Commission Files Brief In 833 Investigation Appeal Regarding Digital Models Qualifying As “Articles” – On February 18, 2015, the International Trade Commission filed its brief in an appeal to the Federal Circuit of the Commission’s opinion in Certain Digital Models,Inv. No. 337-TA-833. This appeal, No. 2014-1527, by Respondents ClearCorrect Operating, LLC and ClearCorrect Pakistan (Private), Ltd. (collectively “ClearCorrect”), challenges, inter alia, the Commission’s decision affirming the ALJ’s rulings that the accused digital models used in constructing dental appliances are “articles” under Section 337 and “materials” used in practicing a patented process under 35 U.S.C. § 271(c). (A separate appeal, No. 2014-1533, brought by Complainant Align Technologies, Inc. challenges other aspects of the Commission’s opinion.) In arguing that the digital models are “articles” under Section 337, the Commission addressed arguments made by amici who, according to the Commission, “raise concerns about the Internet generally, but lose sight of the fact that this is a case about teeth.” For example, the Commission argued that concerns stated by the amici about the ruling’s potential effects on Internet service providers are strictly hypothetical because the cease-and-desist order issued in this investigation is a personal remedy that does not implicate any non-parties. The Commission argued that the finding of contributory infringement is correct because, contrary to ClearConnect’s arguments, the definition of “material” in § 271(c) does not incorporate a “tangibility requirement.” The Commission also noted that certain arguments concerning contributory infringement likely would be resolved by the decision in the en banc Federal Circuit’s rehearing of Suprema, Inc. v. ITC.

Commissioner Johanson Dissents On Scope of Cease And Desist Order In The 890 Investigation – On January 16, 2015, the Commission issued its Final Determination in Certain Sleep-Disordered Breathing Treatment Systems, Inv. No. 337-TA-890. The Commission determined that a cease and desist order should be issued as to Respondents 3B Medical, Inc. and 3B Products, LLC because they had commercially significant inventories of infringing products in the United States. In making its determination, the Commission declined to restrict its order to only those patent claims where the evidence established the existence of commercially significant inventory, finding that significant inventory of certain accused products in the United States was sufficient to support the issuance of a cease and desist order directed to all asserted patent claims. However, Commissioner Johanson would have excluded from the cease and desist order those products found to infringe patent claims where there was insufficient evidence of commercially significant inventory.

Public Interest Statements Urging Early Disposition Submitted In Certain Figurines and Toy Sets – On February 20, 2015, proposed Respondent MEGA Brands Inc. (“MEGA”) submitted a Statement of Public Interest in Certain Toy Figurines and Toy Sets, Docket No. 3054. The submission questioned whether Complainants LEGO A/S, LEGO System A/S, and LEGO Systems, Inc. (“LEGO”) could meet Section 337’s domestic industry requirement and suggested that the Investigation be submitted to the Commission’s Pilot Program for Early Disposition of Certain Section 337 Investigations. MEGA questioned whether LEGO, a Danish company with no manufacturing facilities in the United States, could support its domestic industry allegations based upon “licensing activities as its domestic industry.” MEGA claimed that it “is highly unlikely that the evidence will show that the economic prong of the domestic industry requirement has been satisfied,” and urged expedited review of the domestic industry issue. In its February 25 Reply to MEGA’s public interest statement, LEGO argued that MEGA’s submission was based upon nothing more than conclusory statements, that MEGA had admitted that it did not have access to the evidence supporting LEGO’s domestic industry allegations, and that MEGA’s suggestion for inclusion in the Pilot Program was “an attempt to gain a one-sided tactical advantage to focus not on its infringement, but rather on domestic industry proof.” LEGO noted that since the Pilot Program’s inception, the Commission has required an early disposition hearing in only one investigation, the 874 Investigation, brought by a patent assertion entity.

