Overview
Is it possible to avoid a negative result at the ITC using a decision from a district court or another forum? In a recent ITC case one respondent successfully used parallel proceedings in district court to rescind remedial orders that the ITC had issued against it.
In a combined enforcement and rescission proceeding in Certain Beverage Brewing Capsules, Components Thereof, and Products Containing the Same, Inv. No. 337-TA-929, Administrative Law Judge Theodore R. Essex considered what effect a district court’s determination should have on existing US International Trade Commission (ITC) remedial orders. While the court’s ruling was on appeal to the US Court of Appeals for the Federal Circuit, the ALJ concluded that the ITC’s remedial orders should be temporarily rescinded pending a ruling from the appellate court. By challenging the asserted patent in proceedings other than at the ITC, the alleged infringer was able to overcome a negative infringement ruling by the ITC.
In the original investigation, Complainants Adrian Rivera and Adrian Rivera Maynez Enterprises, Inc. (collectively, ARM) alleged that Respondent Eko Brands, LLC (Eko) (among others) violated Section 337 based on importation of their beverage brewing capsules that infringed US Patent No. 8,720,320 (the ’320 Patent). Eko elected not to participate in the original investigation and was found in default in April 2015. In March 2016, the ITC issued a limited exclusion order and cease and desist order (collectively, the Remedial Orders) against Eko.
While the original investigation was underway, Eko filed an action in federal district court that sought a declaration of non-infringement of the ’320 patent. In August 2016, the district court granted summary judgment that Eko’s accused products do not infringe the ’320 patent. In December 2016, the district court stayed its proceedings pending the outcome of the Federal Circuit’s and the US Patent and Trademark Office’s (USPTO) reviews of the validity of the patent claims at issue in the district court proceeding.
Following the district court’s summary judgment ruling, in September 2016, Eko petitioned the Commission to rescind the Remedial Orders and to terminate the enforcement proceeding. The ITC initiated rescission proceedings and consolidated those proceedings with enforcement proceedings that ARM had sought in June 2016.
Rescission at the ITC is governed by Section 337(k) and Commission Rule 210.76. Specifically, Section 337(k)(1) establishes that “any exclusion from entry or order under this section shall continue in effect until the Commission finds … that the conditions which led to such exclusion from entry or order no longer exist.” Additionally, Section 337(k)(2) provides that persons that are subject to the ITC’s remedial orders may petition the Commission for a determination that they are no longer in violation of Section 337 or for modification or rescission of those remedial orders.
Even though the district court’s non-infringement ruling was on appeal, the ALJ concluded that he was not authorized to review that Court’s decision. The ALJ determined that temporary rescission was appropriate because “the district court’s ruling of noninfringement occurred subsequent to the Commission’s issuance of the remedial orders and has substantially changed the circumstances under which the orders were issued.” Citing the Commission’s opinion in Certain Composite Wear Components and Products Containing Same, 337-TA-644, February 10, 2011, the ALJ recommended that “the Commission take the same action as it did in that investigation and provisionally rescind the remedial orders until the district court’s noninfringement decision is affirmed or reversed on appeal, or the time for appeal has passed.” Moreover, with respect to the enforcement proceeding, the ALJ declined to enforce the exclusion order based on the Commission’s prior holding that the complainant had not satisfied the domestic industry requirement because the domestic industry claims were invalid.
Although the Commission has not yet weighed in on the ALJ’s determination, this case demonstrates an interesting strategic decision for respondents to an ITC investigation – the use of concurrent and parallel proceedings to an ITC investigation. By using concurrent and parallel proceedings, in certain circumstances a party can use a positive result in a non-ITC proceeding to overcome or minimize a negative result in an ITC proceeding. Depending on the timing of the non-ITC proceeding, a party may be able to prevent issuance of ITC remedial orders or obtain prompt rescission of such orders after they have issued. This is especially true for proceedings in venues that provide relatively quick determinations, for example the USPTO or the Eastern District of Virginia.
Thank you to Thomas Yebernetsky for his assistance with this alert.
