by Dennis Crouch
In Suprema, Inc. v. USITC (en banc), the Federal Circuit sitting en banc has overturned the prior-panel decision – now holding that the US International Trade Commission (USITC) has the power to issue an exclusion order to block importation based upon an inducement theory of infringement — even though the imported products themselves are not infringing.
Here, the patents at issue belongs to Cross Match and a fingerprint-scan methodology that uses both hardware and software components. (See U.S. Patent Nos. 7,203,344). The hardware is manufactured abroad and imported by Suprema. Once in the US, the hardware is loaded with software by another company (Mentalix) with the software to make a product used to infringe the claimed methods. Of importance, the imported hardware does not – by itself – directly infringe the patent. However, the USITC found that Suprema was liable for inducing infringement under 35 U.S.C. 271(b).
The original panel rejected the USITC analysis — finding that the government agency’s power extends only to block importation of articles that are infringing at the point of importation. In that case, inducement doesn’t work because it requires an additional step (the underlying infringement) before infringement is complete.
In the en banc rehearing, the Federal Circuit found the statute lacking — finding that the USITC’s enabling statute “Section 337 does not answer the question before us” but instead simply states that the agency can take action against “articles that . . . infringe” a US patent. This provision appears to favor the panel’s opinion – because it focuses on whether the good being imported infringes, but that is less true when considering the goal here is “curbing unfair trade practices that involve the entry of goods into the U.S. market via importation.”
At this point, most patent law readers would expect for the Federal Circuit to weigh the statutory language and consider which of the argued interpretations is correct. Somewhat surprisingly, that is not the approach taken.
Unlike the USPTO, the USITC was given (by Congress) substantive authority to interpret its governing statute – the Tariff Act. This means that the USITC’s interpretations of its power are given deference (here Chevron deference) and as such, a reasonably interpretation by the agency (even if not what the court would have decided) will not be overturned on appeal. Here, the court found that the interpretation is reasonable and consistent with Section 337 and the Congressional mandate “to safeguard United States commercial interests at the border.” Result here is the potential of a significant expansion of USITC power over patents focused on novel methods of use.
This decision effectively reinstates the USITC opinion. I expect a petition for writ of certiorari on this issue. In the original panel, Judge Reyna wrote in dissent. Here, he authored the 6-4 majority opinion. Both Judges O’Malley and Prost wrote in dissent. Decision could have gone the other way if Judges Moore and Stoll had participated (and sided with the dissent).
[…] August, 2015, the Federal Circuit released an en banc decision in Suprema v. International Trade Commission holding that the USITC has power to stop infringing imports if those imports are being used to […]
Fyi, oral arguments at the CAFC just concluded in another controversial ITC case. The key issue is whether Align’s patent-ineligible data file is an “infringing article” under section 337 of the Tariff Act. (previous write-up here: link to patentlyo.com)
Seems like a slam dunk for the defendant (ClearCorrect) unless the CAFC panel goes into extreme deference mode again …
Panel J: Tuesday, August 11, 2015, 10:00 A.M., Courtroom 201
14-1527 ITC ClearCorrect Operating, LLC v. ITC
14-1533 ITC Align Technology, Inc. v. ITC
Judges: Prost, Newman, & O’Malley
Note the panel: both Prost and O’Malley dissented in Suprema Not a great sign for Align.
Recordings are up. link to cafc.uscourts.gov
2014-1527 is the file where the “article” issue is argued.
Judge Newman: “What do you mean by transmittiing information? Knowledge is different from data although I couldn’t explain why, or why that matters here.”
ClearCorrect Attorney: “I have no idea what you’re talking about.”
Prost: “Isn’t this different because 3D printing is so awesome?”
ClearCorrect Attorney: “It’s still just data on a signal.”
O’Malley: “What about Supremo? What about deference?”
ClearCorrect Attorney: “You can’t defer to insanity.”
O’Malley: “But the world is changing sooper dooper quickly! In 1952, Congress had no idea what signals were or that information would be so useful.”
ClearCorrect Attorney: “Uh … no.”
Align Attorney: “This is about teeth! These files correspond to physical articles. You can practically taste them!”
Prost: “This case is about jurisdiction over transmitted digital files”.
Align Attorney: “Digital goods are goods. That’s why people call them ‘digital goods’. Yes, that’s our argument. It’s circular but it’s still an argument because people call it a circular argument.”
