ITC Section 337 Update – August 2014

by King & Spalding

Fifth Annual "Live at the ITC" – On July 30, 2014, the Fifth Annual Forum on Section 337 and Other Developments at the U.S. International Trade Commission, entitled Live at the ITC, was co-sponsored by the ABA-IPL Section ITC Committee, the ITCTLA and the D.C. Bar International Law Section and hosted in King and Spalding's Washington, DC offices.  Highlights of the forum included an intimate Q and A session with ITC Chairman Meredith Broadbent, Vice Chairman Dean Pinkert, Former Chairman and current Commissioner Irving Williamson and more recently appointed Commissioners David Johansson and Scott Kiefe, who discussed their new experience as Commissioners.  Other topics and questions covered by the Commissioners included the issue of public interest, with Chairman Broadbent noting that since 2010, the issue of public interest has been delegated to the ALJ for fact finding in 38 investigations, 5 of which have reached a final determination and 12 are still pending.  Although the 100-Day ID Procedure has only been used in one investigation to date, Commissioner Williamson stated that the Commission is not hesitant to use it in the right case.  Margaret Macdonald, Director of OUII, reviewed the criteria for Staff to have full, partial or no participation in an investigation and encouraged Complainants to respond to public interest statements filed by Respondents and the public.  Finally, a panel of practitioners addressed non-traditional uses of Section 337, emphasizing that injury must be shown in investigations not involving traditional patent, registered trademark and/or copyright infringement issues. 

Domestic Industry Is Not Satisfied Based Solely On Licensees’ Expenditures When License Is Purely Revenue-Driven – ALJ Lord issued an Initial Determination (“ID”) in Certain Optical Disc Drives, Components Thereof, And Products Containing The Same, Inv. No. 337-TA-897, granting motions for summary determination on lack of domestic industry and terminating the investigation in its entirety.  The ID held that a licensing entity whose patent-related activities are purely revenue driven cannot choose to prove the existence of the economic prong of a domestic industry entirely through its licensees’ activities under subsections (A) and (B) of section 337(a)(3), essentially avoiding the requirements of subsection (C), which requires evidence of a revenue-driven licensing entity’s own patent-related activities and expenditures.  See e.g., Certain Multimedia Display and Navigation Devices and Systems, Components Thereof, and Products Containing the Same, Inv. No. 337-TA-694, Corrected Comm’n Op. (Aug. 8, 2011).  The complainant, Optical Devices, made no attempt to prove any domestic expenditures of its own, arguing that it had no obligation to show such expenditures when relying exclusively on the activities of its licensees to argue that a domestic industry relating to the asserted patents exists.  ALJ Lord determined that complainant’s reliance on its licensees activities to prove the economic prong of domestic industry through purely revenue-driven licenses failed to comport with case law construing section 337(a)(3), including Schaper Manufacturing Co. v. Int’l Trade Comm’n, 717 F.2d 1368 (Fed. Cir. 1983), which found a domestic industry where licensees engage in domestic activities under licenses that relate to development or production of patented articles.

Commission Upholds Its Prior Precedent That APO Petitioner Carries The Burden Of Proving Non-infringement – In an Advisory Opinion issued on August 11, 2014 in Certain Sleep-Disordered Breathing Treatment Systems, Inv. No. 337-TA-879, the Commission found the Supreme Court’s holding in Medtronic v. Mirowski, 134 S. Ct. 843 (2014), that the burden of proving infringement in a declaratory judgment action remains with the patent owner, does not apply to an Advisory Opinion Proceeding (“APO”) under Commission Rule 210.79.  The Commission reversed the ALJ’s decision to place the burden of proving infringement on the patentee, ResMed, in view of the Supreme Court’s decision in Medtronic, in the APO requested by Apex.  The Commission adopted, with modified reasoning, the ALJ’s findings that Apex’s redesigned iCH humidifier is covered and Apex’s redesigned WIZARD 220 is not covered by the Consent Order and reversed the ALJ’s finding that Apex’s redesigned XT humidifier is covered by the Consent Order issued by the Commission in the underlying investigation.  The Commission distinguished the Supreme Court’s legal and practical considerations on the burden of proof issue, finding, inter alia, that “in APOs, the patent owner is not necessarily in a better position to bear the burden of proof because the issues of patent scope and infringement of the original, accused products usually have already been determined in the underlying investigation.  In such cases, the respondents are able to point out, how and why their redesign is different from the litigated products and does not infringe.”

Federal Circuit Decides Not To Address En Banc Joint Infringement Issue – On July 24, 2014, the Federal Circuit Sua Sponte rejected Akamai's request and the Supreme Court's suggestion that the Federal Circuit can decide the issue of joint infringement en banc if it chooses to do so in Akamai v. Limelight, Appeal No. 2009-1372.  Instead, the Federal Circuit decided to refer the case on remand to its “two remaining panel members and a newly-selected judge.”  The Federal Circuit had granted Akamai's request to review the issue of joint infringement in 2011, but never reached this issue.  Rather, the en banc Federal Circuit found that Limelight, who does not perform the claim step of tagging components to be stored on its servers, which Limelight requires its customers to do, was liable for induced infringement because inducement can be found even when there is no single entity that directly infringes by performing all steps of a method claim.  As reported in ITC Section 337 Update dated July 18, 2014, the Supreme Court reversed this decision finding that induced infringement cannot be found when no single entity performs all steps of the method claim.  Akamai subsequently requested the Federal Circuit to revisit en banc the issue of whether joint performance of a patented method can create liability for direct infringement.  Limelight argued that Akamai failed to preserve the issue of whether the Federal Circuit's standard for joint infringement set forth in Muniauction v. Thomson, 532 F.3d 1318 (Fed. Cir. 2008) was wrong.

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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