BakerHostetler Patent Watch Suprema, Inc. v. Int'l Trade Comm'n

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[A]n 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 of the articles the exclusion order would bar.

On December 13, 2013, in Suprema, Inc. v. Int'l Trade Comm'n, the U.S. Court of Appeals for the Federal Circuit (Prost, O'Malley,* Reyna) affirmed-in-part, vacated-in-part and remanded-in-part the Commission's cease-and-desist and limited exclusion orders following its determination that the importation of certain optical biometric (fingerprint) scanners infringed U.S. Patents No. 7,203,344, No. 7,277,562, and No. 5,900,993, but not U.S. Patent No. 7,277,562. The Federal Circuit stated:

Suprema appeals the Commission's finding that it violated § 337(a)(1)(B)(i) by infringement of the '344 and '993 patents, and asks that the related exclusion orders be vacated. The ALJ found that a number of Suprema's scanners (RealScan-10, RealScan-D, RealScan-10F, and RealScan-DF), when used with Mentalix's FedSubmit software, directly infringe claim 19 of the '344 patent and recommended an exclusion order relating to those scanners on that ground. The Commission agreed that the '344 patent was infringed, but clarified the controlling infringement theories -- it concluded that Mentalix directly infringes method claim 19 of the '344 patent when it combines Suprema products with its own software and that Suprema induces that infringement. While the ALJ had not considered inducement and made no factual finding on its elements, the Commission nevertheless concluded that the record evidence supported a finding that Suprema (1) was willfully blind to the'344 patent, (2) studied and emulated Cross Match's products before willfully blinding itself to the infringing nature of Mentalix's activities, and (3) actively encouraged those activities. Therefore, it found that Suprema had induced infringement of the patented method under 35 U.S.C. § 271(b), and that this inducement formed the basis for a § 337(a)(1)(B)(i) violation. . . .

We conclude that § 337(a)(1)(B)(i), by tying the Commission's authority to the importation, sale for importation, or sale within the U.S. after importation of articles that infringe a valid and enforceable U.S. patent, leaves the Commission powerless to remedy acts of induced infringement in these circumstances. Accordingly, we vacate the Commission's rulings regarding the '344 patent. On appeal, Suprema contends it does not import "articles that infringe," as required under § 337(a)(1)(B)(i). The accused devices are imported scanners which Cross Match concedes do not directly infringe the method of claim 19 of the '344 patent at the time of importation. The alleged infringement only takes place when the scanners are combined with domestically developed software after the scanners are imported. . . .

Suprema argues that allegations of induced infringement do not adequately connect the fact of importation to the ultimate infringement. Suprema concedes that, if an article is capable of no non-infringing uses, its importation may constitute contributory infringement and thereby violate § 337. But, Suprema asserts that the imported scanners at issue here are capable of multiple noninfringing uses. It is only when they are combined with Mentalix's specific software program that they purportedly infringe the method described in claim 19. Suprema believes that § 337(a)(1)(B)(i) does not reach the conduct in which Cross Match alleges it engaged. . . .

"To prevail on inducement, 'the patentee must show, first that there has been direct infringement. . . .'" Under that longstanding law, while the inducing act must of course precede the infringement it induces, it is not a completed inducement under § 271(b) until there has been a direct infringement. Given the nature of the conduct proscribed in § 271(b) and the nature of the authority granted to the Commission in § 337, we hold that the statutory grant of authority in § 337 cannot extend to the conduct proscribed in§ 271(b) where the acts of underlying direct infringement occur post-importation. . . . Consequently, we hold that the Commission lacked the authority to enter an exclusion order directed to Suprema's scanners premised on Suprema's purported induced infringement of the method claimed in the '344 patent.