Section 337 Update - April Activities Affecting the US International Trade Commission

April 27, 2010

April was an active month in and around the US International Trade Commission (ITC) with respect to its role vis-à-vis enforcement of intellectual property rights (IPR).  We provide some highlights.

Section 332 Investigation Regarding Intellectual Property Right Infringement in China – On April 19, 2010, US Senators Max Baucus and Charles Grassley requested that the ITC conduct an investigation under Section 332(g) of the Tariff Act of 1930, into the effects on the US economy and US jobs, of IPR infringement in China. The Senators have requested that the ITC deliver two reports, in November 2010 and May 2011, respectively, addressing certain specific points.  Section 332 factual investigations can cover a wide range of issues, such as the evaluation of preferential trade and tariff programs, statistical analyses as to specific imports, and sector analyses that may be affected by specific trade agreements.  In their request to the ITC, the Senators state that the US Government has to date not conducted a comprehensive economic analysis of the effect of IPR infringement in China on the US economy and US jobs. Companies may provide timely comments and information to the ITC focused on issues affecting their businesses.  To read a Steptoe & Johnson LLP memo providing more detail on how these investigations are conducted, click here

ITC Determination in Coaxial Cable Connectors Section 337 Investigation –   As reported in our Update of January 21, 2010, in the Section 337 investigation of Certain Coaxial Cable Connectors and Components Thereof and Products Containing Same, Inv. No. 337-TA-650, the full Commission determined to review certain aspects of the Administrative Law Judge’s (ALJ)Initial Determination (ID) with respect to the existence of a domestic industry. On April 14, the Commission released the public version of its opinion. Most significantly, the Commission addressed the question of whether patent infringement litigation activities satisfy the economic prong of the domestic industry requirement.

With respect to the ‘539 design patent (D440,539) that was at issue, the Commissioners concluded that patent infringement litigation activities, alone, do not satisfy the economic prong; rather, a complainant must show that such activities relate specifically to engineering, R&D or licensing, in which case, the activities may satisfy the test. With respect to a domestic industry claim based on litigation related to licensing, therefore, a complainant must show that the litigation relates to licensing, that it pertains to the patent at issue, that the associated expenditures can be documented and that the investments in exploitation are substantial. The Commission remanded the case to the ALJ for further fact findings to determine whether the articulated test was satisfied.

The Commission also reversed the ALJ's findings as to whether the complainant had satisfied the technical prong of the domestic industry requirement with respect to one of the other patents in suit.  The Commissioners disagreed with the ALJ's claim construction as to US Patent No. 5,470,257.  Accordingly, based on the revised claim construction, they found that the complainant did not practice the patent and thus failed to satisfy the technical prong.

This requirement that the complainant practice at least one claim of each patent at issue stands in contrast to the recent clarification that the technical prong does not apply to trade secret and other cases involving non-statutory IPR. Rather, as discussed in the unreviewed ID in Certain Cast Steel Railway Wheels, Processes for Manufacturing or Relating to Same and Certain Products Containing Same, Inv. No. 337-TA-655, the complainant must show that a US industry targeted by the respondent’s unfair acts is being substantially injured or destroyed (or threatened with such) by the unfair acts.

White House Announces Nominees to Fill Federal Circuit Vacancies – On April 14, President Obama nominated Edward C. DuMont to the United States Court of Appeals for the Federal Circuit to fill the vacancy that will be created when Chief Judge Paul Michel retires in May. The nominee is currently in private practice, focusing primarily on Supreme Court and appellate litigation; he also spent more than seven years as a Supreme Court advocate on behalf of the United States as an Assistant to the Solicitor General and served as an Associate Deputy Attorney General.  This nomination follows the one on March 10, of federal District Court Judge Kathleen O’Malley, to fill the vacancy left by Judge Alvin Schall after he assumed senior status.  Judge O'Malley has served as a US District Judge for the Northern District of Ohio since 1994. She also regularly teaches patent litigation at Case Western Reserve University School of Law.  Prior to her appointment to the District Court, Judge O'Malley was First Assistant Attorney General and Chief of Staff to then-Ohio Attorney General Lee Fisher.  Until 1991, she was in private practice.

We will periodically provide you updates on developments relating to Section 337 litigation. If you have any questions or for further information, please feel free to contact Charles Schill at 202.429.8162; Alice Kipel at 202.429.6743; or Steve Barber at 202.429.6430.  (Special thanks to Charles Morris for his assistance in preparing this Newsletter.)