November/December 2015
IP Litigator
By Eric J. Fues; Maximilienne Giannelli, Ph.D.
Authored by Eric J. Fues and Maximilienne Giannelli, Ph.D.
The Federal Circuit's Suprema decision no doubt strengthens the hands of patent holders at the U.S. International Trade Commission (ITC). Based on this en banc ruling, patentees can again assert method of use claims for indirect infringement, even when direct infringement occurs after importation. But before celebrating too much, litigants considering the ITC should ask themselves if things are truly back to normal. Have things really returned to past practice, the "same as it ever was"?1 Or should patentees recognize that substantial risks remain, even with respect to method claims, when alleging direct infringement of those patents? This article addresses these questions through an analysis of the Suprema decisions, the underlying administrative law judge (ALJ) and ITC decisions, and the ITC's vastly different ruling, on a similar record, in the Certain Electronic Devices investigation.
The ALJ's Initial Determination in Suprema
Certain Biometric Scanning Devices, as the case was called at the ITC, involved several patents owned by complainant Cross Match.2 One of them, U.S. Patent No. 7,203,344 (the '344 patent), claimed a method of using an optical scanning system for capturing and processing a fingerprint image.3 Respondent Suprema manufactured and imported hardware and software (in the form of software development kits (SDKs)) for scanning fingerprints. Respondent Mentalix imported Suprema's scanners for integration with Mentalix's software in the United States. Cross Match contended that Suprema's scanners, when used with Mentalix's software, infringed Cross Match's patent. Cross Match alleged both direct infringement and induced infringement of the '344 patent by Suprema and direct infringement of the patent by Mentalix.
Chief Administrative Law Judge Paul Luckern found for Cross Match in his Final Initial Determination (ID). He ruled that Suprema's accused products infringed claim 19 of the '344 patent when combined with Mentalix's "FedSubmit" software.4 But Judge Luckern did not identify the infringer, and his ruling was premised on direct infringement, because he expressly found no indirect infringement.5 The ALJ also rejected the respondents' obviousness and indefiniteness challenges to claim 19, and found that the other elements of a violation of Section 337 had been satisfied.6 Accordingly, with respect to claim 19 of the '344 patent and certain claims of another asserted patent, the ALJ recommended that the ITC issue an exclusion order and a cease-and-desist order.7
The ITC's Suprema Decision
The ITC determined to review-in-part the ID, specifically with respect to the ALJ's finding of a violation of Section 337 based on infringement of claim 19 of the '344 patent.8 In its notice regarding the review, the ITC asked the parties for additional briefing on two issues:
1. Who infringes claim 19 of the '344 patent and what type of infringement has occurred? Please consider direct, contributory, and induced infringement.
2. Is there . . . a sufficient nexus between the infringer's unfair acts and importation to find a violation of Section 337?9
The ITC also required briefing about remedy, bonding, and the public interest.10
After review, the ITC found a violation of Section 337 based on the combination of Suprema's scanner and Mentalix's FedSubmit software. Specifically, the ITC found direct infringement of claim 19 of the '344 patent by Mentalix and induced infringement of that claim by Suprema.11 But the ITC did not find contributory infringement. In a heavily redacted portion of its opinion, the ITC discussed the record evidence which, in its view, showed that Suprema had willfully blinded itself to the existence of the '344 patent, had deliberately shielded itself from the nature of the infringing activities that it actively encouraged and facilitated Mentalix to undertake, and had aided and abetted Mentalix to adapt and integrate its FedSubmit software with Suprema's scanners and its SDK to infringe claim 19.12 With respect to the nexus test, the ITC stated that "we find that the same record evidence that shows induced infringement by Suprema also shows the requisite nexus between importation and the unfair acts to find a violation of Section 337 by both respondents."13 Hence, even though Suprema's scanners did not infringe method claim 19 when imported and direct infringement occurred after importation, the ITC still found a violation of Section 337.
