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 No. 337-TA-644), the Commission recently temporarily rescinded its limited exclusion order and cease and desist order against respondents pending resolution of the validity of the subject patent by the Federal Circuit.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).

OUII can trace its origins back to the Trade Act of 1974 (the “Trade Act”), which instituted significant changes in the procedures for Section 337 actions.  Prior to the passage of the Trade Act, the provisions of the Administrative Procedure Act (“APA”) did not apply to Section 337 actions, and there was therefore very limited participation by the private parties after institution of an investigation — the Commission investigated complaints directly.  This changed drastically after the enactment of the Trade Act.  The private parties suddenly had substantial new rights to participate directly in Section 337 proceedings.  The problem, however, was that now the Commission could not directly communicate with the private parties ex parte because it was serving as an administrative fact-finder.  To remedy this situation, OUII (originally known as the Unfair Import Investigations Division or “UIID”) was created so as to represent the public interest in the proceeding and help the Commission reach a correct and fully informed determination.

OUII plays a number of critical roles in Section 337 investigations, beginning even before a complaint is filed.  Complainants typically consult with OUII before filing in order to ensure the technical sufficiency of the draft complaint and to improve the likelihood of having the Commission institute an investigation based on the complaint.  During the 30-day period following the filing of the complaint, OUII consults with the Complainant and proposed Respondents and then makes a recommendation to the Commission on whether to institute an investigation.

Once the Commission institutes an investigation, OUII’s primary role is to aid in the creation of a complete record in order to support the public’s interest in a correct and fully-informed decision by the Commission.  To this end, OUII can propound written discovery and participate in depositions just like the private parties.  OUII independently briefs the issues relevant to the public interest and will generally take a position on most of the critical legal issues in the investigation.

After an ALJ issues an Initial Determination, OUII remains an independent third party to the investigation and participates in briefing during review by the Commission.  If the Commission’s Final Determination is appealed to the Federal Circuit, however, it is the job of the Office of the General Counsel to represent the Commission on appeal.  OUII continues to play a role in the enforcement of the Commission’s determination, and participates in any formal enforcement proceedings.

In addition to making a timely request, a Respondent also must show that the claims in the district court action involve the same issues before the ITC.  This similarity of issues requirement has been interpreted by some district courts to require that the patents asserted in both forums be identical.  By way of example, in Saxon Innovations, LLC v. Palm, Inc., 2009 U.S. Dist. LEXIS 105928 (E.D. Tx. Nov. 4, 2009), the plaintiff Saxon accused Palm of infringing its ‘873 patent.  Saxon had also asserted its ‘873 patent in a parallel ITC investigation.  Although Palm was a respondent in that parallel ITC investigation, Saxon did not assert its ‘873 patent against Palm in that forum.  The district court denied Palm’s request to stay the district court action against it finding that “[t]he claims against Palm in this case and the claims against Palm in the ITC investigation are not ‘identical parallel claims.’”  In explaining its ruling, the court noted the fact that the ITC will not consider Palm’s alleged infringement of the ‘873 patent nor will it consider Palm’s invalidity theories of the ‘873 patent, if any.  Similarly, in Micron Tech., Inc. v. Mosel Vitelic Corp., 1999 U.S. Dist. LEXIS 4792 (D. Id. Mar. 31, 1999), the district court denied the defendants’ request to stay under § 1659(a) a consolidated action in its entirety where only four of eleven patent infringement claims were asserted in the ITC.  The district court rejected the defendants’ assertions that the seven patent infringement claims not before the ITC were so related to the four patent infringement claims before the ITC that they implicated substantially similar legal and factual issues, including the fact that the plaintiff alleged the same products infringed all eleven patents.  Although the district court refused to stay the action with respect to the seven patent infringement claims not before the ITC, the court granted the defendants’ motion to stay the remaining four patent infringement claims until such time as the resolution of the ITC action became final.

