Appellee Commission and Intervenor Cross Match Submit Briefs Supporting Overturning Federal Circuit Split Panel Decision in Suprema – On October 15, 2014, Appellee Commission filed an En Banc Brief and Intervenor Cross Match filed a Brief on Rehearing En Banc urging the full Federal Circuit to overturn the split panel Opinion in Suprema v. ITC, Appeal No. 12-1170 (Fed. Cir. December 13, 2013), that vacated the exclusionary remedy issued by the Commission in the 720 Investigation and held that "an exclusion order based on a violation of 19 U.S.C. §1337(a)(1)(B)(i) may not be predicated on a theory of induced infringement under 35 U.S.C. §271(b) where direct infringement does not occur until after importation."  The Commission asserts that it correctly determined that Suprema imported scanners to induce infringement, that Congress intended identical infringement liability under Sections 271(a) and (b), and both the Supreme Court and Federal Circuit have tied inducement liability to supplying articles used to directly infringe.  Cross Match asserts that the full Federal Circuit should afford Chevron deference to the Commission’s longstanding interpretation of Section 271(b) and that “[a] contrary conclusion … would leave a gaping hole in the Commission’s ability to enforce the statutory protections against unfair trade practices and permit foreign importers to induce domestic infringement with impunity.”  On October 22, 2014, the ITCTLA and Nokia Corp. filed amicus briefs in support of the Commission following earlier amicus briefs filed by Google, Microsoft, and other technology companies urging the Federal Circuit to uphold the split panel decision.

Commission Takes No Position On FRAND Issues In 868 Investigation – On June 26, 2014, ALJ Essex issued an ID in Certain Wireless Devices With 3G And/Or 4G Capabilities,Inv. No. 337-TA-868, finding no violation of Section 337 based on, inter alia, noninfringement of asserted patents declared essential to the 3G and 4G LTE standards created by the European Telecommunications Institute (“ETSI”).  Nevertheless, should the Commission find that Respondents infringe the asserted patents and that they are essential to the 3G and 4G LTE standards, ALJ found that there was No FRAND Obligation (ID pages 108-171) and issued a Recommended Determination (ID pages 171 – 183) of an LEO with a carve out for noninfringing products and a six month delay to mitigate the effect on the public.  ALJ concluded that ETSI rules “do not bar any remedy as beyond the reach of the parties” and the Complainant was not bound by any obligations under its IPR Licensing Declaration because Respondents did not meet their obligations under the ETSI rules.  ALJ further found that an exclusionary remedy would be appropriate where “Respondents are free to avoid their own obligations under the agreements, can manufacture potentially infringing goods without license or consequence, can seek to invalidate the IPR in question, and yet are free from the risk of a remedy under 19 USC 1337”, and denied Respondents’ affirmative defenses of equitable estoppel, unclean hands and patent misuse as moot.  OUII supported ALJ’s opinion on FRAND.  Respondents opposed, asserting that ALJ erred as a matter of law that conditions can occur that would vitiate Complainant’s FRAND obligations, and that ALJ made incorrect findings regarding such conditions and never made any findings on whether Complainant’s license offers to Respondents were FRAND or Respondents counteroffers were FRAND.  Because the Commission affirmed ALJ’s finding of no violation, the Commission stated that it would not take a position on FRAND and that such issues would be decided, if at all, subsequent to pending appeal InterDigital v. ITC,No. 2014-1176 (oral argument scheduled November 7, 2014).

