U.S. Court of Appeals for the Federal Circuit, Philip Morris v. ITC, Docket No. 2022-1227

Customs

 

Import

 

Section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337

 

Duty to Consult Under Section 337

 

Forfeiture

 

Public Interest

 

Domestic Industry Requirement

 

Patent Infringement

 

Cease and Desist Order

 

Limited Exclusion Order

 

 

 

 

Appeal from the United States International Trade Commission in Investigation No. 337-TA-1199.

 

 

RAI Strategic Holdings, Inc., R.J. Reynolds Vapor Company, and R.J. Reynolds Tobacco Company (collectively “Reynolds”) filed a complaint at the International Trade Commission alleging that respondents Philip Morris Products S.A., Philip Morris USA, Inc., and Altria Client Services LLC (collectively “Philip Morris”) violated Section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337, through the importation and sale of tobacco products that infringed certain claims of U.S. Patent Nos. 9,901,123 and 9,930,915. After conducting a Section 337 investigation, the Commission barred Philip Morris and its affiliates from importing products infringing the asserted patents. Philip Morris appeals, contending that the Commission failed to “consult with, and seek advice and information from” the Department of Health and Human Services (HHS) as required by Section 337. In addition, Philip Morris challenges the Commission’s determinations on public interest, domestic industry, patent validity, and infringement. For the reasons set forth below, we affirm the Commission’s decision in full.

 

 

(…) In response to Reynolds’ complaint, the Commission instituted an investigation and ordered the presiding administrative law judge (ALJ) to “provide the Commission with findings of fact and a recommended determination on the issue” of public interest. J.A. 3432–33 (85 Fed. Reg. 29,482–83 (May 15, 2020)).

 

 

The ALJ issued a final initial determination (FID) concluding that: (1) Reynolds had shown that Philip Morris infringed the asserted claims, and that Philip Morris had not shown the asserted claims to be invalid, id. at *58; (2) Reynolds had established the existence of a domestic industry with respect to both of the asserted patents, id.; and (3) “the public interest evidence of record did not weigh against entry of a remedy,” id. at *73. The ALJ also recommended that the Commission issue a limited exclusion order, id. at *74, but not cease and desist orders, id. at *76. Philip Morris petitioned the full Commission for review of the FID.

 

 

It is undisputed that Reynolds satisfied the technical prong of the domestic industry requirement with respect to the asserted patents. (Fn. 1).

 

 

The Commission decided to review the FID in part. In the Matter of Certain Tobacco Heating Articles & Components Thereof, Inv. No. 337-TA-1199, Commission Opinion, 2021 WL 4947427 (Oct. 19, 2021) (Commission Op.). Among other things, it affirmed the ALJ’s determination of nonobviousness of the asserted claims of the ’123 patent and the ALJ’s determination that Reynolds satisfied the domestic industry requirement. The Commission concluded that Philip Morris had violated Section 337 and issued cease and desist orders directed to Altria Client Services LLC and Philip Morris USA, Inc., and issued a limited exclusion order banning the importation of infringing products by Philip Morris and its affiliates. Philip Morris appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(6).

 

 

Our court reviews the Commission’s decisions under the standards of the Administrative Procedure Act (APA). 19 U.S.C. § 1337(c); 5 U.S.C. § 706(2). We review the Commission’s legal determinations, including statutory interpretation, de novo and its factual findings for substantial evidence. Spansion, Inc. v. Int’l Trade Comm’n, 629 F.3d 1331, 1343–44 (Fed. Cir. 2010).

 

 

We begin with Philip Morris’s argument that the Commission erred by failing to meet its statutory duty as set forth in Section 337. That statutory duty requires that: During the course of each investigation under this section, the Commission shall consult with, and seek advice and information from, the Department of Health and Human Services, the Department of Justice, the Federal Trade Commission, and such other departments and agencies as it considers appropriate. 19 U.S.C. § 1337(b)(2).

 

 

Because Philip Morris forfeited this argument, and because in any event the Commission satisfied its duty to “consult with” HHS, we conclude that the Commission committed no error.

