The U.S. Court of Appeals for the Federal Circuit recently held that the U.S. International Trade Commission (ITC) does not have statutory authority to issue a limited exclusion order (LEO) covering downstream products of third parties not named as respondents in ITC investigations. Kyocera Wireless Corp. v. International Trade Commission, Case No. 07-1493 (Fed. Cir., Oct. 14, 2008) (Rader, J.).
Broadcom (the intervenor) filed a complaint with the ITC and named appellant Qualcomm as the sole respondent. Broadcom alleged in its complaint that 13 Qualcomm chips and chipsets infringe several Broadcom patents and requested as a remedy an LEO. The ITC administrative law judge bifurcated the ITC's proceedings into separate liability and remedy proceedings. On liability, the ITC determined that Qualcomm did not infringe two of Broadcom's patents-in-suit (these aspects were the subject of a separate appeal). With regard to a third patent-in-suit, the ITC found that Qualcomm's baseband processor chips, when programmed to enable certain battery-saving features, infringe Broadcom's patent. The ITC also found Qualcomm liable for inducing certain third-party manufacturers to incorporate battery-saving software and Qualcomm's chips into their mobile devices.
With regard to remedy, the ITC issued an LEO excluding handheld wireless communication devices, including cellular telephone handsets and PDAs, containing the infringing chips or chipsets that are programmed to enable the power saving features. Kyocera Wireless Corporation and other wireless device manufacturers—non-respondents to Broadcom's ITC complaint—were subject to the LEO because they either purchase and incorporate Qualcomm chips into their mobile wireless devices outside the United States and then import them into the United States for sale or deploy networks that depend on devices that include Qualcomm chips.
Qualcomm appealed both the liability and remedy findings. Qualcomm and the non-respondents (third-party appellants) appealed the ITC's LEO, arguing, among other things, that the ITC exceeded its statutory authority by issuing an LEO that excludes imports of downstream manufacturers that were not named as respondents in Broadcom's initial complaint. Broadcom and the ITC argued that the ITC has authority to order an LEO that excludes all of a respondent's articles which are determined to violate, regardless of the identity of the importer.
On review, the Federal Circuit held that the ITC misapplied the standard for induced infringement and vacated and remanded that aspect of the ITC's decision. The Federal Circuit also examined the ITC's authority under 35 U.S.C. § 1337(d) to issue exclusion orders. The Federal Circuit concluded that if certain heightened requirements are met under § 1337(d)(2), the ITC can issue a "general exclusion order" against products of unnamed parties, but that the statutory context limits an LEO to named respondents that the ITC finds in violation of Section 337. Thus, the Federal Circuit held that the ITC has no statutory authority to issue an LEO against downstream products (i.e., products that incorporate infringing components) of non-respondents. In addition, the Federal Circuit upheld a ruling that Broadcom's patents were not anticipated by publicly available specifications because the prior art was not a single reference for purposes of 35 U.S.C. § 102.
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