ITC Section 337 Update

by King & Spalding

U.S. Supreme Court Overturns Federal Circuit Standards For Patent Inducement Infringement And Indefiniteness – In two decisions on June 2, 2014, the U.S. Supreme Court materially changed the standards for patent inducement infringement previously established by the Federal Circuit.  In an Opinion by Justice Alito in Limelight Networks, Inc. v. Akamai Technologies, Inc. 12-786, the U.S. Supreme Court reversed the Federal Circuit and held that a defendant may not be liable for infringing a patent under 35 U.S.C. §271(b) when no single party has directly infringed the patent under Section 271(a) or any other statutory provision.  In a second Opinion on the same day by Justice Ginsberg in Nautilus, Inc. v. Biosig Instruments, Inc. 13-369, the U.S. Supreme Court overruled a decision of the Federal Circuit that an ambiguous claim could be definite under 35 U.S.C. §112  ¶2 as long as the ambiguity was not “insoluble.”  Biosig’s claims were for a heart rate monitor for exercise equipment and included the limitation “spaced relationship.”  The district court found the claims indefinite because no actual parameters for the spacing were specified.  The Federal Circuit decided the claims were not indefinite because they were not “insolubly ambiguous.”  The Supreme Court held the “insolubly ambiguous” standard failed to satisfy the indefiniteness requirement under Section 112¶2:  “[A] patent’s claims, viewed in light of the specification and prosecution history, [must] inform those skilled in the art about the scope of the invention with reasonable certainty.”  This “mandates clarity” but recognizes “absolute precision is unattainable….  To tolerate imprecision just short of that rendering a claim ‘insolubly ambiguous’ would diminish the definiteness requirement’s public-notice function and foster the innovation-discouraging ‘zone of uncertainty’. . . . ”  Both decisions will impact the Commission’s decisions in ITC Section 337 investigations as the Akamai  decision will make it more difficult for patentees to establish inducing infringement and the Nautilus decision will likely increase the challenges to patents under the claim indefiniteness standard.  It also will be interesting to see if the Supreme Court’s decision in Akamai has any impact on the Federal Circuit’s en banc rehearing on the issue of inducing infringement under 19 U.S.C. §1337(a)(1)(B)(i) in Suprema, Inc. and Mentalix, Inc. v. U.S. Int'l Trade Comm'n et al., Court No. 2012-1170.

Federal Circuit Ends Samsung’s Quest To Obtain Exclusion Order In 794 Investigation In an Investigation, 337-TA-794, having widespread ramifications when the White House disapproved the Commission’s determination to issue an exclusion order by letter of August 3, 2013, from U.S. Trade Representative Michael Froman, acting on authority from the President, the Federal Circuit on Wednesday, May 14 halted Samsung Electronics Co. Ltd.’s quest to obtain an exclusion order on one remaining standard-essential patent in the investigation.  In a unanimous, one-sentence order in Samsung Electronics Co. v. U.S. International Trade Commission, Appeal No. 13-1519, the Federal Circuit affirmed the Commission’s ruling that Apple Inc.’s iPad and iPhone did not infringe Samsung’s U.S. Patent Number 7,486,644, a standard-essential patent covering a method of transmitting data on a mobile network.  Samsung had accused Apple of infringing several patents, and the ITC found that Apple did not infringe several of the patents, but did infringe U.S. Patent Number 7,706,348, a patent declared essential to the 3G wireless standard.  The ITC had ordered exclusion and cease and desist orders on imports of older iPhone and iPad models, but the Obama administration disapproved the remedial orders, expressing concern that in this instance an exclusion order on a standard-essential patent would be contrary to the public interest.  Samsung could not appeal the White House’s disapproval, but it did appeal the part of the ITC’s ruling that found Apple did not infringe the ’644 patent.

Commission Stays Cease And Desist Order In 833 Investigation Pending Federal Circuit Review – On June 2, 2014, the Commission stayed its cease and desist order entered in Certain Digital Models, Digital Data, and Treatment Plans for Use In Making Incremental Dental Positioning Adjustment Appliances, Inv. No. 337-TA-833, pending review by the U.S. Court of Appeals for the Federal Circuit.  As described in our April 16, 2014 ITC Section 337 Update, the Commission issued its cease and desist order following a final decision finding a violation of Section 337 with respect to one of the asserted patents because the infringing digital data sets had entered the United States by electronic transmission.  In a lengthy decision starting on page 21, the Commission held that “the statutory phrase ‘importation . . . of articles’ should be construed to include electronic transmission of digital data because the data sets at issue in this investigation are true articles of international commerce that are imported into the United States and their inclusion within the purview of section 337 would effectuate the central purpose of the statute.”  The complainant appealed the Commission’s decision, and the stay pending appeal likely will last into 2015.

House of Representatives Introduces Bill to Amend Section 337 – Representatives Blake Farenthold (R-Tex) and Tony Cardenas (D-Cal.) introduced a bill entitled the Trade Protection Not Troll Protection Act to prevent abusive litigation in the ITC by patent assertion entities.  A summary of the bill can be found here.  The proposed bill would make a number of amendments to Section 337.  First, it would allow the domestic activities of the complainant’s licensees to be the basis for the complainant’s domestic industry only if such activities “lead to the adoption and development of articles that incorporate the patent, copyright, trademark, mask work, or design.”  Second, it would require the Commission to conduct a preliminary inquiry before the institution of the investigation as to the existence of a domestic industry of any complaint that relies on research and development, engineering, or licensing; to accept evidence and argument from the proposed respondents and the public on domestic industry during this preliminary inquiry; and to complete such inquiry within 45 days of the filing of the complaint.  Third, the bill would allow the Commission to make a public interest determination early in the investigation rather than at the end, and would add to the public interest factors (i) the ability of the complainant or its licensees to meet market demand for the protected articles and (ii) the ebay equitable factors for securing an injunction in district court.  There has been no activity on the bill since it was introduced.

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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