Other district courts have determined that although § 1659 may not be applicable, it can use its discretionary authority to stay any non-identical patent infringement claims.  For example, in SanDisk Corp. v. Phison Elec. Corp., 538 F.Supp.2d 1060 (W.D. Wis. 2008), the district court stayed, under its inherent power, a separate action involving non-identical patent infringement claims filed by the plaintiff against the same defendants/respondents.  In staying the separate action, the court noted that the patents shared the same prosecution history and specification of one of the patents asserted in the plaintiff’s other district court action that was stayed under § 1659.  Similarly, in Formfactor, Inc. v. Micronics Japan Co., Ltd., 2008 U.S. Dist. LEXIS 131114 (N.D. Cal. Feb. 11, 2008), in addition to staying two patent infringement claims under § 1659, the district court stayed, under its inherent power, two non-identical patent infringement claims.  The court noted that the four asserted patents shared at least two common inventors.  In staying the entire action, the district court cited the potential duplication of discovery that would occur if the two remaining claims were not stayed and stated that “the similarity of the patents in subject matter [was] sufficient to warrant staying the matter . . . in order to gain the additional knowledge of the ITC proceedings and  . . . to benefit from litigating the four patents in this action together.”

In the event that a district court ultimately determines to stay a civil action under 28 U.S.C. § 1659(a), the civil action is stayed “until the determination of the Commission becomes final.”  This statutory language has been interpreted by the Federal Circuit to mean that “§ 1659 requires that the stay of district court proceedings continue until the Commission proceedings are no longer subject to judicial review.”  In re Princo Corp., 478 F.3d 1345, 1355 (Fed. Cir. 2007).

Temporary relief may be granted, under Section 337, to a party to “the same extent as preliminary injunctions and temporary restraining orders may be granted under the Federal Rules of Civil Procedure.”  19 U.S.C. § 1337(e)(3).  In order to obtain temporary relief, a party must show (1) reasonable likelihood of success on the merits, (2) irreparable harm caused if relief is not granted, (3) balance of hardships tipping in the requesting party’s favor, and (4) the public interest does not preclude issuance of relief.  Reasonable likelihood of success on the merits, in Section 337 cases, includes demonstration that a valid and enforceable intellectual property right has been infringed and that a domestic industry exists, or is in the process of being established, that practices the asserted intellectual property right.

If a party wishes to file for temporary relief, in most cases, the complainant must do so at the time of the complaint. 19 C.F.R. § 210.52.  In certain circumstances, however, a motion for temporary relief may be filed after the complaint, but before the institution of an investigation.  19 C.F.R. § 210.53.  This requires a party to prove that extraordinary circumstances, warranting temporary relief, exist and that the party was not aware, and with due diligence would not have been aware, of those circumstances at the time the complaint was filed.  Id.

Regardless of whether the motion is filed with the complaint or afterward, it must be accompanied by (1) a memorandum of points and authorities in support of the motion; (2) affidavits of persons with knowledge of the facts alleged; (3) all documentary information and other evidence intended to be submitted in support of the motion; (4) a detailed statement of facts bearing on whether the complainant should be required to post a bond; and if so required, (5) the appropriate amount of that bond.  19 C.F.R. § 210.52.

Once a proper motion for temporary relief has been made, the opposing party has 10 days after the service of the motion to file a response. 19 C.F.R. § 210.59.  In the response, the opposing party will attempt to show that the complainant lacks a reasonable likelihood of success on the merits, that no irreparable harm will be caused if relief is not granted, that the balance of hardships tips in the opposing party’s favor, and that the public interest precludes issuance of relief.  Like the motion for temporary relief, the response should also include a memorandum of points and authorities; affidavits, where possible; and address the complainant’s bond assertions. Id.

