as significant or substantial, nor is a large multinational corporation required to invest larger amounts than a smaller corporation to meet the domestic industry requirement.

Holding and Status:

The Commission affirmed that Complainant had failed to satisfy the economic prong of the domestic industry requirement, but declined to adopt certain statements in the ID’s analysis that it felt could be misinterpreted as implementing new legal standards.

Case Background:

The Complainant, Walbro, filed a complaint against 35 Respondents, claiming Respondents violated Section 337 by importing certain carburetors and products containing such carburetors that allegedly infringed five Walbro patents. Respondents filed a motion for summary determination that Walbro failed to satisfy the economic prong of the domestic industry requirement. The ID found that Complainant failed to meet the economic prong because Walbro’s investments were not significant or substantial.

Notable Disputed Issues and Related Points of Law:

Evidence Necessary to Meet the Economic Prong:

The Commission found that Walbro’s investments, including in labor and capital, were not significant when considered in the context of Walbro’s worldwide carburetor sales. In addition, Walbro failed to provide evidence of the nature and significance of its domestic activities related to the carburetors and further failed to provide evidence related to its foreign activities. Finally, because the Commission found that Walbro’s quantitative evidence of investment was insufficient, it was unnecessary to consider any qualitative evidence because qualitative evidence alone is not sufficient to meet the economic prong.

Commission Declines to Adopt a Threshold for Significance:

The Commission clarified that there is no minimum threshold for the amount of investment that would be deemed significant or substantial, emphasizing that the domestic industry requirement is analyzed on a case-by-case basis. The Commission further declined to adopt the ID’s statement that large multinational corporations should be expected to invest more in order to meet the significant or substantial requirement. The Commission emphasized that the domestic industry prong is analyzed using a flexible approach based on marketplace conditions.

The Commission Issues a General Exclusion Order With Only Three Defaulting Respondents Remaining in the Investigation

In the Matter of CERTAIN WATER FILTERS AND COMPONENTS THEREOF, Investigation No. 337-TA-1126, Commission Opinion (Nov. 15, 2019)

Practice Tips and Insights:

When all the accused products are offered for sale through online commerce, there is a higher likelihood of obtaining a general exclusion order because an LEO could be circumvented by masking or changing the identity and source of infringing goods.

Holding:

With only three defaulting respondents remaining in the investigation, after several participating respondents had settled, the Commission issued a general exclusion order (GEO) under section 337(d)(2), and a cease and desist order under section 337(f)(l).

Case Background:

The Commission instituted this investigation based upon a complaint naming eight respondents. Ultimately, the Commission terminated the investigation as to five respondents who participated in the proceedings but ultimately settled. The remaining three respondents had defaulted, and the Commission determined that those entities violated Section 337. The Commission’s analysis of opinion then focused on the requested remedy of a GEO was of particular note.

As an initial matter, the Commission noted that there are two statutory provisions within the Tariff Act that provide the basis for issuing a GEO: sections 337(d)(2) and 337(g)(2). The former applies where one or more respondents participate in the investigation, and the latter governs investigations where all respondents fail to appear. Here, because some respondents had appeared, even though they eventually settled, the Commission concluded that section 337 (d)(2) applies to the remaining defaulted respondents. The Commission noted, however, that although only section 337(g)(2) explicitly states that the underlying violation of section 337 must be “established by substantial, reliable, and probative evidence,” a GEO under section 337(d)(2) “must also rest upon a violation established by the same standard of proof.”

Substantively, Section 337 (d)(2) empowers the Commission to issue a GEO when either “a general exclusion from entry of articles is necessary to prevent circumvention of an exclusion order limited to products of named persons,” or “there is a pattern of violation of this section and it is difficult to identify the source of infringing products.” Because of the far reaching implications of a GEO, the Commission turned to the record evidence in its exercise of caution before issuing such an sweeping order, finding both pre-conditions were satisfied in this investigation.

First, the record showed various internet seller listings on Amazon and eBay as well as generic, unmarked product shipments. Also, orders placed through one defaulting respondent were fulfilled by another, obscuring the distribution networks. The Commission therefore concluded that “there is a high likelihood that an LEO directed to only the Defaulting Respondents would be ineffective from its inception, as it would immediately be circumvented through Internet operations, masking of identities and product sources, and use of unmarked, generic, or reseller branded packaging.”

Second, the Commission concluded that there was a pattern of violation and it was difficult to identify the source of infringing products. Specifically, the evidence showed that numerous foreign entities offered thousands of seemingly infringing products over the internet. Further, the domestic on-line sellers appeared to “operate virtually anonymously” by using pseudonyms with no information about their true identity. The complainant also proffered evidence that showed the source of the infringing products can be further obscured by using intermediary freight companies to ship the goods in generic boxes without any marks identifying the producer. Indeed, the complainant produced evidence of seized counterfeit packaging with its own name falsely identified as the source.

In sum, a GEO is a powerful and sweeping remedy reaching beyond the parties identified as respondents in a 337 investigation. But a complainant can successfully obtain a GEO, even if the respondents do not participate in an investigation,

Most Impactful ALJ Decisions

On remand, Chief Judge Bullock found Evidence Insufficient to Show Direct or Induced Infringement and that the Domestic Products Failed to Satisfy the Technical Prong

In the Matter of CERTAIN GAS SPRING NAILER PRODUCTS AND COMPONENTS THEREOF, Inv. No. 337-TA-1082, Remand Initial Determination (Oct. 28, 2019)

Before: Chief Judge Bullock

Practice Tips and Insights:

Direct infringement of a method claim can be shown through circumstantial evidence, such as instruction manuals teaching users to use products in an infringing manner. Similarly, testimony based upon review of photos or physical samples can suffice to show product features. Care must be taken, however, to provide sufficient proof by reference to documents and/or detailed testimony to show that the operation of the accused device achieves certain claimed results. Conclusory expert testimony is insufficient by itself to satisfy that burden.