 

 

(…) Even in the absence of forfeiture, we conclude that, in this case, the Commission satisfied its duty to “consult with” HHS and the FDA. When the Commission instituted the investigation in May 2020, it published a Notice of Investigation in the Federal Register, J.A. 3432–33, and individually served letters enclosing the Notice of Investigation to representatives of the Department of Justice, the U.S. Bureau of Customs and Border Protection, the Federal Trade Commission, and HHS. J.A. 43501.

 

 

Public Interest:

 

§ 1337(d)(1) provides that if the Commission determines “that there is violation of this section, it shall direct that the articles concerned. . . be excluded. . . unless, after considering public interest, it finds that such articles should not be excluded” (emphasis added). In deciding this issue, the Commission must consider the effect of the remedy on four statutory public interest factors: (1) public health and welfare, (2) competitive conditions in the U.S. economy, (3) the production of like articles in the United States, and (4) U.S. consumers. 19 U.S.C. § 1337(d)(1), (f)(1).

 

 

 

Domestic industry requirement:

 

The domestic industry requirement of Section 337, 19 U.S.C. § 1337(a)(2) and (a)(3), includes an economic prong, which “requires that there be an industry in the United States,” and a technical prong, which “requires that the industry relate to articles protected by the patent,” both of which must be met. InterDigital Commc’ns, LLC v. Int’l Trade Comm’n, 707 F.3d 1295, 1298 (Fed. Cir. 2013).

 

 

(…) Obviousness of the ’123 Patent Claims (…).

 

 

(…) Infringement of the ’915 Patent.

 

 

 

 

(U.S. Court of Appeals for the Federal Circuit, March 31, 2023, Philip Morris v. ITC, Docket No. 2022-1227)

 

U.S. Court of Appeals for the Federal Circuit, Starkist Co. v. U.S., Docket No. 2021-1548

Customs

 

Export

 

HTSUS

 

Tariff Classification

 

Tuna Salad Products

 

Interpretation of “Minced”

 

Interpretation of “In Oil”

 

 

Appeal from the United States Court of International Trade in No. 1:14-cv-00068-TMR

 

StarKist Co. challenges a tariff classification of four imported tuna salad products under subheading 1604.14.10 of the Harmonized Tariff Schedule of the United States. We affirm.

 

The cross-border movement of goods across international markets is regulated by tariff classification systems for ascribing the appropriate tariff to specific imported goods. In the United States, the Harmonized Tariff Schedule of the United States (“HTSUS”) governs the classification of imported goods and merchandise and provides the applicable tariff rates. The HTSUS and the Additional U.S. Notes to the HTSUS have the force of statutory law. Aves. In Leather, Inc. v. United States, 423 F.3d 1326, 1333 (Fed. Cir. 2005); USITC Pub. 4368, at Preface p. 1 (2013).

 

The interpretation of HTSUS provisions is undertaken through General Rules of Interpretation (“GRIs”) and the Additional U.S. Rules of Interpretation (“ARIs”). BASF Corp. v. United States, 482 F.3d 1324, 1325–26 (Fed. Cir. 2007). Absent contrary legislative intent, we construe HTSUS terms according to their common and commercial meanings, which we presume to be the same. Carl Zeiss, Inc. v. United States, 195 F.3d 1375, 1379 (Fed. Cir. 1999).

 

The application of the GRIs and ARIs is rigid. The GRIs are to be applied in numerical order, such that, if proper classification is achieved through a particular GRI, the remaining successive GRIs should not be considered. Id. GRI 1 explains that classification under any heading shall be determined according to the terms of the headings and any relative section or chapter notes. Once the court determines the appropriate heading, the court applies GRI 6 to determine the appropriate subheading. See Orlando Food Corp. v. United States, 140 F.3d 1437, 1439 (Fed. Cir. 1998). GRI 6 provides that “the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules.” Accordingly, where a party disputes a classification under a particular subheading, we apply GRI 1 as a substantive rule of interpretation, such that when an imported article is described in whole by a single classification subheading, then that single classification applies, and the successive GRIs are inoperative. CamelBak Prods., LLC v. United States, 649 F.3d 1361, 1364 (Fed. Cir. 2011).

 

This appeal involves two varieties of tuna salad products, albacore and chunk light, each of which is imported as ready-to-eat pouches or lunch-to-go kits. J.A. 2. The lunch-to-go kits consist of the tuna salad pouches, crackers, a mint, a napkin, and a spoon. J.A. 3.