Based on its findings, the ITC issued a limited exclusion order "prohibiting the unlicensed entry of biometric scanning devices, components thereof, associated software, and products containing the same that infringe . . . claim 19 of the '344 patent where the infringing scanning devices are manufactured abroad by or on behalf of, or are imported by or on behalf of, Suprema or Mentalix," and it issued a cease-and-desist order directed to Mentalix only.14 The exclusion order also contained a certification provision regarding the potential importation of noninfringing biometric scanning devices, components thereof, associated software, and products containing the same.15
The Contemporaneous Investigation and ID in Certain Electronic Devices
While ALJ Luckern was overseeing Certain Biometric Scanning Devices, ALJ James Gildea was handling the investigation in Certain Electronic Devices.16 These investigations involved similar allegations of postimportation infringement, and both featured findings by the ALJs of direct infringement by the respondents. But the investigations fared quite differently after ITC review. As will be seen later, the ITC's opinion in Certain Electronic Devices also figured prominently in the Federal Circuit's initial and en banc decisions in Suprema in a manner leaving open substantial questions about postimportation infringement liability at the ITC.
In Certain Electronic Devices, complainants S3 Graphics Co., Ltd. and S3 Graphics Inc. (collectively S3G) alleged, among other things, that respondent Apple Inc. violated Section 337 by infringing claim 1117 of US Patent No. 6,683,978 (the '978 patent) and claim 1618 of US Patent No. 6,658,146 (the '146 patent). S3G alleged that Apple directly infringed claim 11 of the '978 patent when it made, used, sold, and imported the accused products, including application software containing encoded image data files in the format covered by the claim.19 S3G additionally alleged that Apple induced software developers and consumers to infringe claim 11. S3G also alleged that Apple directly infringed claim 16 of the '146 patent by importing and selling computers and associated Apple software and by performing the claimed method. S3G further alleged that Apple induced software developers to practice the claimed method. After discovery, the record evidence of direct infringement all occurred postimportation.
Apple asserted that the importation requirement of Section 337 could not be met, and hence jurisdiction was lacking, because its accused Mac OS X Devices contained no infringing data at the time they entered the United States.20 In his Final Initial Determination, ALJ Gildea disagreed, noting Apple's stipulation about the importation of its accused products and explaining that "other administrative law judges have previously found that the importation requirement was met when hardware or software that was part of an infringing system was imported."21
As for patent issues, the ALJ found that Apple infringed claim 11 of the '978 patent by making and using the claimed data format when Apple tested its Mac OS X Devices in the United States.22 The ALJ also determined that Apple infringed claim 16 of the '146 patent by practicing the claimed data compression method during US testing.23 But the ALJ rejected S3G's allegations of indirect infringement in all instances.24 The ALJ also rejected Apple's invalidity challenges as to claim 11 of the '978 patent and claim 16 of the '146 patent (among others), found an implied license for a subset of the accused Mac OS X Devices using a NVIDIA CPU, but found that the other elements for a violation of Section 337 had been satisfied with respect to the accused Mac OS X Devices not incorporating the NVIDIA GPU.25 Accordingly, with respect to claim 11 of the '978 patent, claim 16 of the '146 patent, and one other claim, the ALJ recommended that the ITC issue an exclusion order and a cease-and-desist order.26
The ITC Decision in Certain Electronic Devices
The ITC determined to review the final ID in its entirety.27 The ITC asked for briefing on a series of issues, including the following:
(1) Please comment on the Commission's statutory authority to find a violation under 19 U.S.C. § 1337(a)(1)(B)(i) where direct infringement is asserted and the accused article does not meet every limitation of the asserted patent claim at the time it is imported into the United States.
(2) Please comment on the Commission's statutory authority to find a violation under 19 U.S.C. § 1337(a)(1)(B)(i) where an imported article is used in the United States to directly infringe a method claim, but where there is no evidence of contributory infringement or inducement of infringement on the part of the importer.
. . . .
(4) Some ALJ and Commission decisions have found the requirements of Section 337 to be satisfied so long as there is some "nexus" between the products imported and the alleged infringement. Please comment on the history and application of this nexus requirement in patent and nonpatent cases. Please also address the continuing relevance of the nexus requirement, if any, after the 1988 amendments to Section 337 of the Tariff Act of 1930.28
Thus, as in the Certain Biometric Scanning Devices decision under review at the same time, the ITC sought further input about postimportation infringement and the nexus test.