After the complaint, the motion for temporary relief, and the response have been filed, the Commission will determine whether to institute an investigation.  This determination must be made within 35 days of the filing of the complaint and motion for temporary relief.  19 C.F.R. § 210.10.  If an investigation is instituted, the motion for temporary relief is provisionally accepted and forwarded to an ALJ who will make an initial determination (“ID”) as to whether there has been a violation of Section 337 and whether temporary relief is appropriate.  The ALJ then has 70 days after the institution of the investigation to issue the ID.  19 C.F.R. § 210.58.  Like other Section 337 proceedings, the ALJ may deem the temporary relief portion of the investigation “more complicated,” thus extending the deadline for the ID to 120 days from the institution of the investigation.  Id.  By way of example, and as indicated in our December 23 post, ALJ Rogers designated the investigation “more complicated” in Certain Silicon Microphone Packages.

After the ALJ issues an ID on the issue of temporary relief, the Commission has 20 days (30 days in “more complicated” cases) in which to modify or vacate the ID.  19 U.S.C. § 1337(e)(2).  Within that 20 day (or 30 day) period, the parties have the opportunity to submit commentary on any perceived errors in the ID.  If the Commission chooses to award temporary relief, they may do so either in the form of a temporary exclusion order or a temporary cease and desist order.

If the licensing or settlement agreements contain confidential information, such information can be removed from the public versions of these documents.  Indeed, if fewer than all parties settle the investigation, the settling parties might be able to maintain the confidentiality of the financial settlement terms from the non-settling parties.  See, e.g., Certain Machine Vision Software, Inv. No. 337-TA-680, Order 18 (October 29, 2009) (finding that the policy of encouraging settlement through maintaining financial terms secret trumps non-settling parties’ alleged need of such information for remedy issues).  However, keeping financial settlement terms from non-settling parties is not uniformly followed in all cases.  See, e.g., Certain Zero-Mercury-Added Alkaline Batteries, Inv. No. 337-TA-493, Order 35 (October 30, 2003) (while redacted financial information would be kept from non-settling respondents, ALJ denied complainant’s request to keep such information from outside counsel of non-settling respondents, because existing protective order was sufficient).

According to the Commission Rules, the Administrative Law Judge (“ALJ”) is directed to consider and make appropriate findings regarding the effect of the proposed settlement on the public health and welfare, competitive conditions in the U.S., the production of like or directly competitive articles in the U.S., and U.S. consumers.  See Commission Rule 210.50(b)(2).  Although the ALJ may conduct a hearing on these public interest factors, the ALJ’s findings on this issue are normally made solely on the information submitted by the parties.  If the ALJ grants the motion to terminate the investigation based upon settlement, the ALJ then certifies to the full Commission the motion papers and agreements, with an initial determination terminating the proceeding for the affected parties.  Again, if confidential information is contained within the initial determination, agreements, and motion papers, then confidential and public versions of these papers are forwarded to the Commission.

Under Commission Rule 210.42(e), notice of the initial determination based on settlement is provided to the U.S. Department of Health and Human Services, the U.S. Department of Justice, the Federal Trade Commission, the U.S. Customs Service, and any other departments or agencies that the Commission deems appropriate.  These institutions are permitted ten days after service of the notice to provide comments regarding the initial determination.

The Commission then has an opportunity to review the settlement agreements along with any other comments provided by the parties, Commission Investigative Attorney, ALJ, and any agencies or departments.  The Commission can then take action as it sees fit, or more commonly, it will decide not to review the initial determination, in which case it will issue a notice to the public and the parties of its decision, and the investigation will terminate as to the affected parties.

Under Section 337, an appeal of an adverse Commission determination must be made “in accordance with chapter 7 of title 5.”  19 U.S.C.  § 1337(c).  Chapter 7 of title 5, in turn, only provides for appellate actions “against the United States, the [federal] agency by its official title, or the appropriate officer.”  5 U.S.C. § 703.  Accordingly, appeals of adverse determinations at the ITC in connection with Section 337 actions cannot be brought against the other party to the investigation directly; rather, they must be brought against the ITC.

