By Eric Schweibenz
Further to our July 29 post, on August 21, 2009, the International Trade Commission released the public version of its opinion denying certain Respondents’, including Vizio, Inc., TPV International (USA), Inc., and Envision Peripherals, Inc. (collectively, “Respondents”), joint motion to stay enforcement of a limited exclusion order (“LEO”) and cease and desist orders (“C&D Orders”) in Certain Digital Television Products and Certain Products Containing Same and Methods of Using Same (Inv. No. 337-TA-617).

By way of background, on April 10, 2009, the Commission terminated this investigation with a finding of violation of Section 337 by reason of infringement of claims 1, 5, and 23 of U.S. Patent No. 6,115,074 (the “‘074 patent”).  See our April 14 and May 5 posts for more information.  In connection with its Final Determination, the Commission issued an LEO against the Respondents, and C&D Orders directed to Vizio, TPV USA, and Envision, among others.

On June 2, 2009, Respondents filed a joint motion to stay the LEO and C&D Orders pending appeal of the Commission’s determination to the Federal Circuit.  Complainants Funai Electric Co., Ltd. and Funai Corporation (“Funai”) and the Commission Investigative Staff opposed Respondents’ joint motion.  In the opinion, the Commission evaluated the four-prong test as applied by the Federal Circuit in considering whether to issue a stay pending appeal.  Specifically, in connection with a motion to stay, the moving party must demonstrate (1) a likelihood of success on the merits of the appeal; (2) irreparable harm to the movant absent a stay; (3) that issuance of a stay would not substantially harm other parties; and (4) that the public interest favors a stay.

Regarding likelihood of success on the merits, the Commission rejected Respondents’ argument that an admittedly difficult question was presented since all of the asserted ‘074 patent claims currently at issue in the investigation were rejected by the U.S. Patent and Trademark Office (“USPTO”) during reexamination proceedings.  According to the Commission, the “PTO examination procedures have distinctly different standards, parties, purposes, and outcomes compared to civil litigation” and “the two forums take different approaches in determining validity and on the same evidence could quite correctly come to different conclusions.”  More particularly, the Commission noted that in litigation a challenger who attacks the validity of patent claims must overcome the presumption of validity with clear and convincing evidence that the patent is invalid.  In contrast, during USPTO reexamination proceedings the standard of proof is a preponderance of evidence, there is no presumption of validity, and the examiner is not attacking the validity of the patent but it conducting a subjective examination of the claims in light of the prior art.  Lastly, the Commission noted that USPTO’s final office action in connection with the ‘074 patent reexamination proceedings “is not a final decision” since Funai has a number of additional opportunities to reverse the reexamination results.

With respect to irreparable harm to Respondents, the Commission determined that “Respondents could experience some harm if the remedial orders are not stayed” but Respondents did “not provide any evidence to substantiate their claim that they would be irreparably harmed, and the harm they allege is far from certain.”

As to harm to Funai, the Commission determined that “[i]f the Commission’s orders are stayed and Respondents are allowed to continue importing and selling infringing products, Funai will likely lose sales and a share of the market for digital televisions.”

Regarding the public interest, the Commission rejected Respondents’ arguments noting that there is “no evidence that other digital television producers cannot meet the demand in the U.S. market.”  The Commission also determined that “the public interest favors the protection of intellectual property.”  Lastly, the Commission found that “Funai has not raised any public interest arguments that the Commission did not already consider when it issued the remedial orders in this investigation.”