Authored by Michael E. Kudravetz and P. Andrew Riley
Samsung Electronics Co. Ltd. lost two high-profile battles with Apple Inc. in 2013 based on investigations that started at the U.S. International Trade Commission (ITC). In the first, the president vetoed an exclusion order the ITC issued against Apple based on the ITC's finding that Apple infringed Samsung patents. In the second, with the roles of the parties reversed, the president did not veto an exclusion order the ITC issued against Samsung based on infringement of Apple patents.
Samsung, however, still has many options available so that it can reverse, narrow or work around the ITC's exclusion order. This article explains the formal and informal avenues available to parties seeking to import goods that may be subject to an ITC exclusion order, including appeals to the U.S. Court of Appeals for the Federal Circuit, ITC advisory proceedings, and interaction with U.S. Customs and Border Protection, the agency charged with enforcing ITC exclusion orders.
An appeal to the Federal Circuit presents the most obvious route after a loss at the ITC. Section 1295(a)(6) of title 28, gives the Federal Circuit jurisdiction over final actions by the ITC. When the ITC issues an exclusion order, a party can file an appeal after the 60-day presidential review period, provided the president did not veto the exclusion order—a very rare occurrence. If the ITC did not issue an exclusion order, a notice of appeal can be filed immediately by any party adversely affected by the ITC's final determination.
Not every issue in an ITC investigation is ripe for appeal, however. For example, if the ITC concludes that a respondent does not infringe and, therefore, there is no violation of Section 337, it does not need to determine whether the patent is invalid. In such a situation, parties can only appeal the ITC's infringement determination. See, e.g., Beloit Corp. v. Valmet Oy, 742 F.2d 1421, 1422-23 (Fed. Cir. 1984). This often arises when the ITC reviews an administrative law judge's initial determination but takes no position on certain portions of that decision. E.g., id. Any party wanting to file an appeal has 60 days from when the ITC's decision becomes final. 19 U.S.C. § 1337(c).
Anyone can request that the ITC issue an advisory opinion on whether a respondent's new product would violate an existing ITC order. 19 C.F.R. § 210.79(a). The ITC considers a number of factors before concluding whether it will issue an advisory opinion. The ITC examines whether an advisory opinion would "facilitate enforcement of Section 337," whether an opinion would be in the public interest, whether an opinion would "benefit consumers and competitive conditions in the United States," and "whether the person has a compelling business need for the advice and has framed his request as fully and accurately as possible." Id.
In addition, the ITC requires that the "respondent seeking such advice must demonstrate a compelling business need for the advice sought," that the requester framed "its request as fully and accurately as possible," and that the request posed is not a hypothetical. Certain Surveying Devices, Inv. No. 337-TA-69, USITC Pub. No. 1178, Advisory Op., 2-3 (Aug. 1981).
In a recent example, the ITC issued an advisory opinion in Certain Coaxial Cable Connectors and Components Thereof and Products Containing the Same, Inv. No. 337-TA-650, in February 2012. Holland Electronics LLC, which was not named as a respondent in the underlying investigation, sought an advisory opinion regarding whether its cable connectors were subject to the general exclusion order the ITC issued in Inv. 650. Coaxial Cable Connectors, Advisory Op., 1 (Feb. 9, 2012).
Specifically, Holland argued its cable connectors did not infringe the patent at issue and that its connectors were subject to a covenant not to sue signed by the patent owner, John Mezzalingua Associates Inc. (doing business as PPC Inc.). Id. The ITC instituted an advisory opinion proceeding and requested a response from PPC and the ITC's Office of Unfair Import Investigations. Id. at 3. After reviewing the submissions, the ITC determined Holland's connecters were outside the scope the general exclusion order from Inv. 650 because PPC's covenant not to sue was the equivalent of a license. Id. at 6-7.
On its own initiative, or when petitioned by anyone, the ITC can revisit any order it issued and either modify or revoke that order under 19 C.F.R. § 210.76(a). The petition must outline the modifications requested and "the changed circumstances warranting such action." Id. The petitioner must include any supporting materials and argument and serve the petition on all parties to the investigation from which the ITC's order issued. The ITC rules require that any opposition must be filed within 10 days of service of the petition.