Further, only parties who are “adversely affected” by a final determination of the ITC have standing to appeal to the Federal Circuit.  19 U.S.C. § 1337(c).  This statutory “adversely affected” language has been interpreted narrowly, in that only the ultimate outcome of the investigation is taken into account.  Surface Tech., Inc. v. U.S. Int’l Trade Comm’n, 780 F.2d 29, 30 (Fed. Cir.  1985); Krupp Int’l, Inc. v. U.S. Int’l Trade Comm’n, 626 F.2d 844, 846 (CCPA 1980).  This means that, e.g., respondents cannot appeal a determination that section 337 has not been violated.  See Krupp, 626 F.2d at 846; Surface Tech., 780 F.2d at 30; Tanabe Seiyaku Co., Ltd. v. U.S. Int’l Trade Comm’n, 1995 U.S. App. LEXIS 40961, at *2 (Fed. Cir. 1995).

However, in order to mitigate this harsh rule, the Federal Circuit has repeatedly held that if the losing party appeals the Commission’s decision, then the prevailing party has the right to intervene and raise any available arguments in support of the Commission’s final determination.  See, e.g., Krupp, 626 F.2d at 846 (allowing respondent to intervene in complainant’s appeal in order to, inter alia, challenge the Commission’s findings related to four patents, even though the Commission had found no violation of Section 337, due to non-infringement for one of the patents and invalidity for the other three); see also Rule 15(d) of the Federal Rules of Appellate Procedure (providing further information regarding the required substance and timing for a motion to intervene at the Federal Circuit).  Thus, as a practical matter, the prevailing party can argue against unfavorable Commission findings on appeal, as long as the losing party appeals the overall final determination first.

If the Commission finds a violation of Section 337, then it is authorized to issue two types of remedial orders:  exclusion orders and cease and desist orders.  19 U.S.C. § 1337(d)-(f).  An award of money damages is not available as a remedy in the ITC.  The available remedies in the ITC are therefore prospective in nature.  The defense of laches in patent cases, on the other hand, is retrospective in nature:  if the defendant proves by a preponderance of the evidence that the patentee delayed filing suit for an unreasonable length of time from when it new or should have known of the claim against the defendant, and that the defendant suffered either economic or evidentiary prejudice as a result of the delay, then the patentee is barred from recovering pre-filing monetary damages.  Thus, “laches as it pertains to patent-based cases does not, as a matter of law, work to curtail the type of prospective relief sought in 337 cases.”  Certain Personal Watercraft and Components Thereof, Inv. No. 337-TA-452, Order No. 54 at 2, Initial Determination (Sept. 19, 2007) (citing Certain EPROM, EEPROM, Flash Memory and Flash Microcontroller Semiconductor Devices and Products Containing Same, Inv. No. 337-TA-395, Comm’n Op., Suppl. Views of Chairman Bragg at 11, n.65 (July 9, 1998)).

It should be noted that while “ordinary” laches is not an available as a defense, respondents in the ITC may assert prosecution laches.  See Certain Data Storage Systems and Components Thereof, Inv. No. 337-TA-471, Order No. 42 (Jan. 4, 2003).  The two-prong test for prosecution laches requires (1) an unreasonable and inexcusable delay by the patentee in prosecuting the patent, and (2) material prejudice to the defendant attributable to the delay.  If prosecution laches applies, then the patent is rendered unenforceable.  Thus, unlike a laches defense to limit damages, a prosecution laches defense is not retrospective and will impact the type of prospective relief sought by patentees in the ITC.

