Practical Considerations for Accessing the International Trade Commission

February 18, 2015

Litigation Webinar Series: INSIGHTSOur take on litigation and trial developments across the U.S.

Today’s Speakers

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Hon. Theodore EssexAdministrative Law Judge

USITC

Richard SterbaPrincipal

Fish & Richardson

Andrew KopsidasPrincipal

Fish & Richardson

The content of this presentation is for educational purposes only; it reflects only the views and opinions of the individual presentersand not the U.S. International Trade Commission or Fish & Richardson P.C.

Overview

INSIGHTS Litigation Webinar Series

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• Monthly• 3rd Wednesday at 1pm ET• Key Developments & Trends

• Housekeeping• CLE Contact: makarevich@fr.com• Questions• Materials: fishlitigationblog.com/webinars

• Next webinar – March18th

• #fishwebinar

Next in SeriesWednesday, March18th

1:00 p.m. EST | Webinar

Recent Developments Impacting Hatch-Waxman Litigation

Accessing the ITC

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1) What if my patent infringement claims are based on indirect infringement and method claims?

2) What if my domestic industry is based on licensing activity?

3) What if I have non-patent intellectual property rights?

Accessing the ITC With Indirect Infringement

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• The future of patent infringement claims based on indirect infringement and method claims• Suprema, Inc. v. ITC:

• Complainant Cross Match Techs., Inc. filed complaint alleging patent infringement by Suprema, Inc. and Mentalix, Inc.

• Suprema’s optical fingerprint scanners were imported without accused software.

• Mentalix argued that the scanners did not infringe at the time of importation, only after.

• Cross Match argued that direct infringementwas complete once Mentalix loaded its software on Suprema’s scanners in the U.S.

• Suprema optical scanners were capable of substantial noninfringing uses (i.e., being loaded with other companies’ software)

Accessing the ITC With Indirect Infringement

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• The future of patent infringement claims based on indirect infringement and method claims• Suprema, Inc. v. ITC—The claim at issue:

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

Accessing the ITC With Indirect Infringement

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• The future of patent infringement claims based on indirect infringement and method claims• Suprema, Inc. v. ITC—the Commission’s

Opinion

• The Commission found that Mentalix directly infringed by using its own software with Supremaoptical scanners

• Direct infringement completed once software was loaded post-importation

• The Commission also found that Suprema induced infringement of the method claim under 35 U.S.C. § 271(b)

• Issued exclusion orders and cease & desist orders

Accessing the ITC With Indirect Infringement

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• The future of patent infringement claims based on indirect infringement and method claims• Suprema, Inc. v. ITC—the Federal Circuit’s

2-1 Panel Opinion (now Vacated)• Statutory construction of § 337(a)(1)(B)(i) shows that

“articles that infringe” is limited to articles that infringe at time of importation.

• “We conclude that § 337(a)(1)(B)(i), by tying the Commission’s authority to the importation, sale for importation, or sale within the U.S. after importation of articles that infringe a valid and enforceable U.S. patent, leaves the Commission powerless to remedy acts of induced infringement in these circumstances.”

• “[A]n exclusion order based on a violation of 19 U.S.C. § 1337(a)(1)(B)(i) may not be predicated on a theory of induced infringement under 35 U.S.C. § 271(b) where direct infringement does not occur until after importation of the articles the exclusion order would bar.

• Vacated exclusion and cease & desist orders

Accessing the ITC With Indirect Infringement

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• The future of patent infringement claims based on indirect infringement and method claims• Suprema, Inc. v. ITC—the Federal Circuit En Banc

• Two camps:• Reinstate the panel decision (find in favor of Suprema):

O’Malley*, Prost*, Dyk

• Reverse the panel decision (find in favor of ITC):Reyna*, Taranto, Wallach

• If Congress intended to carve out § 271(b) why not say so expressly?

• Chevron: Is “articles that infringe” ambiguous and, if so, is the ITC’s interpretation (which encompasses inducement) reasonable

• Is it possible to police/enforce “intent”?

