ITC Section 337 Update - June 3, 2013

by King & Spalding

Commission Publishes More New Rules On General Discovery Limitations, E-Discovery Limitations, And Claiming Privilege Or Work Product Protection – On May 15, 2013, the Commission published Amendments (78 Fed. Reg. 29618-24) to its Rules of Practice and Procedure concerning Adjudication and Enforcement, which become effective on June 20, 2013.  The amendments provide, inter alia, general limitations on discovery and specific limitations on electronically stored information similar to Federal Rule of Civil Procedure 26(b) as well as procedures under which persons can make claims of privilege or work product and for addressing information that is produced in discovery but is later asserted to be privileged or protected by work product.  The Amendments were made to the Commission’s Rules of Practice and Procedure 19 C.F.R. Part 210 - Adjudication and Enforcement, Subpart E - Discovery and Compulsory Process §210.27 General provisions concerning discovery.  Many of the final rules are identical to the correspondingly numbered proposed rules published by the Commission on October 5, 2012 (77 Fed. Reg. 60952-56).  However, the final rules contain eight changes from the proposed rules after the Commission considered the public comments on the proposed rules amendments.  Click here for a more detailed summary of the amendments to 19 C.F.R. §210.27. 

2013 International Trade Commission Trial Lawyers Association Spring Meeting – On May 15, 2013, a Joint Program of the ITC Trial Lawyers Association and the Federal Circuit Bar Association held the 2013 International Trade Commission Trial Lawyers Association Spring Meeting (“Spring Meeting”) in the Main Hearing Room of the Commission.  Highlights of the Spring Meeting included the Opening remarks of Commission Chairman Irving Williamson and a panel comprising Chief Administrative Law Judge Charles E. Bullock and Administrative Law Judges Theodore Essex and Edward Gildea which collectively emphasized the receptiveness of the Commission to early adjudication of dispositive issues.  Specifically, Chairman Williamson advised that the Commission will in the future use a similar procedure to the requirement of an initial determination (“ID”) “within 100 days of institution” employed in the 874 Investigation to resolve case dispositive issues early in an investigation.  The Chairman further advised that early resolution of case dispositive issues under the 100-Day ID Procedure would extend beyond the issue of whether the economic prong of the domestic industry requirement was satisfied in the 874 Investigation.  Judges Bullock, Essex and Gildea each emphasized their preference to address early Markman claim construction hearings to narrow the issues in certain investigations and their willingness to address selective motions for early summary determination on legal issues that are not being brought simply to educate a Judge.

District Court Finds Breach Of Rand Licensing Obligation And Issues Preliminary Injunction Barring Enforcement Of Any ITC Exclusion Order – On May 20, 2013, District Court Judge Ronald M. Whyte issued an Order (N.D. Cal. Case No. C-12-03451) granting Plaintiff Realtek’s motion for summary judgment that Defendants LSI and Agere breached their licensing obligation by failing to offer a license with respect to Defendants’ asserted standard-essential patents on RAND terms before seeking an exclusion order in pending ITC Investigation No. 337-TA-837.  Judge Whyte further issued a preliminary injunction barring Defendants from enforcing, or seeking to enforce, any exclusion order with respect to the asserted patents pending a determination of the RAND issues by the District Court and denied Defendants’ motion to stay the District Court case pending the ITC investigation.  Judge Whyte noted that there is no dispute that Defendants entered into a binding contract with IEEE to license their declared standard-essential patents and that the breach of contract holding is limited to “where defendants did not even attempt to offer a license, on ‘RAND’ terms or otherwise, until after seeking injunctive relief.”  He also found that the preliminary injunction serves the public interest by “mak[ing] clear that commitments to make patents available on reasonable terms matters.”  Finally, in denying Defendants’ motion to stay, Judge Whyte emphasized that a District Court’s decision on monetary relief, including a RAND royalty, is different from the ITC’s consideration of RAND obligations “in the context of deciding whether” to issue an exclusion order.