Holding and Status:

Chief Judge Bullock held that Complainant failed to prove that asserted claims of U.S. Patent No. 8,387,718 were infringed by the accused products or practiced by the domestic industry products. Additionally, the Chief Judge Bullock held that Respondents had not induced infringement of the asserted claims.

Case Background:

Kyocera filed a complaint against Hitachi alleging that certain gas spring nailers infringed various claims of Kyocera’s ’718 patent. On June 7, 2019, Chief ALJ Bullock issued a final initial determination finding no violation because complainant failed to prove either that the accused products infringe or that the domestic industry products practice the asserted patent. The Commission determined to review the ID and, upon review, remanded the ID in part to reevaluate the findings that complainant failed to prove infringement or satisfaction of the technical prong of the domestic industry. The remand ID again found no direct or induced infringement by Hitachi’s accused products and that Kyocera had failed to show that its domestic industry products practiced at least one claim of the ’718 patent.

Notable Disputed Issues and Related Points of Law:

Burden of Proof to Show Infringement:

For the issue of direct infringement, Hitachi disputed Kyocera’s proofs relating to several limitations and the proof of direct infringement by users of the accused products. Chief Judge Bullock found that infringing use could be established through circumstantial evidence, such as user manual instructions and the failure to point out non-infringing uses. But he also found that conclusory expert testimony without supporting documentary or fact testimony was insufficient to prove infringement. Similarly, Complainant’s other operational proofs were likewise found to be insufficient due to the lack of evidence of how the accused device operates Finally, given the failure of proof regarding how the accused products operate and the failure of the instruction manuals to explain the relevant operation, Chief Judge Bullock also found that Kyocera failed to prove that Hitachi’s users perform those operations.

Burden of Proof to Show Satisfaction of Technical Prong of Domestic Industry Requirement:

The parties arguments regarding the technical prong largely echoed their arguments regarding infringement. As with infringement, Chief Judge Bullock found that expert testimony based on pictures could be sufficient to show product features. But that the proffered testimony was insufficient to establish how the device operates and whether it achieves certain results. Accordingly, he found certain claim limitations were not satisfied in the domestic industry products.

ALJ Applies Issue Preclusion Based on Non-Infringement of Related Patent in Earlier Suit

In the Matter of CERTAIN MEMORY MODULES AND COMPONENTS THEREOF, Inv. No. 337-TA-1089, Initial Determination on Violation of Section 337 and Recommended Determination on Remedy and Bond (Oct. 21, 2019)

Before: Chief Judge Bullock

Practice Tips and Insights:

Repeat infringement suits based on related patents raise the specter of issue preclusion even where asserted claims have different language.

Holding and Status:

Chief Judge Bullock found that Complainant’s patent infringement allegations were barred due to a finding of non-infringement of a related patent in a previous investigation. The Commission has extended the period to determine whether to review the decision until January 31, 2020.

Case Background:

Complainant Netlist, Inc. (“Netlist”) designs and manufactures high-performance memory modules. Respondents (collectively “SK Hynix”) manufacture and supply dynamic random-access memory chips and memory modules, including the accused products.

Netlist accused SK Hynix of infringing certain patents relating to memory modules including data buffer circuits and/or which generate a signal reflecting a status of one or more training sequences that can be transmitted to the system memory controller to communicate that status.

A prior investigation involving the same accused products but a different patent, of which one of the asserted patents was a continuation, resulted in a final decision of non-infringement, which Netlist did not appeal, and the Commission did not review.

Notable Disputed Issues and Related Points of Law:

Issue Preclusion—Non-Infringement of a Related Patent: In a previous investigation involving identical accused products, SK Hynix obtained summary judgment of non-infringement after the ITC held that the claim limitation “notification signal indicating at least one status of at least one initialization sequence” was not met by the accused products. An asserted patent in the present litigation had a limitation requiring a “notification signal indicating at least one status of at least one or more training sequences.” Quoting Semiconductor Integrated Circuits, Inv. No. 337-TA-648, Comm'n Op. at. 2- 3 (Feb. 18, 2009), Chief Judge Bullock applied the following four-factor test of issue preclusion: “(l) [T]he issue is identical to one decided in the first action; (2) the issue was actually litigated in the first action; (3) resolution of the issue was essential to a final judgment in the first action; and (4) the plaintiff had a full and fair opportunity to litigate the issue in the first action.” The Chief Judge then held that the previous investigation’s holding precluded a finding in the present action that the accused products infringed.

Similarly, the finding in the first investigation that accused product’s memory module did not meet the limitation “a controller circuit configured to cause the memory module to enter the initialization mode” precluded a finding of infringement of the limitation in the asserted patent “wherein the module controller is configured to cause the memory module to enter a second mode.” The limitations were not “materially different” because the asserted patent indicated that a memory module undergoes “training sequences” when in the “second mode,” and the patents’ shared specification taught that a “training sequence” is a type of an “initialization mode.”

Issue Preclusion—Explicit Construction of a Limitation in Prior Action Is Not a Prerequisite to Issue Preclusion:  The claim term “initialization sequence” was not explicitly construed in the first investigation.  Chief Judge bullock held that “[n]evertheless, whatever its meaning it must encompass ‘training sequences’ per the language of the shared specification.”  Chief Judge therefore rejected Netlist’s argument that the terms “initialization sequence” and “training sequence” were “not coterminous,” noting that “exact identity” is not necessary as long as the differences do not “materially alter the question of invalidity [or infringement].”