After review, the ITC reversed the ALJ and found no violation of Section 337.29 In doing so, the ITC disagreed with Apple's jurisdictional argument about importation. But it agreed with that argument on the merits, determining that infringement at the moment of importation was necessary for a violation of Section 337:
To prove a violation of section 337(a)(1)(B)(i) based on patent infringement, a complainant must prove "[t]he importation into the United States, the sale for importation, or the sale within the United States after importation" of articles that infringe a US patent. 19 U.S.C. § 1337(a)(1)(B)(i). Although satisfaction of the importation requirement is seldom disputed in section 337 investigations, the present case is an exception.30
In its detailed analysis, the ITC reviewed the statutory language and identified three specific acts that could form the basis of a violation of Section 337: (1) importation, (2) selling for importation, and (3) selling after importation. The ITC then surveyed the statutory "categories of articles that must be involved in the proscribed acts," and observed that "[f]irst on the list are 'articles that—infringe' a US patent." Accordingly, "[b]ecause the statute specifies that the articles in question must 'infringe,' an importation analysis that ignores the question of infringement would be incomplete."31 The ITC also reviewed some of its past decisions and disregarded language in those decisions to "clarify" that merely showing a nexus between an imported article and a later act of infringement "will not substitute for proof that all of the statutory requirements found in section 337 have been satisfied."32 Instead, according to the ITC, the statute "now expressly defines the relevant unfair acts to be importation, sale for importation, and sale after importation of 'articles that—infringe' U.S. patents."33
As noted above, the ALJ had found that Apple infringed claim 11 of the '978 patent by making and using the claimed data format when Apple tested its Mac OS X Devices in the United States. But because the accused Mac OS X Devices did not contain the claimed data format at the time of importation, the ITC determined that no violation of Section 337 had occurred based on direct infringement of claim 11. The ITC affirmed the ALJ regarding the lack of indirect infringement, and therefore found no infringement of this claim.34
The ALJ also had determined that Apple infringed claim 16 of the '146 patent by practicing the claimed data compression method during US testing. But because the claimed method had not been practiced at the time of importation, the ITC found no direct infringement by Apple. In a nod toward indirect infringement in future investigations, however, the ITC added that "S3G might have proved a violation of section 337 if it had proved indirect infringement of method claim 16."35 But here, because of no direct infringement, the ITC determined that indirect infringement could not have occurred and affirmed the ALJ's findings about that issue.36
The Federal Circuit never reviewed the Certain Electronic Devices decision because the parties settled during the appeal. But this decision has been cited in numerous other ITC cases and it figured prominently in the Suprema case at the Federal Circuit.
The Initial Panel Decision in Suprema I
Suprema appealed the ITC's rulings about a violation of Section 337, including its infringement findings about method claim 19 of the '344 patent. In a decision authored by Circuit Judge Kathleen O'Malley, the Federal Circuit panel majority vacated the ITC's rulings regarding Suprema's and Mentalix's infringement of that patent.37 The panel reasoned that there were no "articles that infringe" at the time of importation.38 Hence, it held that "an exclusion order based on a violation of § 1337(a)(1)(B)(i) may not be predicated on a theory of induced infringement where no direct infringement occurs until post-importation."39 Based on this conclusion, the panel also determined that it need not address the merits of the ITC's willful blindness or direct infringement findings for the '344 patent.40 Circuit Judge Jimmie Reyna dissented with respect to the '344 patent and the induced infringement issue.41
In reaching its decision, the panel reviewed the statutory language and determined that the ITC's mandate "is thus premised on the 'importation,' 'sale for importation,' or 'sale within the United States after importation' of 'articles that . . . infringe.'"42 According to the court, "[t]he focus is on the infringing nature of the articles at the time of importation, not on the intent of the parties with respect to the imported goods."43 The panel thought the statutory provision in 19 U.S.C. § 1337(d) about exclusion orders, with reference to "the 'articles concerned,' " also focused on the infringing nature of goods when imported. The court also found support for its statutory construction in the Certain Electronic Devices decision, noting that "[t]he Commission has recognized this limitation on its jurisdiction by refusing to investigate complaints premised on allegations of direct infringement of method claims under § 271(a) because patented methods are not infringed until 'use' in the United States occurs."44 Nonetheless, the panel majority went out of its way to limit its holding, suggesting that the ITC could still carry out its mandate of investigating unfair trade practices "via resort to § 271(a) or § 271(c), or even to § 271(b) where the direct infringement occurs pre-importation."45
