By Eric Schweibenz
On June 23, 2010 ALJ Theodore R. Essex issued the public version of Order No. 12 (dated May 21, 2010) denying Respondents Toyota Motor Corporation, Toyota Motor North America, Inc., and Toyota Motor Sales, USA, Inc.’s (collectively, “Toyota”) renewed motion for summary determination filed April 12, 2010 in Certain Hybrid Electric Vehicles and Components Thereof (Inv. No. 337-TA-688).

By way of background, this investigation follows litigation between Complainant Paice LLC (“Paice”) and Toyota in the U.S. District Court for the Eastern District of Texas in which certain Toyota hybrid vehicles were found to infringe U.S. Patent No. 5,343,970 (the ‘970 patent).  On March 3, 2010, ALJ Essex issued an Initial Determination (“ID”) granting Paice’s motion for summary determination regarding infringement, validity and unenforceability and denying Toyota’s cross motion for summary determination terminating the investigation for claim preclusion.  See our March 29, 2010 post for more details.  On April 2, 2010, the ITC reversed and remanded the ID.  See our April 6, 2010 post for more details.  After remand, on April 6, 2010, ALJ Essex notified the parties that Toyota would be permitted to renew its motion for summary determination terminating the investigation for claim preclusion.  On April 12, 2010, Toyota filed its motion.

As indicated in the Order, Toyota argued that the Accused Products, namely the Toyota Prius III, Toyota Camry Hybrid, Lexus RX450h, and the Lexus HS250h were essentially the same as the accused products in the prior district court litigation and that any differences were merely colorable.  Thus, since the claim was the same, Paice should be precluded from pursuing the investigation unless a claim preclusion exception applied.  Toyota maintained no such exception was applicable.  Specifically, Toyota argued that, despite Paice’s contentions, the relief sought in the previous district court litigation (i.e., a permanent injunction) was not meaningfully different in scope or effect from the relief sought at the ITC (i.e., a limited exclusion order and cease and desist order).  Toyota added that, although a general exclusion order would provide broader relief, Paice was not seeking a general exclusion order.

In response, Paice asserted that an exception did apply as it was unable to pursue a cause of action under Section 337 in the previous district court litigation.  Thus, the relief sought in the current investigation was meaningfully different from that sought in the previous district court litigation.  Paice also maintained that claim preclusion could not bar the current action against Toyota because the products at issue were not introduced into the United States until after the prior district court action had concluded.

The Commission Investigative Staff opposed Toyota’s motion and agreed with Paice that the relief sought in the instant investigation could not have been granted by the district court in the previous district court litigation.

In the Order, ALJ Essex determined that although the previous district court litigation involved the same “claim” as the current litigation, Paice was not precluded from pursuing the instant investigation because an exception to the general rule of claim preclusion applied.  Specifically, Paice was unable to seek a “certain remedy or form of relief,” an exclusion order, in the district court.  ALJ Essex listed several reasons for the determination that the two remedies were meaningfully different.  One difference cited by ALJ Essex was that remedies provided under Section 337 are trade remedies intended to protect domestic industries from unfair importation practices, while injunctive relief under Section 283 of the Patent Act is an equitable remedy based on a patentee's rights under that statute.  Further, ALJ Essex noted that the Federal Circuit has held that the relief provided in Section 337 investigations is not available in district court and that the ITC has held that the relief provided in ITC investigations is unique.  ALJ Essex added that Section 337 investigations “were specifically intended to provide relief to patent holders in addition to the relief provided under the Patent Act.”  In addition, the ALJ observed that exclusion orders issued by the ITC are directed at the infringing products, regardless of the party seeking to import the goods, whereas injunctions issued by district courts are directed at specific parties in the litigation.  ALJ Essex also cited differences in terms of enforcement of ITC orders.  Specifically, the ALJ stated that an exclusion order is enforced by U.S. Customs and Border Protection while an injunction requires the patentee to monitor the infringer's activities.  ALJ Essex also noted that the ITC has stated that it is not required to follow the Supreme Court's decision in eBay, which the district court was required to follow in the previous litigation in determining whether to issue an injunction.  Thus, ALJ Essex determined that the relief sought in the previous litigation was not the “same” relief or remedy as provided by Section 337 investigations and Paice was not precluded from seeking relief at the ITC.

With regard to Paice’s claim that the presently accused products could not have been at issue in the district court action, ALJ Essex stated that there had been no “new acts” by Toyota and that Paice’s cause of action was based on the same transactional facts.  According to ALJ Essex, the focus is on whether the newer models are essentially the same as the products at issue in the previous litigation and whether any differences are significant enough to warrant a new claim.  ALJ Essex found no such differences between the models.  However, as an exception to the claim preclusion doctrine applied, Paice’s claim was not precluded and Toyota’s motion was denied.