By Eric Schweibenz and Tom Yebernetsky
On November 12, 2015, the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) issued its precedential opinion in DeLorme Publ’g Co., Inc. v. ITC (2014-1572).  This was an appeal from the U.S. International Trade Commission’s (“the Commission”) determination finding a violation of the consent order entered in Certain Two-Way Global Satellite Communication Devices, System and Components Thereof (Inv. No. 337-TA-854).

By way of background, the Commission instituted the underlying investigation on September 18, 2012 based on BriarTek IP, Inc.’s (“BriarTek”) complaint of August 17, 2012.  See our September 19, 2012 post for more details.  On March 15, 2013, former ALJ Robert K. Rogers, Jr. granted a motion by DeLorme Publishing Co., Inc. and DeLorme InReach, LLC (collectively, “DeLorme”) to terminate the investigation and for entry of a proposed consent order (“the Consent Order”).  See our March 19, 2013 post for more details.  In the consent order, DeLorme agreed that it would not import or sell two-way global satellite communication devices, systems, or components thereof that infringe BriarTek’s U.S. Patent No. 7,991,380 (the ’380 patent) after April 1, 2013.  On April 10, 2013, BriarTek filed an enforcement complaint alleging that DeLorme violated the Consent Order.  See our April 11, 2013 post for more details.  On July 2, 2014, the Commission issued the public version of its opinion in the enforcement proceeding determining that DeLorme violated the Consent Order and imposed a civil penalty of $6,242,500.  See our July 9, 2014 post for more details.

Judge Moore authored the opinion for the Federal Circuit affirming the Commission’s determination that DeLorme violated the Consent Order and imposed a civil penalty of $6,242,500.  Specifically, the Federal Circuit “agree[d] with the Commission that DeLorme violated the Consent Order by selling InReach 1.5 and SE devices containing imported components with instructions for its customers to use the devices in an infringing manner.”  The Federal Circuit rejected DeLorme’s argument that “the Consent Order did not preclude DeLorme from selling domestically manufactured devices containing imported, noninfringing components.”  The Federal Circuit also held that the terms of the Consent Order “precluded [DeLorme] from selling infringing devices containing imported components with instructions to infringe.”  The Federal Circuit further noted that “[t]he Commission did not abuse its discretion in imposing a civil penalty of $6,242,500.”  More particularly, the Federal Circuit held that “[t]he Commission took into account the EPROM factors and we see no clear error in its fact findings or error in its application of the law.”

After the Commission issued its decision, the U.S. District Court for the Eastern District of Virginia granted summary judgment that claims 1, 2, 5, 10–12, 34, and 35 of the ’380 patent are invalid for anticipation and obviousness.  Based on the district courts determination that the claims at issue in the ITC investigation were invalid, DeLorme argued that the “Commission’s enforcement decision and accompanying civil penalty cannot stand.”  Specifically, Delorme argued that “the subsequent district court invalidation of the claims retroactively eliminates the Consent Order such that [the Federal Circuit] can no longer affirm the civil penalty properly adjudicated by the Commission.”  Furthermore, “DeLorme argue[d] that [the Federal Circuit’s] recent decision in ePlus, Inc. v. Lawson Software, Inc., 789 F.3d 1349 (Fed. Cir. 2015) requires that the Commission’s civil penalty in this case be reversed.”

The Federal Circuit disagreed and held that “the Consent Order applied to DeLorme at the time it committed the acts found to violate the order” and that DeLorme’s interpretation of the Consent Order is “is inconsistent with the plain language of the Consent Order itself.”  The Federal Circuit further rejected DeLorme’s arguments based on ePlus.  The Federal Circuit noted that “ePlus held that a civil contempt sanction can be set aside when the underlying injunction, upon which the sanction is based, is still itself non-final or reviewable.”  In contrast to the facts of this case, the Federal Circuit held that the “there is no question that the underlying Consent Order was final and not appealable.”

Judge Taranto issued an opinion dissenting in part.  In the dissent, Judge Taranto agreed that “the Commission committed no reversible error in entering its order imposing penalties on DeLorme for violation of the patent- infringement-based Consent Order”; however, he “would remand this matter to the Commission for it to consider the effect of the invalidation on enforcement of the civil penalty for pre-invalidation violations of the Consent Order.”  Judge Taranto further noted that the Commission argued that a remand was “necessary.”