Accessing the ITC With Indirect Infringement

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• The future of patent infringement claims based on indirect infringement and method claims• What Suprema does not cover:

• Contributory infringement claims

• Inducement claims where direct infringement is perfected by the time of importation

• Infringement of method claims where infringement is perfected by the time of importation

Accessing the ITC With Licensing DI

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• Meeting the domestic industry requirement when your U.S. activity is limited to licensing• Generalized portfolio licensing expenditures are

insufficient

• But what is sufficient?• Strength of the Nexus Between Activity and

Asserted Patents

• Substantial investment

• What is Substantial?

• Is that all? Do I have to an “article protected by the patent”?

Accessing the ITC With Licensing DI

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What is a Nexus Between Activity and Asserted Patents in a Portfolio?ITC considerations: 1) number of patents in portfolio; 2) relative value contributed by asserted patent to portfolio; 3) prominence of asserted patent in licensing discussions; and 4) scope of technology covered by portfolio compared to scope of asserted patent.

Nexus is increased when asserted patent: 1) was discussed during licensing negotiations; 2) has been successfully litigated by a complainant; 3) relates to a technology industry standard; 4) is a pioneering patent; 5) is infringed or practiced in the United States; and 6) the market recognizes its value.Certain Multimedia Display & Navigation Devices & Systems, Components Thereof, & Products Containing Same, Inv. No. 337-TA-694

Accessing the ITC With Licensing DI

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What is a Substantial Investment?• A LOT

• Determined on a case-by-case basis, there is no bright line rule

• But, measured on a sliding scale, depending on size of the company

Accessing the ITC With Licensing DI

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What is an “article protected by the patent”?• Licensing-based DI requires “an article protected by the

patent”

• Certain Computers and Computer Peripheral Devices, and Components Thereof, and Products Containing the Same, Inv. No. 337-TA-841

• Following Interdigital and Microsoft Federal Circuit cases

• Interdigital: required an article protected by the patent

• Microsoft: the article need not be manufactured in the U.S.

• Preference, not requirement, for production-driven licensing

• “Articles” cannot be the accused products

Accessing the ITC With Non-Patent IP

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• Asserting non-patent intellectual property rights in an ITC investigation• Trade secrets

• Electronic transmissions of data

• Counterfeit/Gray Market products—subject to trademarks/trade dress

• Counterfeit products—pharmaceuticals

• Will Suprema open the door to more claims brought under § 337(a)(1)(A)’s “unfair methods of competition and unfair acts” provision?

Accessing the ITC With Non-Patent IP

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• Examples of successful non-patent cases at the ITC• Certain Handbags and Luggage, Accessories, and

Packaging Thereof (Inv. No. 337-TA-754)

• Certain Energy Drink Products (Inv. No. 337-TA-678)

• Result? – GENERAL EXCLUSION ORDERS

Accessing the ITC With Non-Patent IP

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• When is a General Exclusion Order Issued?• When a limited exclusion order (limited to the named

respondents) would be circumvented

• There is a pattern of violation, difficult to determine source of infringing goods

Accessing the ITC With Non-Patent IP

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Why the ITC?• Faster than a Speeding Bullet!

- Resolution in ~16 months

• More Powerful Than a Locomotive!

- General Exclusion Orders

• Able to Leap Tall Buildings in a Single Bound!

- In Rem Jurisdiction

Accessing the ITC With Non-Patent IP

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But There’s Always Kryptonite• Must have a Domestic Industry

• Limited to U.S. Imports

• Injury

Mark your calendar!

Wednesday, March18th

Recent Developments Impacting Hatch-Waxman Litigationfishlitigationblog.com/webinars

INSIGHTS Litigation Webinar Series

Questions?

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Please send your NY CLE forms or questions about the webinar to Ellen at makarevich@fr.com.

A replay of the webinar will be available for viewing at http://fishlitigationblog.com.

Andrew KopsidasPrincipal, DC202-626-6407ark@fr.com

Richard SterbaPrincipal, DC202-626-7714sterba@fr.com

Thank You!

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