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ITC Failed to Consider Invalidity Defenses During Enforcement Proceedings for General Exclusion Order

October 07, 2004

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Last Month at the Federal Circuit - November/December 2004

Judges: Linn (author), Clevenger, and Bryson

In Vastfame Camera, Ltd. v. International Trade Commission, No. 03-1426 (Fed. Cir. Oct. 7, 2004), the Federal Circuit vacated a decision of the ITC concerning infringement because the ITC’s decision refused to allow Vastfame Camera, Ltd. (“Vastfame”) to present its invalidity defense.

This appeal concerns another decision by the ITC involving disposable film cameras. The ITC had previously issued a general exclusion order in June 1999. Although Vastfame was not a party to that investigation and its cameras were not at issue in that investigation, it knew that the proceedings were taking place.

After the general exclusion order issued, Vastfame obtained a ruling from the U.S. Customs Service (“Customs”) that two of its cameras did not violate the general exclusion order. Fuji Photo Film Company, Ltd. (“Fuji”) then filed a complaint with the ITC concerning whether Vastfame had violated the general exclusion order. Vastfame pled an invalidity defense, but the ALJ refused to consider invalidity, ruling that the defense could not be raised in an enforcement proceeding. The ALJ eventually ruled that Vastfame’s cameras violated the general exclusion order and could no longer be imported.

The Federal Circuit reviewed the statutory authority for the ITC and could not agree with the ITC generally that if no specific statutory authority exists to the contrary, the ITC has the authority to conduct enforcement proceedings. Nonetheless, the Federal Circuit ruled that the ITC has authority to conduct proceedings to enforce general exclusion orders under the provisions of 19 U.S.C. § 1337(b).

Moreover, 19 U.S.C. § 1337(c) specifically states that “all legal and equitable defenses may be presented in all cases.” According to the Federal Circuit, the “all cases” phrase of § 1337(c) clearly encompasses investigations under § 1337(b). As a result, the ITC erred by not allowing Vastfame to present its invalidity defense.