 

The administrative record demonstrates that the production processes for both types of tuna salad products are the same in all ways relevant to this appeal. The fish is caught in South American or international waters, frozen, delivered to a facility in Ecuador, sorted, thawed, cooked, machine chopped, then hand-folded with a prepared mixture of other ingredients including a mayo base comprising more than 12% soybean oil. J.A. 3–4, 45–53, 55–56, 60–61. The resulting mixture is packaged into pouches using metal funnels. J.A. 4, 45, 56, 60–61.

 

The tuna salad products at issue have been classified by United States Customs and Border Protection (“Customs”) under subheading 1604.14.10. Heading 1604 provides: 

 

 

HTSUS 1604 (emphasis added). Accordingly, subheading 1604.14.10, which carries a 35% ad valorem duty, covers: 

Prepared or preserved fish; caviar and caviar substitutes prepared from fish eggs: 

Fish, whole or in pieces, but not minced: Tunas, skipjack and bonito (Sarda spp.): 

Tunas and skipjack:
In airtight containers: 

In oil. 

HTSUS 1604.14.10 (emphases added). 

StarKist seeks a classification under 1604.20.05, which covers “products containing meat of crustaceans, molluscs or other aquatic invertebrates; prepared meals,” and carries a 10% ad valorem duty. Appellant’s Br. 22–42. Or, in the alternative, StarKist seeks a classification under either subheading 1604.14.22, which covers tuna that is “not minced” and “not in oil,” carrying a 6% ad valorem duty, or subheading 1604.14.30, which covers “other,” carrying a 12.5% ad valorem duty. Id. at 42–58.

 

(…) The Court of International Trade granted summary judgment in favor of the government, concluding that the tuna salad products are properly classified under 1604.14.10 because they are “not minced” and “in oil.”

 

The term “minced” is not defined under the HTSUS. Accordingly, the Court of International Trade analyzed different factors to interpret the meaning of the term. J.A. 15. The Court of International Trade determined that a proper understanding of the term requires considering: “(1) whether the pieces, based on their size and physical characteristics, collectively, should be considered ‘minced,’ and, (2) whether the tuna pieces are the product of a minced cut.” J.A. 15. Based on these factors, the Court of International Trade interpreted “minced” under heading 1604 to require “small pieces of a minced cut that are the product of a purposeful process that involves cutting or chopping.” J.A. 19.

 

The Court of International Trade first determined that the size and physical characteristics of the pieces collectively are such that the tuna salad products are “not minced.” J.A. 17–18. The Court of International Trade reasoned that “the presence of certain tuna pieces equivalent in size to minced tuna is purely incidental; the defining character is more accurately described as chunky, with pieces of varying size.” J.A. 17.

 

The Court of International Trade also determined that the tuna salad products are produced through a process distinct from mincing. J.A. 18–20. The Court of International Trade observed that the fish is first passed through a chopper with four blades, producing pieces of fish larger than Customs’ proposed definition of “minced.” J.A. 19–20. Then, these pieces are hand-folded with the other ingredients, breaking up some of the larger pieces. Id. The Court of International Trade reasoned that because the very small pieces in the tuna salad are produced by hand-blending rather than chopping, the subject merchandise is not the product of a minced cut. The Court of International Trade concluded that the products are “not minced” both in result and in process and, as such, are properly classified as “not minced.” J.A. 20.

 

The Court of International Trade then determined that the tuna salad products are also properly classified as “in oil.” J.A. 20–27. The Court of International Trade reasoned that because the oil is added after the fish is cooked but before it is packed, the StarKist products have been properly classified as “in oil” pursuant to HTSUS Chapter 16 Additional U.S. Note 1. J.A. 27.

 

StarKist timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).