Under Commission Rule 210.79, any person may request an advisory opinion from the Commission to determine whether a proposed course of action or conduct would violate a Commission order.  The party requesting the advisory opinion must establish standing by showing that the proposed course of action is not hypothetical, that it has a compelling business need for the advice, and that the request was made as fully and as accurately as possible.  The Commission also takes into consideration whether an advisory opinion would facilitate the enforcement of Section 337, would be in the public interest, and would benefit consumers and competitive conditions in the United States.  Although the Commission’s rules do not require that an Administrative Law Judge (“ALJ”) issue an advisory opinion within a certain timeframe, the Commission can require that an ALJ set an abbreviated procedural schedule.  Typically, the Commission requires that the ALJ issue an initial advisory opinion within nine months of the publication date of the Commission’s Notice of Advisory Opinion Proceedings.  See, e.g., Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406, Notice of Formal Enforcement and Advisory Opinion Proceedings and Accompanying Order (July 31, 2001) (9-months after notice publication).  Advisory Opinion proceedings are not subject to the requirements of the Administrative Procedures Act and thus the ALJ has discretion concerning the course of the advisory opinion proceeding, including taking evidence beyond what is already in the record, whether or not to hold an evidentiary hearing, and the scheduling for the proceeding.  Further, an advisory opinion by the Commission is not appealable as it does not represent a final determination.

Alternatively, persons who desire clarification about whether a redesigned product is covered by an exclusion order may request a ruling under 19 C.F.R. § 177 by sending a written request to U.S. Customs.  Requests are normally processed by U.S. Customs in the order received and as quickly as possible, usually within two to six months.  If U.S. Customs finds that the redesigned product falls outside the scope of the exclusion order, it will issue a ruling to that effect and permit the articles to enter the United States.  On the other hand, in the event that U.S. Customs denies entry of a redesigned product in light of an existing exclusion order, U.S. Customs will issue a ruling.  Such a ruling is subject to a right to appeal to the U.S. Court of International Trade (“CIT”).  Appeals from final decisions of the CIT may be taken to the U.S. Court of Appeals for the Federal Circuit and, ultimately, to the Supreme Court of the United States.

Subsection 337(a)(3) defines domestic industry as follows:

   
An industry in the United States shall be considered to exist if there is in the United States, with respect to the articles protected by the patent, copyright, trademark, mask work, or design concerned –
(A) significant investment in plant and equipment;
(B) significant employment of labor or capital; or
(C) substantial investment in its exploitation, including engineering, research and development, or licensing. 

The domestic industry requirement can be met by satisfying any one of these three criteria.  Certain Integrated Circuit Chipsets and Products Containing Same, Inv. No. 337-TA-428, Order No. 10, Initial Determination (May 4, 2000), citing Certain Variable Speed Wind Turbines and Components Thereof, Inv. No. 337-TA-376, Comm’n Op., USITC Pub. 3003 (Nov. 1996).  If a complainant relies on either Subsection (A) or (B) to prove domestic industry, it must also show satisfaction of the technical prong.  Certain Set-Top Boxes and Components Thereof, Inv. No. 337-TA-454, Initial Determination, USITC Pub. 3564 (Nov. 2002).  If, however, a complainant relies on Subsection (C) to prove domestic industry, it is not always necessary to show satisfaction of the technical prong.

Subsection (C) was added to Section 337 in 1988, making it possible to demonstrate domestic industry using proof of exploitation of the intellectual property right, including if a complainant patent owner makes U.S. investments in the licensing of its patent(s), domestic industry may exist under Subsection 337(a)(3)(C).  See Certain Digital Satellite System (DSS) Receivers and Components Thereof, Inv. No. 337-TA-392, Initial Determination (Oct. 20, 1997) (complainant satisfied the domestic industry requirement solely through investment of money in a patent licensing program); Certain Semiconductor Chips with Minimized Chip Package Size and Products Containing Same, Inv. No. 337-TA-432, Order No. 13, Initial Determination (Jan. 24, 2001) (summary determination granted in favor of complainant on the existence of domestic industry based solely on activities related to licensing); Certain Zero-Mercury-Added Alkaline Batteries, Parts Thereof and Products Containing Same, Inv. No. 337-TA-493, Initial Determination (Jun. 2, 2004) (U.S. investment in exploitation of patent through licensing alone satisfied Subsection 337(a)(3)(C) for domestic industry); Certain 3G Mobile Handsets and Components Thereof, Inv. No. 337-TA-613, Order No. 42, Initial Determination (Mar. 10, 2009) (grant of summary determination of domestic industry based on licensing activities alone).

