By Tom Fisher
Under Commission Rule 210.76, any person who believes that “changed conditions of fact or law, or the public interest” require that an exclusion order, cease and desist order, or consent order be modified or set aside can petition the Commission for such relief.  The petition must state the changes sought and the changed circumstances warranting such action, together with supporting materials and argument.  The Commission can also consider such action sua sponte.  The Commission may provisionally accept the petition, at which point notice will be published in the Federal Register and service of both the petition and the notice will be made on the former parties to the investigation.  Any person may file an opposition to the petition within 10 days of service.  See 19 C.F.R. § 210.76(a)(1).

If the petitioner was previously found in violation of Section 337 and requests a determination that it is no longer in violation, or requests modification or rescission of an order issued pursuant to Section 337(d), (e), (f), (g), or (i), the burden of proof is on the petitioner.  See 19 C.F.R. § 210.76(a)(2).

A public hearing on the petition may be held either before the Commission, or before an ALJ who then issues a recommended determination (RD) to the Commission.  After considering the information placed on the record, the Commission will take such action as it deems appropriate.  See 19 C.F.R. § 210.76(b).  Importantly, there are no statutory or regulatory time limits on Rule 210.76 proceedings.  In certain cases, a Commission order modifying an exclusion order may be appealed to the Federal Circuit.  See, e.g., Allied Corp. v. ITC, 850 F.2d 1573, 1579-80 (Fed. Cir. 1988).

In addition, under Rule 210.77, the Commission may, in the event of a temporary emergency with formal enforcement proceedings pending, immediately modify or rescind a prior order without hearing or notice.  Such immediate action would be taken when necessary to prevent the violation of a Commission order and when “subsequent action by the Commission would not adequately repair substantial harm caused by such violation.”  19 C.F.R. § 210.77(a).  However, before taking such action, the Commission must consider the effect of such action on “the public health and welfare, competitive conditions in the U.S. economy, the production of like or directly competitive articles in the United States, and U.S. consumers.”  19 C.F.R. § 210.77(b).

There have been several examples of modification proceedings in practice.  For instance, in Certain Steel Rod Treating Apparatus and Components Thereof (Inv. No. 337-TA-97), the Commission invoked its power under Section 337(h) to modify or rescind orders due to changed conditions.  In that investigation, the Commission had issued an exclusion order based in part on the finding that the subject patent was valid.  Thereafter, respondents successfully argued in district court that the patent was invalid and unenforceable.  As a result, the Commission revoked the exclusion order.

Likewise, in Certain Composite Wear Components and Welding Products Containing Same (Inv. No. 337-TA-644), the Commission recently temporarily rescinded its limited exclusion order and cease and desist order against respondents pending resolution of the validity of the subject patent by the Federal Circuit.  The patent had been declared invalid by a district court in a declaratory judgment action brought by respondents.  See our January 20, 2011 and February 14, 2011 posts for more details.

The Commission may not, however, modify the remedy while parallel litigation is still pending in district court.  For example, in Certain Integrated Repeaters, Switches, Transceivers and Products Containing Same (Inv. No. 337-TA-435), the Commission did not delay issuing a limited exclusion order when there was a concurrent district court action involving the subject patent, noting that “the Commission’s rules provide adequate means for modification of an exclusion order if and when that should become necessary.”  Comm’n Op. on Remedy, Public Interest and Bonding at 22 (Aug. 16, 2002).

Design-arounds frequently give rise to modification proceedings.  For example, in Certain Amorphous Metals and Amorphous Metal Articles (Inv. No. 337-TA-143), the Commission had commenced Section 337 proceedings against several importers of steel products to determine whether the processes used to make the imported products would infringe a patent held by Allied Corporation.  That investigation led to the issuance of a general exclusion order for the importation or sale of amorphous metal articles or alloys made by the infringing processes.  The Commission then granted petitions for advisory opinion proceedings filed by respondents who sought advice that the importation of articles made by their “newly-developed” processes would not violate the exclusion order.  The Commission also sua sponte initiated exclusion order modification proceedings, which were consolidated with the advisory opinion proceedings for hearing.  The presiding ALJ issued an initial advisory opinion (IAO) and RD that the new processes did not infringe Allied’s patent, and recommended modification of the exclusion order.  Allied petitioned the Commission to review the ALJ’s IAO and RD.  Upon review, the Commission issued an advisory opinion supplementing the ALJ’s IAO, as well as an order modifying the exclusion order.  The modified order set out procedures to be followed by those desiring to import articles covered by the order, which included:  (1) petitioning the Commission to institute further proceedings as appropriate to determine whether the amorphous metal articles sought to be imported fall outside the scope of the order and therefore allowed entry into the U.S., and (2) certifying to the U.S. Customs Service that the articles sought to be imported were manufactured by a process that the Commission determined to be outside the scope of the order.  On appeal, the Federal Circuit affirmed the Commission’s modified exclusion order, but held that the advisory opinion was not a final determination and thus not reviewable.  Allied Corp., 850 F.2d at 1578-80.

