• ITC Issues Opinion Temporarily Rescinding Remedial Orders In Certain Composite Wear Components (337-TA-644)
  • February 23, 2011 | Author: Eric W. Schweibenz
  • Law Firm: Oblon, Spivak, McClelland, Maier & Neustadt, L.L.P. - Alexandria Office
  • Further to our January 20, 2011 post, on February 10, 2011, the International Trade Commission issued an opinion determining to temporarily rescind its limited exclusion order and cease and desist order entered on November 24, 2009 against Respondents AIA Engineering Limited and Vega Industries Ltd. (collectively “AIA”) in Certain Composite Wear Components and Products Containing Same (Inv. No. 337-TA-644).

    By way of background, the Commission instituted this investigation on April 25, 2008, in response to a complaint filed by Magotteaux International S/A and Magotteaux Inc. (collectively, “Magotteaux”).  The complaint alleged a violation of Section 337 by Respondents Fonderie Acciaierie Rioale S.P.A. (“FAR”) and AIA based on alleged infringement of U.S. Patent No. RE39,998 (the ‘998 patent).  FAR was terminated from the investigation on the basis of a settlement agreement, leaving AIA as the remaining respondent.

    AIA responded to the complaint, but thereafter reduced its participation in discovery.  On March 19, 2009, ALJ Essex issued Order No. 23, granting several motions to compel and ordering AIA to respond to written discovery and to produce fact and expert witnesses for deposition.  AIA failed to comply with the order and continued to refuse to participate in discovery.  On May 8, 2009, ALJ Essex issued an Initial Determination (“ID”) finding AIA in default pursuant to Commission Rules 210.16(a)(2) and 210.17.  The Commission determined not to review the ID, and indicated that, in addition to finding a violation pursuant to Commission Rule 210.17, the Commission would presume the facts alleged in the Complaint to be true with respect to AIA.  The Commission then issued a limited exclusion order, a cease and desist order, and terminated the investigation.

    On September 3, 2010, the ‘998 patent was declared invalid by the U.S. District Court for the Middle District of Tennessee in a declaratory judgment action filed by AIA against Magotteaux.  On September 28, 2010, Magotteaux noticed an appeal of the district court’s decision to the U.S. Court of Appeals for the Federal Circuit.  Accordingly, on October 6, 2010, AIA filed a petition under 19 U.S.C. § 1337(k) and 19 C.F.R. § 210.76 asking the Commission to rescind its November 24, 2009 exclusion order and cease and desist order directed to AIA in light of the district court’s holding invalidating the ‘998 patent.  Magotteaux opposed the petition and requested that the Commission hold a public hearing.

    According to the Opinion, AIA argued, in its petition, that the Commission did not have statutory authority to maintain an exclusion or cease and desist order based on an invalidated patent, and that the Commission had the authority to rescind any such order as soon as the patent’s invalidity was brought to its attention.  AIA also argued that the district court’s final judgment of invalidity was binding on the Commission and that the judgment was issue preclusive, notwithstanding Magotteaux’s appeal to the Federal Circuit.

    In opposition, Magotteaux argued that instead of completely rescinding the remedial orders, the Commission is authorized to rescind the orders, reopen the investigation, and reissue the same relief to Magotteaux under bond, pending outcome of the Federal Circuit appeal.  In response to Magotteaux, AIA argued that Magotteaux had not made the requisite showing for temporary relief under bond.

    The Commission agreed with AIA and determined that Magotteaux had not satisfied the requirements for temporary relief, as they had not yet addressed the likelihood of success in proving infringement and surviving invalidity challenges to the ‘998 Patent.  Rather, the Commission determined that because the district court’s invalidity ruling occurred subsequent to the Commission’s remedial orders and because the invalidity ruling substantially changed the circumstances under which the orders were issued, the remedial orders should be rescinded pending resolution of the appeal at the Federal Circuit.  The Commission stated it would not permanently rescind the remedial orders at this time to take into account the possibility of the reversal of the district court’s invalidity finding.  However, it determined that the orders would be permanently rescinded if the Federal Circuit affirmed the district court with respect to the claims of the ‘998 patent covered by the Commission’s remedial orders, i.e., claims 12-13 and 16-21, and would be reinstated if the Federal Circuit reversed the district court with respect to those claims.  Lastly, the Commission denied Magotteaux’s request for a public hearing.