Judge Reyna disagreed with the majority's refusal "to stop induced infringement at the border."46 He views Section 337 as a trade statute designed to provide relief from unfair trading practices, including the importation of articles that will lead to harm to a domestic industry by virtue of infringement of a valid and enforceable patent.47 In a lengthy footnote, he cited decades of precedent where the ITC found violations of Section 337 by respondents who had actively induced infringement in the United States, even though infringement did not occur until after importation of the accused articles.48 Judge Reyna also faulted the majority's statutory construction, explaining that "Section 337 is defined, much like § 271, in terms of conduct that may occur before and after the precise moment of importation."49 Because the statute does not confine the specific time frame when an article must "infringe," he believed the majority erred by using patent law provisions such as Section 271(a) and Section 271(c) to introduce a strict temporal limitation on the moment when infringement liability must be complete for the purpose of Section 337. Judge Reyna also feared that the majority's holding would allow importers to circumvent Section 337 liability for indirect infringement. Because the ITC already declined to find violations of Section 337 based on the Certain Electronic Devices decision for direct infringement of method claims occurring postimportation, the availability of indirect infringement claims against importers was all the more important to Judge Reyna.50
The ITC and complainant Cross Match Technologies sought rehearing and rehearing en banc. On May 13, 2014, the Federal Circuit issued an order granting rehearing en banc and vacating the panel decision. On June 11, 2014, the court issued a briefing schedule, invited the Attorney General to present the views of the United States, and indicated that briefs from amici curiae would be entertained. The Federal Circuit did not indicate what specific issues it wanted to be addressed in the en banc briefing.
The Federal Circuit's En Banc Suprema II Decision
The Suprema I decision generated considerable controversy, leading to many amicus brief filings in connection with the en banc appeal.51 The amicus and party briefing focused on the "articles that infringe" statutory language and whether this phrase in 19 U.S.C. § 1337(a)(1)(B)(i) precluded liability for induced infringement when direct infringement occurred postimportation. Many of the briefs also addressed the issue of whether the ITC should be afforded deference for its interpretation of its governing statute. Cross Match prevailed by a narrow margin in a 6-4 split decision with two dissents.52 Judge Reyna wrote for the majority, Judge Timothy Dyk dissented, and Judge O'Malley also dissented.
The en banc majority framed the issue as "whether goods qualify as 'articles that infringe' when the Commission has found that such goods were used, after importation, to directly infringe by the importer at the inducement of the goods' seller."53 The court assessed what deference, if any, was owed to the ITC's interpretation of its statute. To decide this issue, the court employed the two-part test of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.,54 which evaluates whether Congress has directly spoken to the precise issue and, if not, whether the agency's interpretation of the issue in its statute was reasonable.55
With respect to the first prong of the test, the majority assessed whether the phrase "articles that infringe" in Section 1337(a)(1)(B)(i) unambiguously excluded inducement of postimportation infringement. In evaluating the statutory language, the majority first considered the word "infringe," as defined in 35 U.S.C. § 271(a), and determined that, "[s]imply put, the phrase 'articles that infringe' does not map onto the Patent Act's definition of infringement."56 This is because Section 271 defines a person's actions as infringement—by making, using, offering for sale, selling, or importing without authority a patented article—whereas the article itself cannot infringe under any subsection of Section 271. Furthermore, focusing on the present tense of the verb "infringe" would produce "absurd results" under the pre-1994 version of Section 271(a), since, at that time, the statute only covered making, using, and selling in the United States. But Congress added the "articles that infringe" language to Section 337 in 1988, meaning that a literal focus on verb tense would have excluded "even the ordinary case of direct infringement," because none of these acts would have occurred in the United States at the time of importation.57 As for the original panel's focus on the "involved articles" clause of the exclusion order provision, the en banc majority distinguished them from the "articles that infringe," because exclusion orders are prospective and forward-looking. For at least these reasons, the majority determined that Congress had not directly addressed, through the statutory language, the issue of induced infringement when direct infringement occurred postimportation.
