ITC Section 337 Update

ITC Section 337 Update

ITC Judge Gildea Finds NPE Established Domestic Industry In 884 Investigation – On August 29, 2014, ITC Judge James Gildea issued a Notice of Initial Determination (“ID”) finding a violation by reason of infringement by Respondents Toshiba of two asserted patents in Certain Consumer Electronics With Display And Processing Capabilities, Inv. No. 337-TA-884.  Judge Gildea found that Complainant Graphics Properties Holdings (“GPH”), a non-practicing entity (“NPE”), satisfied the domestic industry (“DI”) requirement with respect to the two asserted patents.  The procedural history of this investigation is interesting and bears revisiting.  GPH filed a motion for summary determination on November 7, 2013 asserting that GPH had established a licensing based DI under 19 U.S.C. §1337(a)(3)(C);  the ALJ held a hearing on April 10-18, 2014; the ALJ issued an Order denying GPH’s motion for summary determination on DI on April 18, 2014, i.e., the last day of the hearing.  The denial of GPH’s motion for summary determination was based on two grounds:  (1) GPH did not attempt to prove the technical prong of DI even though the change in law required proof that its licensee(s) are practicing the patents; and (2) genuine issues of material fact existed with respect to the economic prong of GPH’s licensing-based DI.  Apparently GPH corrected these insufficiencies at the Hearing.  A public version of the ID has not yet been released and will likely reveal more details on the bases for Judge Gildea’s upholding DI; and the Commission has not yet decided whether to review Judge Gildea’s decision.

Judge Shaw Issues ID Finding Trade Secret Theft In 887 Investigation – The ITC has issued the public version of an Initial Determination in a Section 337 investigation on Certain Crawler Cranes And Components Thereof, Inv. No. 337-TA-887.  The complainant, Manitowoc Cranes, LLC, a U.S. manufacturer of crawler cranes, alleged that Sany Heavy Industry Co. and its affiliates misappropriated its trade secrets and used them in the importation of competing crawler cranes into the U.S.  In his Initial Determination, the ALJ affirmed earlier ITC and Federal Circuit pronouncements that a uniform federal standard applied in trade secret theft cases  The ALJ also held that the following information constituted trade secrets:  (1) Manitowoc’s market research and identification of a specific need for a certain type of crawler crane used in the wind industry and the development of a product to meet that need; (2) Manitowoc’s information about dealer discounts and profit margins; (3) Manitowoc’s Charpy requirements (i.e., the minimum technical requirements) of the metal alloys used in its cranes; and (4) Manitowoc’s method of fabricating its booms and method of processing large weldments.  The ALJ then held that these trade secrets had been misappropriated as a consequence of a disclosure by a former Manitowoc employee to Sany.  In a separate opinion, the ALJ held that the lease of a single Sany crane injured or threatened to injure the domestic crawler crane industry. The Commission affirmed the ALJ’s decision in March.  Finally, the ITC recommended that the Commission impose an exclusion order against Sany and its affiliates for a period of 5-10 years.  The full Commission has until November 19, 2014 to review the ALJ’s Initial Determination, make the final agency decision, and implement a remedy.

Commission Vacates Initial Determination Finding No Domestic Industry Based On Non-Revenue Driven Licensing – As previously reported, ALJ Lord issued an Initial Determination (“ID”) on July 17, 2014 in Certain Optical Disc Drives, Components Thereof, And Products Containing The Same, Inv. No. 337-TA-897, terminating an investigation for no domestic industry because the complainant licensing entity whose patent-related activities were purely revenue driven could not prove the existence of the economic prong of a domestic industry entirely through its licensees’ activities under subsections (A) and (B) of section 337(a)(3). No petitions for review of ALJ Lord’s ID were filed, but the Commission determined to review and, on review, to vacate the ID and remand for further proceedings. The Commission’s Remand Order, issued on September 3, 2014, noted that 19 U.S.C. § 1337(a)(3) requires only that “an industry in the United States shall be considered to exist,” but does not specify that the industry must be comprised of the complainant, noting that Commission precedent allows a complainant to rely on the activities of its licensees in order to show a domestic industry. The Commission further clarified that it examines the nature of a complainant’s license(s) only when a complainant asserts a domestic industry based on its own licensing activities. Finally, the Commission addressed the issue of revenue driven licensing, noting that although it gave less weight to such licenses in the calculus of whether a complainant’s investments were substantial under 337(a)(3)(C), such an inquiry has never been the Commission’s focus where the complainant alleges a domestic industry through its licensees’ activities under subsections (A), (B), or the engineering or research and development provisions of subsection (C).

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