By Eric Schweibenz
On September 29, 2016, ALJ David P. Shaw issued Order No. 24 in Certain Automated Teller Machines, ATM Modules, Components Thereof, and Products Containing the Same (Inv. No. 337-TA-989).

By way of background, this investigation is based on a February 9, 2016 complaint filed by Nautilus Hyosung, Inc. and Nautilus Hyosung America Inc. (collectively, “Nautilus”) alleging violation of Section 337 in the importation into the U.S. and sale of certain automated teller machines, ATM modules, components thereof, and products containing same that infringe one or more claims of U.S. Patent Nos. 7,891,551 (the ’551 patent); 7,950,655; 8,152,165 (the ’165 patent); and 8,523,235.  See our February 9, 2016 and March 10, 2016 posts for more details on the complaint and Notice of Investigation, respectively.

According to Order No. 24, Respondents Diebold Inc. and Diebold Self-Service Systems (collectively, “Diebold”) filed a motion for sanctions alleging that Nautilus did not fulfill the duty imposed by 19 C.F.R. § 201.4 to verify that it had an adequate legal and factual basis for filing its complaint with respect to the ’551 and ’165 patents and thus should be sanctioned.  Specifically, Diebold argued that although it informed Nautilus that the asserted claims of the ’551 and ’165 patents are invalid, Nautilus continued to assert those patents, and responded that it would oppose any motion for summary determination filed by Diebold.

In the Order, ALJ Shaw first noted that since the filing of the pending motion for sanctions, Nautilus withdrew its allegations under the ’551 and ’165 patents and the ALJ denied Diebold’s motion for summary determination that the ’551 and ’165 patents are invalid as anticipated because such patents are no longer asserted in this investigation.  ALJ Shaw further noted that Commission Rule 201.4 requires that a motion seeking sanctions thereunder cannot be filed with, or presented to, the presiding ALJ or the Commission unless, within seven days after service of the motion (or such other period as the ALJ or the Commission may prescribe), the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected.  Accordingly, because Nautilus withdrew its allegations and Diebold failed to provide the pending motion for sanctions to Nautilus – as required by the safe-harbor provision set forth in Commission Rule 210.4 – ALJ Shaw denied Diebold’s motion for sanctions.