IP Law Alert : Intellectual Property Lawyers & Attorneys : Gibbons Law Firm : Copyrights, Patent Infringement, Unfair Competition

Yesterday’s Federal Register included a public notice indicating the U.S. International Trade Commission’s (“ITC”) intention to solicit input from complainants who obtained exclusion orders from the ITC following proceedings under 19 U.S.C. § 1337 (“Section 337”).

Section 337 addresses unfair practices in the import trade, and especially, for enforcing U.S. intellectual property rights at the border. An exclusion order may be “limited” or “general,” and it prevents articles found to be infringing from being imported into the U.S.

With this Notice, the ITC is seeking feedback, via a three-question survey of complainants with exclusion orders presently in place, regarding the effectiveness of exclusion orders to prevent certain imports. This effort is part of the ITC’s study to examine the efficacy of exclusion orders in blocking the importation of infringing products. As a formality, the ITC must first gain approval from the Office of Management and Budget to fund the survey.

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The International Trade Commission (the “ITC”) recently issued its opinion in Certain Lighting Control Devices Including Dimmer Switches and Parts Thereof (IV), Inv. No. 337-TA-776. The ITC opinion addressed whether the complainant had established the facts necessary for a finding of circumvention of a Limited Exclusion Order to justify the issuance of a General Exclusion Order. The ITC ultimately issued the General Exclusion Order sought by the complainant, disagreeing with the findings of the Administrative Law Judge and the recommendation of the Commission Investigative Staff.

As a background point, a Limited Exclusion Order is limited to those products specifically brought to the ITC’s attention as violative of Section 337, which addresses unfair practices in the import trade and especially for enforcing U.S. intellectual property rights at the border. A General Exclusion Order may issue against all infringing articles whether or not they were included in the ITC’s investigation.

The Section 337 investigation at issue stemmed from a complaint by Lutron Electronics Co., Inc. (“Lutron”) relating to the importation and sale of electric dimmer switches that infringe Lutron’s U.S. Patents. Administrative Law Judge Essex’s initial determination granted Lutron’s motion for summary determination in part as the respondents were in default. Specifically, Judge Essex found that the defaulting respondents met the importation requirement and that their accused products infringed at least one claim of the two Lutron patents at issue.

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On December 19, 2011, in GPX Intl. Tire Corp. v. U.S., the Federal Circuit affirmed the International Court of Trade’s ruling that countervailing duty law does not apply to a non-market economy (“NME”) country, such as China. We previously summarized the Federal Circuit’s ruling here.

Recently, the United States and Titan Tire Corporation petitioned for a rehearing of the Federal Circuit’s decision. While the petition was pending, Congress passed legislation to apply countervailing duty law to NME countries. The new legislation applies retroactively and applies to this case. Congress’ intent plainly was to overrule the Court’s previous decision. Further, the new legislation contains a provision regarding an adjustment of antidumping duties on imported goods. This so-called “double counting” provision does not apply to the rehearing proceeding. Although the scope of the new legislation is clear, the appellees argue that it is unconstitutional. As a result, the Federal Circuit ordered that the Trial Court should decide this issue.

In summary, the Federal Circuit granted the petitions for rehearing and remanded the case to the Trade Court to determine whether the new legislation is constitutional.

Gibbons will monitor developments in this important area of law.

Jillian A. Centanni is an Apprentice in the Gibbons Intellectual Property Department.

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On April 26, the Gibbons Institute of Law, Science & Technology, Seton Hall University School of Law, and the New Jersey Intellectual Property Law Association will present, "Patent Litigation at the ITC: Views from the Government, In-House Attorneys and Outside Counsel."

Throughout the afternoon, two panels comprised of various government officials and in-house counsel will come together to share their views on patent litigation and how it is approached in their specific practice areas.

New Jersey, New York and Pennsylvania CLE credits will be granted at this program. Please click here for additional event details, including a list of featured speakers and pricing levels. To register, click here or call (973) 642-8187.

