• Preventing Importation of Your Patented Goods: Guidance on What the ITC Can and Can’t Do for Patent Owners
  • February 15, 2016 | Author: Emmanuel D. Filandrianos
  • Law Firm: Sunstein Kann Murphy & Timbers LLP - Boston Office
  • Crafting the best strategy for protecting intellectual property requires knowing all the rights that come with it. Patent owners should be aware of the tools offered to them by the International Trade Commission, the federal agency responsible for dealing with unfair international trade practices. The ITC administers “Section 337” investigations, which can result in a patent owner winning the remedy of an exclusion order. The ITC can, by issuance of an exclusion order, prevent importation of patented goods.

    The agency acts quickly. Usually, an ITC proceeding is resolved in about a year, and patent owners can seek emergency temporary relief prior to issuance of the exclusion order. Once the ITC issues such an order, U.S. Customs and Border Protection is directed to block the goods in question from entering the United States. Furthermore, Section 337 investigations do not preclude district court litigation, which may run in parallel. Patent owners may consider filing a Section 337 investigation to prevent further importation of goods and to prevent sales of goods already imported (known as a cease-and-desist orders), while simultaneously filing a district court action to seek damages from the patent infringer.

    After a patent owner files a complaint, the ITC has 30 days to decide whether an investigation should be instituted. The ITC investigates the patent owner’s claim that their IP is being infringed. Exclusion orders are issued only after an administrative proceeding and the opportunity for the alleged infringer to be heard. However, at the time the complaint is filed, the patent owner may also seek a temporary exclusion or cease-and-desist order that will take effect during the investigation. In the ordinary case, the regulations require the ITC to make a decision on the temporary exclusion order within 90 days.

    If an investigation is instituted, the ITC is required by statute to complete Section 337 investigations at the earliest practicable time. The case is assigned to an administrative law judge who sets a target date for completion of the investigation, from 12 to 18 months after the date of institution, depending on the complexity of the investigation and the judge’s caseload. The judge issues an initial determination, and either party may petition the decision for review by the Commission. The Commission then issues its final determination as to whether there has been a violation of Section 337, and an exclusion order may be issued. This final determination can be appealed to the U.S. Court of Appeals for the Federal Circuit.

    In order for patent owners to garner the benefits the ITC has to offer, the alleged infringer must import “articles that infringe” a valid U.S. patent or copyright. As clear as this may sound, recently there has been litigation about what exactly constitutes an “article that infringes.” For example, if a patent claim requires a scanner for scanning fingerprints and software for analyzing the prints, is the scanner --without the completed software- an article “that infringes”? Or, if a patent claim requires obtaining a series of digital data sets representing dental aligners, are the digital data sets “articles” that infringe?

    The Federal Circuit recently took up these two issues. The cases help define the term “articles that infringe,” and thus, the jurisdiction of the ITC in a 337 investigation. In one case, Suprema v. ITC, the Federal Circuit held en banc that the ITC has the authority to block the importation of a part of a patented article if it is imported for a downstream use that would infringe the claim of a patent. More recently, in ClearCorrect v. ITC, a Federal Circuit panel ruled that the ITC does not have the authority to block importation of digital transmissions, even if the digital transmissions infringe a patent.

    Suprema v. ITC

    In Suprema, a South Korean company imported fingerprint scanners along with software development kits into the United States. U.S. companies then used the software development kit in a manner that allowed the fingerprint scanner to become functional, and resultantly infringe the U.S. patent. The owner of the patent asked the ITC to halt the importation of the fingerprint scanners. The manufacturer argued that because the patent required that the software be activated, there were no “articles that infringe” at the time of importation. Furthermore, the importing company argued that the scanners have substantial non-infringing uses, i.e., that the scanners are “staple articles.” Essentially, the issue was whether importing a part of a patented article qualifies as an “article that infringes”, and thus, whether the ITC has jurisdiction over the imported items.

    The Federal Circuit found that Section 1337’s “articles that infringe” language does not limit the ITC’s jurisdiction to end-products that infringe a patent. As long as the other requirements of induced infringement are met (i.e., knowledge or willful blindness of infringement of a patent), a staple article that is imported as component of a patented article falls under the jurisdiction of the ITC.

    ClearCorrect

    The second case deals with whether a digital file qualifies as an “article” under § 1337. In ClearCorrect, a Pakistani company created and sent digital models of dental aligners to the United States for 3D printing. The method of producing the aligners was covered by at least one U.S. Patent. The Federal Circuit said that digital files do not constitute articles, and therefore, are not under the jurisdiction of the ITC.

    Judge Prost, writing for the court panel, stated that the “[ITC]’s jurisdiction... is limited to ‘unfair acts’ involving importation of ‘articles.’” Because the only items to have been imported were digital data that was transferred electronically, the ITC was found to have no jurisdiction over the alleged “article.” Judge Newman wrote a strong dissent arguing that the majority opinion frustrates the purpose of Section 1337- to stop unfair competition through the importation of goods that are protected by U.S. intellectual property rights. Allowing the importation of digital files that are intended to be 3D printed (and infringe the patent downstream) frustrates that purpose.

    The ClearCorrect case also drew the attention of the Motion Picture Association of the United States, which filed an amicus brief in support of the ITC. Specifically, because Section 1337 (A)(1)(b)(1) also includes articles that infringe “a valid and enforceable United States copyright registered under title 17,” the decision may have a broader effect on importation of IP than was intended. Because the court’s interpretation of “article” in Section 1337 also applies to copyrighted items, and the court held that digital data is not an “article,” it is likely that the ITC, at present, does not have the ability to prevent the importation of copyrighted items such as digital files of movies and music.

    While ClearCorrect may have eliminated a barrier to potential importers of digital data who wish to produce infringing products domestically, this affects the rights of IP owners only with respect to the remedies they wish to seek through the ITC. The decision has no effect on a determination in district court actions of patent infringement by transmission of digital files. Those sending 3D-printable models of patented goods may still be found liable for infringing a patent under a theory of induced or direct infringement, if applicable.