Judge McNamara Finds No Violation in Garage Door Case

In the Matter of CERTAIN MOVABLE BARRIER OPERATION SYSTEMS AND COMPONENTS THEREOF, Inv. No. 337-TA-1118, Initial Determination on Violation of Section 337 and Recommended Determination on Remedy and Bond (Nov. 25, 2019)

Before: ALJ McNamara

Practice Tips and Insights:

This opinion demonstrates Judge McNamara skepticism of certain litigation positions where both sides were unnecessarily stretching their positions. This is a good reminder that sometimes less is more when it comes to trials at the ITC.

Holding and Status:

The ALJ determined there was no violation. Petitions for Review are currently pending at the Commission.

Case Background:

Complainant The Chamberlain Group, Inc. (“CGI”) is a manufacturer of garage door operators, including infrared remote control operators. Respondents, collectively, “Nortek,” are electronics manufacturers with lineage in the garage door industry that developed a series of proprietary wireless controls that allowed the company to establish a significant position in the home security industry. CGI filed a Complaint with the Commission asserting Nortek violated Section 337 by reason of patent infringement of three of its patents.

After the evidentiary hearing and post-hearing briefing, Judge McNamara found that two of the three Respondents had not violated Section 337 as Nortek’s accused products did not infringe patents, and because the third patent was shown to be invalid.

Notable Disputed Issues and Related Points of Law:

Domestic Industry: When analyzing domestic industry, Judge McNamara raised issues with CGI’s attempt to lump products together that have relevant operational differences. Specifically, CGI relied on the two products as representative of its On-board WiFi and Internet Capable Domestic Industry (“DI”) products; one that required a specific component to make it internet capable and another that did not.

Judge McNamara noted that for purposes of satisfying the economic prong of domestic industry, CGI had included all domestic industry expenditures for internet capable products without mentioning the necessity of the additional component. She also rejected this approach as artificially inflating CGI’s domestic industry expenditures and it was unclear whether CGI tracked the number of customers who had acquired the specific component when purchasing certain models known to use the component in question. CGI’s domestic industry showing could therefore not include the internet capable products and expenditures for those products.

Inequitable Conduct: Among the arguments Nortek raised with respect to inequitable conduct for CGI’s failure to disclose one of the prior art references to the United States Patent Office, Nortek also listed a number of “bad acts” that it alleged CGI had engaged in during the course of the litigation before the ITC. These acts were unrelated to the prosecution of the patents-in-suit, and included CGI’s “Last-Minute Document Dump” of over 160 thousand pages of documents, CGI’s alleged gamesmanship by failing to drop certain asserted claims until just before the Hearing, CGI’s repeated objections and delays during the testimony of one of their experts and CGI’s removal of certain statements in CGI’s ARQ manual.

Judge McNamara found that Nortek’s enumeration of these “bad acts” as a basis for patent unenforceability under Therasense was a gross overreach and unsupported legally. Moreover, many of Nortek’s grievances relating to the prejudice suffered as a result of these actions had been addressed by Judge McNamara during the Hearing or during separate teleconference, whereby CGI was penalized accordingly.

Judge Lord Finds No Violation; Complainant Failed to Prove Infringement and Satisfy Domestic Industry As To Certain Asserted Patents

In the Matter of Certain Infotainment Systems, Components Thereof, and Automobiles Containing the Same, Inv. No. 337-TA-1119, Initial Determination (Nov. 13, 2019)

Before: ALJ Lord

Practice Tips and Insights:

Proving infringement requires presenting actual evidence. In particular, on the issue of “sale for importation” specific evidence that respondent “knew or should have known” should be required. With respect to collateral estoppel issues, an ALJ may entertain the doctrine when considering a decision by another judge, but cannot do the same when the Commission has rendered a binding determination on the issue.

Holding and Status:

Based on the record as a whole, Judge Lord found no violation of Section 337 in the importation into the United States of certain infotainment systems. On November 26, 2019, Broadcom filed its petition for review by the Commission.

Case Background:

The 1119 Investigation is based on a complaint filed by Broadcom Corporation (“Broadcom”) against Toyota, Panasonic, DENSO TEN, Renesas, and Japan Radio Co., Ltd. (“JRC”). Broadcom alleged infringement of certain claims of six U.S. Patents relating to electronics architecture, electronics for video processing, and navigation satellite systems.

JRC asserted defenses of invalidity, no domestic industry, and non-infringement. Further, JRC argued that Broadcom was collaterally estopped from contesting the facts underlying the Commission’s holding in an earlier Investigation (the 1047 Investigation).

Notable Disputed Issues and Related Points of Law: </p">

Disputed importation:

Judge Lord found that Broadcom failed to prove a sale for importation by one of the named Respondents. In particular, Broadcom argued that one of the respondents, Socionext Inc. (“Socionext”), knew or should have known that is SoCs would be exported into the United States. But Socionext contended that it had no knowledge of their SoCs subsequent incorporation into vehicles that are imported in the United States. Judge Lord found the record evidence insufficient to support a finding that Socionext knew or should have known that the accused SoC would be imported into the United States. Nor was Socinext’s attendance at a U.S. trade show where it demonstrated some related SoCs evidence of any knowledge regarding the importation of the specifically accused products.

Hypothetical scenario insufficient to show infringement:

Judge Lord found that Broadcom failed to carry its burden to show infringement by failing to present any proof that the claimed function is actually performed.

