ITC Section 337 Update - June 18, 2013

by King & Spalding

Commission Issues Exclusion Order In 794 Investigation Despite FRAND Declarations – On June 4, 2013, the Commission issued a Notice of its Final Determination in Investigation No. 337-TA-794, finding, inter alia, that Apple’s iPhone 4, iPhone 3GS, iPad 3G, iPad 3 and iPad 2 3G models infringe Samsung’s ’348 patent.  The Commission issued both a limited exclusion order and cease and desist order barring Apple from importing the models for sale in the U.S. before June 3, 2015.  After postponing its ruling in March and again in May so that it could consider comments from the companies and public on the potential public harm of a ban, the Commission determined that “the public interest factors enumerated in section 337(d)(1) and (f)(1) do not preclude issuance of the limited exclusion order and cease and desist order” and that “Samsung’s FRAND declarations do not preclude that remedy.”  Commissioner Pinkert dissents on public interest grounds from the determination to issue an exclusion order and cease and desist order.  Compare Microsoft, Corp. v. Motorola, Inc., 2012 WL 5993202, at *7-8 (W.D. Wash. Nov. 30, 2012) (injunction denied because, in light of its commitment to license on FRAND terms, “Motorola has not shown it has suffered an irreparable injury. . . .”)  A public version of the Commission’s decision is required to issue within 30 days under new Commission Rule 210.5(f) effective May 20, 2013.  The Commission’s decision is subject to the 60-day Presidential Review Period and subsequent appeal, if any, to the Federal Circuit.

White House Releases Report On Patent Assertion And U.S. Innovation; Makes Legislative Recommendations And Executive Actions To Curtail PAE Activity At The ITC – On June 4, the White House released its policy document on non-practicing entities (“NPEs”) and Practice Assertion Entities (“PAEs”) entitled Patent Assertion And U.S. Innovation together with a press release announcing certain legislative recommendations and executive actions.  The White House policy document concludes that litigation by PAEs is on the rise; PAE suits harm firms of all sizes, particularly small, inventor-driven companies and end users of products; PAEs take particular advantage of software patents; and policies should be developed to curtail the activities of PAEs.  Two of the White House’s legislative proposals are of particular relevance to the ITC:  (1) the proposal to change the standard for ITC exclusion orders to match more closely the eBay standard used in U.S. District Courts to determine whether to issue an injunction; and (2) the proposal to ensure that the ITC has sufficient flexibility to hire Administrative Law Judges to adjudicate Section 337 investigations.  The press release also announced an executive action relevant to the ITC, which action called for the Administration’s Intellectual Property Enforcement Coordinator to create an interagency process to make Customs’ and the ITC’s exclusion order enforcement process more transparent and predictable.

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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