 

Proper classification of goods under the HTSUS is a two-step process. Sigma-Tau HealthScience, Inc. v. United States, 838 F.3d 1272, 1276 (Fed. Cir. 2016). First, we ascertain the meaning of the specific terms in the tariff provision. Orlando Food Corp., 140 F.3d at 1439. Absent contrary legislative intent, we construe HTSUS terms according to their common and commercial meanings, which we presume to be the same. Carl Zeiss, 195 F.3d at 1379. To assist it in ascertaining the common meaning of a tariff term, the court may rely upon the term’s ordinary meaning, lexicographic and scientific authorities, dictionaries, and other reliable information sources. Brookside Veneers, Ltd. v. United States, 847 F.2d 786, 789 (Fed. Cir. 1988). Second, we determine whether the goods come within the description of those terms. Victoria’s Secret Direct, LLC v. United States, 769 F.3d 1102, 1106 (Fed. Cir. 2014). This step is a factual inquiry that we review for clear error. Id. When there is no factual dispute regarding the nature, structure, and use of imported merchandise, the proper classification turns on the first step. Faus Grp., Inc. v. United States, 581 F.3d 1369, 1372 (Fed. Cir. 2009).

 

“NOT MINCED”

Pursuant to the GRIs, the question of whether the products at issue are “not minced” is a threshold question. StarKist contends that Customs and the Court of International Trade erred in interpretating the term “minced” and/or clearly erred in concluding that StarKist’s products are “not minced.” Appellant’s Br. 25–31. We disagree.

 

First, we address the proper interpretation of the term “minced.” Based on the record dictionary definitions, the language and context of the relevant subheadings, as well as the term’s ordinary meaning, we conclude that when used in the context of imported fish, the common and commercial meaning of the term “minced” at least requires separation into very small pieces.1

(1)                  Because, as explained below, Customs did not clearly err in determining that the subject tuna salad products do not satisfy this requirement, we do not reach whether the pieces must be “the product of a purposeful process that involves cutting or chopping” to qualify as “minced.” J.A. 19.

 

Next, we must assess whether Customs clearly erred in its determination that the subject tuna salad products are “not minced.” We find no such error. StarKist’s tuna salad products at issue are not separated into very small pieces. Instead, the products are first roughly chopped, then hand-folded with additional ingredients, which results in a product consisting of some very small pieces and some chunks. J.A. 55, 60–61. More specifically, cooked albacore tuna is chopped by machine into 0.8–1.0 inch chunks, and cooked chunk light tuna is chopped by machine into 1.0–1.5 inch chunks. J.A. 45, 47–53, 55–56, 60– 61, 65. Then, a person hand-folds the tuna pieces with the prepared mayonnaise-based dressing, breaking up some of these larger pieces. J.A. 48, 50, 56, 61. As the Court of International Trade recognized, at the end of this process, the products are properly described as chunky, with pieces of varying size. J.A. 18. This determination is supported by substantial evidence, including sworn testimony and laboratory reports. Accordingly, we determine that Customs did not clearly err in determining that the subject tuna salad products fall within the meaning of the term “not minced.” Next, we turn to whether the products are properly classified as “in oil.”

 

“IN OIL” 

StarKist contends that its products are not properly classified as “in oil” because HTSUS Chapter 16 requires classification of tuna products as “in oil” only where the oil was added for purposes of packing—i.e., at the “packing stage.” Appellant’s Br. 42–58 (citing J.A. 56, 61, 593, 599). StarKist further contends that because the oil in its products is added during the preparation stage, and not the packing stage, its products are properly classified as “not in oil.” Id.

 

HTSUS Chapter 16 Additional U.S. Note 1 governs this inquiry. Note 1 states: 

For the purposes of this chapter, the term “in oil” means packed in oil or fat, or in added oil or fat and other substances, whether such oil or fat was introduced at the time of packing or prior thereto.

 

HTSUS Chapter 16 Additional U.S. Note 1. This statutory authority explicitly states that for the term “in oil” to apply, it matters not whether the oil was added during preparation or in the packing process.

 

StarKist cites two cases in support of its contention that Note 1 does not settle this issue in the government’s favor: Del Monte Corp. v. United States, 730 F.3d 1352 (Fed. Cir. 2013), and Richter Bros., Inc. v. United States, 44 C.C.P.A. 128 (1957).

 

Del Monte involves the tariff classification of StarKist’s “Tuna Fillets” products—cooked tuna products packaged in airtight foil pouches consisting of chunks of cooked albacore and yellow fin tuna marinated with a mixture of flavoring ingredients in a viscous sauce. 730 F.3d at 1355. In contrast with this case, in Del Monte, the tuna was placed in the packaging first, then a sauce containing oil was added. Id. This court determined that those StarKist products are “packed in oil” within HTSUS Chapter 16. Id.