Prost: [speechless]
Align Attorney: “Webster’s is a leading dictionary and it defines article very broadly. Chevron! Chevron! Chevron!”
Prost: “How does customs enforce this?”
Align Attorney: “The same way they enforced liquor in prohibition.”
Prost: “What?”
Align Attorney: “Please let me finish kicking up dust, okay?”
Prost: “You and the Commission rely on a Senate report but the original Senate Report contains the line ‘importation of goods’ and the reference to ‘goods’ is deleted without an ellipsis.”
Align Attorney: “So what? It means the same thing because goods includes information … because Webster’s.”
Prost: “Why was the phrase deleted, then, without ellipses”?
Align Attorney: “Who knows?”
ITC Attorney: “The term ‘articles’ is so broad! It’s crazy to let domestic companies be terrorized by the relentless invasion of information goods that are totally intangible but which describes something that can be inside your own mouth! Chevron! Chevron! Chevron! Chevron! Chevron! Chevron!”
O’Malley: “Can’t you just enforce the patent laws in Texas if there is infringement going on there?”
ITC Attorney: “1974. 1982. 1988.”
O’Malley: “Okay. Next.”
ClearCorrect Attorney: “The commission doesn’t even understand what’s in these files. It’s digital descriptions of people’s teeth. Maybe it’d be better to let Congress decide whether this huge expansion of the ITC’s power is the right way to go.”
I think a major source of the problem in this case stems from the claim at issue. Is there anything, anything at all, in the following claim that is not routine and conventional?
19. A method for capturing and processing a fingerprint image, the method comprising:
(a) scanning one or more fingers;
(b) capturing data representing a corresponding fingerprint image;
(c) filtering the fingerprint image;
(d) binarizing the filtered fingerprint image;
(e) detecting a fingerprint area based on a concentration of black pixels in the binarized fingerprint image;
(f) detecting a fingerprint shape based on an arrangement of the concentrated black pixels in an oval-like shape in the binarized fingerprint image; and
(g) determining whether the detected fingerprint area and shape are of an acceptable quality.
How can it be said that the fingerprint scanner imported was specially adapted to infringe this claim when every step in the claim is old and routine. Every fingerprint scanner could be adapted to infringe this claim. Every, single, one. There is no novelty in this claim. There is no hint of invention this claim.
Why is a patent office granting claims like this? Why is the ITC finding invention here? Why are we deciding to protect staple items of commerce from being imported into United States based upon this claim?
If there was an invention in the patent, in some detail in the method or means, it is not claimed here.
It is cases like this that give the patent system a black eye. The PTO should be ashamed. The ITC should be ashamed. The Federal Circuit should be ashamed. The lawyers for the government should be ashamed.
6-4? You have to be kidding. There must be something going on here that is not apparent from the opinion to justify this result.
This case reminds one of Mercoid where the patentee was making money from sales of non infringing stoker switches, staples, that were used in an infringement of combination claim where the location of the stoker switch in an furnace was the sole novelty.
What was the holding? Patent misuse?
Well, Federal Circuit, why don’t you read Mercoid?
MOREOVER, can anyone explain to me how the sale of a staple item of commerce be an inducement to infringe?
A staple item can be – and easily – an inducement to infringe.
It ALSO (and just as easily) can not be.
I think that too many people (who should know better) are thinking that the ITC is limited as to acting on patent law alone or like a patent court.
The power of the ITC is broader. Heck they stop things at the boarder that are NOT COVERED BY PATENTS AT ALL.
Is this what happens when the “ecosystem” becomes an echo chamber…?
It’s not pretty guys.
Is there anything, anything at all, in the following claim that is not routine and conventional
Previous fingerprint scanners didn’t “determine” that the “area and shape” were “acceptable” which is like a sooper dooper techno advance. The new ones even let you email the data files it creates which is, like, totally hard to believe.
Is that any momre “sooper dooper techno than lines on a measuring cup or numbers on a magic hat band…?
You know, non-software arts types of things…
What a chump.
Ned,
How was this allowed? The Examiner did reject the claims as directed to non-statutory subject matter, citing State Street. Applicants responded by arguing that some of the steps require physical transformations outside of a computer, e.g., by a scanner, and this was persuasive.