If the ITC determines to institute a proceeding in response to the petition, it can hold a public hearing or delegate the hearing to an administrative law judge. The ITC will consider information from the public hearing, the petition and any responses before issuing its decision. If delegated, the ALJ will issue a recommended determination after holding the public hearing and considering the petition and responses. Id.
For example, in August 2010, the ITC instituted a modification proceeding in Certain GPS Devices and Products Containing Same, Inv. No. 337-TA-602, based on a modification petition filed by the respondents in that investigation. 76 Fed. Reg. 15340 (Mar. 21, 2011).
Specifically, the respondents argued the ITC should modify its limited exclusion and cease and desist orders "because new evidence establishes that the facts on which they were based have substantially changed"—namely, the servers at issue were now located outside the United States. Certain GPS Devices and Products Containing Same, Inv. No. 337-TA-602, Corrected Petition of Respondents to Modify the Commission's Jan. 15, 2009, Limited Exclusion and Cease and Desist Orders, 1 (Apr. 29, 2010); see also SiRF Tech., Inc. v. Int'l Trade Comm'n, 601 F.3d 1319, n.2 (Fed. Cir. 2010) (affirming the ITC's decision in Inv. 602) ("If in fact the servers are now located outside of the United States, appellants are not without a remedy as appellants may petition for a modification or a rescission of an exclusion order or a cease and desist order under 19 C.F.R. § 210.76 if appellants are 'no longer in violation of section 337.'").
At the same time, the ITC declined to institute a modification proceeding based on a petition submitted by the complainant. Instead, the ITC stated the complainant "might find a formal enforcement proceeding under rule 210.75(b) a more suitable avenue to address its concerns." 75 Fed. Reg. 51481 (Aug. 10, 2010). In response, the complainant filed and the ITC instituted an enforcement proceeding in December 2010. 76 Fed. Reg. 15340 (Mar. 21, 2011). The parties quickly settled, and the ITC rescinded the remedial orders it issued in Inv. 602 in March 2011. Id.
The ITC also has broad authority to enforce any provision of its exclusion orders, cease and desist orders, or consent orders. The ITC's Office of Unfair Import Investigations (OUII) can conduct informal proceedings "through correspondence or conference or any other way that the Commission deems appropriate." 19 C.F.R. § 210.75(a). Through informal proceedings, the ITC can issue orders to ensure compliance with its remedial orders, and any matter not resolved through informal proceedings may be taken up in formal proceedings. Id.
The commission may also institute a formal enforcement proceeding in response to a complaint filed by the complainant from the original investigation, or by the OUII, or on its own initiative. 19 C.F.R. § 210.75(b)(1). A response to the enforcement complaint must be filed within 15 days of service. Id. In a formal proceeding, the commission can hold a public enforcement hearing or delegate the hearing to an ALJ. 19 C.F.R. § 210.75(b)(3).
At the conclusion of formal proceedings, the ITC may modify a remedial order as necessary to effect enforcement, revoke a remedial order, or file suit in U.S. district court to recover civil penalties for breach of a remedial order. 19 C.F.R. § 210.75(b)(4). Additionally, the ITC may order the seizure and forfeiture to the United States of any article imported in violation of an exclusion order, provided the owner, importer, or consignee received sufficient notice of the exclusion order. 19 C.F.R. § 210.75(b)(6).
Certain Incremental Dental Positioning Adjustment Appliances and Methods of Producing Same, Inv. No. 337-TA-562, provides a good example of an ITC enforcement proceeding. In that case, complainant Align Technology Inc. filed a complaint for enforcement of a consent order with respondent OrthoClear Inc. (and OrthoClear's related entities) in the original investigation. 77 Fed. Reg. 25747 (May 1, 2012). OrthoClear agreed in the consent order to stop importing its accused products, but after termination of the investigation continued importing digital datasets used to manufacture the products in the United States. Certain Incremental Dental Positioning Adjustment Appliances, Comm'n Op. at 3.