Collateral estoppel:

Respondents also argued that Broadcom is collaterally estopped from contesting the facts underlying the Commission’s holding in the 1047 Investigation (“Semiconductor Devices”). In the 1047 Investigation, the ALJ construed the claims and found that claims 1-10 of the ’844 patent were anticipated. The Commission affirmed the findings regarding anticipation and modified one construction. After the deadline for filing an appeal from the Commission’s decision had passed, Broadcom withdrew claims 1-10 of the ’844 patent from the instant investigation. Respondents argued that Broadcom is estopped from challenging the Commission’s construction. Broadcom responded that collateral estoppel does not apply because it did not have a full and fair opportunity in the 1047 Investigation to litigate the validity of the claims, the Commission’s findings were not essential to the Commission’s final determination, and equitable considerations weigh in favor of not applying collateral estopped.

Judge Lord explained that ALJs lack the power to deviate from the Commission’s decision and she must apply the Commission’s decision regarding the invalidity of claims 1-10 of the ’844 patent. Judge Lord found that Broadcom had preserved its arguments regarding the 1047 decision and should it appeal before the Commission, Broadcom can present its arguments to the Commission, which has the authority to alter the 1047 decision.

Satisfaction of a functional limitation:

Judge Lord found that the accused Pioneer products are not “configured to” perform the claimed functions of claim 12 of the ’104 patent. Specifically, Judge Lord found no evidence that anyone in the United States has ever modified a Pioneer head unit to receive and process signals from more than one satellite navigation system. Indeed, there was no record evidence showing that it was possible to do so. Broadcom argued that it did not matter whether the code performing the claimed functions is disabled or enabled, so long as the code is present. Judge Lord stated that Broadcom’s argument is based on a misreading of the law and stated a key distinction: “configurable” only requires that an accused product be capable of being configured to perform a claimed function, whereas “configured to” requires that the accused product be actually configured to perform the claimed function. The claim language at issue requires a processor “configured to” perform the claimed functions, not a processor that is “configurable” to perform the claimed functions.

Judge Elliot Finds Respondents’Existing Product Infringes and Rejects Respondent’s Attempt to Adjudicate New Design

In the Matter of CERTAIN HUMAN MILK OLIGOSACCHARIDES AND METHODS OF PRODUCING THE SAME, Inv. No. 337-TA-1120, Initial Determination on Violation of Section 337 and Recommended Determination on Remedy and Bond (Sept. 9, 2019)

Before: ALJ Elliot

Practice Tips and Insights:

The ability to insert a redesigned product into an ITC investigation and have it adjudicated as non-infringing can be critical to lessening the impact of an exclusion order. To insure that new designs get adjudicated, a respondent bears the burden of producing sufficient evidence before the end of discovery to show not only importation, but a sufficiently fixed design and evidence sufficient to analyze the infringement issues.

Holding and Status:

The Initial Determination found that there was a violation of Section 337 because Respondent’s methods of producing 2‘-FL, a human milk oligosaccharide (a.k.a. HMO), infringe the asserted patents. After the evidentiary hearing and post-hearing briefs, Judge Elliot recommended the issuance of a limited exclusion order and a cease and desist order.

Case Background:

Complainant Glycosyn LLC ("Glycosyn") filed a complaint alleging certain products of respondent Jennewein Biotechnologie GmbH ("Jennewein") infringed one or more claims of U.S. Patent Nos. 9,453,230 (the "'230 patent") and 9,970,018 (the '"018 patent''). Glycosyn is a Massachusetts LLC that conducts research and development of commercially-viable methods for synthesizing and producing HMOs including the 2’-FL HMO for the infant formula market. Jennewein is a German company that also conducts research and development of HMOs and distributes 2’-FL HMO in the United States.

The claims of the ‘230 patent were subsequently terminated from the investigation and the case went to hearing on the asserted claims of the ‘018. The ‘018 patent describes methods of producing the bacterium that assist the production and collection of the desired oligosaceharide. For example, the bacterium may be engineered by the addition, deletion, or inactivation of genes to create the desired oligosaceharide.

The case was originally assigned to Judge Pender and upon his retirement, assigned to Chief Judge Bullock who presided over the claim construction hearing. The case was later reassigned to Judge Elliot who conducted an evidentiary hearing in May and issued an ID on September 9, 2019.

Notable Disputed Issues and Related Points of Law:

Presenting a Redesign into the Investigation

Glycosyn accused a 2’FL HMO product made using an E. coli #1540 bacterial strain. In addition to that product, Jennewein sought a ruling that its 2’FL HMO produced by the TTFL12 strain was within the scope of the investigation but not found to infringe. Glycosyn had not accused that product of infringement such that it was an “accused product” but Jennewein contended that it placed this strain into the scope of the investigation such that an infringement determination was warranted. The staff agreed.

Relying on Certain Two-Way Radio Equipment and Systems, Related Software, and Components Thereof, the ALJ set forth a four-factor test for determining whether a respondent has rnet its burden to show the infringement of a redesigned product should be adjudicated. The product must be: (1) within the scope of the investigation, (2) imported, (3) sufficiently fixed in design, and (4) subject to extensive discovery. The ALJ found Jennewein had not met its burden with regard to its new product because it had not provided the necessary “extensive” or “sufficient” discovery on that product. The ALJ found that Jennewein’s interrogatory response identifying the TTFL12 strain on the last day of discovery and the few documents produced about it earlier were insufficient. The ALJ held, “An earnest effort to force TTFL12 into the investigation would have seen Jennewein prove to Glycosyn the nature of TTFLI2, and how it had been used to produce imported 2’-FL, before the very last day of fact discovery. This was not done, however.”