As for the second step of the Chevron analysis, the court found the ITC's interpretation consistent with the statutory text, policy, and legislative history of Section 337. As for the statute, the court noted that induced infringement is one type of infringement, and that when an article is supplied, it can be an "article that infringes" as long as the other requirements of inducement are met. Furthermore, by defining as unlawful "the sale within the United States after importation . . . of articles that—(i) infringe . . . ,"58 the statutory language confirms that the ITC is permitted to focus on infringement occurring after importation. As for the legislative history, the majority found that it "consistently evidences Congressional intent to vest the Commission with broad enforcement authority to remedy unfair trade acts."59 In reaching this conclusion, the court surveyed the predecessor of Section 337, Section 316 of the Tariff Act of 1922, as well as Section 337 of the Tariff Act of 1930 as promulgated, and Section 337 as amended in 1988. In each instance, the statute has been interpreted to be broad and inclusive in order to remedy unfair trade practices. Particularly with respect to the 1988 amendments, which added the language "articles that infringe," the en banc majority noted Congress's stated purpose at that time to enhance ITC authority by making Section 337 a more effective remedy.60 The majority also noted that the Federal Circuit had consistently affirmed ITC findings for a violation of Section 337 based on induced infringement both before and after the 1988 amendments, and that prior to this case, the court had never questioned the Commission's authority to find a violation of Section 337 based on acts of induced infringement. Thus, the en banc majority found the ITC's interpretation to be reasonable, and it remanded the appeal to the original panel for further proceedings consistent with its opinion.61
Judge Dyk wrote a short dissent emphasizing how, in his view, the current case differed from past ITC practice regarding induced infringement. He asserted that in prior cases, the inducing instructions had been imported along with the accused articles that ultimately were used to directly infringe in the United States.62 In contrast, in the present case, Suprema collaborated with Mentalix to integrate the hardware and software after importation. For this reason, Judge Dyk found the ITC's exclusion order overbroad, because some of the imported Suprema scanners would be used for noninfringing purposes and not be integrated with Mentalix's software.63 According to Judge Dyk, the certification provision of the exclusion order did not remedy this problem. Judge O'Malley wrote a lengthy dissent echoing points she made in the original panel decision. According to this dissent, Section 337 unambiguously excludes liability for induced infringement with its "articles that infringe" language.64 Objects are imported, not methods. Judge O'Malley cited to the ITC's Certain Electronic Devices decision for acknowledging that the ITC's "focus under the statute must be on the point of importation, and patented methods generally are not directly infringed until their use in the United States after importation."65 Indeed, Judge O'Malley and the other three dissenters believed that the 1988 amendments to Section 337 did "not include the possibility of post-importation infringement of method claims."66 Because it concluded that the statute lacked ambiguity, the dissent determined that the majority should not have proceeded to Chevron step two by deferring to the ITC's statutory interpretation. The dissent also pointed out that patentees would not be without a remedy concerning allegations of method claim infringement, where the infringement occurred postimportation, because these allegations could be addressed in the district courts.67
The Remand Decision in Suprema III
About a month after the Federal Circuit issued its en banc decision, the panel hearing the remand issued a nonprecedential decision reinstating the original panel's rulings in Suprema I with respect to everything but the inducement issue addressed en banc.68 As for the '344 patent, the remand panel affirmed the ITC's findings that Mentalix directly infringed claim 19 and that Suprema had been willfully blind to Mentalix's infringement.69 Accordingly, the court affirmed the ITC's induced infringement findings and the exclusion order predicated thereon.
The issue of post importation method claim infringement at the ITC recently became more complicated. As discussed above, the ITC has drawn a line between indirect infringement of method claims (Suprema) and direct infringement of method claims (Certain Electronic Devices), when direct infringement occurs postimportation. But the Federal Circuit's en banc Suprema holding, while acknowledging the recent Certain Electronic Devices decision, appears to support the ITC's prior practice of finding violations of Section 337 based on post-importation infringement of method claims having a nexus to an imported article. Suprema may thus harken a return to this practice.
The ITC for many years applied a "nexus test" to tie the unfair trade practices to the importation requirement. As explained in Certain Sputtered Carbon Coated Computer Disks, "[t]he Commission has long held that there must be a nexus between unfair activities such as patent infringement, on the one hand, and importation . . . , on the other."70 The nexus test supported the ITC's authority to adjudicate postimportation infringement, provided the other elements of Section 337 were satisfied. Both before and after the 1988 amendments, the Federal Circuit has affirmed findings of a violation of Section 337 by respondents engaged in postimportation infringement.