 

In Richter, the product at issue was herring that was cleaned, covered with wheat meal, put on sieves, and then fried in a pan. 44 C.C.P.A. at 131. The frying fat consisted of 50% herring oil and 50% tallow. Id. After frying, the herring was cooled, and as much as possible of the remaining oil was drained off. Id. After cooling, the herring was packed into tins filled with a brine of wine, vinegar, water, sugar, and salt. Id. It was undisputed that some of the oil remained in the tins as a result of the frying process, but no oil, nor any ingredient containing oil, was added to the tins during packing. Id. Our predecessor court held that these products were not “packed in oil” under a different tariff schedule. Id.

 

StarKist contends that its tuna salad products are not “packed in oil” because they are prepared in a similar fashion to the products in Richter. StarKist argues that, under Del Monte, the oil must be added after the fish is already in the package to be considered “packed in oil.” Contrary to StarKist’s contention, Note 1 resolves this dispute by clarifying that “in oil” is meant within Chapter 16 to distinguish products that incidentally contain oil as a result of their preparation, as was the case in Richter, from those in which oil is separately added, as is the case here and in Del Monte. Accordingly, we determine that the tuna salad products are properly classified as “in oil” under subheading 1604.14.10 because the oil in the tuna salad products was introduced to the fish prior to packing and the oil is not merely incidental to the preparation, as described in Note 1.

 

CONCLUSION 

We hold that the tuna salad products at issue are properly classified under subheading 1604.14.10 of the HTSUS because they are “not minced” and are “in oil.” We have considered the parties remaining arguments and find them unpersuasive. Accordingly, we affirm the judgment of the Court of International Trade. 

 

 

 

 

(U.S. Court of Appeals for the Federal Circuit, March 30, 2022, Starkist Co. v. U.S., Docket No. 2021-1548)

U.S. Court of Appeals for the Federal Circuit, Broadcom Corp. v. International Trade Commission, Docket No. 20-2008

Import

 

Customs

 

Patent Infringement

 

19 U.S.C.  § 1337  

Existence of a Domestic Industry Requirement (Consists of an “Economic Prong” and a “Technical Prong.”)

 

 

 

Appeal  from  the  United  States  International  Trade  Commission in Investigation No. 337-TA-1119.

 

 

 

Broadcom Corporation (“Broadcom”) filed a complaint at the International Trade Commission (“the Commission”) alleging a violation of 19 U.S.C. § 1337  (“Section  337”) based on the importation of products by Renesas Electronics Corporation (“Renesas”) and other companies that are asserted to infringe U.S.  Patents 7,437,583  (the “’583  patent”) and 7,512,752 (the “’752 patent”). In a final initial determination, the administrative law judge (“the ALJ”) held that  Broadcom failed to demonstrate a violation of Section 337 with respect to the ’583 patent because it failed to satisfy the technical prong of the domestic industry requirement and because there was no infringement of claim 25. (For the ’752 patent, the ALJ held that claim 5 would have been unpatentable as obvious over certain prior art). The parties then filed petitions seeking Commission review, and the Commission affirmed the relevant portions of the    final initial determination. Certain Infotainment  Sys., Components Thereof, and  Auto.  Containing the Same, Inv. No. 337-TA-1119 (May 28, 2020) (Final) (“Decision I”).

 

 

(…) Holding that there was no Section 337 violation because Broadcom failed to show the existence of a domestic industry (…).

 

At the Commission, Broadcom alleged a violation of Section 337 based on the importation of products by Renesas and other companies that it asserts infringe claims 17 and 18 and 25 and 26. Each of the accused infringers was a respondent in the Commission investigation and most have intervened in support of the Commission in this appeal.

 

In the final initial determination, the ALJ held that Broadcom failed to demonstrate that its system-on-a-chip (“SoC”) satisfied the technical prong of the domestic industry requirement in Section 337 because the SoC did not include a “clock tree driver,” which is a limitation of the asserted claims. J.A. 46. The ALJ also held that Broadcom failed to demonstrate infringement of claims 25 and 26 because it “could not identify any specific source code in the accused product where the claimed sequence of events ‘actually happened.’” J.A. 96. The Commission affirmed both holdings.

