by Dennis Crouch
DBN (formerly DeLorme) v. US International Trade Commission (Supreme Court 2016)
In addition to district court infringement litigation, U.S. law offers a second avenue for patent enforcement – the United States International Trade Commission (USITC). In today’s free-trade environment, the USITC’s role is somewhat counter — protecting of U.S. industry. A substantial portion of USITC work involves enforcement actions to prohibit importation into the U.S. of “articles that … infringe a valid and enforceable” patent. See 19 U.S.C. 1337.
Despite the statutory language “articles that . . . infringe”, in Suprema an en banc Federal Circuit held that the USITC has the power to block importation based upon an inducement theory of infringement — even if the imported products themselves are not infringing. (6 – 4 en banc decision)
In a well written petition, DBN has challenged the holding of Suprema – asking “Whether the International Trade Commission’s jurisdiction over the importation of ‘articles that … infringe a valid and enforceable’ patent extends to articles that do not infringe any patent.”
The case also involves an interesting separation of powers issue — although the USITC found the patent enforceable, a district court found the patent invalid. DBN terms this a “zombie patent” penalty. In the case, the ITC first issued the exclusion order and the patent was later found invalid. In that interim, DBN violated the exclusion order and the ITC assessed a $6 million contempt penalty that is being challenged in the second question presented: “Whether the Federal Circuit erred in affirming the Commission’s assessment of civil penalties for the domestic infringement of a patent that has been finally adjudicated to be invalid.”
““Whether the International Trade Commission’s jurisdiction over the importation of ‘articles that … infringe a valid and enforceable’ patent extends to articles that do not infringe any patent.””
lulz.
See post 4, below.
At least for now, patents remains”public rights,” which means that Congress could designate the ITC as the only patent court in the country. Imagine that.
One way to remove the Supreme Court…
😉
David,
You just reminded me of a suggestion for Ned: if the Court grants cert, Ned should appeal to the Court’s addiction for mashing the 101 nose of wax, and how – if patents are deemed not personal property, dominion over them can be shunted completely away from the Article III wax addicts.
(We don’t have to even drop the hint that Congress could also employ their Constitutional power of jurisdiction str1pp1ng and remove the non-original jurisdiction of patent appeals from the Supreme Court if Congress ever woke up).
anon, you do recognize that Congress has already stripped the right of appeal to the Supreme Court. The Supreme Court hears cases (other than where it has original jurisdiction) only by a common law writ, and the Supreme Court has already decided that, under the constitution, it has ultimate authority over the judiciary of this nation, both Federal and State, on matters arising under the laws and Constitution, and that it has the power to review decisions of any court.
Congress tried once upon a time to monkey with the constitutional jurisdiction of the Supreme Court. Marbury decided that Congress did not have that authority.
Ned,
Your view here is decidedly incorrect in a number of different ways.
First, and perhaps most broadly, the way that you have defined “original jurisdiction” is just not correct and literally swallows ALL jurisdictions. You have once again elevated the Supreme Court to be above ANY type of checks and balances and simply put, above the Constitution itself (feel free to run away from the obligatory question as to what your actual attorney oath states). Your view necessarily means that their is no such thing as jurisdiction stripping and we both know that such is simply not true and that there has been NO Constitutional amendment to remove that power allocated to Congress.
Secondly – and critically – the Marbury case ONLY requires a review by an Article III court and NOT by the highest level Article III court. Congress could very well employ jurisdiction stripping from the Supreme Court based on the fact that patent appeals are NOT a matter of original jurisdiction of the Supreme Court. As I have previously mentioned on this topic (and yes, deliberately left out of the initial post here), the jurisdiction stripping would need to be accompanied by Congress setting up an Article III court to preserve the actual holding of the Marbury case. Of course, since the current CAFC has been tainted and brow-beaten by the wax-addicted Supreme Court, the best path would be for Congress to set up a new Article III court that can pick up and properly apply the mandate from Congress that the CAFC originally had been given.
(I know that I have told you previously of this habit of yours of over reading case law – read again the Marbury case, this time paying attention to exactly what the Coury says, noting the distinction between an Article III court (entirely possible to be outside of the Supreme Court and the Court’s original jurisdiction) and the direct mention of the Supreme Court itself – Marbury just is NOT the “uber-self-empowering” decision that you are attempting to make it out to be. And then for good measure, go back and read the Federalist Papers and the concerns of having such a “Royal Court” that could place itself above the Constituion; please do so with at least some awareness of your tendency to incorrectly elevate the Supreme Court to be above the checks and balances integral to the Constitution)
Anon, it would be interesting case, would it not, if Congress were to attempt to deny the Supreme Court the right to review the decisions of any court in the United States even by certiorari. You might think that such a statute would be constitutional. I predict to you reliably though, that the Supreme Court would not.
So where would that leave us in a power struggle between the Supreme Court and Congress? Would Congress attempt to impeach every Supreme Court justice that voted against it?
Recall how Abraham Lincoln almost blew up the Constitution when he almost ordered the arrest of Chief Justice Taney when the Chief Justice effectively countermanded Abraham’s Lincoln’s order to arrest a traitor. He thought better of it.
You have ignored every point that I have made Ned.
I have to wonder if you understand the concept of checks and balances with your desire to place the Supreme Court on that untouchable pedestal.
Did the loser here exhaust its administrative remedies by going back to the ITC to request lifting the ITC penalty after the D.C. invalidity decision or its affirmance?
Does Blonder–Tongue Labs, Inc. v. University of Illinois Foundations, 402 US 313 (1971) apply to the ITC here?
