Year in Review 2018: Duplicative Litigation

A look at the ITC’s docket in 2018 shows very clearly that the trade agency’s patent powers are very rarely being used to protect domestic industries from shady foreign pirates. The agency’s broad jurisdiction under Section 337 mostly just enables forum shopping, excessive remedies and abusive litigation—all while undermining the power of constitutional courts.

New Complaint: Integrated Circuits

On December 19—just two days before the government shutdown—the ITC received its last Section 337 complaint of 2018.  The total number of new complaints for the year was 47, which is perfectly even with the annual average over the last ten years.

In its complaint styled Integrated Circuits and Products Containing the Same, Tela Innovations is accusing certain Intel processors of infringing four patents related to circuit design.  The complaint names Intel as well as four device makers that use Intel chips: Acer, ASUS, Lenovo, and MSI.  

This is Tela's second time at the ITC.  They filed a similar complaint in 2013 naming five mobile phone makers as part of a dispute with Qualcomm.  That investigation was terminated when Tela and Qualcomm reached a settlement.  

It's worth noting that the legal dispute between Tela and Intel began after Intel sought a declaratory judgment of non-infringement in district court.  Intel was a major investor in Tela, and the two companies originally entered into a covenant not to sue for patent infringement.  The primary dispute between the parties is whether the patents at issue in this complaint are covered by that agreement.  

To satisfy the domestic industry test, Tela is relying on the domestic investments of Samsung as a third-party licensee. Interestingly, this is the second time in just a few months that Samsung has been drawn into an ITC complaint as a licensee by subpoena.  The other investigation is LTE- and 3G-Compliant Cellular Communication Devices—possibly the best example a terrible ITC case highlighting the need for Section 337 reform—in which a nonpracticing entity has hauled in an unwilling domestic industry in order to block imports of smartphones based on infringement of FRAND-encumbered standard-essential patents.

Because of the government shutdown, the ITC is not receiving or publishing docket submissions, so we haven’t yet seen any public interest comments from proposed respondents. Intel is currently at the center of the ITC’s public interest inquiry in Mobile Electronic Devices (Inv. 1065), in which the ALJ recommended against an exclusion order because blocking Apple phones with Intel chips would harm competitive conditions and national security. The new complaint from Tela involves processors for laptops and desktop computers—not phones—and doesn’t appear to implicate the same concerns.

Photo Credit: Ai.Comput’in

Three New Complaints: Lighters, Truck Bed Covers, Dental Scanners

The ITC has received three new Section 337 complaints in December.  If no more complaints are filed before the end of the year, the total number for 2018 will be 46.  That number is quite a bit fewer than last year's 63 but about even with the ten-year average of 47 per year since 2009.

Pocket Lighters

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On December 6, BIC Corporation filed a complaint against six respondents that allegedly import lighters that infringe two registered trademarks for a lighter with an oblong eliptical shape. BIC is a French company that manufactures lighters in Europe, Brazil, China, and (importantly for its ITC complaint) Milford, Connecticut. The accused products are all imported from China.

Trademark cases are not very common at the ITC (about 2 per year), and rarer still are cases where a trademark infringement complaint is made without an accompanying allegation of patent infringement or other unfair act (about 1 every two years).

BIC is asking the ITC to issue a general exclusion order blocking importation of infringing lighters from all sources, not just the named respondents.  They claim such an order "is necessary and appropriate to prevent circumvention of limited exclusion orders directed to products of Respondents."  As evidence, BIC notes that it "has filed multiple lawsuits over the course of several years," and that one of the respondents opened a second U.S. subsidiary after its first one settled an injury lawsuit.  

According to the complaint, BIC is also suing respondents in the Eastern District of New York for not only trademark infringement but also false designation of origin and unfair competition.  The latter claims are not part of BIC's ITC complaint; probably because Section 337 requires an extra showing of injury to the domestic industry for any unfair acts that are not statutory intellectual property claims.

Pickup Truck Folding Bed Cover Systems and Components Thereof

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On December 7, Truck Hero filed a complaint through two of its subsidiaries, Extang and Laurmark. The complaint names eleven respondents, accusing each of infringing at least one of six patents and one of the respondents of also infringing two registered trademarks.  The complaint also seeks a general exclusion order.

