United States: Unpacking The Latest ITC Trends: Part 1

Last Updated: October 4 2019
Article by Elizabeth A. DiMarco and Gregory F. Corbett

Despite a brief hiatus stemming from the government shutdown, 2019 has already been a very busy year in Section 337 practice at the U.S. International Trade Commission. Two administrative law judges considered whether the public interest weighed against remedial orders in two separate but related proceedings, and each ALJ reached a different conclusion.

This year has also seen ITC developments related to the impact of Patent Trial and Appeal Board proceedings, the domestic industry requirement and the commission's authority to decline to institute an investigation. This two-part series will discuss meaningful ITC developments in 2019, spanning from ALJ rulings to U.S. Court of Appeals for the Federal Circuit guidance.

In part one of this series, we will examine the latest ITC developments involving PTAB proceedings, the public interest and importation. In part two, we will discuss the latest ITC developments on domestic industry, as well as recent ITC decisions from the Federal Circuit.

Interaction of PTAB and ITC Proceedings

Impact on the Investigation

District courts routinely stay litigation in view of an inter partes review proceeding pending before the PTAB. The ITC, however, applies a strict five-factor test to a motion to stay, and it is extremely rare for an ALJ to stay an investigation in view of pending IPR proceedings.1

Recent ITC litigation confirms that staying an ITC investigation in view of PTAB proceedings remains rare, with one ALJ denying a stay even though the PTAB had already issued its final written decision.2 Nevertheless, a stay of ITC litigation is possible in certain circumstances. For instance, one ALJ stayed ITC litigation last August where the complainant did not oppose and the PTAB had issued a final written decision seven months prior to the scheduled ITC hearing.3

Impact of Estoppel

In the last 12 months, ALJs have addressed IPR estoppel under 35 U.S.C. Section 315 (e)(2), clarifying that IPR estoppel does not apply against the ITC Office of Unfair Import Investigations staff but does apply against a respondent regardless of whether the respondent prevailed in the PTAB's final written decision.

In Certain Magnetic Tape Cartridges and Components Thereof, the ALJ concluded that IPR estoppel does not apply against OUII staff.4 There, the evidentiary hearing concluded five days before the PTAB issued a final written decision. As a result, the respondent presented all evidence relating to invalidity at the ITC hearing before IPR estoppel was in effect. The ALJ concluded that the question of whether the respondent was estopped from making invalidity arguments was essentially irrelevant because "the statute does not prevent Staff from raising the prior art references in this investigation, which it did."

Later in the year, another ALJ concluded that IPR estoppel applies to an IPR petitioner regardless of whether the petitioner is unsuccessful during the IPR proceedings, a question that has not yet been addressed by the Federal Circuit.5 Because the PTAB final written decision issued prior to the ITC hearing, the ALJ precluded the respondents from presenting any invalidity evidence.

The staff acknowledged that the respondents were estopped from asserting the disputed invalidity theories but nonetheless opposed precluding invalidity evidence in view of the fact that estoppel does not apply to the staff.6 The ALJ did not specifically address that point.

Impact on Remedy

Finally, on the issue of remedy, the commission opinion in Magnetic Tapes considered how the Patent Trial and Appeal Board final written decision that issued days after the ITC hearing would impact the remedy entered. The commission noted that it has "broad discretion in selecting the form, scope and extent of the remedy," and determined that it was appropriate to partially suspend enforcement of its remedial orders pending the appeal of the PTAB final written decision.7

Notably, however, the commission suspended the remedial orders only in part and expressly acknowledged that suspending them had "no practical effect since the accused products will still be subject to immediate exclusion" in view of other asserted claims.8 Commissioner Rhonda Schmidtlein agreed that the remedial orders should be suspended but did not support the "no practical effect" rationale for doing so.

Takeaways and Practice Tips

ITC respondents should carefully consider the expected timing of a final written decision when filing a petition for IPR. If the final written decision issues before the ITC hearing, the respondent may be precluded from presenting any evidence of invalidity at the hearing. Without supporting evidence in the record, the staff will not be able to support any invalidity arguments despite the fact that the staff is not formally estopped under 35 U.S.C. Section 315(e)(2).

The practical impact is significant. In Magnetic Tapes, the final written decision issued after the hearing, the staff's post-hearing briefing repeatedly cited the respondent's expert testimony, and the initial determination credited the arguments and evidence that the respondent was estopped from making.

At the same time, a respondent has the greatest likelihood of avoiding remedial relief in a patent infringement investigation if the PTAB issues a final written decision before the commission issues its final determination. For a respondent balancing the impact of estoppel against the benefit of a final written decision before the commission opinion, the ideal timing for a final written decision to issue is after the ITC evidentiary hearing but before the commission opinion.

In practice, however, it is extremely difficult to obtain a final written decision before the commission opinion because a final written decision typically issues about 18 months after an IPR petition is filed, while the commission opinion typically issues within 16-18 months of institution of the ITC investigation. Moreover, even if the final written decision issues during the respondent's ideal time period, it remains uncertain whether the full commission would entirely suspend remedial orders in a scenario in which the PTAB issues a final written decision finding that all claims at issue in the ITC investigation are unpatentable.