Customs Withdraws Appeal Of Corning Gilbert Decision – U.S. Customs and Border Protection (“CBP”) has withdrawn its appeal of the decision of the U.S. Court of International Trade (“CIT”) in Corning Gilbert v. United States, Slip Op. 13-15 (Feb. 1, 2013), and the U.S. Court of Appeals for the Federal Circuit issued its mandate dismissing the appeal on May 16, 2013.  As reported in April 15 edition of the ITC Section 337 Update including an Analysis of the case re-attached here, the CIT’s decision significantly expanded the role of CBP in the enforcement of exclusion orders issued by the ITC.  The decision also confirmed that the CIT provides importers with an avenue for judicial review of such enforcement decisions, including making substantive patent claim construction and infringement determinations.  As a result of CBP’s withdrawal of the appeal, the CIT’s decision will become final as to the parties in Corning Gilbert, but the decision is not precedential in future cases.

Commission Avoids Deciding Whether Breach Of Contract Is An Unfair Act Under Section 337; Issues Another Exclusion Order For Overseas Trade Secret Misappropriation – In Certain Electric Fireplaces, Inv. Nos. 337-TA-791/826, the Commission reviewed the question of whether breach of contract constitutes a violation of Section 337 and issued another exclusion order for trade secret misappropriation that occurred entirely overseas.  Complainants, Twin-Star International and TS Investment Holding Corp. (“Twin-Star”), alleged that the Respondents, purported Twin-Star investors, breached Twin-Star’s Subscription and Stockholders Agreement (“SSA”), misappropriated Twin-Star’s trade secrets, and infringed a Twin-Star copyright.  Respondents moved for summary determination on whether breach of contract could constitute an unfair act under Section 337, but later defaulted in the investigation.  The ALJ denied Respondents’ summary determination motion and found a violation of Section 337 based on Respondents’ default.  The Commission avoided making any categorical decisions on the question of whether breach of contract could constitute an unfair act under Section 337 because the alleged breach of contract claims either could not be remedied by a prospective exclusion order or were unproven.  The Commission also affirmed the ALJ’s finding of a violation of Section 337 based on trade secret misappropriation that occurred entirely overseas, as well as copyright infringement.  The Commission’s decision on trade secret misappropriation follows the Federal Circuit’s decision in TianRui v. United States Int’l Trade Comm’n, which authorized the use of Section 337 to exclude articles made with stolen trade secrets even when such theft occurred entirely overseas.

Nokia Files Cert Petition In InterDigital Case – On May 10, 2013, Nokia Inc. and Nokia Corporation filed with the U.S. Supreme Court a Petition For Writ Of Certiorari seeking review of the Opinion of the U.S. Court of Appeals for the Federal Circuit in InterDigital Communications, LLC v. Int’l Trade Comm’n, No. 2010-1093 (Aug. 1, 2012).  In that case, the Federal Circuit reversed the Commission’s Final Determination of non‑infringement and affirmed the Commission’s conclusion that proof of a licensing domestic industry was satisfied, holding that:  “It is not necessary that the  party manufacture the product that is protected by the patent, and it is not necessary that any other domestic party manufacture the protected article. As long as the patent covers the article that is the subject of the exclusion proceeding, and as long as the party seeking relief can show that it has a sufficiently substantial investment in the exploitation of the intellectual property to satisfy the domestic industry requirement of the statute, that party is entitled to seek relief under section 337.”  Nokia’s petition presents two questions:  (1) “Whether the “domestic industry” requirement of Section 337 is satisfied by ‘licensing alone’ despite the absence of proof of ‘articles protected by the patent’”; and (2) “Whether underlying factual determinations in a patent claim construction ruling should be subject to deferential review by the Federal Circuit.”  On May 31, 2013, the Supreme Court issued an Order setting a July 15, 2013 deadline for responses to the petition.

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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