ITC Patent Docket Update: Federal Circuit Opinions

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Just like patent cases in district court, Section 337 investigations at the ITC are appealable to the Federal Circuit Court of Appeals. The number of ITC investigations appealed to the Federal Circuit has been steady over the last three years, with 13 in 2017, 14 in 2018, and 8 in the first half of 2019. During that time the court issued opinions in far fewer cases: 5 in 2017, 4 in 2018, and 5 so far this year.

In most appeals of ITC determinations, the Federal Circuit is simply reviewing the ITC's application of patent law the same as they would in an appeal from district court. For example, appeals decided in 2019 include Neology v. ITC, in which the Federal Circuit affirmed an ITC determination finding certain claims of the complainant's patent invalid, and iRobot v. ITC, where the court affirmed the agency's construction of a patent claim that led to a finding of no infringement.

But appeals can also involve issues that are unique to ITC litigation. In Amarin v. ITC, for example, the Federal Circuit reviewed a decision by the ITC not to institute an investigation when the complaint alleged a violation of the Food, Drug, and Cosmetic Act, which is under the exclusive jurisdiction of the Food and Drug Administration. The court affirmed the ITC's action, but one member of the three-judge panel dissented, arguing that ITC decisions on whether or not to institute an investigation are not appealable.

One ITC-specific issue that has been addressed by the Federal Circuit twice already this year is the preclusive effect of ITC decisions on district courts. This is an especially important issue considering that most ITC investigations are duplicative additions to co-pending district court lawsuits. It is well understood that district courts are not required to adopt any of the ITC's findings related to patent validity or claim construction in a previous Section 337 investigation. This arrangement ensures that while invalidity remains a defense in Section 337 cases, the ITC cannot invalidate a patent.

In Hyosung v. ITC, complainant Diebold, despite winning its case on infringement, wanted the appeals court to review the ITC's construction of one patent claim the patent holder thought was overly narrow. Respondent Hyosung argued that the issue was moot because that patent—and also therefore the ITC's exclusion order—had already expired. Diebold wanted the court to review the construction anyway and argued that the appeal was not moot because the Federal Circuit's holding would be relevant in a co-pending district court case.

The court sided with respondents and vacated the ITC's decision on the expired patent. In its opinion, the Federal Circuit clarified that "the ITC’s determination of patent infringement and validity do not have claim or issue preclusive effect even if affirmed by our court." [emphasis added]

In Swagway v. ITC, respondent Swagway was appealing the ITC's decision to issue a final determination instead of accepting Swagway’s proposed consent order. That consent order would have barred Swagway from importing the accused articles and terminated the investigation in complainant Segway's favor, but it would have given Swagway the added benefit of avoiding a ruling on the merits of Segway’s infringement claims.

The court noted, however, that respondent was not injured by the the ITC's decision since the agency's determinations lack preclusive effect in other litigation. In its opinion, the Federal Circuit articulated for the first time that district courts are also not bound by ITC findings on trademark invalidity. The court's reasoning was simple and briefly stated:

We have previously determined that “Congress did not intend decisions of the ITC on patent issues to have preclusive effect." . . . We see no reason to differentiate between the effect of the Commission’s patent-based decisions and the Commission’s decisions regarding trademarks.

There are a number of ongoing appeals of ITC cases at the Federal Circuit, and we will certainly see more opinions released before the end of the year. Most notably, in Comcast v. ITC, the court will soon opine on what limits, if any, there are on the ITC's power to block non-infringing imports based on purely domestic activity that induces infringement in the United States.