Diverging Rulings on Appropriate Weight of Public Interest Factors

In separate but related investigations, ALJ Thomas Pender and ALJ MaryJoan McNamara reached opposite conclusions on whether the public interest factors weighed against a remedy for Apple Inc.'s violation of Section 337 by importing iPhones that infringe Qualcomm Inc.'s patents.9 Both decisions garnered widespread attention, with dozens of interested third parties submitting public interest statements.

In both investigations, Apple argued that issuing an exclusion order to remedy its violation would lead to a cascading sequence of events that would be detrimental to the public interest. Namely, if Apple could not import infringing products, then Apple would stop purchasing chips from its supplier, Intel Corp., which would cause Intel to exit the market, and Intel would then stop investing in research and development for 5G technology, which in turn would create U.S. national security concerns.

Despite being presented with nearly identical evidence, the two ALJs reached opposing conclusions. ALJ Pender concluded that Apple's sequence of events was "nearly certain" to occur and would pose a significant risk to national security. He, therefore, recommended that the commission issue no remedy. He was the first ALJ in history to make such a recommendation, and the commission itself has declined to enter an exclusion order due to public interest concerns in only three cases.10

Six months after ALJ Pender's decision, ALJ McNamara determined that the very same sequence of events was merely "predictive or speculative" rather than nearly certain or even likely. ALJ McNamara explained that a noninfringing redesign would resolve essentially all public interest concerns and was readily achievable according to Apple employee testimony. ALJ McNamara determined that the public interest did not weigh against a remedy. However, she did recommend that the exclusion order have carveouts specifically designed to encourage Apple to develop a noninfringing redesign.

Takeaways and Practice Tips

ALJ Pender's conclusion that the public interest favored no remedy was highly unusual. The tailored exclusion order recommended by ALJ McNamara, on the other hand, was more in line with the existing state of public interest analysis. Nevertheless, her analysis strongly suggests that the mere possibility of a noninfringing redesign generally will be sufficient to resolve public interest concerns unless the patents at issue are standard-essential patents or directly relate to the public's physical well-being, as in the case of hospital beds.11

Both investigations have terminated, the commission did not weigh in on which conclusion was correct, and ALJ Pender has retired.

Going forward, absent a concrete demonstration of certain harm to the public, even expert testimony is likely insufficient to establish that the public interest weighs against a remedy. However, such evidence may support a tailored remedial order. In some cases, respondents may even be in a position to argue that the public interest evidence supports delaying the date on which an exclusion order goes into effect.

For example, ALJ Clark Cheney recently recommended that an exclusion order "not take immediate effect" in view of certain unrebutted comments from members of the public regarding the length of time it would take to switch from the infringing products to a replacement.12 ALJ Cheney recommended that "the effect of any remedy be delayed by a period of at least 12 months."

Developments on Importation

Two recent investigations have addressed when it is appropriate for one entity to be considered an "importer" within the meaning of Section 337 based on the importation activities of another entity.

In Certain Digital Video Receivers,13 the commission held that, although Comcast Corp. was not the importer of record, Comcast was an "importer" based on the activities of suppliers, who were not named in the investigation. The commission determined that Comcast was "sufficiently involved with the design, manufacture, and importation of the accused product" via its relationship with suppliers. Comcast has appealed the decision to the Federal Circuit, which held oral argument on March 6. The Federal Circuit decision is still pending.

The initial determination in Certain Subsea Telecommunications Systems and Components Thereof14 confirmed that a parent corporation may be found to satisfy the importation requirement based on the actions of its subsidiaries. There, ALJ Cheney rejected the notion of a "context-agnostic" rule, explaining that the commission applies a fact-intensive inquiry to determine whether a respondent's conduct satisfies the importation requirement.

Takeaways and Practice Tips

The importation requirement continues to be a low bar for subject matter jurisdiction, to which most respondents are likely to stipulate. By stipulating to importation, respondents can save costs and allocate hearing time to other defenses.

Footnotes

1. Certain Memory Modules, Inv. No. 337-TA-1089, Order No. 49 (Apr. 11, 2019).

2. Memory Modules, Inv. No. 337-TA-1089, Order No. 49.

3. Certain Integrated Circuits, Inv. No. 337-TA-1024, Order 55 (Aug. 31, 2018).

4. Inv. No. 337-TA-1058, Init. Det. (August 18, 2018).

5. Memory Modules, Inv. No. 337-TA-1089, Order No. 51 (June 26, 2019).

6. Inv. No. 337-TA-1089, Staff's Response to Complainant's Motion (June 3, 2019).

7. Magnetic Tape Cartridges, Inv. No. 337-TA-1058, Comm'n Op. (Apr. 9, 2019).

8. Id.

9. Certain Mobile Electronic Devices, Inv. No. 337-TA-1065, Init. Det., (Sept. 28, 2018); Certain Mobile Electronic Devices (II), Inv. No. 337-TA-1093, Findings on Public Interest, (April 16, 2019).

10. Inv. Nos. 337-TA-60, 337-TA-67, 337-TA-182/188.

11. Certain Fluidized Supporting Apparatus, Inv. No. 337-TA-182/188 (Oct. 5, 1984).

12. Certain Strontium-Rubidium Radioisotope Infusion Sys., Inv. No. 337-TA-1110 (August 1, 2019).

13. Inv. No. 337-TA-1001.

14. Inv. No. 337-TA-1098.

Originally published by Law360

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions