ITC Remedies

  • BASICS: ITC investigates and precludes certain “unlawful” trade practices. These include: “(1)(B) The importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer, or consignee, of articles that—(i) infringe a valid and enforceable United States patent or a valid and enforceable United States copyright registered under title 17; or (ii) are made, produced, processed, or mined under, or by means of, a process covered by the claims of a valid and enforceable United States patent.” But, this provision applies only if there is a domestic industry, both as a technical matter, i.e., “(2) … only if an industry in the United States, relating to the articles protected by the patent, … exists or is in the process of being established;” and as an economic matter: “(3) For purposes of paragraph (2), an industry in the United States shall be considered to exist if there is in the United States, with respect to the articles protected by the patent, copyright, trademark, mask work, or design concerned—(A) significant investment in plant and equipment; (B) significant employment of labor or capital; or (C) substantial investment in its exploitation, including engineering, research and development, or licensing.” 19 U.S.C. § 1337(a). “Section 337 is an enforcement statute enacted by Congress to stop at the border the entry of goods, e., articles, that are involved in unfair trade practices.” Suprema II (Fed. Cir. 08/10/15) (en banc, 6-4). “Proof of quantifiable harm is not an element of liability, and monetary damages are not available as relief.” Id.
  • “Articles” Do Not Include Electronic Transmission of Digital Data: The term “‘articles’ means ‘material things,’” a “tangible thing,” “not intangibles,” and although electrons have mass, commonsense shows that “there is a fundamental difference between electronic transmissions and ‘material things.’” Clearcorrect (Fed. Cir. 11/10/15) (2-1) (ITC jurisdiction is limited to unfair acts involving the importation of “articles” so it has no jurisdiction to issue cease and desist order based on electronic transmissions [not using thumb drives or similar physical media] of “‘digital models, digital data and treatment plans, expressed as digital data sets, which are virtual three-dimensional models of the desired positions of the patients’ teeth at various stages of orthodontic treatment’ (‘digital models’), from Pakistan to the United States.”), rehearing en banc denied (Fed. Cir. 03/31/16) (Newman, J. dissenting).
  • ITC May Exclude Products Not Infringing At Time Of Importation, But Some Of Which Had Induced Direct Infringement When Used: Statute bars import of “articles that infringe,” 19 U.S.C. § 1337(a)(1)(C). This does not require articles to be infringing at time of importation, but rather “covers goods that were used by an importer to directly infringe post-importation as a result of the seller’s inducement” (also phrased as “importation of goods that, after importation, are used by the importer to directly infringe at the inducement of the goods’ seller.”) Suprema II (Fed. Cir. 08/10/15) (en banc, 6-4) (based on Chevron deference to ITC interpretation of ambiguous statute; limited exclusion order barred all of respondent’s fingerprint scanners (subject to importer’s certification of non-infringing use) even though scanners had substantial non-infringing uses and were not accompanied by instructions causing an infringing use; method claim had been directly infringed by customer combining imported scanner with computer running software customer had domestically developed using SDK provided by importer with scanner), rev’g, Suprema I (Fed. Cir. 12/13/13) (2-1) (alleged direct infringement (allegedly induced by the importer) takes place only when the imported scanners, which have substantial non-infringing uses, are combined by software developer with domestically developed software after the scanners are imported). See Suprema III (Fed. Cir. 09/14/15) (aff’g finding of violation and exclusion order based on inducing direct infringement of claimed method for capturing and processing a fingerprint image).
  • Non-Practicing-Entity Complainant Can Satisfy Domestic Industry Requirement: ITC complainant must establish the existence of a domestic industry. Lelo (Fed. Cir. 05/11/15) (element not proven; qualitative factors (e.g., that domestic components “crucial”) insufficient; need quantitative proofs); Microsoft (Fed. Cir. 10/03/13) (element not proven); Motorola (Fed. Cir. 12/16/13) (element proven). This may be satisfied by “substantial investment in [the patent’s] exploitation, including … licensing” (§ 1337(a)(3)(C)) but those licensing activities must relate specifically to “articles protected by the patent” and “must pertain to products that are covered by the patent that is being asserted.” InterDigital (Fed. Cir. 01/10/13) (does not require manufacture of a patented product); accord LSI Corp. (Fed. Cir. 03/20/15) (non-precedential). Also, the licensing program must “encourage adoption and development of articles that incorporate [the] patented technology” and not mere financial gain through litigation, Motiva (Fed. Cir. 05/13/13). Domestic industry must exist at time of filing. Motiva.
  • Remedy – Exclusion/Cease & Desist Order: ITC does not award monetary damages or restitution. ITC typically grants a limited exclusion order pursuant to 19 U.S.C. § 1337(d) excluding entry into U.S. goods infringing specified claims of the patent, when imported by the respondent or its related companies or agents. If have commercially significant inventories of the accused goods, then ITC typically grants a cease and desist order pursuant to 19 U.S.C. § 1337(f) prohibiting the respondent or its related companies or agents from engaging in the importation, sale for importation, marketing, and/or advertising, distribution, offering for sale, sale, sale after importation, or other transfer within the United States of the infringing goods in the U.S. (but allows their export). Delorme Publishing (Fed. Cir. 11/12/15) (aff’g ITC civil penalty of ~ $6.2MM (determined based on six EPROM factors) for contempt of cease and desist order based on respondent’s importation of non-infringing components, assembly in U.S. into finished devices, and sale with instructions to use in infringing manner, despite claims later being declared invalid). “The Commission has ‘broad discretion in selecting the form, scope, and extent of [a] remedy, and judicial review of its choice of remedy necessarily is limited.’” Arista Networks (Cisco) (Fed. Cir. 10/18/17) (affirming exclusion order: “‘[n]etwork devices, related software and components thereof that infringe’ certain claims of the [patents] ‘are excluded from entry for consumption into the United States.’”). Less common, but ITC may grant a “general exclusion” order applicable to everyone, if it finds that such 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.” ITC has no authority to grant a limited exclusion order against downstream products manufactured by non-respondents just because they include infringing components of respondents. Kyocera Wireless (Fed. Cir. 10/14/08). eBay does not apply to ITC remedy determinations. Spansion (Fed. Cir. 12/21/10).
  • ITC Determinations Have Had No Preclusive Effect, But That Will Be Revisited: “Decisions of the ITC involving patent issues have no preclusive effect in other forums.” LSI Corp. (Fed. Cir. 03/20/15) (non-precedential) (citing Texas Instruments (Fed. Cir. 07/19/96) (denying ITC decisions issue preclusion effect, relying on 1974 Senate Report (“Commission’s findings neither purport to be, nor can they be, regarded as binding interpretations of the U.S. patent laws in particular factual contexts. Therefore, it seems clear that any disposition of a Commission action by a Federal Court should not have res judicata or collateral estoppel effect in cases before such courts.”))). But, surely this will be revisited in view of B&B Hardware (U.S. 03/24/2015) (issue preclusion “will apply except when a statutory purpose to the contrary is evident.”)
  • TIPS: