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)

 

United States Court of Appeals for the Federal Circuit, Comcast Corp. v. United States International Trade Commission, Docket No. 18-1450

 

Import

Software

Customs

ITC

Section 337 of the Tariff Act of 1930

Patent Infringement

Infringement May Occur After Importation

Exclusion Order

Blocking Imports

Cease and Desist Order

 

Appeals from the United States International Trade Commission in Investigation No. 337-TA-1001.

 

Rovi Corporation and Rovi Guides, Inc. (collectively “Rovi”) filed a complaint with the ITC alleging violation of Section 337 of the Tariff Act of 1930. Rovi asserted, inter alia, infringement of claims 1, 2, 14, and 17 of United States Patent No. 8,006,263 (“the ’263 patent”) and claims 1, 3, 5, 9, 10, 14, and 18 of United States Patent No. 8,578,413 (“the ’413 patent”). Rovi stated, and the Commission found, that Comcast’s customers directly infringe the ’263 and ’413 patents by using Comcast’s X1 system. The Commission found that Comcast is in violation of Section 337 by importing the X1 set-top boxes that are used in the infringing system.

 

(…) The administrative law judge (“ALJ”) conducted an investigation and trial, and found violation of Section 337. The ALJ found that the X1 set-top boxes are imported by ARRIS and Technicolor, and that “Comcast is sufficiently involved with the design, manufacture, and importation of the accused products, such that it is an importer for purposes of Section 337.” Final ID at *11. The full Commission affirmed “the Final ID’s findings and conclusion that Comcast imports the X1 STBs into the United States.” Comm. Op. at *7.

 

The full Commission affirmed “the Final ID’s conclusion that the X1 systems meet all of the limitations of the asserted claims” and “Comcast’s customers directly infringed the ’263 and ’413 patents through their use of the X1 systems in the United States.” Id. at *10–11. The Commission stated that “the Final ID’s unreviewed findings also conclude that Comcast induced that infringement,” and that “Comcast also instructs, directs, or advises its customers on how to carry out direct infringement of the asserted claims of the ’263 and ’413 patents with the X1 STBs.” Id. The Commission affirmed that Comcast violated Section 337.

 

The Commission issued a limited exclusion order and cease and desist orders directed to the Comcast respondents. The limited exclusion order excludes importation of the X1 set-top boxes by Comcast (…).

 

Section 337 contemplates that infringement may occur after importation. The statute defines as unlawful “the sale within the United States after importation . . . of articles that—(i) infringe . . . .” The statute thus distinguishes the unfair trade act of importation from infringement by defining as unfair the importation of an article that will infringe, i.e., be sold, “after importation.” Section 337(a)(1)(B)’s “sale . . . after importation” language confirms that the Commission is permitted to focus on post-importation activity to identify the completion of infringement.

 

(…) Wing Shing Pdts. (BVI), Ltd. v. Simatelex Manufactory Co., 479 F.Supp.2d 388, 409–11 (S.D.N.Y. 2007) (“Numerous courts have held that, in contrast to §§ 271 (a) and (c), § 271 (b) applies to extraterritorial conduct.”)

 

(…) Comcast’s inducing activity took place overseas, prior to importation; it took place at importation; and it took place in the United States, after importation.

 

Comcast argues that it is not an importer of the X1 set-top boxes, in that the importer of record is ARRIS or Technicolor. Comcast states that it does not physically bring the boxes into the United States and it does not exercise any control over the process of importation. The Commission and Rovi respond that Comcast is an importer in terms of Section 337 because Comcast causes the X1 set-top boxes to enter the United States.

 

The Final ID found that the X1 set-top boxes “are so tailored to Comcast’s system and requirements that they would not function within another cable operator’s system.” Final ID at *11. “Further, the software at issue in the heart of this investigation is attributable squarely to Comcast.” Id. The Final ID concluded that “the evidence shows that Comcast is sufficiently involved with the design, manufacture, and importation of the accused products, such that it is an importer for purposes of Section 337.” Id.

 

The Final ID also found that Comcast “requires ARRIS and Technicolor to handle importation formalities, such as fees, documentation, licenses, and regulatory approvals.” Id. The Final ID concluded that “Comcast is sufficiently involved in the importation of the accused products that it satisfies the importation requirement, under 19 U.S.C. § 1337(A)(1)(B).” Final ID at *405.

 

The full Commission concluded that Comcast is an importer of the X1 set-top boxes. The Commission stated that “Section 337, as applied to Comcast’s relevant conduct here, requires importation of articles, proof of direct infringement, and proof of inducement, all of which have been established by the record.

 

The Commission has discretion in selecting a remedy that has a reasonable relation to the unlawful trade practice. See Cisco Systems, Inc. v. U.S. Int’l Trade Comm’n, 873 F.3d 1354, 1363 (Fed. Cir. 2017) (“Blocking imports of articles that induce patent infringement has a reasonable relationship to stopping unlawful trade acts.”).