For example, in a case involving the pre-1988 version of the statute, Young Engineers, Inc. v. U.S. International Trade Commission, the Federal Circuit affirmed findings of a violation of Section 337 in the importation and sale of molded-in sandwich panel inserts.71 The accused inserts were made in Japan, imported into the United States by respondent The Young Engineers, Inc., and subsequently sold to several US based respondents. The ALJ and the ITC found the US based respondents' purchase and use of the accused inserts after importation infringed certain apparatus and method claims of three US patents.72 In so finding, the ITC explained that its authority extended beyond the physical importation of the accused products, stating, "[T]he jurisdiction of the Commission is not limited to those acts which occur during the actual physical process of importation. If there is some nexus between the unfair methods or acts and importation, the Commission's jurisdiction is established."73
Similarly, in a case decided 20 years after the 1988 amendments, Certain Digital Televisions, the ITC found that respondents violated Section 337 by inducing their U.S. customers to directly infringe an asserted patent after importation of the goods in question.74 The ITC also found that certain respondents, Vizio and SBC, themselves directly infringed through product testing in the United States.75 With respect to importations of certain legacy digital televisions, the Federal Circuit affirmed.76 These decisions and others show that the ITC commonly addressed the issue of infringement after importation.
In Certain Electronic Devices, however, the ITC sought to "clarify" its precedent regarding the nexus test and postimportation infringement. The ITC observed that the statute "now expressly defines the relevant unfair acts to be importation, sale for importation, and sale after importation of 'articles that—infringe U.S. patents,"77 and it focused on this phrase to require infringement at the time of importation. Sitting en banc, the Federal Circuit has now rejected this "articles that infringe" argument and its impediment to addressing induced infringement when direct infringement occurs after importation.
Will Suprema Apply More Broadly?
Although limited in its facts to induced infringement of method claims, the Suprema decision could apply more broadly in the context of direct infringement of both method claims and apparatus claims. First, as for infringement of method claims, there appears to be little principled distinction between indirect and direct infringement. All of the factors underlying the en banc majority's Suprema decision—ambiguity in the "articles that infringe" statutory text, the stated policy of using Section 337 to protect domestic industries from unfair trade practices, a legislative history indicating that Congress sought to improve the effectiveness of the statute, and prior decisions of the appellate courts affirming infringement liability—apply equally to claims of direct infringement. As a factual matter, the arguments supporting the ITC's enforcement of method claims based on direct infringement appear stronger than those justifying enforcement of such claims based on indirect infringement.
The Certain Electronic Devices investigation illustrates these facts. There, Apple carried out the claimed data compression method through testing that occurred after importation. So, rather than having to assess issues such as the intent of the importer, how and when instructions to infringe are provided to another party, whether willful blindness of the infringement has occurred, whether the accused article has a substantial noninfringing use, etc., the analysis can stop with direct infringement. There was no question that the entity causing injury to the domestic industry (Apple) was the same entity that had imported the accused Mac OS X Devices. In contrast to Suprema, where the imported articles had substantial noninfringing uses and thus raised concerns about an overbroad exclusion order, in Certain Electronic Devices there was no question that end-users of these devices also would practice the claimed data compression method.
The Certain Electronic Devices investigation also involved direct infringement of apparatus claims based on use in the United States. Once again, the ITC determined that Apple directly infringed in the United States through its domestic product testing, and there was no question that the entity causing injury to the domestic industry also had imported the accused Mac OS X Devices. Nor was there any question about users of the computers generating the claimed data sets during operation of the devices, thereby allaying concerns about an overbroad exclusion order. Thus, as in the context of method claims, the rationale of Suprema would support the ITC's enforcement of apparatus claims when infringement occurs in the United States.
The real question is whether claims for direct infringement belong solely in district court. To the extent that the ITC may be concerned about a flood of cases involving allegations of postimportation direct infringement, the ITC may wish to limit its jurisdiction. This result, however, would be difficult to square with the ITC's authority to enforce patents in the context of induced infringement and contributory infringement when direct infringement occurs after importation. In simple terms, if the ITC finds it illegal for an importer to instruct someone else to infringe a method claim after importation, then why also should it not be illegal for the importer to infringe that claim after importation?
