07
Apr
By John Presper

On April 1, 2022, ALJ Cameron Elliot issued the public version of Order No. 23 (dated March 24, 2022) denying Respondent Amazon.com, Inc’s ("Amazon") motion for summary determination of no importation in Certain Laptops, Desktops, Servers, Mobile Phones, Tablets, and Components Thereof (Inv. No. 337-TA-1280).

By way of background, this investigation is based on an August 2, 2021 complaint filed by Sonrai Memory Ltd. of Ireland (“Sonrai”) alleging a violation of section 337 by Respondents Amazon; Dell Technologies Inc. of Round Rock, Texas; EMC Corporation of Round Rock, Texas; Lenovo Group Ltd. of China; Lenovo (United States) Inc. of Morrisville, North Carolina; Motorola Mobility LLC of Chicago, Illinois; LG Electronics Inc. of South Korea; LG Electronics USA, Inc. of Englewood Cliffs, New Jersey; Samsung Electronics Co., Ltd. of South Korea; and Samsung Electronics America, Inc. of Ridgefield Park, New Jersey in the unlawful importation and/or sale in the U.S. of certain laptops, desktops, servers, mobile phones, tablets, and components thereof by reason of infringement of certain claims of U.S. Patent No. 7,159,766; U.S. Patent No. 7,325,733; and U.S. Patent No. 8,193,792.  See our September 3, 2021 post for more details regarding the complaint and Notice of Investigation.

According to the order, Amazon argued in its motion that it purchases and resells the accused products domestically without any involvement in their importation, and that such resales bear no nexus to importation of those products by their manufacturers.  More specifically, Amazon contended that in order to violate the “sale within the United States after importation” clause of section 337(a)(1)(B)(i), the sale must be made by the owner, importer, or consignee of the articles “upon importation” (i.e., its resales “must have a nexus to importation”), and that “[a]ny other reading eliminates the importation requirement entirely, as it would result in Section 337 covering all domestic sales of once-imported products.”  Sonrai argued in opposition that the words “upon importation” do not appear in section 337(a)(1)(B)(i).

The Commission Investigative Staff (“OUII”) opposed the motion, arguing that the seller need not also have been the “owner” at the time of importation or “upon importation,” and that Amazon’s position is inconsistent with the original language and intent of the Tariff Act of 1930, which recited “sale by the owner, importer, consignee or agent of either.”  Instead, according to OUII, “any ‘owner, importer, or consignee’ of the imported ‘articles that . . . infringe’ who then resells them domestically falls under the ‘sale . . . after importation’ language” (i.e., the evaluation of “owner” is at the time of sale).  OUII further asserted that there is no dispute that Amazon is the “owner” at the time of “after importation” sales in satisfaction of the statute, and that if a “nexus” is required, Sonrai has shown evidence that Amazon knew or should have known that the accused products are imported.

ALJ Elliot denied Amazon’s motion for two reasons.  First, he found that the motion rested on an unsupported legal principle—that “sale within the United States after importation by the owner, importer, or consignee” within the statute only means owners, importers, or consignees upon importation.  Observing that there are no recent Commission or Federal Circuit decisions squarely on point, the ALJ cited two recent decisions that suggest Amazon’s is not the proper interpretation.  In Certain Wearable Monitoring Devices, Systems, and Components Thereof (Inv. No. 337-TA-1190), the ALJ found that a respondent that “stipulated that it sold Fitbit products after importation under a distribution agreement” but “no longer sold any Fitbit products at the time the complaint was filed in this investigation” nevertheless met the statutory requirement.  The respondent in that investigation did not petition for review of the finding, and it was not reviewed by the Commission.  Similarly, in Certain Artificial Eyelash Extension Systems, Products, and Components Thereof (Inv. No. 337-TA-1226), the ALJ described respondents Walmart, Inc. and CVS Pharmacy, Inc.—who were in a similar position to Amazon in the chain of commerce—as “resellers” of certain accused products.  Those respondents did not dispute that acting as domestic “resellers” satisfied the importation requirement.  They also did not petition for review of this finding, and the Commission likewise did not review the issue.  Although neither of these decisions constitute explicit statements on the scope of after-importation jurisdiction, ALJ Elliot noted that Commission’s determinations likely could not stand if sales after importation did not include domestic resellers.

Second, even if Amazon’s interpretation of the law is correct, ALJ Elliot found genuine factual issues regarding whether Amazon is an “importer” under the statute.  For example, the ALJ found that the general sales contracts and vendor agreements relied on by Amazon are not purchase orders for specific goods and contain no shipping or other information that establishes or suggests that every single one of Amazon’s accused products is already within the United States and entered the United States regardless of any action taken by Amazon.  The ALJ also considered the testimony of Amazon’s representative to be “vague” and a related purchase order record spreadsheet to be unpersuasive, and that when viewed in a light most favorable to the non-movant, such evidence “would show Amazon does not know, or does not care to know, from where its purchased products come when shipping is arranged by the supplier.”  Moreover, the ALJ noted that the spreadsheet “indicates that some purchase orders were sent to ‘distributors’ outside of Samsung, Acer, ASUS, or VAIO,” and that Amazon provided no explanation of how these unnamed “distributors” also constitute purely domestic sourcing.  Accordingly, Amazon’s motion was denied.

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