In Section 337 investigations, Commission Rule 210.14(b) requires good cause to amend the complaint and notice of investigation after an investigation has been instituted. Administrative Law Judges (ALJ) in several recent investigations, such as Certain Digital Photo Frames and Image Display Devices, Inv. No. 337-TA-807, Order No. 22 (Certain Digital Photo Frames), Certain Portable Electronic Devices and Related Software, Inv. No. 337-TA-797, Order No. 39 (Certain Portable Electronic Devices), and Certain Computer Forensic Devices, Inv. No. 337-TA-799, Order No. 21 (Certain Computer Forensic Devices), have found that complainants failed to demonstrate the necessary good cause to amend the complaint and notice of investigation.
Under Commission Rule 210.14(b), "after an investigation has been instituted, the complaint or notice of investigation may be amended only by leave of the Commission for good cause shown and upon such conditions as are necessary to avoid prejudicing the public interest and the rights of the parties to the investigation." 19 CFR § 210.14(b)(1). Generally, good cause exists when new information is obtained during discovery that was not known to a complainant prior to institution. Certain Display Controllers with Upscaling Functionality, Inv. No. 337-TA-481, Order No. 8. Motions to amend have also been granted when the complainant receives information during discovery that confirms information available to the complainant prior to institution. Additionally, "good cause" to add a party as a respondent has been found when the party has information relevant to the investigation, and is necessary in developing a complete record. See Certain R-134A Coolant, Inv. No. 337-TA-623, Order No. 6. However, a complainant must also demonstrate why it was unable to bring the allegations forward at an earlier point. Certain Liquid Crystal Display Modules, Inv. No. 337-TA-634, Order No. 5.
In Certain Digital Photo Frames, complainant Technology Properties Limited, LLC (TPL) filed a motion to amend its complaint and notice of investigation to add Transcend Information Inc. (Transcend USA) as a respondent. In its original complaint, TPL only named Transcend, a Taiwanese entity, but claimed that since the filing of the complaint, it had learned that Transcend USA, a US subsidiary of Transcend, was the entity that was importing and selling the accused products in the United States. TPL also asserted that any delay in bringing its motion was due to Transcend's failure to provide timely responses to interrogatories.
The ALJ denied the motion, finding that TPL had sufficient basis to name Transcend USA as a respondent when it initially filed its complaint. For example, as evidence that the accused Transcend devices were being sold in the United States, TPL included, as an exhibit to the complaint, a screenshot from the publicly available transcendusa.com website. This website made clear that Transcend USA was involved in the sale of Transcend products. Furthermore, TPL filed a corresponding district court action on the same day it filed its complaint at the ITC naming both Transcend and Transcend USA as defendants. Accordingly, because TPL could have brought allegations against Transcend USA at the time of filing the original complaint, TPL failed to demonstrate the necessary good cause to amend the complaint and notice of investigation.
The ALJ's Order is available online.
Similarly, in Certain Computer Forensic Devices, the ALJ denied the complainant's motion to amend. Complainant MyKey Technology Inc. (MyKey) filed a motion to amend the complaint and notice of investigation to substitute Diskology, LLC for named respondent Diskology, Inc. MyKey asserted that it did not know that Diskology Inc. had dissolved at the time that the complaint was filed. However, after filing its motion, MyKey sent a letter to the ALJ to "clarify the record," stating that it was in fact aware that Diskology, Inc. had dissolved prior to preparing its motion for order to show cause. MyKey submitted that this "clarification" did not affect the substance of its motion to amend. However, the ALJ found that MyKey knew and admitted that it knew that Diskology had dissolved over three weeks prior to MyKey filing its complaint. Additionally, in denying MyKey's motion, the ALJ further found that the fact that MyKey waited over four months to file its motion to amend and provided absolutely no explanation was inexcusable.
The ALJ's order is available online.
In Certain Portable Electronic Devices, the ALJ denied complainant Apple Inc.'s (Apple) motion to amend to assert additional claims of the two patents asserted in the initial complaint, which was filed nearly seven months after Apple filed its initial complaint. In opposing this motion, respondents HTC Corp., HTC America, Inc., and Exedea, Inc. (collectively, HTC), argued that Apple's proposed amendments would severely prejudice HTC because the amendments added claims with unique subject matter not previously at issue in the investigation, which would result in the need to reset significant case deadlines that had already passed, including claim construction and discovery deadlines.
The ALJ found that Apple did not provide any evidence to support that it conducted a reasonable and diligent pre-suit investigation, but instead relied solely on attorney argument, and unsworn attorney argument is not evidence. Furthermore, the ALJ found that respondent HTC had demonstrated that the evidence relied upon by Apple to support its infringement contentions with respect to these new claims was publicly available before the original complaint was filed. The ALJ also found that Apple's proposed amendment would require significant adjustments to the procedural schedule, including possible delay of the hearing and target date. Accordingly, the ALJ held that Apple had failed to demonstrate good cause for the proposed amendment, as Apple had not demonstrated that it could not have asserted these allegations at an earlier time.
The ALJ's order is available online.
Practice Tips:
- A complainant must provide evidence obtained during discovery that was not available to it prior to the filing of the complaint, in order to establish good cause to amend a complaint and notice of investigation. Mere conclusory statements based on information that could have been located prior to filing a complaint with due diligence is not sufficient to support an amendment.
- The fact that a complainant's motion to amend its complaint and notice of investigation is filed at an early stage of the investigation may not be sufficient basis for establishing the requisite good cause to amend the complaint and notice of investigation.
- The addition of a party as a proposed respondent that has information relevant to the investigation and necessary for developing a complete record may be used to establish the requisite good cause to amend the complaint and notice of investigation.
Motions to Amend Complaint and Notice of Investigation in Section 337 Proceedings
The following list highlights examples of decisions regarding the good cause standard required to amend the complaint and notice of investigation in other Section 337 proceedings:
- Inv. No. 337-TA-667, Certain Electronic Devices, Including
Handheld Wireless Communications Devices - The ALJ denied
complainant's motion to amend the complaint and notice of
investigation to add respondents, holding that good cause cannot be
based solely on the fact the complainant's motion was filed at
an early stage of the investigation. The newly named
respondent was not closely related to any of the current
respondents, and complainant also failed to show that adding the
additional respondent was necessary to develop a full and complete
record.
The ALJ's Order is available online.
- Inv. No. 337-TA-735, Certain Flash Memory Chips and
Products Containing Same - The ALJ declined to find good cause
to amend the complaint and notice of investigation to add three
additional respondents based on a conclusory statement that
complainant was unable to obtain the alleged asserted products of
the proposed respondents prior to the filing of its
complaint. Furthermore, the ALJ found the complainant did not
make any argument that without the proposed respondents, the
parties would be unable to develop a complete record.
The ALJ's order is available online.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
