Federal Circuit affirms ITC’s $6m patent penalty
A mapping technology company could not convince the US Court of Appeal for the Federal Circuit to dismiss a $6 million penalty handed down by the US International Trade Commission (ITC).
The Federal Circuit panel ruled Tuesday, March 1, that the ITC had not abused its discretion by imposing a penalty on DBN holdings over the violation of a consent order.
The ITC order itself barred DBN from importing technology that infringed a patent from BriarTek IP, despite the fact that the asserted patent claims were found to be invalid in parallel litigation.
In an earlier appeal, the Federal Circuit instructed the ITC to assess on remand “whether to modify or rescind the civil penalty… based on the final judgment of invalidity” of the patent asserted. On remand, the ITC determined that the civil penalty did not require modification or rescission, denying DBN’s petition.
“Because we discern no abuse of discretion in the International Trade Commission’s determination, we affirm,” the Federal Circuit panel ruled.
DBN argued that Federal Circuit precedent and ITC practice support its petition to modify or rescind the ITC’s civil penalty order. Specifically, it cited ITC precedent in Certain Neodymium-Iron-Boron Magnets, Magnet Alloys, and Articles Containing Same (1999) that ruled that a consent order prohibited the importance of infringing products “except under consent or licence”.
However, as DBN and BriarTek IP had not reached any retroactive settlement licence following the order, it held that DBN’s violation was not “consensual”, upholding the ITC’s ruling that DBN violated a consent order was justified.
The circuit panel concluded that the ITC’s remand determination was based on a correct interpretation of law and findings that are reasonable and supported by substantial evidence.
“We hold that the ITC did not abuse its discretion in declining to rescind or modify its civil penalty order in view of the asserted claims’ invalidation,” it said.
Case background
In November 2015, the Federal Circuit affirmed that the US District Court for the Eastern District of Virginia’s summary judgment invalidating asserted patent claims from BriarTek IP’s patents asserted against DBN. It also held that the ITC did not abuse its discretion in imposing on DBN a $6,242,500 fine for violating a consent order.
The order stated that DBN should not import into the US or sell any “two-way satellite communication devices, systems and components” that infringe certain claims of BriarTek’s US patent 7,991,380.
DBN then filed a petition before the ITC to rescind or modify the penalty order, arguing that the penalty should be set aside as patent claims asserted in the Section 337 investigation were found to be invalid in the district court and Federal Circuit proceedings.
However, the ITC denied DBN’s petition, claiming that the Federal Circuit’s invalidation had “no effect on the civil penalty order”.
The decision was again appealed to the Federal Circuit and remanded back to the ITC, which in turn denied DBN’s petition again, holding that the invalidation of the asserted claims did not change its original assessment of the factors when deciding to impose a penalty.
It referred to “EPROM” and “Ninestar” factors in dividing whether the invalidation impacted the penalty. These factors included considering the BDN’s injury, ability to pay the penalty, the benefit it gained from its violation, public interest, and the scope of the commission’s order.
DBN chose to appeal this analysis to the Federal Circuit yet again in an attempt to rescind or modify the order. However, the Federal Circuit found no abuse of discretion in its ruling in the decision handed down this week.
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