 

 

(United States Court of Appeals for the Federal Circuit, March 2, 2020, Comcast Corp. v. United States International Trade Commission, Docket No. 18-1450 (18-1653, 18-1667), Circuit Judge Newman)

U.S. Court of Appeals for the Federal Circuit, Laerdal Medical Corp. v. International Trade Commission, Docket 17-2445

Default (ITC practice v. federal court practice)

19 U.S.C. § 1337 (g) (1) (ITC)

Fed. R. Civ. P. 55 (federal court)

Order to show cause

Exclusion order

Cease and desist order

Export

Despite being served with the amended complaint and notice of investigation, no respondent submitted any response, appeared, or otherwise participated in any way in any of the proceedings. J.A. 2478–99. On October 20, 2016, therefore, Laerdal moved for an order requiring Respondents to show cause why they should not be found in default under § 1337(g)(1). J.A. 2550–59. The Administrative Law Judge (“ALJ”) granted Laerdal’s motion and issued the Order to Show Cause on November 7, 2016. J.A. 2584–86. Respondents again failed to respond to or acknowledge that order. Two weeks later, the ALJ issued an initial determination finding all respondents in default. J.A. 2589–95.

(We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(6)).

We conclude that the statute, on its face, unambiguously requires the Commission to grant relief against defaulting respondents, subject only to public interest concerns, if all prerequisites of § 1337(g)(1) are satisfied. The statute’s plain text, surrounding context, purpose, and legislative history, as well as the Commission’s own prior decisions, support this conclusion.

(…) Important distinction between district court and ITC practice—the Commission must conduct a preliminary review that district courts do not, and only then may institute an investigation. Rule 55, moreover, governing default judgment in district court litigation, is unlike § 1337(g)(1); it does not require the court to grant relief, it grants the court discretion to “conduct hearings or make referrals” in evaluating whether to “enter or effectuate judgment.” Fed. R. Civ. P. 55(b)(2). We presume that Congress was aware of the discretion granted to district courts under Rule 55 when it later drafted subsection (g) to § 1337. See Miles v. Apex Marine Corp., 498 U.S. 19, 32 (1990) (“We assume that Congress is aware of existing law when it passes legislation”).

Here, it is undisputed that Laerdal met the prerequisites for § 1337(g)(1). The amended complaint and notice of investigation were served on all respondents, the respondents failed to respond or appear in any way and failed to show good cause why they should not be found in default, and Laerdal limited the relief it sought to exclusion orders and cease and desist orders against only the respondents. J.A. 2478–99, 2550–59, 2584–86, 2589–95, 2599, 2609–12. Subject only to public interest concerns, therefore, the Commission was required under § 1337(g)(1) to presume all facts alleged in the complaint as true and issue an exclusion order, cease and desist order, or both.

(U.S. Court of Appeals for the Federal Circuit, Dec. 7, 2018, Laerdal Medical Corp. v. International Trade Commission, Docket 17-2445, Circuit Judge O’Malley)

Le défaut dans les procédures devant l’ITC, comparé au défaut en procédure devant les cours fédérales. Devant l’ITC, la partie adverse qui ne répond pas sera sommée de justifier son omission par un « Order to show cause ». Sans justification ou si la justification est insuffisante, le défaut sera prononcé et les conclusions de la demande seront adjugées. La Règle 55 de procédure civile fédérale laisse davantage de souplesse à la cour, qui n’est pas tenue, dans de telles circonstances, de rendre de ces faits son jugement au fond.

USITC Institutes Section 337 Investigation

April 13, 2018

News Release 18-043

Inv. No. 337-TA-1108

Republication

https://www.usitc.gov/press_room/news_release/2018/er0413ll933.htm

USITC INSTITUTES SECTION 337 INVESTIGATION OF CERTAIN JUMP ROPE SYSTEMS

The U.S. International Trade Commission (USITC) has voted to institute an investigation of certain jump rope systems.  The products at issue in the investigation are jump ropes with handles that contain a bearing element that permits a shaft to more easily rotate.

The investigation is based on a complaint filed by Jump Rope Systems, LLC, of Louisville, CO, on February 13, 2018.  The complaint alleges violations of section 337 of the Tariff Act of 1930 in the importation into the United States and sale of certain jump rope systems that infringe patents asserted by the complainant.  The complainant requests that the USITC issue a limited exclusion order and cease and desist order.

The USITC has identified Suzhou Everise Fitness Co., Ltd., of Suzhou, Jiangsu, China as the respondent in this investigation.

By instituting this investigation (337-TA-1108), the USITC has not yet made any decision on the merits of the case.  The USITC’s Chief Administrative Law Judge will assign the case to one of the USITC’s administrative law judges (ALJ), who will schedule and hold an evidentiary hearing.  The ALJ will make an initial determination as to whether there is a violation of section 337; that initial determination is subject to review by the Commission.

The USITC will make a final determination in the investigation at the earliest practicable time.  Within 45 days after institution of the investigation, the USITC will set a target date for completing the investigation.  USITC remedial orders in section 337 cases are effective when issued and become final 60 days after issuance unless disapproved for policy reasons by the U.S. Trade Representative within that 60-day period.