21
Aug
By Eric Schweibenz
On August 3, 2017, the International Trade Commission (“the Commission”) issued its opinion 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 complaint filed by Nautilus Hyosung, Inc. and Nautilus Hyosung America Inc. (collectively, “Nautilus”) alleging violation of Section 337 by Respondents Diebold Nixdorf, Inc. and Diebold Self-Service Systems (collectively, “Diebold”) 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 (“the ’655 patent”); 8,152,165 (“the ’165 patent”); and 8,523,235 (“the ’235 patent”). See our February 9, 2016 and March 10, 2016 posts for more details on the complaint and Notice of Investigation, respectively. The ALJ previously granted motions by Nautilus to terminate the investigation as to all asserted claims of the ’551, ’165, and ’655 patents. After holding an evidentiary hearing in November 2016, the ALJ issued a final initial determination (“ID”) on March 13, 2017 finding a violation of Section 337 by Diebold in connection with the ’235 patent. Specifically, the ID found that the Commission has subject matter jurisdiction, in rem jurisdiction over the accused products, and in personam jurisdiction over Diebold. The ID also found that Nautilus satisfied the importation requirement, that the accused products directly infringed claims 1-3, 6, 8, and 9 of the ’235 patent, and that Diebold contributorily infringed such claims. The ID further found that Diebold failed to establish that the asserted claims of the ’235 patent are invalid for indefiniteness, anticipation, or obviousness. Finally, the ID found that Nautilus established the existence of a domestic industry that practices the ’235 patent. Accordingly, the ALJ recommended issuance of a limited exclusion order (“LEO”) prohibiting the importation of Diebold's automated teller machines, ATM modules, components thereof, and products containing the same that infringe the asserted claims of the ’235 patent. The ALJ also recommended issuance of cease-and-desist orders based on the presence of Diebold’s commercially significant inventory in the U.S.

According to the Opinion, the Commission affirmed the ID’s finding that the accused products and domestic industry products satisfy the claim limitation “a main transfer unit coupled to the bundle separator and configured to horizontally transfer the individual sheets of the banknotes along a main transfer path” in claim 1.

The Commission reversed the ID’s finding that certain prior art does not disclose the preamble to claim 1, i.e., an “automatic depositing apparatus for automatically depositing a bundle of banknotes including at least one cheque.” Specifically, the Commission reversed the ID’s requirement that the preamble requires a mixed bundle of banknotes, which is at odds with the construction of “banknotes.” This reversal did not alter the ID’s finding that Diebold failed to establish by clear and convincing evidence that the asserted claims are invalid, however, because the Commission affirmed the ID’s detailed reasons on the merits explaining the flaws in Diebold’s invalidity proofs. For example, Diebold merely relied on its assertion that whether the “main transfer path” limitation of claim 1 is taught by the prior art is not disputed, instead of offering any opinion regarding how any piece of prior art discloses or renders obvious this limitation. The Commission rejected Diebold’s argument that it is relieved of its burden to show that the prior art discloses a claim element if the presence of that element in the prior art is allegedly undisputed. Moreover, the Commission noted that “Nautilus actually did dispute that the prior art disclosed each element of the asserted claims.”

Having found a violation of Section 337, the Commission agreed with the ALJ’s determination that the appropriate form of relief is an LEO and cease-and-desist orders directed to Diebold’s infringing products. The Commission also determined that the public interest factors do not preclude issuance of the orders, and that no bond is required to permit temporary importation and sale during the Presidential review period.