The En Banc Federal Circuit Hears Argument in Suprema, Inc. v. ITC

On Thursday, February 5, 2015, the en banc Federal Circuit heard oral argument in the matter of Suprema, Inc. v. ITC, reviewing its controversial panel decision holding that in ITC investigations induced infringement cannot be found where no direct infringement occurs until after importation. Complainant Cross-Match Technologies, Inc. filed an ITC investigation accusing Mentalix of infringing claim 19 of its U.S. Patent No. 7,203,344 by importing fingerprint scanners made by Suprema and incorporating them with certain Mentalix software post-importation. The Commission found that operation of the Mentalix software on the scanners infringed claim 19 and that Suprema induced that infringement. A Federal Circuit panel overturned, finding that the necessary direct infringement of the method claim did not occur until after importation, and, consequently, the articles were not infringing at the time of importation, putting the scanners outside the reach of § 337.[1]  At the en banc argument, the attorneys representing the parties almost exclusively responded to intense questioning, although the questioning did not reveal a clear majority for either side. Interestingly, the Court focused many of its questions on the enforcement of ITC decisions and the ramifications of entirely excluding from importation an article that might be used for non-infringing uses. Please check back for a detailed analysis of the en banc opinion once it issues.  Continue reading for a summary of the Appellants' presentations.

Appellants Suprema, Inc. and Mentalix, Inc.

Appellants’ presentation focused mainly on three themes: that the scanners at issue are staple articles of commerce, that the language of § 337 is written expressly in terms of “articles” that infringe, not acts leading to infringement, and that the amendments to § 337 in 1988 caused the statute to be directed less toward the acts of an alleged infringer and more toward the imported article itself. Though the parties’ briefs did not focus on the mechanisms for enforcement of ITC exclusion orders, Appellants were asked if importation of staple articles should be allowed if the importer certified that they had no knowledge of how the products were used. A substantial portion of the questions directed towards Appellants also related to the issue of Chevron deference to the ITC and why the ITC’s interpretation of the statute was not a reasonable one.

Appellee International Trade Commission

The Appellee International Trade Commission faced intense questioning. A substantial portion of the judges’ questions focused on enforcement procedures relating to ITC exclusion orders. The Court expressed concern that the exclusion order in this case would exclude all Suprema scanners, though the scanners could potentially be used in a non-infringing manner, and also about the degree of discretion in enforcing exclusion orders. Appellee emphasized the expertise of U.S. Customs and Border Protection in executing ITC exclusion orders and explained that there are various avenues of recourse if a party subject to an exclusion order feels that the order is overly broad, such as certification provisions. At least one judge responded approvingly to the Appellee’s statement that the Commission was open to providing guidance on the scope of its exclusion order. Appellee also argued that if the judges’ concern was with respect to the language of the ITC’s exclusion order, the proper solution would be to remand the case to the ITC for further proceedings or with instructions to tailor its order. During the Appellee’s presentation, the Judges also raised the issue of whether the ITC believed it had jurisdiction to stop digital importation, and how an exclusion order banning such importation could be enforced. This questioning appeared to relate to the appeal of the ITC decision in Certain Digital Models (for more information please see our post here), but, because the appeal in that case has not yet been heard, Appellee’s attorney declined the invitation to discuss the case.

Intervenor Cross-Match Technologies, Inc.

Intervenor Cross-Match Technologies, Inc. echoed the points made by the Commission, and argued that in determining infringement the Commission has authority to look beyond the article as imported to consider the intent of the importer, and that ITC certification provisions ensure that exclusion orders only bar importation of articles that will be used in an infringing manner.

United States as Amicus Curiae

When asked whether the use of the term “article” suggests that infringement should be  determined by looking at the article alone, without with associated conduct, the United States responded in the negative, explaining that it is commonplace, under § 337, for the Commission to look outside the article, in order to determine whether there has been a violation. The United States further reiterated that (1) the exclusion order at issue here will exclude only articles that infringe, not sales of the subject scanners for noninfringing use, and (2) Congress intended that the Commission would ascribe culpable conduct under the Patent Act to articles through § 337, arguing that Congress could have used language to limit liability under § 337 to direct infringement, but did not.

The decision of the Federal Circuit in this case is hotly anticipated because it will have significant repercussions for how litigants in the ITC frame future complaints of patent infringement, and because it will largely determine the viability of claims of inducement of infringement at the ITC. The en banc opinion in this case will likely issue by the summer. Check back for a detailed analysis of the opinion, and its likely effects on practice at the ITC, once it issues.

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