Doctrine of Equivalents

Although Judge Elliot found that the accused products did not literally contain “a functional sequence of DNA that encodes β-galactosidase" he went on to find that two distinct sequences of DNA satisfy the “finction/way/result test and therefore found infringement under the doctrine of equivalents.

Validity

Judge Elliot rejected Jennewein’s prior art combinations supporting its obviousness contentions on the ground that Jennewein failed to show an adequate motivation to combine. In addition, Judge Elliot was persuaded that secondary considerations, including Jennewein’s own expert’s testimony on unexpected results, supported a finding of nonobviousness.

Enablement

Jennewein argued that several asserted claims of the ‘018 patent failed to satisfy the enablement requirement of 35 U.S.C. § 112. Specifically, Jennewein argued that the patent’s specification does not enable the full range of β-galactosidase activity (0.05 to 200 Units) because it only shows production at an activity level of 1-2 Units. Jennewein contended that undue experimentation would be necessary to reach the higher levels of the claimed range. The issue was therefore whether the limited species disclosure in the specification sufficiently enables a person having ordinary skill in the art to practice the claim over the full range without undue experimentation.

Judge Elliot found that resolving the issue requires consideration of the eight factors set forth in In re Wands, 585 F.2d 731, 737 (Fed. Cir. 1988). Those are: (1) the quantity of experimentation necessary; (2) the amount of direction or guidance presented; (3) the presence or absence of working examples; (4) the nature of the invention; (5) the state of the prior art; (6) the relative skill of those in the art; (7) the predictability or unpredictability of the art; and (8) the breadth of the claims.

After weighing those factors, Judge Elliot found that several factors are neutral and two factors favor Jennewein. Nevertheless, he found the quantity of experiment necessary (which favored Glycosyn) outweighed all other factors such that it precluded a finding that Jennewein has met its clear and convincing evidence burden to show the asserted claims are not enabled.

Chief Judge Bullock Grants Summary Determination that Multiple Non-Participating Respondents Violated Section 337

In the Matter of CERTAIN hEIGHT-ADJUSTABLE DESK PLATFORMS AND COMPONENTS THEREOF, Inv. No. 337-TA-1125, Initial Determination (Sept. 13, 2019).

Before: Chief ALJ Charles E. Bullock

Practice Tips and Insights:

To prove importation for a Section 337 violation, circumstantial evidence, including markings on packaging and products, may be sufficient. Companies not participating in Investigations should be advised that an ALJ may find infringement has been satisfied where they fail to present contradictory evidence. To prove entities operate a common enterprise, sharing an address, executive, and trade name may be sufficient.

Holding and Status:

Chief Judge Bullock granted in part Complainant’s motion for summary determination, finding a Section 337 violation with respect to all Non-Participating Respondents other than Haining Orizeal.

Case Background:

The Commission initiated this investigation, naming Varidesk, LLC as Complainant against a host of Respondents to determine whether Section 337 violations were occurring through the importation of certain height-adjustable desk platforms and components thereof, potentially infringing four patents held by Complainant. After motions to terminate the investigation as to several Respondents were granted based on settlement agreements, the Investigation continued as to several non-participating respondents. None of these remaining Respondents filed a response nor participated in the Investigation.

Varidesk filed a Motion for Summary Determination Against the Non-Participating Respondents. None filed a response. The Staff filed a response, largely supporting the requested relief, with the exceptions that the Staff did not agree that a violation of Section 337 should be found as to one Respondent, or that cease and desist orders should be issued as to any of the Non-Participating Respondents. Chief Judge Bullock found that a Section 337 violation was established as to all Non-Participating Respondents other than Haining Orizeal.

Notable Disputed Issues and Related Points of Law:

Proof Necessary to Show Importation: Although there was no direct evidence that several of the Non-Participating Respondents had imported infringing products from China, Chief Judge Bullock held that circumstantial evidence was sufficient. In particular, he relied on markings on the packaging and products indicating the country of origin was China.

Proof Necessary to Establish Related Companies: Complainant alleged that three Non-Participating Respondents are related companies under common ownership. To establish that the entities were related companies, Complainant presented evidence that the companies shared an address and common executive. Additionally, Complainant established that all three companies sold an adjustable-height desk under the name “Logix.” Chief Judge Bullock found that this evidence was sufficient to attribute the evidence related to the importation requirement by one of the three entities to all three.

Judge McNamara Finds Imported Beer Dispenser Components Violate Section 337 and Should be Excluded

In the Matter of CERTAIN BEVERAGE DISPENSING SYSTEMS AND COMPONENTS THEREOF, Inv. No. 337-TA-1130, Initial Determination on Violation of Section 337 and Recommended Determination on Remedy and Bond (Sept. 19, 2019)

Before: ALJ MaryJoan McNamara

Practice Tips and Insights:

Judge McNamara held that the Commission has jurisdiction over “(i) products that directly infringe after importation; and (ii) infringing products whose components are not imported together or assembled at the time of importation.”

The economic prong determination in this case also highlights the importance of a value-add analysis when it comes to smaller companies operating hand-in-hand with larger companies that spend much more money in operational costs.

Holding and Status:

In response to a complaint for patent infringement filed by Heineken, the decision recommends a limited exclusion order against the respondents Anheuser-Busch and InBev (ABI). The decision also recommends issuing a cease and desist order and that ABI post a 5% bond during the Presidential Review Period.

The Commission solicited briefing on remedy, the public interest, and bonding, as well as on specific issues concerning claim construction, infringement, invalidity, and the domestic industry requirement. Briefs have been submitted and the Commission has extended the target date until January 28, 2020.

