En Banc Federal Circuit Upholds The Commission’s Position In Suprema – On August 10, 2015, in an en banc Opinion written by Circuit Judge Reyna, the Federal Circuit upheld the Commission’s position in Suprema, Inc. v. ITC,AppealNo. 2012-1170, that trade relief is available under 19 U.S.C. §1337(a)(1)(B)(i) for induced infringement based on the importation of goods that, after importation, are used by the importer to directly infringe at the inducement of the goods’ seller. A majority panel of the Court had disagreed, reasoning that there are no “articles that infringe” at the time of importation when direct infringement does not occur until after importation. Suprema, Inc. v. ITC, 742 F.3d 1350, 1352 (Fed. Cir. 2013). Judge Reyna noted that “[i]n so doing, the panel effectively eliminated trade relief under Section 337 for induced infringement and potentially for all types of infringement of method claims.” Judge Reyna began the en banc Opinion by emphasizing that Congress has been vigilant both to encourage and protect U.S. domestic interests in connection with unfair commercial activity involving foreign imports and “established a distinct legal regime in Section 337 aimed at curbing unfair trade practices that involve the entry of goods into the U.S. market via importation.” The issue for the en banc Court to decide was whether the importation of goods that are used, after importation, to directly infringe by the importer at the inducement of the goods’ seller qualify as an unfair trade act under Section 337. Because the en banc majority found that Congress has not directly answered whether such goods qualify under the language “articles that infringe” of Section 337, the en banc majority applied Chevron deference to the nearly 35 years of Commission precedent interpreting Section 337 to embrace induced infringement. It found the Commission’s interpretation to be “reasonable” and “consistent with the statutory text, policy, and legislative history of Section 337.” It also found that the Court “has consistently deferred to the Commission, recognizing the Commission’s technical expertise in deciding issues arising under Section 337, a statute Congress has entrusted the agency to administer.” A Dissenting Opinion by Circuit Judge O’Malley, joined by Chief Judge Prost and Circuit Judges Lourie and Dyk stated that “the majority strains to find an ambiguity in the statute where there is none, just so that it may resort to the protective umbrella of Chevron.” Judge Dyk also wrote a separate dissenting opinion objecting to the Commission's issuance of exclusion orders directed to all of the subject articles, even those that ultimately may never be used to infringe, and stating that allowing “the importer to certify that certain of the staple articles will not ultimately be used to infringe reads the statute backwards.” The case was remanded to the original panel for further proceedings consistent with the en banc Opinion.
Federal Circuit Debates Extension Of ITC Jurisdiction To Infringing Electronic Transmissions – On August 11, the Federal Circuit heard oral argument in ClearCorrect Operating, LLC v. U.S. International Trade Comm’n, Appeal No. 14-1527. The case involved allegations by Align Technology, Inc. that digital data electronically transmitted from Pakistan to ClearCorrect in the United States infringed Align’s patents on a teeth straightening system. The Commission previously held that the digital data in such electronic transmissions were “articles” over which it possessed jurisdiction, found that transmission of such digital data violated Section 337, and issued a cease and desist order against such transmissions. Chief Judge Prost and Circuit Judges Newman and O’Malley presided over the oral argument at the Federal Circuit. Counsel for the Commission argued that the case involved the Commission’s exercise of jurisdiction only over “digital goods” that had a “physical counterpart,” not solely electronic transmissions. Thus, the broader question of jurisdiction over electronic transmissions without a physical counterpart should be addressed in a future case on different facts. Judge O’Malley noted this point and asked whether ClearCorrect was seeking to broaden the case. Judges Prost and O’Malley both asked whether a decision that electronic transmissions were outside the Commission’s jurisdiction would create a loophole in the statute, particularly for copyright infringement. Judges O’Malley and Newman also asked about Customs’ inability to enforce an exclusion order against electronic transmissions, noting that cease and desist orders typically supplement exclusion orders; they are not replacements for exclusion orders. Finally, Judge Prost asked about the amount of deference to which the Commission was entitled, citing the recent en banc decision of the Federal Circuit in Suprema, Inc. v. Int’l Trade Comm’n, Appeal No. 2012-1170, and ordered further briefing on the issue. A decision from the Federal Circuit is expected this fall.
Chief Judge Bullock Orders Disclosure Of Settlement Terms To Non-Settling Respondent In 955 Investigation – On July 22, 2015, Chief Judge Bullock issued Order No. 9 in Certain Protective Cases For Electronic Devices And Components Thereof, Inv. No. 337-TA-955, terminating the investigation with respect to Respondent Speculative Product Design, LLC (“Speck”) based on a Settlement Agreement And Release entered between Speck and Complainant Otter Products, LLC (“OtterBox”) and denying a request by OtterBox and Speck (“the Moving Parties”) for non-disclosure of the settlement terms to the non-settling Respondent Tech21 UK Limited (“Tech 21”). In the motion to terminate, the Moving Parties had requested that the full terms of the settlement not be disclosed to Tech 21, arguing that non-disclosure would promote settlement with Tech 21. Tech 21 opposed the Moving Parties’ request to prevent disclosure of the settlement terms, arguing that its counsel were subscribed to the Protective Order and were entitled to see the unredacted version of the settlement agreement. Chief Judge Bullock agreed with Tech 21, finding that the Protective Order is sufficient to ensure that the Moving Parties’ confidential business information remains protected and noting his rulings in previous investigations to the same effect.
ALJ Shaw Finds No Violation In 921 Investigation – On July 29, 2015, the public version was issued of Judge Shaw’s Final Initial Determination On Violation And Recommended Determination On Remedy in Certain Marine Sonar Imaging Devices, Inv. No. 337-TA-921, determining that a violation of Section 337 had not occurred. As mentioned in prior coverage on July 14, 2015, Navico Holdings AS and Navico, Inc. (“Navico”) accused underwater scanning devices comprised of head units, sonar processing units, and transducers using “downscan” sonar technology, sold by Garmin International, Inc., Garmin USA, Inc., and Garmin (Asia) Corp. (“Garmin”) of infringing Navico’s patents. In his 320-page opinion, Judge Shaw found that Garmin’s products do not infringe the asserted patents because they do not satisfy the limitation of a “linear downscan transducer” under the proper construction of that claim phrase because the plurality of elements in Garmin's transducers do not operate as if they were a single element. The accused products also were found not to infringe the asserted ’499 patent because they do not merge together conical and linear data, as required by the claims. Judge Shaw found that Garmin was not liable for indirect infringement both because the accused devices do not directly infringe and because the evidence showed that Garmin purposely designed around what it believed was the scope of the Navico patents, and thus lacked intent to infringe, and certain of Garmin’s devices have substantial non-infringing uses. On July 30, 2015, Navico filed a Petition For Review, and Garmin filed a Contingent Petition For Review, of the Final ID.