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Last week in GPX Intl. Tire Corp. v. U.S., the Federal Circuit decided whether both antidumping and countervailing duties may be imposed on a non-market economy (“NME”) country like China. The Federal Circuit affirmed the International Court of Trade’s (“ITC”) ruling that countervailing duty law does not apply to an NME country, but for different reasons than the ITC. Earlier, the ITC had reasoned that the U.S. Department of Commerce’s (“Commerce”) 2007 interpretation of the law was “unreasonable” because of the high probability of “double counting.” Alternatively, the Federal Circuit came to its decision by looking at the statute’s Congressional intent. Specifically, when Congress amended and reenacted countervailing duty law in 1988 and 1994, the Federal Circuit concluded that government payments could not be characterized as “subsidies” in an NME context. Therefore, countervailing duty law does not apply to NME countries.

In his opinion for the court, Justice Dyk first provided background on the two types of duties arising from imports: antidumping and countervailing duties, stemming from the Tariff Act of 1930. Pursuant to 19 U.S.C. §§ 1673 and 1671(a), antidumping duties are placed on goods that are sold in the U.S. for less than fair value and countervailing duties are placed on goods that receive “a countervailable subsidy.” The subsidy in this case arises from a “domestic subsidy,” where the subsidy benefits both domestic and exported goods. Conversely, an “export subsidy” benefits only exports, and both antidumping and countervailing duties may be forced by market economy countries.

Additionally, the Federal Circuit also provided a history on countervailing duties. The issue of whether Commerce should impose countervailing duties on goods from NME countries was first considered in 1983 and in 1984 when Commerce concluded that countervailing duties should not be imposed on NMEs. After U.S. manufacturing companies appealed to the ITC and were successful, Commerce then appealed to the Federal Circuit. The Federal Circuit then reinstated Commerce’s decision in Georgetown Steel Corp. v. U.S. that countervailing duties should not be imposed on NMEs.

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The Federal Circuit’s Myriad Genetics decision, Ass’n for Molecular Pathology v. U.S. Patent and Trademark Office, 99 U.S.P.Q. 2d 1938 (Fed. Cir. 2011), which invalidated most of the method claims in the patents at issue, brings to mind a concern about the value of method claims, particularly to the pharmaceutical industry.

The Myriad Genetics patents at issue included two types of method claims relating to human genetics: one involved determining whether a female patient had abnormal BRCA1/2 genes by comparison of BRCA1/2 gene and BRCA 1/2 RNA from the patient’s tumor sample to those from a non-tumor sample; the second was an activity screening method for anticancer drugs that compared the growth of a host cell transformed with a cancer-causing BRCA gene in the presence and absence, respectively, of the test compound.

The practice of these method claims abroad would not necessarily raise an infringement issue in the U.S. because neither type entails the importation into the U.S. of a product that would potentially infringe the Myriad Genetics composition claims or method claims. Rather, only data from the results of the method claims need be imported. The methods could be practiced in the absence of a claim to the BRCA genes themselves since the technology for isolating the genes, their sequences and the means of transforming host cells therewith are within the skill of the art.

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Earlier this week the Federal Circuit affirmed an International Trade Commission (“ITC”) decision by refusing to find a patent owner complainant’s litigation expenses satisfied the “domestic industry” requirement of 19 U.S.C § 337. The Court’s decision in John Mezzalingua Assocs. (d/b/a PPC, Inc.) v. International Trade Comm’n, 2010-1536 (Fed. Cir. October 4, 2011) is a blow to ITC complainants, in particular, non-practicing entities intent on relying solely on patent litigation expenses to establish the domestic industry requirement of § 337.

Patent owners are increasingly filing § 337 actions before the ITC seeking an “exclusion order” - an order that blocks infringing products from being imported to the United States. Section 337 is intended to protect domestic manufacturers by excluding importation of infringing products by foreign competitors. Although the ITC cannot award damages for a violation of § 337, an exclusion order is an effective tool for stopping the importation of infringing goods. Indeed, the threat of an exclusion order often provides patentees with a significant bargaining chip during negotiations involving patent disputes.

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