Case Background:

The complaint alleged a section 337 violation by way of patent infringement for eleven asserted claims, all falling within the same asserted patent. The parties went to trial on four asserted claims. All tried claims were found infringed and not invalid.

Notable Disputed Issues and Related Points of Law:

Direct Infringement: ABI contended that its products did not infringe because the accused products have never been imported together or in a fully assembled state. The ALJ conducted a thorough analysis of Commission and Federal Circuit precedent, including the Federal Circuit’s landmark Suprema decision. Based on her analysis, Judge McNamara determined that “the Federal Circuit’s well-reasoned interpretation of the meaning of ‘articles that infringe’ defined in Suprema covers: (i) products that directly infringe after importation; and (ii) infringing products whose components are not imported together or assembled at the time of importation.” (emphasis in original). The decision finds direct infringement through ABI’s importation, sale, and use of the accused product.

Indirect Infringement: Heineken successfully proved induced infringement of its apparatus claims and the Judge McNamara ’s opinion reiterates that service of the complaint is sufficient for showing notice for indirect infringement. Heineken’s contributory infringement claims fell short because ABI showed substantial non-infringing uses.

Obviousness: Judge McNamara found that ABI failed to meet its burden of proof on invalidity for two independent reasons. First, the Judge found that the cited prior art never disclosed certain claim limitations. Second, Judge McNamara found there was no motivation to combine the primary references. With respect to motivation to combine, the Judge McNamara noted that ABI’s expert raised two new theories related to “inherent” motivation at trial, but, because those were previously undisclosed theories, they needed to be stricken. With respect to motivation theories that were disclosed, Judge McNamara found them to be too generic and not tied specifically to the relied upon prior art.

The opinion also covered secondary considerations. Particularly, Judge McNamara found that Heineken was able to prove commercial success but failed in its proof on copying and industry praise.

Inequitable Conduct and Inventorship: ABI’s inequitable conduct defense failed because the references relied upon did not invalidate the patent and, thus, were not material. Additionally, Judge McNamara found that ABI’s allegations were wrongfully levied against the corporate entities and not individuals. Judge McNamara noted that inequitable conduct needs to be committed by persons. There was also no showing of an intent to deceive. ABI also tried to prove that the asserted patent named the wrong inventors, but that defense fell short.

Economic Prong: ABI lodged six attacks against Heineken’s proof that its licensee, Hopsy, had sufficient domestic investments to satisfy the economic prong. Judge McNamara particularly found that Hopsy was not a mere importer and that its “craft beer subscription-based business model added disproportionate value to the U.S. marketplace over time.” Judge McNamara also confirmed that in the context of the economic prong domestic versus international comparisons are not required.

Remedy: The limited exclusion order included a certification provision that allows ABI to import kegs that will not be used in the accused system. A cease and desist order was also recommended. Bond during the Presidential Review Period was set based on a licensing rate.

Judge Elliot Finds Respondents Violated Trade Dress Related to Jeep Vehicles But No Dilution Or Trademark Infringement

In the Matter of CERTAIN MOBILIZED VEHICLES AND COMPONENTS THEREOF, Inv. No. 337-TA-1132, Initial Determination on Violation of Section 337 and Recommended Determination on Remedy and Bond (Nov. 21, 2019)

Before: ALJ Elliot

Practice Tips and Insights:

Non-patent based claims are alive and well at the ITC. Judge Elliot lays out the factors required to prove a violation based on trademark and trade dress infringement as well dilution.

Holding and Status:

The Initial Determination found that there was a violation of Section 337 because Respondents' Roxor vehicle infringes Complainant's trade dress but found no violation based on dilution or trademark infringement. Judge Elliot recommended the issuance of a limited exclusion order and a cease and desist order.

Case Background:

Complainant, FCA US LLC ("FCA") is a vehicle manufacturer and the owner of the Jeep brand, certain Jeep trade dress, and Jeep design marks. Respondent Mahindra & Mahindra Ltd. ("M&M”) is a multinational federation of companies that include vehicle manufacturing and distribution entities. Respondent Mahindra Automotive North America ("MANA") is a subsidiary of M&M that manufactures off-road only vehicles in the United States. FCA filed a Complaint with the Commission asserting Respondents violated Section 337 by reason of trade dress infringement, trademark dilution, or infringement of common law trademarks as well as alleged infringement of five registered marks.

Judge Elliot found that Respondents violated Section 337 because Respondents' Roxor vehicle infringes Complainant's Jeep Trade Dress which included 6 vehicle attributes relating to a “boxy body shape;” a “substantially flat hood with curved side edges”; “trapezoidal front wheel wells”; a “flat appearing grille with vertical elongated grille slots”; “exterior hood latches”; and “door cutouts above a bottom portion of the side body panels.” He found no violation based on dilution or trademark infringement.

Notable Disputed Issues and Related Points of Law:

Trade Dress Infringement

Judge Elliot recognized that trade dress infringement falls within the meaning of "unfair methods of competition" under 337(a)(l)(A) and held that, to prevail on a claim of trade dress infringement, a Section 337 complainant must show: (1) it possesses legal rights in its trade dress; (2) the respondents' use of that trade dress has created a likelihood of confusion regarding the source or sponsorship of the accused products; and (3) infringement of the trade dress has the threat or effect of injuring the domestic industry.

Judge Elliot analyzed whether a protectible trade dress exists by examining (1) the six factors relating to whether the trade dress has acquired secondary meaning; (2) the eight factors relating to the credibility and reliability of consumer surveys; and (3) the four factors relating to whether the trade dress is “nonfunctional.”

