ITC Section 337 Update - May 15, 2013

by King & Spalding
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Federal Circuit Affirms Commission Determination That Litigation Activities Unrelated To Licensing Do Not Satisfy Domestic Industry – On May 13, 2013, the Federal Circuit affirmed a January 2012 Commission determination that Motiva LLC failed to prove a domestic industry existed or was being established for its patents-in-suit at the time Nintendo Co. Ltd. was importing its popular Wii system into the United States.  A three-judge panel rejected Motiva's argument that its litigation against Nintendo satisfied the economic prong of the domestic industry requirement as “a necessary step to preserve and hasten [its] licensing opportunities, which would otherwise remain completely curtailed by Wii’s infringing presence on the market.”  Agreeing with the Commission, the panel concluded that Motiva’s litigation was not aimed at developing a licensing program to exploit its patents, but rather at obtaining “financial gains” through either monetary damages or settlement.  The panel pointed to substantial evidence in support of this conclusion, including Motiva’s decision not to seek preliminary injunctive relief from the district court, Motiva’s delay in seeking relief from the Commission for more than three years after the launch of Wii, and the absence of a launch-ready product by Motiva incorporating its patented technology, or interest in one by any partners before or after the launch of Wii.  In short, the panel stated, “[t]here is simply no reasonable likelihood that, after successful litigation against Nintendo, Motiva’s patented technology would have been licensed by partners who would have incorporated it into ‘goods practicing the patents.’”

Administrative Law Judge Denies Apple’s Motion For Sanctions Against VirnetX Terminating Its Second Complaint Alleging Infringement Of The Same Patent – Administrative Law Judge Gildea denied Apple’s motion to sanction complainant VirnetX Inc. (“VirnetX”) for requesting withdrawal and termination of its second ITC complaint alleging Apple infringed the same patent.  Apple argued that the complaint was a waste of public and private resources driven by VirnetX’s forum shopping in an effort to obtain a license.  The hearing in the investigation, Certain Devices with Secure Communication Capabilities, Components Thereof, and Products Containing Same, Inv. No. 337-TA-858, was scheduled to commence on May 20.  In the order made public on April 30, 2013, Judge Gildea held that Apple did not prove that VirnetX’s statement that it wished to focus on district court litigation lacked candor, and therefore Apple failed to demonstrate that VirnetX “crossed the line into sanctionable conduct under the Commission’s rules.”  Specifically, Judge Gildea noted that many litigants file complaints in both district court and the ITC, which is not, in itself, a basis to finding inappropriate conduct.  With respect to VirnetX filing two complaints on the same patent, Judge Gildea noted that the “significant expenditure of fees and costs by Apple as well as the use of agency and other resources, are not yet enough to become a pattern of harassing behavior.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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