Moreover, historically, the ITC has adjudicated claims of direct infringement of both method and apparatus claims when infringement occurs after importation, without overburdening its caseload. Provided that the nexus test, or some analogue of it, can be properly administered to require a close connection between the importation and the later infringement—such as the same entity importing the product and carrying out the infringement, infringement activities occurring reasonably close to the time of importation, etc.—any caseload increase should be manageable. Moreover, given the historically broad application of the statute and the ongoing need to protect domestic industries from unfair methods of competition, some expansion of the ITC's authority appears justified.
Although it is impossible to predict all of the issues that will arise, the ITC's future caseload will involve new technologies, new modes of delivering accused products and components thereof (including through digital transmissions), and new infringement fact patterns. Section 337 has been applied broadly and flexibly in the past to prevent circumvention, and the Suprema decision allows for such flexibility in the future. In particular, importers will not be able to import devices in an unfinished state, install software in them to facilitate infringement of a US patent, and escape liability at the ITC. On the flip side, certification provisions in exclusion orders may become more important, given the real dangers of over breadth and potential noninfringing uses. These and other issues will be ironed out in future ALJ, ITC, and Federal Circuit decisions.
The Federal Circuit's en banc decision in Suprema affirmed the ITC's authority to protect domestic industries from unfair trade practices involving induced infringement based on direct infringement occurring in the United States after importation. Given the rationale of this en banc decision, it would be appropriate for the ITC to adjudicate future claims of direct infringement when infringement occurs postimportation and the requirements of Section 337 are otherwise satisfied.
Endnotes
1 Talking Heads, "Once in a Lifetime," on Remain in Light (Sire Records 1980).
2 Certain Biometric Scanning Devices, Components Thereof, Associated Software, and Products Containing Same, Inv. No. 337-TA-720, USITC Pub. 4366 (Feb. 2013).
3 This article focuses on the '344 patent, and specifically on claim 19 of that patent, because this is the only claim at issue in the Federal Circuit's en banc opinion.
4 Certain Biometric Scanning Devices, Inv. No. 337-TA-720 at 97, 168 (June 17, 2011).
5 Id. at 98 ("As complainant has not shown infringement by any third parties, the administrative law judge finds that complainant has also shown neither contributory infringement nor inducement to infringe by respondents.").
6 Certain Biometric Scanning Devices, Inv. No. 337-TA-720 at 132, 140, 168.
7 Id. at 168–169.
8 Certain Biometric Scanning Devices, Inv. No. 337-TA-720, Notice at 2 (Aug. 18, 2011).
9 Id. (citations omitted).
10 Id. at 3.
11 Certain Biometric Scanning Devices, Inv. No. 337-TA-720 Comm'n Op. at 12 (Nov. 10, 2011).
12 Id. at 12–16.
13 Id. at 12.
14Certain Biometric Scanning Devices, Inv. No. 337-TA-720, Notice at 3 (Oct. 24, 2011).
15 Certain Biometric Scanning Devices, Inv. No. 337-TA-720, Exclusion Order 3 (Oct. 24, 2011).
16Certain Electronic Devices with Image Processing Systems, Components Thereof, and Associated Software, Inv. No. 337-TA-724, USITC Pub. 4374 (Feb. 2013).
17 Claim 11 covers a data format stored in computer memory. Certain Electronic Devices, Inv. No. 337-TA-724, USITC Pub. 4374, ID at 67 (July 1, 2011).
18 Claim 16 covers a method for compressing an image file. Id. at 88–89, 91.
19 Id. at 66. While S3G's allegations involved two different compression technologies, PVRTC and DXT, this article focuses only on the DXT implementation. The Apple products accused of implementing DXT included all Mac computers imported during the time of the investigation that ran the Mac operating system OS X and are referred to as the "Mac OS X Devices." Id. at 13.