In his infringement analysis, Judge Elliot also used the thirteen factor test set forth in In re E.I. DuPont DeNemours & Co., 476 F.2d 1357, 1361 (CCPA 1973) in determining whether there is likelihood of confusion as to origin, sponsorship, or approval due to similarities between the asserted trade dress and the accused product. In addition to the thirteen DuPont factors, Judge Elliot also considered the intent of the accused infringer and the strength of the mark.

After analyzing and weighing all factors, Judge Elliot found that FCA had proven its trade dress infringement claim.

Dilution

Judge Elliot declined, however, to find for FCA on its dilution claim. To prevail, FCA needed to show (1) the trade dress was not functional and 2) famous separate and apart from any registered mark. Judge Elliot found that while the trade dress was famous, there was insufficient evidence to show fame separate from the fame of the registered marks, specifically the marks directed to the Jeep grill designs.

FCA’s Claim on its Registered Marks

Judge Elliot also rejected the claim of infringement of FCA’s registered trademarks, finding that the accused products’ grill design, that included five slots of varying sizes, did not infringe FCA’s trademarks directed to Jeep’s “iconic” seven slot grill design. Applying the DuPont factors, Judge Elliot found that the degree of dissimilarity of the products (particularly the number and length of the grill slots) overwhelmed the other factors.

Injury to Domestic Industry

Because the violation was based on trade dress infringement, FCA was required to show injury to FCA’s domestic industry and a nexus with the unfair acts. Using the “broad range of indicia” factors for nexus, including injury to FCA’s goodwill and reputation, Judge Elliot found that the injury requirement was met.

Judge Shaw Denies Respondents’ Motion to Terminate an Investigation Based on Arbitration and Forum Selection Agreements

In the Matter of CERTAIN LUXURY VINYL TILE AND COMPONENTS THEREOF, Inv. No. 337-TA-1155, Order No. 11 (Sept. 20, 2019)

Before: ALJ Shaw

Practice Tips and Insights:

Unlike courts of general jurisdiction, which often read arbitration clauses expansively in favor of enforcing them, the Commission will often, as it did here, interpret such agreements narrowly in favor of allowing the investigation to proceed. If enforcement of arbitration or forum selection clauses is desired, respondents should focus on arguments that place the central subject of the investigation squarely within the four corners of the relevant agreements. Respondents might also consider pursuing in court an action to enforce the arbitration or forum selection provisions, and/or enjoining the complainant on that basis.

Holding and Status:

Respondents’ motion to terminate the investigation in favor of certain licenses and royalty agreements, which provided for arbitration and forum selection for certain disputes, was denied. Judge Shaw determined that the agreements did not apply to the subject articles accused of infringement, and the investigation raised issues different from the subject matter of such agreements.

Case Background:

Complainants alleged Respondents’ vinyl flooring products infringed Complainants’ patents. Some Respondents moved to terminate the investigation, arguing that their license agreements with Complainants mandated arbitration in Hong Kong. Other Respondents argued that a forum selection clause in a royalty payment agreement required termination of the investigation in favor of a pending action in Germany.

After first noting the provisions of 19 C.F.R. § 210.21(a)(2), allowing for termination of an investigation where the parties have agreed to arbitrate, Judge Shaw held that the subject agreements applied only to certain labeled products, which were licensed, and did not preclude patent infringement claims as to unlabeled, and thus unlicensed, products. Because unlicensed products were not within the scope of the licenses, the disputes in the investigation did not arise from and were not connected with the license agreements. Judge Shaw accordingly denied the Respondents’ motions based on the license agreements.

As to the royalty agreement, Judge Shaw held that such agreement concerned the obligation to pay royalties, and the dispute in Germany concerned whether certain products fell within the agreement’s definition of “Product.” Judge Shaw found that issue to be separate and different from the issue of whether Respondents should be permitted to import unlabeled products accused of patent infringement, and thus denied the motion to terminate based on the royalty agreement.

Notable Disputed Issues and Related Points of Law:

Termination in Favor of Arbitration: Motions to terminate an investigation in favor of parties’ agreements to arbitrate are governed by 19 C.F.R. §210.21(a)(2), which provides:

“Any party may move at any time to terminate an investigation in whole or in part as to any or all respondents on the basis of a settlement, a licensing or other agreement, including an agreement to present the matter for arbitration, or a consent order, as provided in paragraphs (b), (c) and (d) of this section.”

19 C.F.R. §210.21(d) further provides:

“Upon filing of a motion for termination with the administrative law judge or the Commission, a section 337 investigation may be terminated as to one or more respondents pursuant to section 337(c) of the Tariff Act of 1930 on the basis of an agreement between complainant and one or more of the respondents to present the matter for arbitration.”

Judge Lord Denies Motions for Failing to Comply with Logistical Requirements in the Ground Rules

In the Matter of CERTAIN VEHICLE SECURITY AND REMOTE CONVENIENCE SYSTEMS AND COMPONENTS THEREOF, Inv. No. 337-TA-1152, Order Nos. 11 and 12 (Dec. 3, 2019)

Before: ALJ Lord

Practice Tips and Insights:

It should go without saying that following the ALJs’ Ground Rules is paramount in ITC proceedings. Lest the practitioners forget this obvious but important step, these orders from Judge Lord rejecting two motions for failing to “include the Motion Docket Number assigned to the motion by the Commission’s Office of the Secretary in either the title or the first paragraph” stand as a stark reminder. Practitioners will do well do remain vigilant about, and in compliance with, the Ground Rules controlling each ITC investigation. It is also good practice to review those rules as issued in a new investigation because they might contain slight variations from those controlling a previous investigation presided over by the same Judge.

