ITC Section 337 Update – January 17, 2014

by King & Spalding

Commission Confirms Licensing-Based Domestic Industry Must Be Tied To Article That Practices Asserted Patent In 841 Investigation – On January 9, 2014, the Commission issued an Opinion in Certain Computers And Computer Peripheral Devices, Inv. No. 337-TA-841, holding that Complainant “TPC failed to demonstrate that the accused products infringe and that domestic-industry articles practice the asserted patents.”  In finding no domestic industry, the Commission followed recent Federal Circuit precedent (InterDigital v. ITC, 690 F.3d 1318, reh’g denied, 707 F.3d 1295 (Fed. Cir. 2013) and Microsoft v. ITC, 731 F.3d 1354 (Fed. Cir. 2013)) and held for the first time that a licensing-based domestic industry must be tied to an article that practices the asserted patent.  The Commission clarified that, while the existence of an article practicing the patent is required, a complainant cannot rely on the accused products to satisfy the domestic industry requirement and the article need not be made in the United States.  The Commission further noted that while Microsoft was decided in the context of engineering, research and development, “we do not interpret the opinion to provide a special, and more lenient, test for licensing-based industries.  Rather, the Court discusses research and development as an example, with the general statement that an article is required [for] a company seeking section 337 protection….  Additionally, special treatment for licensors is inconsistent with InterDigital, which did not distinguish between licensing and non-licensing activity under subparagraph (C), but instead looked at all of the subparagraph (C) activities together.” 

InterDigital Withdraws Complaint Against LG In 800 Investigation After Remand From Federal Circuit –  The Commission instituted Certain Wireless Devices With 3G Capabilities, Inv. No. 337-TA-800 on August 31, 2011, based on InterDigital’s Complaint against Huawei, Nokia and ZTE alleging that certain of their imported 3G wireless devices infringe InterDigital patents.  The Complaint was amended to add respondent LG.  On July 6, 2012, the Commission determined to terminate the investigation as to LG under 19 U.S.C. §1337(c) based on a prior InterDigital/LG patent license agreement that permits the parties to submit to arbitration any disputes arising under the agreement.  In a split panel Opinion issued on June 7, 2013, the Federal Circuit held that the Commission’s order terminating the investigation as to LG was an appealable final determination under Section 337(c), and reversed the Commission’s order finding that LG’s assertion of arbitrability as to its accused 3G products was “wholly groundless.”  On December 19, 2013, the Commission issued a Notice finding no violation by Huawei, Nokia and ZTE based on patent non-infringement and/or invalidity.   On December 20, 2013, the Commission issued a Renewed Order requesting InterDigital, LG and the Commission Investigative Attorney to address issues that should be remanded to the ALJ in view of the Federal Circuit’s decision.  In response, InterDigital filed a motion withdrawing its Complaint and terminating the investigation as to LG.  InterDigital appealed the Commission’s decision regarding Huawei, Nokia and ZTE, and LG petitioned the Supreme Court to review the Federal Circuit’s decision on arbitration.        

USTR Conducts Review Of Countries That Do Not Provide Adequate Protection Of Intellectual Property Rights – On January 3, 2014, the United States Trade Representative (“USTR”) published a Notice soliciting comments concerning its annual “Special Section 301” review of countries that do not provide adequate protection of intellectual property (“IP”) rights or deny fair market access to U.S. businesses that rely on IP.  Based on USTR’s review, any trading partner that USTR determines (i) had egregious IPR-related acts, policies and practices with the greatest adverse impact on U.S. exports and (ii) was not entering into good faith negotiations or making significant progress in providing adequate and effective IP protection will be designated a “Priority Foreign Country.”  Any country given such designation will be the subject of intensive bilateral engagement and a possible Section 301 investigation.  USTR also compiles a Priority Watch List and a Watch List to identify additional countries in which U.S. companies are encountering IP protection, enforcement, or market access problems.  Countries placed on these lists are targeted for additional bilateral engagement.  Last year, ten countries – Algeria, Argentina, Chile, China, India, Indonesia, Pakistan, Russia, Thailand, and Venezuela – were on the Priority Watch List.  Thirty countries were on the Watch List.  Public comments are due on Friday, February 7, 2014.  Foreign Governments may submit written comments by Friday, February 14, 2014.  A public hearing will be held on Monday, February 24, 2014.  Post-hearing comments are due on Friday, March 7, 2014.  USTR will issue its Special 301 Report in May.

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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