 

The Commission determined that there was no Section 337 violation because Broadcom failed to satisfy the technical prong of the domestic industry requirement. On appeal, Broadcom asserts error in the Commission’s findings of fact. Reviewing these findings for substantial evidence, we affirm the Commission’s decision.

 

To establish a violation of Section 337 a complainant must show both infringement and that an industry “relating to the articles protected by the patent . . . exists or is in the process of being established” in the United States. 19 U.S.C. § 1337(a)(2), (3). Under Commission precedent, the domestic industry requirement consists of an “economic prong” and a “technical prong.” See, e.g., Alloc, Inc. v. ITC, 342 F.3d 1361, 1375 (Fed. Cir. 2003). To meet the technical prong, the complainant must establish that it practices at least one claim of the asserted patent. This requires a complainant to identify “actual ‘articles protected by the patent.’” Microsoft Corp. v. ITC, 731 F.3d 1354, 1361–62 (Fed. Cir. 2013) (citing 19 U.S.C. § 1337(a)(2)–(a)(3)). To meet the economic prong, the complainant must demonstrate that its investment in the protected article is “significant” or “substantial.” 19 U.S.C. §1337(a)(3). The economic prong is not at issue in this appeal.

 

The ALJ determined that Broadcom identified only its SoC as a domestic industry article. However, the ALJ found, and Broadcom did not dispute, that the SoC did not contain the “clock tree driver” that is required by claim 25; it found that the driver must be stored on an external memory, separate from the SoC. But Broadcom instead argued that it satisfies the technical prong of the domestic industry requirement because it collaborates with its customers to integrate its SoC with external memory to enable retrieval and execution of the “clock tree driver” firmware. However, the ALJ faulted Broadcom for failing to identify any specific external memory that contained the “clock tree driver,” and noted that an actual article protected by the patent is needed to meet the industry requirement.

 

The Commission similarly found that Broadcom failed to identify any specific integration of the purported domestic industry SoC and the “clock tree driver” firmware, or a specific location where the firmware was stored. The Commission reasoned that without identifying an actual integration of the SoC and “clock tree driver,” Broadcom posited only a hypothetical device that did not meet claim 25’s limitations and therefore did not satisfy the technical prong of the domestic industry requirement. The Commission added that Broadcom’s new argument, i.e., that it manufactured and tested a “system” that included an SoC and firmware that contained the clock tree driver, was waived because Broadcom did not raise this theory in the ALJ proceedings.

 

We agree with the Commission that Broadcom failed to satisfy the technical requirement. We have previously found that, in order to meet the technical requirement of Section 337, a complainant must “show that there is a domestic industry product that actually practices” at least one claim of the asserted patent. Microsoft, 731 F.3d at 1361. In Microsoft, the patentee Microsoft supplied a mobile operating system to its customers. Id. at 1358, 1361. Microsoft’s asserted patent dealt with server-client communications, in which the client application was run on a mobile phone manufactured by Microsoft’s customers. Id. at 1360–61. Microsoft failed to show, however, that any such client applications were actually implemented on any third-party mobile device. Id. We therefore found that Microsoft did not satisfy the domestic industry requirement.

 

Broadcom suffers from substantially the same failure of proof here. As in Microsoft, Broadcom failed to identify any specific integration of the domestic industry SoC and the “clock tree driver” firmware, or a specific location where the firmware was stored. Broadcom does not challenge this finding, and instead introduces new theories that the Commission properly deemed waived. Because Broadcom failed to identify an actual article that practices claim 25, the Commission’s finding that Broadcom failed to satisfy the domestic industry requirement of Section 337 was supported by substantial evidence.

 

In light of our affirmance of the Commission’s finding of no domestic industry, the portion of the Commission’s decision addressing infringement of claim 25 is moot. We thus do not address Broadcom’s appeal from that portion of the Commission’s decision.

 

 

 

 

(U.S. Court of Appeals for the Federal Circuit, March 8, 2022, Broadcom Corp. v. International Trade Commission, Docket No. 20-2008)