When domestic industry exists under Subsection (C) due to investments made in the licensing of a patent, it is unnecessary to show that complainant patent holder or its licensee(s) are involved in actual domestic production to satisfy the technical prong.  Certain Semiconductor Chips with Minimized Chip Package Size and Products Containing Same, Inv. No. 337-TA-432, Order No. 13, Initial Determination (Jan. 24, 2001).  It is, however, necessary to show a nexus between the licensing activities relied on by complainant under Subsection 337(a)(3)(C) and the asserted patent(s).  Certain Microlithographic Machines and Components Thereof, Inv. No. 337-TA-468, Initial Determination (Jan. 29, 2003).  In addition, a complainant must actually receive some revenue, such as a lump sum payment or royalty payments, from its licensing activities in the U.S., Certain Digital Processors and Digital Processing Systems, Components Thereof and Products Containing Same, Inv. No. 337-TA-559, Order No. 24, Initial Determination (May 11, 2007), and the investment in licensing activities must be substantial to alone satisfy domestic industry under Subsection 337(a)(3)(C).  Certain Stringed Musical Instruments and Components Thereof, Inv. No. 337-TA-586, Initial Determination (Dec. 3, 2007).

As summarized recently by Chief ALJ Paul J. Luckern, “[u]nder 337(a)(3)(C), a complainant may satisfy the domestic industry requirement solely by relying on licensing activities that relate to the patent(s) asserted in the investigation, even if the complainant (or a licensee of the complainant) does not manufacture patented products in the United States. …  [C]omplainant need only demonstrate that (1) it has made a substantial investment in its licensing program and (2) there is a sufficient nexus between the patent at issue and the alleged domestic licensing industry.”  Certain Short-Wavelength Light Emitting Diodes, Laser Diodes and Products Containing Same, Inv. No. 337-TA-640, Order No. 72, Initial Determination (May 8, 2009).

How a given ALJ handles claim construction can be discerned by examining each ALJ’s recently issued ground rules.  The Ground Rules of ALJs Rogers, Bullock, and Essex specifically address claim construction in a provision entitled “Markman Hearing on Claim Construction.”  This provision provides a general outline and structure of the procedural schedule surrounding a Markman hearing if the ALJ determines that a Markman hearing would be beneficial to the investigation.

ALJ Rogers’ Ground Rules, under the heading “Procedural Schedule,” also sets specific dates for the parties to exchange disputed claim terms, exchange proposed constructions, and submit a joint claim construction list.  Similarly, ALJ Gildea also sets specific dates regarding disputed claim terms under the heading “Procedural Schedule,” but does not contain a specific rule regarding a Markman hearing.  In place of a Markman provision in ALJ Gildea’s Ground Rules, he has included, in the Order setting forth his Ground Rules, that the parties may submit comments as to whether a separate Markman hearing would be useful.

The Ground Rules of ALJ Charneski and Chief ALJ Luckern do not include any provision specifically addressing the exchange of disputed claim terms, claim constructions, or a Markman hearing.  However, Chief ALJ Luckern does suggest in his Ground Rules that, in connection with pre-hearing statements, each party should be able to establish a position on claim interpretation prior to the evidentiary hearing.

Ultimately, the manner in which claim construction is performed in an ITC investigation will depend upon the ALJ who is assigned the case.  Thus, it is important for prospective section 337 litigants to be familiar with the claim construction procedures of each ALJ.

* Mark Tison is a summer associate at Oblon Spivak