Federal Circuit Reverses ITC Violation of Its Own Rules

by McDermott Will & Emery
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Align Technology, Inc. v. U.S. Int’l Trade Comm’n

The U.S. Court of Appeals for the Federal Circuit reversed a ruling by the International Trade Commission (ITC, the Commission), finding that, under the ITC’s rules, the Commission was not authorized to review a motion denied by an order, instead of by an initial determination.  Align Technology, Inc. v. U.S. Int’l Trade Comm’n, Case Nos. 13-1240, -1363 (Fed. Cir., July 18, 2014) (Chen, J.).

The appeal resulted from an enforcement proceeding before the Commission to exclude certain products from importation into the United States, based on a consent order issued in ITC Inv. No. 337-TA-562, Certain Incremental Dental Positioning Adjustment Appliances and Methods of Producing Same.  At the outset of the enforcement proceeding, the Commission issued a notice that the administrative law judge (ALJ) consider via a motion for summary determination (the Commission’s equivalent of a summary judgment motion) whether the accused articles were within the scope of the consent order and ordered that the ruling should be issued as an initial determination (ID).  Rather than issue an ID, the ALJ instead issued an order, finding that the accused products were within the scope of the consent order.  The respondents petitioned for review and, over the objections of the complainant, the Commission reversed the order and terminated the enforcement proceeding.  On appeal, the complainant argued that under ITC rules, an order is not reviewable by the Commission except as part of a final ID, and therefore the Commission was without authority to reverse the ALJ’s ruling.

On review, the Federal Circuit reversed the Commission’s ruling.  The Court found that while the Commission had broad authority under the Administrative Procedure Act (APA) to set its own procedural rules, once those rules were set it was obligated to obey them.  Under the Commission’s rules, an initial determination may be immediately reviewed by the Commission, but an order “may not be appealed to the Commission prior to the administrative law judge’s issuance of an initial determination.”  By issuing his decision as an order, the ALJ had rendered it non-reviewable immediately; the order could only be reviewed after a determination on the merits of the enforcement proceeding.  The panel further found that the ALJ had the authority to issue his ruling as an order instead of as an ID, because the procedural rules clearly contemplated that the ALJ could deny a motion for summary determination by order, but could approve it by ID only.  The Court rejected the Commission’s argument that its notice superseded the rules by redefining an ID for the purposes of this proceeding only to include a denial of a summary determination motion as a post hoc rationalization of its actions, as well as its argument that the ALJ mislabeled his ruling as a non-reviewable order instead of as a reviewable ID.

As a closing note, the panel noted that the Commission had relied, in reversing the ALJ’s decision, on its established practice of requiring its remedial orders to explicitly mention digital data in order for that data to be covered.  Although the issue was not technically before the panel, the Court nevertheless noted that it did not find such reasoning persuasive, and that there was no evidence of any such established practice.  The panel further concluded that whatever practice existed was insufficient to put the public on notice that digital data must be specifically described in in an exclusion order before such data was included in that order.

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