Federal Circuit Decisions And Arguments

Federal Circuit Reverses Claim Construction and Vacates Orders Excluding Garage Door Openers

Techtronic Indus. Co. v. Int’l Trade Comm’n, No. 2018-2191 (Fed. Cir. Dec. 12, 2019) (on appeal from Inv. Nos. 337-TA-1016)

Before: Federal Circuit (Lourie, Dyk, and Wallach)

Practice Tips and Insights:

This appeal is an example of a case in which a single contested issue of law can unwind powerful remedial orders entered by the Commission. It is well established that the Federal Circuit reviews legal determinations of the Commission, including claim constructions, de novo. When faced with an exclusion order or cease and desist order, a losing respondent at the Commission should strongly consider whether it can raise any issues of law on appeal, for which the Federal Circuit will afford the Commission no deference.

Holding and Status:

The Federal Circuit reversed the Commission’s claim construction and its final determination of infringement, and vacated the limited exclusion orders and cease and desist orders.

Case Background:

Chamberlain filed a Section 337 complaint in 2016 alleging various respondents infringed an asserted patent related to garage door openers. The parties disputed the construction of only one term of the asserted patent, which the ALJ construed narrowly. Based on the ALJ’s claim construction order, the respondents moved, unopposed, for summary determination of noninfringement, which was granted. The Commission then reversed the ALJ’s construction, vacated the ALJ’s initial determination of noninfringement, and entered limited exclusion orders and cease and desist orders.

Notable Disputed Issues and Related Points of Law:

Claim Construction: Reviewing the Commission’s construction of the term “wall console” de novo, the Federal Circuit concluded that the Commission’s construction was wrong. The Commission had construed “wall console” broadly, finding that the patentee did not disavow wall consoles without passive infrared detectors. The Court concluded that the patentee had indeed disavowed wall consoles lacking passive infrared sensors. The Court noted that the specification was replete with descriptions of the invention touting the improvement gained by including the infrared sensor in the wall console, which thus amounted to a disavowal.

Administrative Updates

USPTO Issues New Guidance “Clarifying” its 2013 Policy Statement on Availability of Injunction Relief and Exclusion Orders for SEPS:

For those of you who attended our October webinar on SEP issues at the ITC, you may recall that, in 2013, the PTO and DOJ issued a policy statement relating to an SEP holder’s ability to seek an injunction for infringement of a F/RAND encumbered patent. According to that policy statement, the DOJ and USPTO concluded that “the remedy of an injunction or exclusion order may be inconsistent with the public interest” and that “an exclusion order based on a F/RAND encumbered patent appears to be incompatible with the terms of a patent holder’s existing F/RAND licensing commitment to an SDO.” Although the DOJ had since altered its stance on the issue in favor of the “New Madison” approach, the USPTO had remained relatively silent on the issue since 2013.

That changed on December 19, 2019, when the USPTO expressly withdrew its 2013 policy statement. Instead, the PTO clarified in a new statement that, although a patent owner’s F/RAND commitment is a relevant factor in determining the appropriateness of any particular remedy, it “need not act as a bar to any particular remedy.” The USPTO’s new guidance, purports to be based on “additional experience with disputes concerning standards-essential patents” and “concerns that the 2013 policy statement has been misinterpreted” to suggest “a unique set of legal rules” and/or that “injunctions and other exclusionary remedies should not be available in actions for infringement of standards-essential patents.” It also states that the 2013 statement may “have been misinterpreted to suggest that antitrust law is applicable to F/RAND disputes.”

The statement presents the view that all remedies “including injunctive relief and adequate damages” as well as “exclusion orders issued by the U.S. International Trade Commission” should be “equally available in patent litigation involving standards-essential patents.” The statement concludes by opining that “a balanced, fact-based analysis, taking into account all available remedies, will facilitate, and help preserve competition and incentives for innovation and for continued participation in voluntary, consensus-based, standards-setting activity.”

In the years following the 2013 guidance, accused infringers routinely availed themselves of the prior statements to argue that an injunction in the district courts or an exclusion order at the ITC was inappropriate in light of the SEP’s promise to grant a license on F/RAND terms. With this new guidance, the PTO clearly walks back from its earlier statements. This change will undoubtedly embolden SEP holders to take advantage of the ITC’s jurisdiction in particular, given the availability of injunctive relief as the main remedy, to seek exclusion orders on F/RAND encumbered standard essential patents.

By the Numbers

The Quarterly Numbers

Event Amount
New Institutions 10 (1179-1188)
ALJ Initial Determinations 7 (1089, 1132, 1082- remand, 1118, 1139, 1119, and 936-remand)
Holdings of No Violation in ID 4 (1082, 1118, 1119, 936)
Holdings of Violation in ID 3 (1089, 1139, 1132)
Commission Opinions (reviewing IDs) 7 (1124, 1068, 1098, 1111, 1123, 1110, 1091)
Holdings of No Violation by Commission 5 (1098, 1111, 1123, 1110, 1091)
Holdings of Violation by Commission 2 (1124, 1068)
Exclusion Orders 4 (1044, 1121, 1126, 1068)

 

 

 

 

 

 

 

 

The Trends

Instituted Investigations

 Instituted Investigations

The Merits by ID

 The Merits by ID

Commission Review

 Commission Review

Commission Review - Remedy v. No Remedy

 Commission Review Remedy v No Remedy

Comparative Success Rates—current through previous quarter

 

Comparative Success Rates - current through September 2019