By John Presper
On February 15, 2021 the U.S. Court of Appeals for the Federal Circuit granted an interim stay of the ITC’s remedial orders in Certain Botulinum Toxin Products, Processes for Manufacturing or Relating to Same and Certain Products Containing Same (Inv. No. 337-TA-1145) while the court considers a motion for a stay pending appeal.

By way of background, the 337-TA-1145 investigation was instituted on March 6, 2019 based on a complaint filed by Medytox Inc. of South Korea (“Medytox”) and Allergan Ltd. of Ireland and Allergan, Inc. of Irvine, California (“Allergan”) (collectively, “Complainants”) alleging a violation of section 337 through the importation and sale in the U.S. of certain botulinum toxin (“BTX”) products, processes for manufacturing or relating to same and certain products containing same by reason of misappropriation of Complainants’ trade secrets by Daewoong Pharmaceuticals Co., Ltd. of South Korea (“Daewoong”) and Evolus, Inc. of Irvine, California (“Evolus”) (collectively, “Respondents”). In particular, Complainants alleged that Daewoong misappropriated (i) Medytox’s Clostridium botulinum bacterial strain used to manufacture its BTX products, and (ii) certain Medytox manufacturing processes for BTX products. Complainants specifically asserted that Daewoong obtained Medytox’s strain through former Medytox employee Dr. Byung Kook Lee, and that Daewoong misappropriated Medytox’s secret manufacturing processes and related testing information for its 900 kDa BTX products, including Meditoxin, Innotox, and MT10109L. According to Complainants, Daewoong used the misappropriated Medytox strain of C. botulinum to produce DWP-450, the accused BTX product manufactured by Daewoong and sold by Evolus under the brand name Jeuveau®.

Following an evidentiary hearing, ALJ David P. Shaw issued a final initial determination (“ID”) on July 6, 2020 finding a violation of section 337 and recommended a limited exclusion order (“LEO”) barring certain BTX products imported by Respondents for ten years, and a cease-and-desist order (“CDO”) against Evolus. On January 13, 2021, the Commission issued the public version of its opinion finding a violation of section 337 as to the misappropriation of trade secrets relating to Medytox’s manufacturing processes, but reversed the ID’s finding with respect to misappropriation as it relates to Medytox’s bacterial strain. The Commission issued an LEO and CDO directed to Respondents for a 21-month period.

Both sides appealed the ITC’s remedial orders to the Federal Circuit. Respondents also filed a motion with the Federal Circuit to stay the ITC’s remedial orders pending the outcome of the appeal, and additionally sought an emergency interim stay of the remedial orders pending the court’s disposition of the stay motion. In their motion papers, Respondents assert that the ITC “weaponized Section 337” by ruling “for the first time ever that Section 337 empowers it to ban imported goods so long as that manufacturer has committed misconduct the ITC deems an ‘unfair act’—even where there is no predicate violation of U.S. law at all.” (Emphasis in original). According to Respondents, the ITC’s interpretation of Section 337 in the underlying investigation “virtually invites U.S. industries to scour the world to find allegations that their importing competitors engaged in ‘unfair acts’ abroad—not just traditional intellectual property offenses but any “business tort[],” … in circumstances in which the substantive U.S. law does not even arguably apply. And, going a step further, the ITC says those U.S. industries may be completely disconnected from the misconduct, as is indisputably the case here.”

According to Monday’s order, the Federal Circuit granted the emergency request for an interim stay pending disposition of the stay motion, and ordered any oppositions to the stay motion to be filed no later than March 2, 2021.