America Invents Act’s Inter Partes Review Process Has Not Resulted In ITC Stays –After the America Invents Act was enacted in September 2011, the possibility existed that the Act’s inter partes review process would result in more frequent stays of ITC proceedings than historically with motions to stay pending resolution of USPTO patent reexaminations.  Three years after the statute’s enactment, that has not been the case.  There have been no stays granted pending inter partes review, and the sole opinion to address the issue, ALJ Gildea’s May 21, 2013 Order in Certain Microelectromechanical Systems, Inv. No. 337-TA-876, denied a motion to stay pending the reexamination of three patents that were “in advanced stages” and anticipated petitions for inter partes review of the remaining two asserted patents.  While the ALJ denied the motion to stay based on the anticipated petitions as premature because it was unclear whether the USPTO would reexamine the patents, his analysis may pose a hurdle for future stay requests.  In particular, the ALJ noted that while a district court plaintiff has a remedy for past damages once a stay is lifted, no relief is available to a complainant until an exclusion or cease and desist order is issued, effectively depriving a complainant of the ability to “assert its patent rights against alleged infringers” during the “dead zone” the stay is in effect.  The ALJ went on to state that “if it were possible to create such a lengthy dead zone, reexamination petitions would become part of every respondent’s tactical playbook in every single ITC investigation.”  Although the dead zone of two to three (or more) years referenced in the Order is longer than the statutorily mandated 12 to 18 month time-frame for a final determination of the inter partes review process, that may not be a meaningful difference in the ALJ’s view.

ALJ Gildea Finds Domestic Industry In -844 Investigation Based Solely On Patent Licensing. – In the Initial Determination in Certain Consumer Electronics With Display And Processing Capabilities, Inv. No. 337-TA-884, Administrative Law Judge James Gildea found that Complainant, Graphics Property Holdings, Inc. (“GPH”), had shown the existence of domestic industry-economic prong based solely on licensing activities associated with the asserted patents.  Judge Gildea earlier denied GPH’s motion for summary determination on domestic industry-economic prong under section 337(a)(3)(C) because genuine issues of material fact existed with respect to GPH’s licensing-based domestic industry.  GPH apparently corrected these errors at trial.  According to Judge Gildea, GPH’s domestic industry was based on expenses incurred for the retention of an outside patent monetization consulting firm, the salience of the asserted patents in the licensed portfolio, and GPH’s internal expenses, among other things.  With respect to the role of litigation expenses in the complainant’s domestic industry calculation, Judge Gildea distinguished the Federal Circuit’s decision in John Mezzalingua Assoc’s v. Int’l Trade Comm’n, 660 F.3d 1322, 1328 (Fed. Cir. 2011), which held that “expenditures on patent litigation do not automatically constitute evidence of the existence of an industry in the United States established by substantial investment in the exploitation of a patent.”  According to Judge Gildea, “[l]icensing activity may be preceded by demand letters, followed perhaps by negotiations and ultimately a license, or perhaps by litigation followed by a license.  Litigation costs may be significant and integral to a licensing program because, unlike other commercial products, patents are not understood or appreciated either in terms of their utility or their value.”

U.S. Customs And Border Protection Lays Out Plan For Inter Partes Procedures For Obtaining Rulings On ITC Exclusion Orders. – In October 2014, officials from the Intellectual Property Rights (“IPR”) Branch of U.S. Customs and Border Protection (“CBP”) made a presentation to the Executive Committee of the International Trade Commission Trial Lawyers Association on a forthcoming Notice of Proposed Rulemaking (“NPRM”) with respect to CBP’s administration of ITC exclusion orders.  The NPRM is in draft form, is not public, and has not yet been finally approved by CBP.  Nevertheless, the CBP officials’ description of the draft NPRM indicates that CBP is moving towards an inter partes procedure under Part 177 of CBP’s regulations that would allow interested parties to seek rulings on interpretations of ITC exclusion orders, including redesigns or modifications to otherwise covered articles.  Such procedures currently take place on an ex parte basis between Customs and one of the parties to an ITC section 337 investigation.  As currently drafted, the proposed ruling request procedure would have built-in timelines; allow for briefs and oral argument before an IPR Branch official; provide for further review by the ITC; and require the publication of final ruling letters.  Issues still to be worked out include the handling of confidential business information, the role of the courts in the review process, and the timing of publication of the NPRM.