By John Presper

On January 6, 2022, ALJ MaryJoan McNamara issued the public version of her December 14, 2021 enforcement initial determination (“EID”) finding no violation by Respondents East West Manufacturing, LLC and East West Industries (collectively, “East West”) of a consent order terminating the underlying investigation in Certain Blowers and Components Thereof (Inv. No. 337-TA-1217).

By way of background, the underlying investigation was based on a complaint filed by Regal Beloit America, Inc. (“Regal”) alleging a violation of section 337 by East West in the importation/sale of certain blowers and components thereof used by gas water heater manufacturers that infringe one or more claims of U.S. Patent No. 8,079,834 (“the ’834 patent”).  On October 22, 2020, the ALJ issued an initial determination terminating the investigation based on a proposed consent order, which the Commission entered on November 12, 2020.  The subject articles were defined by the Commission in the consent order as “certain blowers and components thereof that infringe claims 1, 2, 7-10, and 15 of the ’834 Patent.”  The asserted claims are directed to a blower housing intended to be mounted over the flue of a gas-operated heater (e.g., tank water heater).  The blower housing includes a motor and fan for drawing ambient air and exhaust gases into a dilution compartment, where the ambient air and exhaust gases are mixed.  In the enforcement complaint, Regal alleged that East West violated the consent order through the importation/sale of a “redesigned” blower that is “virtually identical” to the original blower that East West acknowledged infringed the ’834 patent and is covered by the consent order.  The enforcement proceeding was instituted on February 16, 2021.  See  our February 4, 2021 and February 18, 2021 posts for more details regarding the enforcement complaint and Notice of Investigation.

According to the EID, ALJ McNamara found that East West’s redesigned power direct vent (“PDV”) blower does not literally infringe the claims of the ’834 patent, particularly in light of the purpose and structure of a gasket that is part of and integrated into the redesigned blower.  In addition, the ALJ found that if the Commission were to find to the contrary, the mandatory civil penalty imposed on East West should be de minimus because “the weight of the evidence supports a finding that East West had a good faith belief that its Redesigned PDV Blower did not infringe the ’834 patent” and “East West’s actions complied with most of the factors of the six-factor test the Commission uses to evaluate the amount of the penalty for violation of a Consent Order.”  Finally, ALJ McNamara addressed “whether Regal and its Counsel or East West and its Counsel should be sanctioned pursuant to Commission Rule 210.4(d)(2), or for violation of any other Commission Rules that are equivalent to Fed. R. Civ. P. 11, that hold parties to the duty of candor and good faith during a Commission proceeding.”  One of the actions scrutinized by the ALJ was Regal’s counsel’s removal of the aforementioned gasket—which was “instrumental in infringement/non-infringement arguments”—from the redesigned blower in the enforcement complaint such that “Regal did not represent accurately [East West]'s Redesigned PDV Blower either in its narrative or in certain photographs attached to its Complaint.”  The EID stated that “[w]hile neither Regal nor East West is being sanctioned with monetary sanctions, the outcome hinged, at least in part, on listening to the testimony of the lawyers with respect to their interactions before and after the enforcement complaint was filed, and an analysis of the strict legal application of Commission Rule 210.4(d)(2).”  ALJ McNamara also issued Order No. 36 concurrently which denied East West's motion for sanctions and “explains the outcome and why."