Docket Update: Four New Section 337 Complaints

With four new Section 337 complaints at the ITC since the middle of August, the total number of new complaints for 2019 is now 32, keeping pace with the same rate of filings at the agency over the last three years. One unusual thing about the 2019 docket, however, is how many trade secret complaints there have been. The ITC is currently conducting five active trade secret investigations, all filed within the last seven months.

The four most recent complaints provide a good survey of some of the different sorts of cases the ITC adjudicates under Section 337. We have a complaint seeking to block an expensive end product due to an allegedly infringing component, one complaint involving a low-tech consumer product, another case about printer ink with 32 respondents, and a retaliatory trade secret complaint that’s really just one part of a global legal dispute that has nothing to do with imports between two companies with questionable domestic industry credentials. And all of these cases are duplicative additions to ongoing lawsuits in federal district court.

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Self-Driving Car Parts

Most self-driving cars employ a spinning coffee-can like object on their roofs to detect nearby objects and ostensibly prevent the autonomous vehicle from running into things like pedestrians, road signs, and oncoming trucks. Some of that technology is protected by a patent that Velodyne is asserting against two respondents in a recent Section 337 complaint verbosely captioned Rotating 3-D LiDAR Devices and Products Containing the Same (Including Autonomous Vehicles, Unmanned Aerial Vehicles, Industrial Machines, and Robotics), and Components Thereof.

As with most ITC investigations, this complaint is a redundant duplication of a lawsuit in federal court. Velodyne is also suing both respondents, Hesai and Robosense, in district court in northern California. Also, it appears that the respondents haven't actually begun doing any business in the United States, since the only imports Velodyne could identify in the complaint were for display at trade shows.

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Rocking Folding Camping Chairs

The ITC's patent investigations tend to involve products and patents we typically think of "high-tech" like computers and medical devices, but the agency also gets a handful of cases every year involving relatively low-cost consumer products. In recent years, the ITC has adjudicated cases involving, for example: pool covers, diapers, razor blades, cell phone holders, plastic mugs, jump ropes, and outlet covers. In 2019, we've already seen complaints for baby-wearing harnesses, floor tiles, fish pliers, and ziplock bags.

The most recent "low-tech" ITC complaint is Collapsible and Portable Furniture, which specifically involves folding camping chairs that rock back and forth. Complainant GCI is asserting two patents in the complaint against three competing folding chair makers—Denovo, Zenithen, and Westfield. Before GCI brought its complaint to the ITC, Denovo filed a lawsuit against GCI in federal district court seeking a declaratory judgment of non-infringement and invalidity of one of the two patents asserted at the ITC. In its argument that the patent is invalid as obvious, Denovo cites numerous prior art references from the 1800s and notes that "the concept of utilizing springs to convert a standard chair into a rocker was prevalent as early as 1868."

GCI was itself a respondent in a short-lived ITC investigation—Backpack Chairs (Inv. 1062). That complaint was filed in June 2017 by Rio Brands but withdrawn a few months later. We'll see if GCI's own complaint has any more staying power.

Toner Cartridges Forever and Ever

On August 19, a Section 337 complaint was filed by Brother Industries, a Japanese electronics company, asserting five patents related to toner cartridge designs. Some of these respondents in this investigation are veterans at the ITC, having been named in numerous past printer cartridge cases.

The ITC has conducted at least fourteen investigations in the last ten years on behalf of printer companies like Canon, Epson, HP, Lexmark, and (now) Brother asserting patents related to ink and toner cartridges. The investigations often involve dozens of respondents selling low-cost replacement cartridges to U.S. businesses who use complainants' printers. In order to keep customers from buying ink from other these sellers, printer companies are notorious for employing a variety of commercial and legal tactics, including the use of patented technology in both printers and replacement cartridges.

The ITC can be an excellent venue for printer companies asserting these patent rights, because the agency allows an unlimited number of respondents to be joined in a single action and can issue a general exclusion order that applies to all importers, not just those named in the complaint.

Brother has followed this pattern, requesting a general exclusion order and naming 32 individual respondents.

Bone Cement Trade Secret Retaliation

In Bone Cement and Components Thereof (Inv. 1153) the ITC is currently adjudicating a trade secret dispute between two multinational medical device companies. That investigation—currently pending before an ALJ—is the result of a complaint by Heraeus claiming that respondent Zimmer Biomet stole its formula for bone cement and developed a competing product.

On August 19, Zimmer Biomet filed its own trade secret-based Section 337 complaint—Bone Cement and Bone Cement Accessories—claiming that Heraeus misappropriated the company's proprietary customer and pricing information when it hired key members of Zimmer Biomet's U.S. sales staff.

This dispute between the two companies seems to be the result of a change in relationship from collaborators, in which Zimmer Biomet sold Heraeus's product in the U.S. and European market, to now being competitors each with its own product and sales operation. This dispute is about more than trade secrets and is being adjudicated by a host of different courts in various countries.

Trade secret complaints at the ITC fall under Section 337(a)(1)(A), which prohibits "unfair methods of competition and unfair acts in the importation of articles . . . the threat or effect of which is . . . to destroy or substantially injure an industry in the United States." The companies in this dispute may have trouble satisfying this injury to industry requirement. Both companies are selling a product that was designed in Europe and is manufactured abroad. As such, the domestic industries they claim to be injured by each other's accused imports are merely sales operations that will suffer from the existence of a competing product. But the ITC generally does not consider sales activity alone to be sufficient under Section 337’s domestic industry requirement.