United States: Top Developments At The ITC In 2015

The past year has seen a number of major developments for Section 337 investigations at the International Trade Commission, including several high profile Federal Circuit decisions, the announcement or proposed expansion of two pilot programs for expedited proceedings, and the naming of a new Administrative Law Judge (ALJ). Here are the top developments at the ITC in 2015:

  1. In August 2015, the en banc Federal Circuit ruled in Suprema v. ITC that the ITC has the power to exclude infringing imports under an induced infringement theory even if the imports do not infringe the patented method until after they have been imported into the United States. The court held that the statutory language "articles that infringe" covers goods that infringe the asserted patent post-importation. The accused products were fingerprint scanning devices that did not infringe until software was added within the United States. By reversing an earlier panel decision, the Federal Circuit eliminated substantial uncertainty as to whether method patents (which would generally only be infringed after importation) are enforceable at the ITC.

    Suprema v. ITC, 796 F.3d 1338 (Fed. Cir. 2015) is discussed in our previous post, " Suprema v. ITC: Federal Circuit Affirms Induced Infringement at ITC."
  2. In November 2015, a Federal Circuit panel issued its decision in ClearCorrect v. ITC, concluding that the ITC does not have the authority to exclude infringing digital products (e.g., software or other data) that are electronically transmitted to the United States (as opposed to being imported on a physical medium, such as a CD-ROM). Interpreting Section 337, the court held that the term "articles" is limited to "material things."

    In her dissent, Judge Newman pointed out that the decision would permit exclusion of infringing digital data carried on discs or other storage media, but not the same infringing data if transmitted electronically. The Commission recently filed a request for en banc rehearing of this appeal, which has not yet been ruled upon by the court.

    ClearCorrect Operating, LLC v. ITC, 116 U.S.P.Q.2d 1883 (Fed. Cir. 2015) is discussed in our previous posts, " Digital Models: Federal Circuit Rejects ITC Jurisdiction Over Electronic Transmissions," and " Digital Models: ITC and Align Ask for Federal Circuit En Banc Review."
  3. In March 2015, the Federal Circuit again affirmed that to establish a domestic industry based on licensing activities, the complainant must show the existence of articles that practice the patent-in-suit. The Federal Circuit in the LSI case affirmed a Commission determination that a domestic industry did not exist because the complainant's licensing activities did not relate specifically to "articles protected by the [asserted] patent." LSI Corp. v. ITC, 604 Fed. Appx. 924 (2015).

    Though non-precedential, the LSI decision extends the Federal Circuit and Commission's development of the "articles" requirement for domestic industry based on licensing, as explained in our previous post, " Show Me the Article: The "Articles" Requirement for Domestic Industry Based on Licensing."
  4. In August 2015, Judge MaryJoan McNamara was named an ALJ at the ITC, filling a vacancy that was created when Judge Gildea retired in August 2014.  The Commission now has a full complement of six ALJs. See our prior post, "MaryJoan McNamara Named New ALJ."
  5. Complainants asserting trade secret misappropriation at the ITC had considerable success in 2015.  In both Certain Opaque Polymers and Certain Crawler Cranes, the Commission found a violation of Section 337 based on misappropriation of trade secrets. The remedy for both cases involved limited exclusion orders and cease-and-desist orders directed to importation of the products manufactured using the misappropriated trade secrets. In Certain Opaque Polymers, the finding of violation was part of dispositive sanctions issued by the ALJ for respondents' bad faith spoliation of evidence. 

    These investigations are discussed in our previous posts, " Opaque Polymers: ITC Affirms Dispositive Sanctions," and " Crawler Cranes: 10-Year Exclusion Order for Misappropriated Trade Secrets."
  6. In a September 2015 notice, the ITC proposed codifying and expanding its 100-day pilot program for expedited consideration of case-dispositive issues in Section 337 investigations. The current program, which has been used for two investigations so far, allows the Commission to designate case-dispositive issues for an early ruling after an expedited hearing. The new proposal would allow parties to move for an early ruling and allow ALJs to designate, on their own initiatives, issues for early ruling.

    This proposal and other proposed rules are discussed in our previous post, " ITC Proposes Expansion of 100-Day Pilot Program for Early Termination."
  7. In February 2015, the ITC announced a new pilot program to decide whether new or redesigned products are covered by ITC exclusion orders. A respondent who loses in a Section 337 investigation can file a petition to determine whether its re-designed product should be "carved out" of the existing exclusion order. Petitions involving "purely legal" questions will be assigned to the ITC General Counsel for a recommendation, followed by a Commission decision within 60-90 days after institution. Petitions that require "minimal fact finding" will be decided by the Commission 90-180 days after a proceeding before the Office of Unfair Import Investigation (OUII). Petitions with extensive fact-finding will be assigned to an ALJ for an initial determination, followed by a Commission decision 6-9 months after institution. 

    Further discussion is available in our previous post, " New ITC Pilot Program for Redesigns and New Products."
  8. In May 2015, in Lelo Inc. v. ITC, the Federal Circuit found that qualitative factors alone, without quantitative data, were insufficient to show that the complainant's purported domestic industry investments were significant. The Commission had found that the complainant's purchase of "crucial" components of its practicing devices from suppliers in the United States could satisfy the domestic industry requirement because the "contribution of the components at issue from a qualitative standpoint is indeed significant." The Federal Circuit reversed, concluding that qualitative factors cannot overcome the lack of quantitative data supporting the significance of the investments.

    Further discussion is available in our previous post, " Lelo v. ITC: Qualitative Factors Alone Are Insufficient for Domestic Industry."
  9. The ITC experienced a surge in new Section 337 filings in the last quarter of 2015.  The Commission instituted 36 new investigations in 2015, and 16 Section 337 complaints were filed between October 1 and December 31.

    A round-up of 2015 statistics is available in our previous post, " Round-Up: 2015 Decisional Statistics."

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.

© Morrison & Foerster LLP. All rights reserved

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