Judge Lord Overrules Objection To Disclosure Of CBI To Experts In 925 Investigation – In Certain Communications Or Computing Devices, Inv. No. 337-TA-925, ALJ Lord issued Order No. 12 overruling Apple’s objection to disclosure of Apple’s CBI to two of EST’s proposed technical experts. This Order is exemplary of the Commission’s general rule that CBI may be disclosed to an independent expert provided there is no real threat that the expert could potentially misuse CBI to the competitive disadvantage of the producing party. One of EST’s experts works as a consultant involving assessing patents and identifying potential targets and the other works as a consultant on evaluating patent portfolios offered for sale. In both instances, Apple asserts that EST’s experts have worked for Apple competitors in the past and could potentially misuse CBI to assist such competitors in targeting Apple in the future. ALJ Lord overruled Apple’s objection finding that it is “based entirely on the hypothetical argument” that EST’s experts could, at some point in the future, use the CBI learned in the Investigation to assist Apple competitors, which Judge Lord asserted “is true of any technical expert in patent infringement litigation.” Judge Lord cited to Paragraph 4 of the Protective Order, as specifically addressing Apple’s concerns, by prohibiting the experts from revealing or using Apple’s CBI “for purposes other than this Investigation.” Judge Lord also found that Apple has not called into question the “personal integrity or reputation” of EST’s experts.

U.S. Court Of International Trade Takes Case Challenging Customs’ Exclusion Of Articles Under Commission General Exclusion Order – On December 10, 2014, Otter Products LLC filed a Complaint in the U.S. Court of International Trade (“CIT”) challenging a decision by U.S. Customs And Border Protection (“CBP”) excluding from entry and requiring redelivery of certain of Otter’s protective cases on the ground that they were covered by a general exclusion order (“GEO”) issued by the Commission in Certain Cases For Portable Devices, Inv. Nos. 337-TA-861, -867. Otter was not named as a Respondent in these consolidated investigations. The named Respondents in the investigations were either terminated from the investigation or defaulted; the Commission issued a GEO without making any final determination as to the validity of the asserted patent. The Complainant, Speculative Product Design LLC, also filed a patent infringement lawsuit against Otter in the Northern District of California. In response, Otter filed an inter partes review (“IPR”) of the asserted patent at the PTO; appealed the Commission’s decision to the Federal Circuit and sought two stays of the GEO, both of which the Federal Circuit denied; and commenced an action in the CIT seeking declaratory judgments that (a) the asserted patent was not infringed, (b) CBP violated its own rules in excluding Otter’s products, and (c) the asserted patent was invalid for the reasons set forth in the IPR proceeding. Otter also sought a temporary restraining order and preliminary injunction preventing CBP from requiring redelivery of its products. The CIT held that it had jurisdiction over CBP’s decision to exclude Otter’s products pursuant to 28 U.S.C. § 1581(a), but denied Otter’s motion for preliminary injunction for lack of irreparable injury. The CIT also initially stayed the action with respect to Otter’s non-infringement and invalidity claims pending resolution of the issues in the N.D. Cal, PTO, and Federal Circuit, but allowed Otter’s challenges to CBP’s procedures to proceed. Based on agreement among the parties, the CIT later stayed the case in its entirety.  This is the second recent case filed in the CIT challenging CBP’s exclusion of articles pursuant to a Commission exclusion order. The other case, Corning Gilbert Inc. v. United States, was reported in a King & Spalding Client Alert, available here.

Commission Announces Pilot Program To Test Expedited Procedures For Rulings On Redesigned And New Products – On February 23, the Commission announced a Pilot Program to test an expedited administrative process for modification and advisory opinion proceedings under Commission Rule 210.76.  Modification proceedings determine whether a “carve-out” for a redesigned or new product should be added to an existing order.  Under the Pilot Program, a petition for modification must state the changes desired, show that a redesigned or new product is outside the scope of an existing order, and, if the petitioner was a respondent found in violation of Section 337, demonstrate that the product could not have been adjudicated during the original investigation.  The Commission may also issue advisory opinions, which are non-appealable final Commission determinations whether importation of a redesigned or new product will violate an existing exclusion, consent, or cease and desist order.  Under the Pilot Program, any person may petition the Commission.  For example, would-be importers could use either modification or advisory proceedings to determine whether their products would violate a general exclusion order.  For modification or advisory opinions, the Commission may refer proceedings to (1) the Office of the General Counsel (for cases involving “a pure question of law”), with the Commission’s final decision normally issued within 60-90 days; (2) OUII (for cases involving “minimal fact finding”), with the Commission’s final decision issued within 90-180 days; or (3) an ALJ (for cases involving “extensive fact finding”), with the Commission’s final decision issued within 6-9 months.