By Eric Schweibenz and Christopher Ricciuti
On August 11, 2014, the U.S. International Trade Commission (the "Commission") issued the public version of an advisory opinion ("AO") adopting-in-part and reversing-in-part ALJ Gildea's Initial Advisory Opinion ("IAO") in Certain Sleep-Disordered Breathing Treatment Systems and Components Thereof (Inv. No. 337-TA-879). The Commission also reversed the ALJ's determination to place the burden of proof in this Advisory Opinion Proceeding ("AOP") on the patent owner in view of Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S. Ct. 843 (2014), and instead placed the burden on Respondents Apex Medical Corp. and Apex Medical USA Corp. (collectively, "Apex").

By way of background, this AOP was initiated by Apex.  Apex sought an advisory opinion in order to confirm that their redesigned sleep-disordered breathing treatment systems are not covered by the consent order previously entered into by Apex. See our December 16, 2013 post for more details on the ITC's decision to institute this advisory opinion proceeding.  Complainants ResMed Corp. of San Diego, California, ResMed Inc. of San Diego, California, and ResMed Ltd. of Australia (collectively, "ResMed") and the Commission Investigative Staff participated in the AOP.

On June 3, 2014, ALJ Gildea issued the IAO finding that Apex's redesigned iCH and XT CPAP humidifiers are covered by the Consent Order, but that the redesigned WiZARD 220 mask is not covered by Order. The Commission adopted, with modified reasoning, the ALJ's determination that the iCH CPAP humidifier is covered by the Consent Order and that the WiZARD 220 mask is not covered by the Consent Order.  However, the Commission reversed the ALJ's determination with respect to the XT CPAP humidifier, holding that this device is not covered by the Consent Order.

Burden of Proof

According to the Commission, the petitioner bears the burden of proving non-infringement in an AOP.  See, e.g., Certain Condensers, Parts Thereof, and Products Containing Same, Including Air Conditioners for Automobiles, Inv. No. 337-TA-334, IAO at 2, 20 (March 14, 2000) (adopted by the Commission on May 1, 2000).  However, ALJ Gildea placed the burden of proof on the patent owner to prove infringement following the Supreme Court's guidance in Medtronic, which held that the burden of proving infringement rests upon the patentee, even in a declaratory judgment action brought by a licensee for non-infringement.  ResMed and the Commission Investigative Attorney asked the commission to review the ALJ's decision concerning Medtronic.

ResMed argued that Medtronic is not applicable to advisory opinions because "the risk of inconsistent, equally controlling decisions that the court cautioned against in Medtronic is not applicable to AOPs where there is no final ruling on the merits."  In contrast, and following the Supreme Court's rationale in Medtronic, Apex argued "that ResMed, as the patent owner, is in a better position than Apex to know, and be able to point out, where, how, and why Apex's redesigned products purportedly infringe ResMed's patents."

The Commission reversed ALJ Gildea's finding, stating that "the Supreme Court's legal and practical considerations discussed in Medtronic weigh in favor of keeping the Commission's longstanding practice of placing the burden of proof in AOPs on the petitioner."  First, the Commission distinguished Medtronic as controlling precedent because the case did not involve a Section 337 proceeding.  Second, the Commission found that the legal and practical considerations underlying Medtronic weigh in favor of placing the burden of proof in AOPs on the petitioner.

The Commission determined that the parties provided no evidence of any risk that placing the burden of proof on the petitioner will create unnecessary post-litigation confusion regarding the scope of the patents at issue, and that the patent owner is not necessarily in a better position to bear the burden of proof because "the issues of patent scope and infringement of the original, accused products usually have already been determined in the underlying investigation. In such cases, the respondents are able to point out how and why their redesign is different from the litigated products and does not infringe."  The Commission also described other unique aspects of AOPs that militate in favor of keeping the burden on the petitioner such as the fact that the complainant to the original investigation may choose not to participate in the AOP and, under section 337(k)(2) regarding modification or rescission of an issued exclusion order, Congress has determined that the burden of proof shall be placed on the petitioner, indicating congressional preference that the burden be placed on petitioners seeking post-order relief.

Apex's Redesigned Products

ResMed's U.S. Patent No. 6,935,337 (the '337 patent) generally relates to a humidifier for delivering humidified air in a CPAP system to patients with sleep apnea.  The particular dispute between the parties here concerned whether Apex's redesigned iCH and XT humidifiers have a "top cover defining both the inlet and outlet," as required by claim 20 of the '337 patent.  Regarding the iCH humidifier, the Commission determined to adopt the ALJ's finding that the redesigned humidifier literally infringes claim 20 as Apex's non-infringement arguments were irrelevant and unpersuasive.

With respect to the XT humidifiers, Apex argued that the ALJ misapplied the law on the doctrine of equivalents by not assessing the accused equivalent structure on a limitation-by-limitation basis, and instead finding that because the entire humidifier device includes both an inlet and outlet, that the top cover limitation of claim 20 was met.  By applying the doctrine of equivalents in this fashion, Apex argued that the ALJ's analysis entirely vitiated the requirement that the top cover, separate from the humidifier's body, define both the inlet and outlet.  The Commission agreed and reversed the ALJ's finding with respect to this product.  The Commission found that the XT humidifier lid clearly provides an outlet, but the inlet is included in the tank body, and applying the doctrine of equivalents as proposed by the ALJ would eliminate claim 20's requirement that both the inlet and outlet be defined by the lid.

ResMed's U.S. Patent No. 7,159,587 (the '587 patent) is directed to a nasal mask for use with a CPAP system.  The parties' particular dispute here concerned whether the language of claim 15 reciting a "gas washout vent portion" was limited to vents having "a thin air permeable membrane extending across an opening for exhausting gas to the atmosphere."  ALJ Gildea found that the claim language was so limited in view of the intrinsic evidence and, as a result, determined that Apex's redesigned WiZARD 220 mask does not infringe claim 15 of the '587 patent.

The Commission agreed with the ALJ, finding that the proposed construction "is based on specification disavowal as evidenced by the patentee's repeated disparaging of prior art masks having vents made of the same material and thickness as the mask shell, and the patentee's clear and unmistakable statements that limit the scope of the claims to masks having vents constituting a thin air permeable membrane."  The Commission conducted a review of the specification of the '587 patent and found that it "repeatedly and consistently state[d] that the invention includes a thin air permeable membrane, and nothing in the intrinsic record suggests otherwise."  The Commission also noted that every embodiment described in the '587 patent, and every figure depicted in the patent, includes a thin air permeable membrane.  Accordingly, because Apex's redesigned WiZARD 220 mask does not include "a thin air permeable membrane extending across an opening for exhausting gas to the atmosphere," the Commission affirmed ALJ Gildea's finding of non-infringement.