Independent claims were rejected as anticipated by Takhar et al. (US 6,002,787). This is directed to a method to prevent credit card fraud using fingerprints. Paraphrasing, Applicants argued that Takhar taught classifying individual fingerprints based on arches, loops, whirls, etc. Moreover, in claim 19, Takhar does not teach steps (e), (f), or (g). In particular, Takhar teaches classifying fingerprint images based on details within each but does not teach looking at the overall fingerprint and determining whether the fingerprint area and shape are acceptable from a combined image of a plurality of fingerprints. (Step a)
Before exclaiming this patent is ridiculous, one would have to look at the prior art, of which there was a four page list. Presumably, invalidity arguments were made at the ITC, but I am not ambitious enough to get those.
Takhar teaches classifying fingerprint images based on details within each but does not teach looking at the overall fingerprint and determining whether the fingerprint area and shape are acceptable from a combined image of a plurality of fingerprints.
LOL.
Because the concept of approving work is sooooooooooooooo “innovative.”
But wait — there’s a shiny compooter involved so let’s all pretend we were born yesterday.
What a joke of a patent system.
The problem, Troubled, is that steps e-g in the claim, including making sure the fingerprint is acceptable, is notoriously old in analyzing fingerprints. What the claim amounts to is automating a known process.
It cannot be an invention to do the same thing one does manually but do it in a computer without an identification of a problem in doing so and without disclosing and claiming a particular solution to that problem.
We had a similar case from the Central District of California involving synchronizing lip movements to recorded speech. What the claim did was claim the automation of a known process without more.
Does it make any difference how much of the known process one places in the claim? I should think not.
This is where KSR would really apply.
This is where KSR would really apply
Or use 101 and acknowledge that the generic concept of “determining that something is acceptable” is abstract baloney, regardless of whether you make that determination with a compooter “configured to do it” or your brain.
Same result and nobody has to spend thousands upon thousands of dollars listening to some mouthpiece tell you why the prior art generic determinations aren’t “analogous.”
Ah yes, the old “whatever” script.
Funny thing Malcolm, the means really do matter with the law.
Are you even an attorney?
You do know Ned that automating a known system is NOT per se ineligible, right?
Are you an attorney?
The opinion creates interpretive and administrative headaches:
1. Direct infringement focuses on the device, indirect infringement (here inducement) is personal to the infringer. The inducer has to have knowledge (or at least willful blindness) of the direct infringer’s infringement AND has to actively encourage it.
So the same article can be banned for one importer but not another, depending on if the inducement showings can be made as to each importer. That seems a very strange way of reading a statute that empowers the ITC to ban imports of “articles that . . . infringe” a US patent. Articles alone do not indirectly infringe; importers who have a particular mens rea and associated activities do. It seems bizarre to read the statute to allow the ITC to say this article is banned as to Importer 1, but Importer 2 is free to bring in as many as he wants.
2. Inducement is not only personal to the indirect infringer, but that is relative to a particular customer. The importer might know and have encouraged one customer to make infringing uses, but might have no clue what other customers intend to do.
So does that mean the ITC can ban imports of staple articles if the importer intends to sell them to some customers, but leave him free to import them to sell to others? Suppose Suprema now said, we have five other customers in the US that make non-infringing uses (or we have no clue what they are doing)? Does the ITC have to let them import? How do you police that? Seems like a major administrative headache
Bored, beginning to get it, I see. Check post 6.1 for more examples.
Although the applicants provided pages of prior art, all the hardware seems to be conventional. The earlier proceedings were pre-Alice and pre-Nautilus (see step (g)), so I suspect there may be more to come.
And people wonder why the supremes are all up in the federal circ’s business of late. Keep up the good work fed. circ.
#unreasonable
Yeah, since staples that are used in an infringement may now be excluded, I would think the music, movie, and software industries will move to ban the importation of blank CDs and DVDs, and of digital recording devices of any kind.
Reyna and his fellow travelers Newman, Wallach, Taranto, Chen and Hughes have shown us real brilliance here. Perhaps we should give them an award of some kind? Perhaps the Sarah Palin award given to those who show some, even if very modest, academic achievement?
Interesting how they approach thinking about this. I’d start with that it seems fairly clear that the purpose of the laws roping importation of goods into the infringement analysis was to close the loophole that allowed people to avoid infringement by simply producing the goods outside the country and importing, not to create illegal protectionist trade barriers.
Thus, if a product could be made in the US without infringing, it can be imported into the US without infringing.
Karl, I agree.
A staple cannot infringe when made, used or sold, nor contribute to an infringement.