Similarly, in Certain Wire Electrical Discharge Machining Apparatus and Components Thereof (Inv. No. 337-TA-290), the Commission had instituted formal enforcement proceedings to determine whether respondents’ newly-designed wire electrical discharge machining apparatus infringed certain claims of complainant’s patent, in violation of earlier cease and desist orders.  Those proceedings were terminated on respondents’ motion after a district court granted partial summary judgment that the newly-designed apparatus did not infringe the claims of the patent covered by the Commission’s cease and desist orders.  See Notice of Termination of Formal Enforcement Proceeding, 55 Fed. Reg. 51356 (1990).

Additional examples of “changed conditions of fact or law” giving rise to modification proceedings are set forth below:

In Certain Miniature Plug-In Blade Fuses (Inv. No. 337-TA-114), the Commission had issued a general exclusion order for imported miniature plug-in blade fuses having a “product configuration and/or packaging” that simulated complainant’s trade dress.  Thirteen years later, a German company not involved in the original investigation challenged the validity of complainant’s trademark registrations in district court, successfully arguing that the individual features of complainant’s fuse housing and the overall configuration of those features were functional, thus rendering the registrations invalid and unenforceable.  The Commission instituted a modification proceeding sua sponte and solicited submissions from interested persons and entities, but did not hold a public hearing or delegate the proceeding to an ALJ.  Having found that the conditions which led to the general exclusion order no longer exist, the Commission modified the order by deleting the reference to product configuration.  See Notice of Exclusion Order Modification (Mar. 20, 2002).

In Certain Novelty Glasses (Inv. No. 337-TA-55), the Commission had conducted an investigation of the alleged unauthorized importation of certain novelty beverage glasses that infringed complainants’ trademarks and trade dress, finding a violation of Section 337 and issuing an exclusion order.  The exclusion order required complainants to report to the Commission, on a semi-annual basis, whether complainants were continuing to use the subject trade dress.  When complainants failed to submit the required reports, the Commission ordered complainants to show cause why the exclusion order should not be rescinded pursuant to Interim Rule 211.57.  Thereafter, the Commission modified the exclusion order to state that, if complainants fail in the future to timely comply with the reporting requirement, and if they also fail to submit the required information within thirty days of receiving written notice from the Commission that the reporting requirement has been violated, then the Commission may rescind the exclusion order without further notice or proceedings.  See Comm’n Notice of Modified Exclusion Order, 57 Fed. Reg. 12339 (1992).

In Certain Plastic Encapsulated Integrated Circuits (Inv. No. 337-TA-315), the Commission had issued a limited exclusion order and cease and desist orders upon finding a violation of Section 337 in the unlicensed importation of circuits manufactured by an infringing process.  The orders did not explicitly cover licensed products, and the limited exclusion order allowed entry of products that the manufacturer or importer certified were covered by a license.  The cease and desist orders contained quarterly reporting requirements.  Complainant Texas Instruments (TI) petitioned for modification of the orders, asking the Commission to decide the dollar amount of patented product respondent Analog could import under a limited license Analog had acquired when it purchased a cross-licensee (PMI) of TI.  Pursuant to Interim Rule 211.57, the Commission provisionally accepted TI’s position that Analog could only sell up to the amount of PMI’s sales of licensed plastic encapsulated integrated circuits at the time of its acquisition ($15 million), and published a notice in the Federal Register setting a schedule for responses.  Analog and the Commission Investigative Staff argued in opposition that, under the cross-license, Analog could sell patented product up to the amount of PMI’s sales of all licensed products at the time of acquisition, or $94 million.  The Commission decided in favor of Analog, but agreed with TI that the reporting provision in the cease and desist orders should be modified to ensure that Analog’s sales do not exceed the $94 million ceiling.  See Modified Order to Cease and Desist (July 2, 1993).

In Certain Hardware Logic Emulation Systems and Components Thereof (Inv. No. 337-TA-383), complainant Quickturn had filed a motion for temporary relief simultaneously with its complaint, which was provisionally accepted by the Commission.  The ALJ subsequently issued an initial determination granting Quickturn’s motion, which was adopted by the Commission.  The Commission determined that a temporary limited exclusion order and a temporary cease and desist order directed to respondents was the appropriate form of temporary relief, and that bond would be set at 43% of the entered value of the imported articles.  Quickturn later petitioned the Commission under Rule 210.76 for an increase in respondents’ TEO bond rate from 43% to 180% of entered value of the subject emulation systems in light of the entered values that respondents had declared to the U.S. Customs Service, arguing that evidence gathered during the permanent relief phase of the investigation revealed that the TEO bond rate established during the temporary relief phase was inadequate to protect Quickturn from injury.  The Commission amended the temporary exclusion order to increase the TEO bond rate to 180% when the entered value did not equal the transaction value as defined in 19 C.F.R. § 152.103.  See Comm’n Op. on Pet. to Modify Temporary Relief Bond (Sept. 27, 1997).