The commission delegated the enforcement proceedings to an ALJ, who determined that the digital datasets were "articles manufactured" within the meaning of the consent order. See id. at 4. Upon review, the commission reversed the ALJ, holding that electronic transmissions are not included in the scope of an ITC cease-and-desist order or consent order unless they are specifically enumerated in the order. Certain Incremental Dental Positioning Adjustment Appliances, Comm'n Op., at 10 (Feb. 19, 2013).
The commission also noted that Customs and Border Protection has determined not to regulate electronic transmissions, and therefore the ITC typically does not include electronic transmissions in exclusion orders (which Customs is charged with administering). Id. at 8.
Customs oversees enforcement of ITC exclusion orders. Anyone interested in importing an article subject to an ITC exclusion order can approach Customs in one of two ways. First, before actually importing the article, anyone can request a ruling from Customs under 19 C.F.R. § 177 that the exclusion order does not apply. Second, if Customs excludes an article because Customs believes it is subject to an ITC exclusion order, the importer can file a protest under 19 C.F.R. § 174.
Regardless of which method is used, Customs uses similar ex parte procedures to reach a decision. An adverse decision by Customs under either procedure can be appealed to the Court of International Trade (CIT) and then to the Federal Circuit. See 28 U.S.C. §§ 1581(a)&(h); 28 U.S.C. § 1295(a)(5).
Customs does not require a 19 C.F.R. § 177 requester to notify the ITC complainant of the request. Instead, Customs only requires that the request must identify any interested parties. Significantly, however, Customs does not have a formal procedure for receiving briefing from all interested parties before rendering a decision. Thus, the ITC complainant does not have a formal procedure to seek administrative or judicial review of a decision by Customs to allow imports that are arguably subject to the ITC exclusion order.
For example, Microsoft Corporation sued Customs—one of many agencies under the auspices of the U.S. Department of Homeland Security—in July 2013 in an effort to overturn two Customs decisions. Microsoft Corp. v. U.S. Dept. of Homeland Security, No. 13-1063, Complaint (D. D.C. July 12, 2013). Specifically, Microsoft alleged that Customs issued two Section 177 rulings based on ex parte submissions by Motorola Mobility Inc. allowing Motorola to import certain products despite an ITC exclusion order issued in Certain Mobile Devices, Associated Software, and Components Thereof, Inv. No. 337-TA-744, USITC Pub. 4384, Limited Exclusion Order (May 18, 2012).
In its complaint, Microsoft alleges that Customs "has allowed the importation of infringing devices based on claims that Motorola has made on an ex parte basis, and that [Customs] has accepted without providing Microsoft notice of those claims, much less an opportunity to address them." Microsoft Corp., No. 13-1063, Complaint at ¶ 4. The district court has yet to rule on the relief Microsoft requests—an injunction ordering Customs to exclude Motorola's products, among other relief requested.
To object to an actual exclusion by Customs, importers must file a protest under 19 C.F.R. § 174 within 180 days of the denial. Customs will then review its initial decision and issue a final decision within 30 days. If Customs maintains its denial, the importer can appeal the decision to the CIT within 180 days. See, e.g., Corning Gilbert v. U.S., 896 F. Supp. 2d 1281 (Ct. Int'l Trade 2013) (reversing decision by Customs denying importation of coaxial cable connectors due to an exclusion order from Inv. 337-TA-650).
Here again, however, the patent owner is prohibited from intervening and the importer proceeds against Customs without the patent owner's input. See 28 U.S.C. § 2631(j)(1)(A) (no person may intervene in a civil action under Section 515 or 516 of the Tariff Act of 1930); Corning Gilbert v. U.S., 837 F. Supp. 2d 1303, 1306-07 (Ct. Int'l Trade 2013) (denying patent owners request to participate as amicus curiae).
An importer subject to an ITC exclusion order has a number of options to seek review of that order. One or more of the available judicial and administrative options may present the best opportunity for the importer to continue importing goods after the exclusion order goes into effect.
Originally printed in Law360 (www.law360.com). Reprinted with permission. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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