Did You Know...

Did You Know … The America Invents Act (AIA) May Lead To Stays Of Section 337 Investigations Pending The Completion Of New Post Grant Proceedings?

By Eric Schweibenz
|
Jun
29
Historically, stays of Section 337 actions pending the resolution of patent reexaminations at the U.S. Patent and Trademark Office (“PTO”) have rarely been granted.  But on September 16, 2012, new post-grant proceedings—Post Grant Review (PGR), Transitional Program for Covered Business Method Patents (TPCBMP), and Inter PartesReview (IPR)—will become available to the public pursuant to the America Invents Act (AIA).  Unlike traditional reexamination, these new post-grant proceedings are designed to proceed relatively rapidly to final resolution.  Also unlike traditional reexamination, the estoppel provisions of the new proceedings will extend to the ITC.  As discussed on the Patents Post-Grant Blog, in view of these significant differences, it is possible that the ITC will eventually start to grant motions to stay Section 337 actions pending resolution of the new post-grant proceedings much more readily than it has in the past with traditional reexaminations. By way of background, patents asserted in Section 337 actions have often been the subject of concurrent reexamination proceedings at the PTO.  When this occurs, Respondents sometimes seek to stay the Section 337 investigation pending the outcome of the reexamination.  However, because of the unique nature of the ITC as a forum, stays pending reexamination have rarely been granted at the ITC.  See our November 6, 2009 post for more details on the factors used in evaluating motions to stay at the ITC.  For example, in Certain Semiconductor Chips with Minimized Chip Package Size and Products Containing Same (Inv. No. 337-TA-605), the Commission reversed an ALJ’s Initial Determination granting a motion to stay the investigation pending the completion of reexamination proceedings.  The Commission made note of “Congress’s mandate that section 337 investigations be expeditiously adjudicated … and the Commission policy that, to the extent practicable and consistent with requirements of law, investigations be conducted expeditiously to avoid delay.”  Comm’n Op. at 6.  The Federal Circuit later denied a request for a writ of mandamus to vacate the Commission’s opinion.  In re Freescale Semiconductor, Inc., 2008 U.S. App. LEXIS 15739, at *4 (Fed. Cir. Jun. 25, 2008).  More recently, ALJ E. James Gildea denied a motion to stay an investigation pending reexamination in Certain Blu-Ray Disc Players, Components Thereof and Products Containing the Same (Inv. No. 337-TA-824).  See our April 18, 2012 post for more details. A primary reason that stays pending reexamination are rarely granted at the ITC is that the ITC has a statutory mandate to expeditiously process its docket.  See Certain Semiconductor Chips(Inv. No. 337-TA-605), Comm’n Op at 6.  Since patent reexamination proceedings can often take 4-5 years to come to an ultimate resolution, the ITC has been reluctant to stay its relatively fast investigations while the PTO resolves a drawn-out reexamination. However, the new post-grant proceedings allowed under the AIA are designed to conclude within 12-18 months of initiation.  The speed of these proceedings as compared to traditional reexamination could significantly alter the calculus used to determine whether a stay is appropriate at the ITC.  Since a stay pending a post-grant proceeding under the AIA would likely not last nearly as long as a stay pending reexamination, the justification for denying a stay based on the relative slowness of PTO proceedings may be significantly weakened in the future.   Moreover, since the estoppel provisions under the AIA will extend to the ITC, the ITC may have more of an incentive to allow the PTO to come to a determination as to an asserted patent’s validity in the first instance. The ITC will likely take a wait-and-see approach in the short term based on its historical practice of rarely granting motions to stay pending traditional reexamination.  However, if it becomes clear that the PTO is actually concluding trials within the mandated 12-18 month time frame, motions to stay ITC actions pending post-grant proceedings at the PTO stand a chance of gaining traction.  We will continue to monitor developments in this area.  For more information on the AIA and the new post-grant proceedings, please visit the Patents Post-Grant Blog.
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Did You Know…Satisfying The Domestic Industry Requirement With Licensing Now Requires Proof Of Articles Protected By The Patent?