20 Certain Electronic Devices, Inv. No. 337-TA-724 at 16.
21 Id. at 17.
22 Id. at 69–70.
23 Id. at 90–91.
24 Id. at 78–79, 107–108.
25 Id. at 276–278.
26 Id. at 287.
27 Id., Notice at 2 (Sept. 2, 2011).
28 Id.
29 Id., Comm'n Op. at 2 (Dec. 21, 2011). Commissioner Lane would have affirmed the ALJ's finding of a violation and did not join those portions of the opinion finding no violation. Id. at 1, n.1.
30 Id. at 10 (alteration in original).
31 Id. at 13.
32 Id. at 17.
33 Id. at 17 (emphasis in original) (citation omitted).
34 Id. at 19.
35 Id. at 18.
36 Id. at 20.
37 Suprema, Inc. v. Int'l Trade Comm'n (Suprema I), 742 F.3d 1350, 1352, 1357 (Fed. Cir. 2013), vacated, No. 2012-1170, 2014 WL 3036241 (Fed. Cir. May 13, 2014).
38 Id. at 1352.
39 Id. at 1353.
40 Id.
41 Id. at 1371 (Reyna, J., concurring-in-part and dissenting-in-part).
42 Id. at 1358 (majority opinion).
43 Id.
44 Id. at 1359.
45 Id. at 1361 n.4.
46 Id. at 1371 (Reyna, J., concurring-in-part and dissenting-in-part).
47 Id. at 1372.
48 Id. at 1372 n.2.
49 Id. at 1375 (emphasis in original).
50 Id. at 1376.
51 In the interest of full disclosure, coauthor Eric Fues was counsel of record for an amicus brief submitted by the ITC Trial Lawyers Association (ITCTLA). The ITCTLA supported the ITC in its brief. Mr. Fues was not otherwise involved with the Suprema or Certain Electronic Devices cases, although his law firm Finnegan represented S3 Graphics Co., Ltd. and S3 Graphics Inc. in the Certain Electronic Devices investigation.
52 Suprema, Inc. v. Int'l Trade Comm'n (Suprema II), No. 2012-1170, 796 F.3d 1338, 2015 U.S. App. LEXIS 13929 (Fed. Cir. Aug. 10, 2015) (en banc).
53 Id. at *16–17.
54 Chevron, U.S.A., Inc. v. Natural Res. Defense Council, Inc., 467 U.S. 837 (1984).
55 Suprema II, 2015 U.S. App. LEXIS 13929, at *17–18.
56 Id. at *19.
57 Id. at *22–23.
58 Id. at *26.
59 Id.
60 Id. at *30–31.
61 Id. at *33–34.
62 Id. at *36–37 (Dyk, J., dissenting).
63 Id. at *37.
64 Id. at *41 (O'Malley, J., dissenting).
65 Id. at *42. The dissent cites the ITC's Certain Electronic Devices decision five separate times as supporting its position.
66 Id. at *46–47.
67 Id. at *74–75.
68 Suprema, Inc. v. Int'l Trade Comm'n (Suprema III), No. 2012-1170, 2015 U.S. App. LEXIS 16515 (Fed. Cir. Sept. 14, 2015).
69 Id. at *14, *20.
70 Certain Sputtered Carbon Coated Computer Disks and Products Containing Same, Including Disk Drives, Inv. No. 337-TA-350, USITC Pub. 2701, Comm'n Op. at 13 (Nov. 1993).
71 Young Engineers, Inc. v. U.S. Int'l Trade Comm'n, 721 F.2d 1305, 1309, 1317 (Fed. Cir. 1983).
72 Certain Molded-In Sandwich Panel Inserts and Methods for Their Installation, Inv. No. 337-TA-99, USITC Pub. 1246, Comm'n Op. at 3 (May 1982).
73 Certain Molded-In Sandwich Panel Inserts, Inv. No. 337-TA-99, USITC Pub. 1246, Comm'n Op. at 4 (citation omitted).
74 Certain Digital Televisions and Certain Products Containing Same and Methods of Using Same, Inv. No. 337-TA-617, Comm'n Op. at 10 (Apr. 2009).
75 Id. at 6.
76Vizio, Inc. v. Int'l Trade Comm'n, 605 F.3d 1330, 1343 (Fed. Cir. 2010).
77 Certain Electronic Devices, Inv. No. 337-TA-724, Comm'n Op. at 17 (emphasis in original) (citation omitted).
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