ITC Section 337 Update

by King & Spalding

ITC Judge Lord Declines Applying Suprema Holding In ITC Enforcement Proceeding – On May 20, 2013, the Commission instituted an enforcement proceeding in Two-Way Global Satellite Communication Devices, System And Components, Inv. No. 337-TA-854 to determine whether Respondents violated the terms of a Consent Order, providing that Respondents “shall not import into the United States, sell for importation into the United States, or sell or offer for sale within the United States after importation any two-way global satellite communication devices, system, and components thereof, that infringe claims 1, 5, 10-12, and 34 of the ‘380 Patent after April 1, 2013 ….”   Complainant alleged that “Respondents’ InReach Models 1.5 and SE (2.0), when combined with Earthmate software that runs on a smartphone or tablet, the Iridium satellite system, Respondents’ servers in Chicago, and recipients of messages, including GEOS, a monitoring company and Respondents, directly infringe claims 1, 2 and 10 of the ‘380 patent.”  In order to determine whether Respondents violated the Consent Order, Administrative Law Judge Dee Lord requested the parties to provide additional briefing on the impact of Suprema v. ITC, 2013 WL 6510929, No. 2012-1170 (Fed. Cir. 2013) because “Complainant’s infringement allegations appear to be based, at least in part, on actions that occur within the United States after importation….”    In an Enforcement Initial Determination And Recommended Determination On Remedy on March 7, 2014, Judge Lord held that Suprema is not relevant because “the issue raised on appeal in Suprema addressed what constituted a violation under section 337(a)(1)(B)(i).  In contrast, the question that must be addressed here is whether or not Respondents violated a consent order.”  Judge Lord ultimately found that Respondents violated the Consent Order and recommended a penalty of $637,500.     

Fee-Shifting Not On The Horizon For Section 337 – Patent litigation fee-shifting provisions before Congress and at issue in Supreme Court litigation currently do not portend any changes in Section 337 investigations.  The Innovation Act, H.R. 3309, passed by the House of Representatives on December 5, 2013, includes a fee-shifting provision requiring courts to award fees and expenses to prevailing parties unless (1) the nonprevailing party’s position was “reasonably justified in law and fact” or (2) special circumstances apply.  The Patent Abuse Reduction Act, S. 1013, pending before the Senate Judiciary Committee includes a similar fee shifting provision.  Neither bill applies fee-shifting to Section 337 litigation.  House Judiciary Committee Chairman Goodlatte, chief sponsor of the Innovation Act, has stated that the ITC is “not primarily the jurisdiction of the House Judiciary Committee,” but that he is “very open to collaborating with the Ways and Means Committee” on ITC reform.  The U.S. Supreme Court in February heard oral arguments on two cases, Octane Fitness, LLC v. Icon Health & Fitness, Inc., No. 12-1184, and Highmark Inc. v. Allcare Health Mgmt. Sys., No. 12-1163, concerning attorney fee awards under 35 U.S.C. § 285.  The decisions are unlikely to significantly impact Section 337 litigation.  Although some litigants or Administrative Law Judges have addressed the § 285 standard by analogy in connection with a motion for sanctions under Commission Rule 210.4(d), see, e.g., Certain CD-ROM Controllers, No. 337-TA-409, Recommended Determination (August 10, 1999), no ALJ has relied on § 285 in awarding sanctions in a Section 337 investigation.

Commission Releases Public Version Of Trade Secret Theft Decision In Rubber Resins Investigation – The U.S. International Trade Commission recently published the public version of its February 26, 2014 Opinion in Certain Rubber Resins And Processes For Manufacturing Same, Inv. No. 337-TA-849.  The Opinion is attached in two parts here and here.  The Commission found that certain of the named respondents misappropriated the trade secrets of Complainant, SI Group, which secrets involved SI’s manufacturing processes for making tackifiers used in the production of rubber resins.  The Commission employed the trade secret theft standard announced in the Federal Circuit’s decision in TianRui Group Co., Ltd. v. ITC, 661 F.3d 1322, 1327 (Fed. Cir. 2011).  The Commission found that a departing employee of SI Group had stolen the trade secrets for the benefit of a competitor and based its conclusion on “strong circumstantial evidence.”  The Commission also found that the domestic industry had both been injured and threatened with substantial injury.  In Section 337 trade secret cases, the complainant must show not only that a domestic industry exists, but that the “threat or effect” of the unfair method of competition is to “destroy or substantially injure an industry in the United States.”  The Commission issued a limited exclusion order for 10 years and prohibited the unlicensed importation of rubber resins made using any of the stolen manufacturing processes and manufactured by, for, or on behalf of the respondents or any parents, subsidiaries, affiliates, contractors, successors, or assigns.

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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