But try to import it? Well…
And it seems interpreting the scope of the ITC’s authority in this way might cause WTO-TRIPS-related problems.
Judge Reyna likens the ITC’s exclusion orders to injunctions (slip op. at 19), but I don’t think a patent owner could get an injunction against sales of a staple article of commerce in district court litigation. An injunction against the acts of inducement yes, but not an injunction against sales of a product with non-infringing uses.
In this respect, the imported products here are being treated less favorably than domestic products under the patent/trade laws.
Also, it seems problematic that the patent owner was able to get foreign competition in a whole class of products reduced (Suprema’s finger-print scanners, generally) even though his patent covered only a specific use, and other uses are not infringing.
It very well might Pilgrim.
Thing is, this is not an indictment on the decision, nor on patent law.
You might recognize that the ITC’s power is just a tad different….
anon: I’d be curious to hear some expansion on that thought. How is it not an indictment on the decision that it violates international trade agreements and invites retaliation? How is it not an indictment on patent law if it is to be interpreted as acting as an artificial and illegal barrier to fair trade across borders? Whatever someone thinks of patent law, it would seem a disingenuous vehicle for what is essentially preclusionary trade tariffs.
Is the point meant to be that protectionism is good, and we should sneak it in however we can?
The point Karl is that an agency and its scope of power is very much dependent on its charter.
Perhaps it’s just the echosystem here, but the point of the case just does not hinge (as much as the usual suspects would like) on a diminished or denigrated patent power.
Read my comment at 9.2.1, and then realize that different agencies have different charters and different levels of powers.
As my comment did not hinge on concern that the ITC ruled based on authority other than patent law, I am lost on the relevance of 9.2.1. My point is that patent law should not be interpreted in a way that supports illegal action by the ITC. Do you have support for the proposition that the ITC has the power, outside of the patent system, to prohibit the importation of classes of products that can be produced and sold domestically (outside of very specific circumstances)? Again, I’m no expert on our nation’s trade agreements, but the protection of domestic industry by selectively prohibiting imports in a field seems beyond the power that would have been vested in the ITC.
Karl, you should know that anon does not do citations to authority other than himself.
Where anon gets the idea that the sale of a staple can induce infringement is beyond me.
With all due respect Ned, I am the one that provides probably the second most citations in the comments section.
And I get the “versions” correct, unlike you.
As for Karl, think foreign dumping and other actions that are to “staples.”
The point of the matter (that Ned, unsurprisingly does not dare to grasp) is that the power of the ITC in its charter is broader than the Patent Office and its charter and that the ITC can take actions that the Office cannot. Actions that may in fact extend beyond mere patents (and for that reason the attempted analogy with patent injunctions is faulty).
anon, “I am the one that provides probably the second most citations in the comments section.”
Maybe. Paul Morgan often cites cases. Do you really believe you cite cases more often that he?
Yes I do.
But Paul does indeed cite cases. He does have that in his favor. It’s too bad that he cannot get out of his own way and his litigation-defense mode of thinking.
Further Ned, the point at issue here is less citing cases and more understanding the law of Federal Agencies.
Try reading again my posts with the correct perspective.
Along with Promega v. Lifetech, this is the second time that the en banc Federal Circuit has stepped far outside the bounds of reasonable statutory construction to create liability for the importation of staple items of commerce.
I wonder how this is going to turn out.
DC: I expect a petition for writ of certiorari on this issue.
I do, too.
MM, by stepping out of bounds — do you mean to say that the meaning of “articles that infringe” is not ambiguous?
Because of your “awesome” statutory construction power of singular/plural is sooooo convincing in the Promega case, right Malcolm?
Oh wait, it is not.
Oh wait, I gave you a case citation on statutory construction of the singular/plural.
Oh wait, because vap1d arguments made ad nauseum is what this “echosystem” is all about.
How does one say that last point “politely?”
The power of the administrative scheme with respect to the nation’s patent rights continues to grow.
David, in a way yes and in a way no. This case will go to the Boss Court and will result, I predict, in a 9-0 reversal. There is no way that “articles that infringe” is ambiguous.
(A 5-4 split at the Federal Circuit seems like a split among the circuits justifying Supreme Court review when the issue is statutory construction.)
Judge Newman and the New Guard vs. the Old Guard
I honestly do not believe that there is any ambiguity in “articles that infringe.” These are articles that embody the invention in that their sale, or use, would directly or contributorily infringe without more.
See, Quanta.
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