By Eric Schweibenz
|
May
19
In Section 337 actions before the International Trade Commission (“the Commission”), the complainant must establish that a domestic industry for articles protected by the asserted patent(s) exists or is in the process of being established.  19 U.S.C. § 1337(a)(2).  The domestic industry requirement consists of two prongs:  an economic prong and a technical prong. To satisfy the economic prong of the domestic industry requirement, a complainant must show that one of the economic activities set forth in subsection 19 U.S.C. § 1337(a)(3) has taken place or is taking place.  These economic activities include:  significant investment in plant and equipment; significant employment of labor or capital; or substantial investment in exploitation, including engineering, research and development, or licensing.  The first two categories of economic activity generally require the complainant to show that significant manufacturing-related activities are taking place in the United States, while the third addresses other activities that may be considered in situations where there usually is no domestic manufacture of articles covered by the patents in suit. Generally, to satisfy the technical prong of the domestic industry requirement, a complainant must establish that it practices at least one claim of each asserted patent (although it is not required to be an asserted claim).  That being said, until recently, Commission precedent did not require a complainant to demonstrate the existence of articles practicing the asserted patents in order to satisfy the technical prong of the domestic industry requirement based on licensing activities.  Long-standing Commission precedent on this point had relied substantially on the legislative history of the 1988 Act adding § 337(a)(3)(C). However, the Commission recently held in Certain Computers and Computer Peripheral Devices, and Components Thereof, and Products Containing the Same (Inv. No. 337-TA-841) that proof of “articles protected by the patent” is required to satisfy the technical prong of the domestic industry requirement, even where the domestic industry allegation is based on licensing activities.  In the opinion, the Commission looked to recent Federal Circuit decisions to determine whether there was an articles requirement for § 337(a)(3)(C).  See our January 15, 2014 post for more details. In InterDigital Communs., LLC v. ITC, the Federal Circuit considered this issue, and held that InterDigital Communications LLC (“InterDigital”) met the domestic industry requirement with its licensing activities.  690 F.3d 1318 (Fed. Cir. 2012) (“InterDigital I”).  However, in this case, there was no dispute that InterDigital’s licensees manufactured articles that practiced the patent.  In its opinion denying rehearing of this case (“InterDigital II”), the Court stated:
Applying the same analysis to subparagraph (C) of paragraph 337(a)(3) produces a parallel result that is consistent with the Commission’s and this court’s statutory construction:  The “substantial investment in [the patent’s] exploitation, including engineering, research and development, or licensing” must be “with respect to the articles protected by the patent,” which means that the engineering, research and development, or licensing activities must pertain to products that are covered by the patent that is being asserted.  Thus, just as the “plant or equipment” referred to in subparagraph (A) must exist with respect to articles protected by the patent, such as by producing protected goods, the research and development or licensing activities referred to in subparagraph (C) must also exist with respect to articles protected by the patent, such as by licensing protected products.
InterDigital II, 707 F.3d 1295, 1297-98 (Fed. Cir. 2013) (“InterDigital II”).  See our January 14, 2013 post for more details. Citing to InterDigital II, the Commission found that the Federal Circuit held that there is an “articles” requirement to satisfy subparagraph 337(a)(3)(C).  The Commission also stated that, while InterDigital II requires the existence of an article practicing the patent, the article does not need to be made in the United States.  The Commission found additional support for this position in Microsoft Corp. v. ITC, 731 F.3d 1354 (Fed. Cir. 2013). The Commission applied this reasoning in overruling the ALJ’s finding of domestic industry in Certain Audiovisual Components and Products Containing the Same (Inv. No. 337-TA-837).  In that case, the Commission affirmed the ALJ’s decision that the Complainant had not proved that licensed products practice any claims of the asserted patents.  See our April 15, 2014 post for more details. We will continue to monitor the Commission’s application of this requirement.  Until the Federal Circuit weights in on this issue again, the implications are clear – proving domestic industry based on licensing activities has become significantly more challenging for complainants.
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Did You Know The Commission Investigative Staff’s Participation Rate During The Last Three Years In Newly-Instituted Section 337 Investigations?

By Eric Schweibenz
|
Dec
16
For purposes of assessing the ongoing impact of the Commission’s 2011 plan to reduce the role of the Office of Unfair Import Investigations (“OUII”) in Section 337 investigations, we reviewed OUII’s participation rate in newly-instituted Section 337 actions over approximately the last three years.

By way of background, OUII serves, inter alia, as an independent third party representing the public interest in Section 337 actions. One of OUII’s tasks is to help create a complete record on all contested issues so that the Commission can properly enforce the provisions of Section 337. This is important because, unlike with district court litigation, a Section 337 action “is not purely private litigation ‘between the parties’ but rather is an ‘investigation’ by the Government into unfair methods of competition or unfair acts in the importation of articles into the United States.” Young Eng’rs, Inc. v. U.S. Int’l Trade Comm’n, 721 F.2d 1305, 1315 (Fed. Cir. 1983).
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