ITC Proposes Extensive Changes To Rules For Adjudicating Section 337 Investigations – On September 24, 2015, the Commission published a Notice of Proposed Rulemaking in the Federal Register announcing proposed changes to its existing Rules Of General Application, Adjudication, And Enforcement of Section 337 investigations. The proposed changes, if adopted, would clarify certain provisions of the Commission’s existing rules, harmonize different parts of the Commission’s existing rules, and make certain technical amendments. Attached is a Summary of the principal proposed changes to 19 C.F.R. Parts 201 and 210. This is the third set of proposed changes to the ITC’s Rules Of General Application, Adjudication, And Enforcement of Section 337 investigations in the last few years. Comments on the ITC’s proposed rule changes are due no later than November 23, 2015.

ALJ McNamara Issues Order To Show Cause Why Complainants And Respondent Should Not Be Sanctioned In 930 Investigation – Following the prior reported August 17, 2015 news release announcing the appointment of Judge MaryJoan McNamara as an ALJ, Judge McNamara wasted very little time in issuing on September 9, 2015, Order No. 99: Order To Show Cause Why Complainants And Respondent Eroglu, As Well As Their Counsel, Should Not Be Monetarily Sanctioned Or Face Other Consequences For Such Behavior As Failure To Timely Comply With Orders in Certain Laser Abraded Denim Garments, Inv. No. 337-TA-930. In Order No. 96, Judge McNamara initially sought more information from the parties regarding “some of Eroglu’s allegations that it was unable to engage in settlement discussions with Complainants despite numerous requests” in response to Complainants’ second motion for default against Eroglu. In light of the parties’ responses “which involved finger-pointing, contradictions, discussions of settlement activity not relevant to the specific questions … posed, and a disregard for the Commission’s Rules, Ground Rules, and Amended Notice of Investigation,” Judge McNamara ordered the parties to show cause why Complainants and Eroglu, as well as their counsel, should not be monetarily sanctioned or face other consequences for, inter alia, failure to timely conduct the following activities ordered in the Procedural Schedule: “[1] a first settlement conference; [2] file a first settlement conference report; [3] a one-day in-person mediation session; [4] file a report of the one-day in-person mediation session” Judge McNamara considers the foregoing “failure to timely complete the activities and file the reports ordered by Chief Administrative Law Judge Bullock to be a serious and perplexing lapse on the part of Complainants and Eroglu.” Judge McNamara listed several “possible mitigating factors,” including “Actual settlement between Complainants and Eroglu.”

Federal Circuit Vacates District Court’s Denial Of Apple’s Request For A Permanent Injunction Against Samsung And Remands For Further Proceedings – On September 17, 2015, the Court of Appeals for the Federal Circuit issued an Opinion vacating an order of the district court denying Apple’s post-trial motion to permanently enjoin Samsung Electronics Company, Ltd., Samsung Electronics America, Inc., and Samsung Telecommunications America, LLC (collectively “Samsung”) from “making, using, selling, developing, advertising, or importing into the United States software or code capable of implementing the infringing features of its products.” Although the district court found that the balancing of hardships and public interest factors from the Supreme Court’s decision in eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), favored Apple’s request, it held that Apple had not shown irreparable harm or an inadequate legal remedy. In holding that the district court abused its discretion by not enjoining Samsung’s infringement, the Federal Circuit found that the district court misapplied the causal nexus test for irreparable harm by requiring Apple “to show that the infringing features were the reason why consumers purchased the accused products.” The Federal Circuit held that Apple was only required to show that “the patented features impact consumers’ decisions to purchase the accused devices,” and that Apple had met its burden because it established that (1) customers “wanted, preferred, and would pay extra for these features,” (2) Samsung “believed these features were important and copied them,” (3) “Samsung’s carriers and users wanted these features on phones,” (4) Apple “believed these features were important to customer demand,” and (5) Samsung was Apple’s largest rival. The Federal Circuit held that the district court also erred in finding that Apple had not demonstrated an inadequate legal remedy, because that holding was based upon its erroneous conclusion that Apple had failed to demonstrate irreparable harm. The Federal Circuit held that this eBay factor strongly favored an injunction because as the district court found, Apple’s “sales-based losses were difficult to quantify.”

Original Suprema Panel Affirms Commission On Remand From En Banc Court – On September 14, 2015, the original three-judge panel of the Federal Circuit in Suprema, Inc. v. ITC, Appeal No. 2012-1170, issued a nonprecedential Opinion affirming the Commission’s finding of a violation of Section 337 and issuance of an exclusion order. As this publication previously reported, the en banc Federal Circuit upheld the Commission’s position that trade relief is available under 19 U.S.C. § 1337(a)(1)(B)(i) for induced infringement based on the importation of goods that, after importation, are used by the importer to directly infringe at the inducement of the goods’ seller. The appeal had been remanded to the original panel for further proceedings consistent with the August 10, 2015 en banc Opinion. On remand, the panel reinstated its previous rulings affirming the Commission’s non-infringement ruling with respect to the first asserted patent and ruling that Suprema infringes and failed to prove invalid the second asserted patent. With respect to the third asserted patent, which was the subject of the en banc Opinion, the panel affirmed the Commission’s ruling that Mentalix directly infringes, and that Suprema is liable for induced infringement due to willful blindness of Mentalix’s infringement, finding substantial evidence in the record to support the Commission’s rulings. With respect to willful blindness, noting its deferential standard of review, the panel stated that “[n]one of the facts upon which the Commission relied, in isolation, would support a finding of willful blindness,” but that the totality of the evidence, including evidence of Suprema’s “extensive market research on its competitors,” including research on Cross Match’s patents, adequately supported the Commission’s finding. The panel rejected arguments that the Commission’s ruling would require manufacturers to research every reference referred to in a competitor’s patents to avoid willful blindness, stating that it did “not hold that such an exhaustive patent search is required in every instance,” nor that the Commission “predicated its willful blindness finding only upon such an obligation.”