An interesting facet of this complaint is that Truck Hero has taken the unusual step of requesting preliminary relief in the form of a temporary exclusion order prohibiting importation of the accused products during the investigation.  

The test for issuing a temporary exclusion order is essentially the same as the test for a preliminary injunction in district court.  Truck Hero will have to show a likelihood of success on the merits, that it will suffer irreparable injury without immediate relief, that the injury is more severe than the harm a temporary exclusion order would cause for others, and that granting preliminary relief is in the public interest.  Under standard procedures, the administrative law judge will make a determination on these factors within 90 days after the investigation is instituted.

Dental and Orthodontic Scanners and Software

3Shape Trios

On December 10, Align filed a new complaint against 3Shape for importing dental scanners that allegedly infringe five different patents.  This is Align's third complaint against the same products, for a total of seventeen patents asserted against 3Shape.  The other investigations—Intraoral Scanners (Inv. 1090) and Color Intraoral Scanners (Inv. 1091)—are still pending before two different administrative law judges.  

No stranger to the ITC, Align was also the complainant in Digital Models (Inv. 833), the highly publicized investigation leading to the Federal Circuit's decision in ClearCorrect v. ITC.  In that investigation, the Commission ruled in Align's favor and found a violation of Section 337 based solely on the cross-border transmission of electronic data.  ClearCorrect overturned the Commission's determination, holding that Section 337's 90-year-old provision concerning the "importation of articles" unambiguously refers only to physical goods and does not give the ITC the power to regulate the internet.

Final Determination: Robotic Vacuum Cleaning Devices

Rosey Robot

On November 30, the ITC issued a Final Determination in Robotic Vacuum Cleaning Devices (Inv. 1057) upholding the ALJ's finding of violation and issuing exclusion orders and cease and desist orders against all remaining respondents.  

Complainant iRobot makes the popular Roomba brand of robot vacuums and holds a number of patents related to that technology.  Original respondents included Hoover, iLife, Black & Decker, Bissell, and a number of Chinese manufacturers.  Due to a series of settlements, however, Black & Decker, Bissel, and iLife were dropped from the investigation.

In August, the Commission issued an opinion affirming a summary determination that iRobot satisfied the economic prong of the domestic industry test.  That opinion, discussed in an earlier post, helped clarify how research and development costs can be used to establish a domestic industry.  

Ultimately, iRobot was found to have satisfied the domestic industry test under both 337(a)(3)(B)—"significant employment of labor and capital"—and 337(a)(3)(C)—"substantial investment in . . .  exploitation [of the patented technology through] engineering, research and development, or licensing." 

Another summary determination in this investigation is currently under appeal at the Federal Circuit.  iRobot has challenged one of the ALJ's claim construction decisions that resulted in a summary determination of noninfringment and termination of one of the patents from the investigation.  That appeal is still ongoing, as are iRobot's district court lawsuits against non-settling respondents. 

Final Determination: Redesigned products and adverse inferences allowed in Two-Way Radio Equipment

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The ITC issued a notice on November 16 of the Commission’s final determination in Two-Way Radio Equipment (Inv. 1053).  The final determination found that Hytera violated Section 337 by importing walkie-talkies that infringe patents held by Motorola.  

Motorola's patent complaint at the ITC was part of a broader campaign accusing Hytera of trade secret theft by hiring three former Motorola engineers to copy Motorola's technology.  Those employees were called to testify during the ITC investigation, but refused to answer any questions—invoking their fifth amendment right against self-incrimination.  The behavior prompted the ALJ to apply an adverse inference against Hytera on the question of induced infringement, a decision that was upheld by the Commission on review.

Despite the finding of violation, Hytera issued a press release declaring the ITC outcome as a victory.  That's because the final determination also reversed some important findings from the initial determination that originally went against Hytera.  In particular, the Commission found that Hytera's redesigned products do no infringe any of the patents in suit.  This is very good news for Hytera.  Because an exclusion order will only apply to older models, they can continue to sell the newer products in the United States.

Motorola is still pursuing both patent and trade secret claims against Hytera in district court.

Photo credit: Craig A. Rodway