ITC breaks new ground in IPR decision
Litigators sometimes question whether post-grant procedures at the US Patent and Trademark Office (USPTO) can help companies facing patent infringement allegations in the US International Trade Commission (ITC).
The ITC does not typically stay cases in deference to USPTO proceedings, and the ITC usually reaches a decision before the USPTO can declare the patent invalid. So, why file a post-grant or inter partes review (IPR) petition when facing an ITC case? The ITC provided one answer: in the event that the USPTO invalidates the patent before the ITC case ends, your products will probably not be excluded—even if the ITC decides against you.
In Certain Unmanned Aerial Vehicles and Components Thereof, Inv. no. 337-TA-1133 (UAVs), the ITC issued orders preventing infringing imports and sales, but then suspended enforcement of those orders because the patent claims on which the orders rested were previously found unpatentable in an IPR final written decision from the Patent Trial and Appeal Board (PTAB). As a result, although the ITC found a violation of section 337, no products are being excluded.
The ITC had hinted at this possible result twice before, but this is the first time the ITC suspended all potential relief based on an earlier PTAB decision.
Background
The complainant accused the respondent (represented by Finnegan) of infringing three patents. After trial, the presiding judge found for the respondent on two of the patents. As to the third patent (US no. 9,260,184) the judge found that several products infringed one claim and that the respondent had not shown that the ’184 patent claims were invalid. Both parties sought full ITC review of aspects of that decision.
During the investigation, the respondent filed IPR petitions. After the judge’s decision, but before the ITC determined whether to review it, the PTAB issued final written decisions finding all challenged claims of all three patents unpatentable.
The ITC reviewed only parts of the judge’s decision, all relating to the ’184 patent, making the “no violation” decision on the other two patents final. Specifically, the ITC reviewed several infringement issues regarding the ’184 patent, but not the determination that it was valid, making that portion of the decision final as well.
The ITC also asked for briefs on: “what, if any, effect the final written decision of the PTAB finding the claims of the ’184 patent unpatentable has on the Commission’s present investigation with respect to the accused products and the ’184 patent, including any impact on the issuance of relief”.
While the ITC received and considered the parties' briefs on review, the complainant appealed the PTAB decisions.
The ITC’s final decision
The ITC’s final decision found that some accused products infringed two claims of the ’184 patent. Since validity was already determined, the ITC found a violation of section 337 and issued limited exclusion and cease and desist orders.
However, after issuing those orders, the ITC suspended their enforcement while the respondent appealed the adverse PTAB decision. The ITC’s opinion noted that it can issue an exclusion order only if the accused articles “infringe a valid and enforceable US patent”. And the ITC recognised that it had previously suspended enforcement of remedial orders, “at least in part”, where the PTAB found some asserted claims unpatentable before the ITC finished its investigation.
In particular, the ITC referred to Certain Magnetic Tape Cartridges and Tape Components Thereof, Inv. no. 337-TA-1058, and Certain Three-Dimensional Cinema Systems and Components Thereof, Inv. no. 337-TA-939.
In the Magnetic Tape and Three-Dimensional Cinema cases, the complainants succeeded on patent claims in addition to the claims the PTAB found unpatentable. As a result, the accused products would still be excluded even if the orders were not fully enforced. Indeed, the ITC highlighted that fact.
In Three-Dimensional Cinema, the ITC said: “In light of the advanced posture of the IPR proceeding and the Commission’s finding of a violation as to MasterImage’s products (all of which will be subject to immediate exclusion even if relief is suspended as to the ’934 patent), the Commission has determined to exercise its discretion and suspend enforcement of the remedial orders.”
Likewise, in Magnetic Tape, the ITC noted that “as was the case in Three-Dimensional Cinema, a suspension in the enforcement of the remedial orders as to claim 17 of the ’774 patent pending final resolution of the appeal of the PTAB decision will have no practical effect since Fujifilm’s LTO-5 products will still be subject to immediate exclusion based on the Commission’s finding of a violation with respect to claims 1-13 of the ’596 patent”
Unlike Three-Dimensional Cinema and Magnetic Tape, the UAVs case presented a situation where all the patent claims forming the basis of the ITC’s violation finding and, therefore, the underpinning for the remedial orders, were held unpatentable. The “no practical effect” justification no longer applied, since suspending enforcement would mean the difference between excluding the accused products and no exclusion at all.
Without addressing the “no practical effect” language from its prior decisions, the ITC simply stated that suspension of the orders in UAVs is “consistent with the Commission’s past practice on this issue” and noted that “neither party has identified an instance in which the Commission determined not to suspend remedial orders due to a PTAB final written decision that issued prior to the Commission’s determination” (emphasis in original).
The ITC contrasted the “USPTO’s role as the lead agency in assessing the patentability, or validity, of proposed or issued claims” with the ITC’s own role, noting that “the Commission’s invalidity determinations in patent cases, in contrast, are for purposes of adjudicating whether or not a section 337 violation has occurred, and are not binding on the USPTO, federal courts, or other tribunals, even if affirmed by the Federal Circuit”.
Further, suspending enforcement of remedial orders in light of a PTAB final written decision is consistent with the Congressional intent of creating the IPR procedure as “a quick, inexpensive, and reliable alternative to district court litigation to resolve questions of patent validity”.
The UAVs opinion roundly endorses suspending enforcement of any remedial order based on patent claims that the PTAB has found unpatentable before the ITC reaches its final decision, regardless of whether that suspension results in no relief to the complainant.
But the ITC continues to distinguish investigations where the PTAB decision comes after the remedial orders issue and the respondent is seeking to rescind or modify those orders. In that situation, the ITC has concluded that that there are no “changed circumstances” justifying rescission or modification of an existing exclusion order because the patent claims are not cancelled until all appeals from the PTAB decision are exhausted.
Practice issues
The ITC prefers reaching its own patent validity decisions and rarely defers to the USPTO or stays its proceedings in light of USPTO activity. The UAVs case contrasts with that practice.
Granted, the ITC reached its own decision on the merits, and that decision found the patent claims were not invalid while the PTAB came to the opposite conclusion. The ITC did not defer to the PTAB up to the moment it issued its remedial orders. But after issuing those orders, the ITC suspended their enforcement unless the respondent successfully reverses the PTAB decision, essentially elevating the PTAB decision over its own contrary determination. That demonstrates how valuable a PTAB decision finding the asserted claims unpatentable can be if it comes before the ITC case is over.
Not all litigants will be able to take advantage of this opportunity. ITC investigations typically last about 17 months from complaint filing to final decision, while IPRs last 18 months and petitions take time to prepare. As a result, it is not easy to satisfy the basic requirement for suspension—a final written decision before the ITC case ends.
But section 337 investigations can and do experience delays. Several delays in the UAVs case allowed the PTAB proceeding to finish before the ITC proceedings. Many current ITC investigations have been delayed by COVID-19, while PTAB proceedings appear to be keeping to its prescribed 18-month schedule. IPR petitions are sometimes filed even before the ITC complaint where, for example, the respondent has advance warning through earlier negotiations or district court litigation.
At a minimum, there have been at least five section 337 investigations where the PTAB decisions issued in time to have a potential effect, and there will likely be more in the future.
Even before the UAVs decision, some ITC respondents filed post-grant petitions knowing that the ITC would not stay its investigation. The UAVs case provides an additional and tangible reason to challenge patents in the USPTO even if a stay in the ITC is unavailable.
Smith Brittingham is a partner at Finnegan. He can be contacted at: smith.brittingham@finnegan.com