Arguably no. There is a request for modification pending (337-TA-854 modification) but that was filed AFTER the Federal Circuit ruled. Now that there is a final Federal Circuit decision that address the issue upon which DeLorme is requesting modification, the ITC is somewhat powerless. The ITC argued that the initial appeal should be remanded so that the ITC could consider the impact of the invalidity ruling, but DeLorme thought otherwise as did the Federal Circuit – pointless to remand. Keep in mind there was a finding of intent and some conduct in this case that mitigated against feeling sorry for DeLorme.
The petititon does not appear to mention this parallel request pending before the ITC.
337 does not apply to ITC consent orders. See United States v. ITT Continental Baking Co., 420 U.S. 223, 238, 43 L. Ed. 2d 148, 95 S. Ct. 926 (1975); H.F. Allen Orchards v. United States, 749 F.2d 1571, 1574 (Fed. Cir. 1984). And 19 CFR 210.21(c)(4)(ii) vs. (iii).
The ITC consent order required compliance until a finding of invalidity that had become final and unreviewable. The SJ of invalidity was filed after the ITC record closed and was not decided until the underlying matter was on appeal. Rather than reopen the record (to put the SJ motion or DC decision before the ITC) or seek modification (after the DC decision), Delorme went right to the Federal Circuit on the initial loss. The invalidity ruling and motion was never part of the ITC record.
The cert tries to treat a consent order as if it equals Section 337 in scope. There is a long history of Article III and Article I consent orders that goes in the opposite direction.
Thank you for the unusually substantive response.
[However, the cert petition still sounds like it might be attractive if that $6 million contempt penalty for an invalid patent claim is still in force even after the Fed. Cir. decision.]
The petition to the Supremes on the invalidity ruling failed (#15-1025) earlier this year so the Consent Order terminated under its own terms. Which is another reason why the ITC does not need to modify anything, or can’t.
The fine in this case was for the months BEFORE the SJ or invalidity ruling by the district court. In theory the ITC could have tried to capture post SJ filing, but then the record would have had to be reopen and DeLorme would have had a chance to seek modification – so $6.2m was already in essence discounted.
Honestly this case is more about the importance of understanding how the ITC works and how consent orders work.
Paul, are you suggesting that anyone can ignore valid orders of a court of the ITC while they pursue the issue of validity?
I do not think this is a serious question.
Is it a matter of semantics to point out that “articles that infringe” is different than “articles that in and of themselves directly infringe”…?
Does “infringe” only mean “direct infringement”…?
This semantic appears to be the sole argument here.
“articles that infringe” does not appear in the consent order at issue under which DeLorme got fined.
For completeness and less anyone think that the fine was imposed for violating Section 337 as opposed to the specific consent order, drafted and voluntarily entered into by DeLorme:
DeLorme will not import into the United States, sell for importation into the United States, or sell or offer for sale within the United States after importation any two-way global satellite communication devices, systems, and components thereof, that infringe claims 1, 2, 5, 10–12, and 34 of the ’380 Patent after April 1, 2013, until the expiration, invalidation, and/or unenforceability of the ’380 Patent or except under consent or license from Complainant, its successors or assignees.
Consent Order at ¶ 1.
6. The Consent Order shall not apply with respect to any claim of any intellectual property right that has expired or been found or adjudicated invalid or unenforceable by the Commission or a court or agency of competent jurisdiction, provided that such finding or judgment has become final and non-reviewable.
Consent Order at ¶ 6.
“Articles” = “devices, systems, and components thereof”
Am I misconstruing something?
(Consent Order at ¶ 6 does not apply to the point presented)
yes but to be clear – not that it matters –
The first issue presented is –
1. Whether the International Trade Commission’s jurisdiction over the importation of “articles that . . . infringe a valid and enforceable” patent extends to articles that do not infringe any patent.
The quotation is from Section 337 and NOT from the consent order. Section 337 does not apply to consent orders. The ITC and Fed Cir applied the terms in the consent order not 337.
With respect to the consent order and how it differs from 337 –
(i) articles vs. devices, systems and components thereof; and
(ii) until “valid and enforcebale” vs. found invalid or uneforcebale by final and unreviewable order.
There is a difference in both scope and timing.
Jurisdiction is also consented to under an ITC Consent order so I think trying to cast this as jurisdictional issue that somehow triggers off Section 337 is odd at best.
Infringement under ITC consent orders covers the entire range, direct, contrib and inducement. It is actually quite broad. Importing a component that forms part of an infringing system is, and has been, actionable. See Certain Set-Top Boxes and Components Thereof, Inv. No. 337- TA-454, Initial Determination at 7-8 (U.S.I.T.C., Nov. 8, 2002) – of course not addressed in the petition.
The second issue presented is –
2. Whether the Federal Circuit erred in affirming the Commission’s assessment of civil penalties for the domestic infringement of a patent that has been finally adjudicated to be invalid.
But once again the question does not track the language of the consent order which goes to unreviewability and not merely finality. Someone didn’t understand the difference between those two concepts. The fine was only issued for a period before the district court held the claim invalid. There was no fine for acts after the finding of invalidity even though one could have applied.
Th petition may be well written but it is really doesn’t look like it relates to the Fed Cir’s decision, the ITC’s decision or the consent order.
Thanks !
(Looks like this article was written for an interesting question, just not one pertinent to this case)
“interim” should be “interval”.
Hey man, gotta love the Yuge-nited States of America, where there are multiple venues to litigate patents and multiple venues to challenge validity, operating under different procedural rules and with different standards for assessing validity. Sure, it pays lip service to the notion of rationality, but who said that a legal system is supposed to be rational? Rationality is vastly overrated. For the lawyers who are asked to answer the straightforward question, “Do I need to worry about this patent”, it all adds up to mo’ money.
Link to petition?
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