ITC Section 337 Update – November 18, 2013

by King & Spalding

Commission To Review FRAND Issues In 837 Investigation – In one of the Commission’s first reviews of whether to issue an exclusion order involving a standard essential patent (“SEP”) since the President’s disapproval in the 794 Investigation on August 3rd, the Commission issued a Notice on October 23 that it has determined to review in its entirety an Initial Determination that Funai’s accused products infringe one non-essential LSI patent and do not infringe three LSI SEPs in Certain Audiovisual Components, Inv. No. 337-TA-837 (“the 837 Investigation”).  The Commission requested the parties (also including respondent Realtek) to brief, inter alia, the public interest factors, including the FRAND-encumbered nature of the declared SEPs, the obligations between LSI and standard-setting organizations, the history of the license negotiations between LSI and Funai/Realtek, a summary of all licenses to the SEPs, the value of each SEP, the specific licensing terms for the SEPS that each party believes is fair and non-discriminatory and any evidence of any party constructively refusing to negotiate a license.  In the August 3rd Letter addressing the 794 Investigation, USTR underscored that the White House “will look for these elements in any future decisions involving FRAND-encumbered SEPs.”  Whether the Commission ultimately issues an exclusion order in the 837 Investigation is also of interest in view of a May 20 Order in Realtek  v. LSI, C-12-03451 (N.D. Cal.), barring LSI from enforcing any Commission import ban as an improper “attempt to gain leverage in future licensing negotiations.”

Denial Of Petition For Rehearing En Banc To Address Change In Law Of Induced Infringement – On October 25, a sharply divided Federal Circuit denied a combined petition for panel rehearing and rehearing en banc of a split panel Opinion vacating and remanding a district court’s finding of inducement to infringe in Commil USA v. Cisco Systems, 2012-1045.  The original Federal Circuit panel determined that the district court erroneously precluded Cisco from presenting evidence of its good-faith belief of invalidity to show that it lacked the requisite intent to induce infringement.  The panel found that “[i]t is axiomatic that one cannot infringe an invalid patent” and that “there is no principled distinction between a good faith belief of invalidity and a good faith belief of non-infringement for the purpose of whether a defendant possessed the specific intent to induce infringement.”  In a First Dissenting Opinion, Judge Reyna, joined by Chief Judge Rader, and Judges Newman, Lourie, and Wallach, argued that the original panel “established a substantive, precedential change in patent law” by holding that an accused inducer’s good-faith belief of invalidity may negate the requisite intent for induced infringement.  In a Second Dissenting Opinion, Judge Newman, joined by Chief Judge Rader, and Judges Reyna, and Wallach, argued the “new rule of law whereby an adjudged inducer of infringement is absolved of liability” based on a “good faith belief” of patent invalidity, is contrary to Federal Circuit precedent that can only be changed by an en banc court. 

Commission Announces Addition Of New Commissioner, General Counsel And OUII Director – On October 18, F. Scott Kieff was sworn in as a Commissioner for a term extending through June 16, 2020.  An Illinois Republican, Kieff has held professorships at the George Washington University Law School in Washington, DC and Washington University in Saint Louis; was a visiting professor in the law schools at Northwestern, Chicago, and Stanford; was a faculty member of the Munich Intellectual Property Law Center at the Max Planck Institute; and was a faculty fellow in the Olin Program on Law and Economics at Harvard.  Commissioner Kieff also served in multiple capacities at the Stanford University Hoover Institution.  Before entering academia, Commissioner Kieff practiced law for over six years as a trial lawyer and patent lawyer and was Law Clerk to U.S. Circuit Judge Giles S. Rich.  The Commission also announced the appointment of Dominic L. Bianchi as General Counsel and Margaret D. Macdonald as Director of the Office of Unfair Import Investigations (“OUII”).  Mr. Bianchi previously served as Acting General Counsel and several other roles at the ITC and in the Office of U.S. Trade Representative, and practiced trade law in private practice.  Prior to joining the ITC, Ms. Macdonald represented clients in intellectual property matters in both U.S. District Court and the ITC.

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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