ALJ Finds No Violation In Beverage Capsules Enforcement Proceeding And Recommends Temporary Rescission of Remedial Orders Based On U.S. District Court Judgment of Non-Infringement
On June 1, 2016, the complainant in Certain Beverage Capsules (Inv. 337-TA-929) filed a complaint with the ITC seeking enforcement of ITC remedial orders issued against a respondent (Eko Brands) that had been defaulted for failing to participate in the original investigation. The presiding administrative law judge (ALJ) has now issued his ruling finding no violation by the respondent and recommending rescission of the remedial orders.
Noting that the only claim that complainant had established at the hearing before the ALJ as being practiced by Complainant’s products (claim 5) had subsequently been found invalid by the Commission, the ALJ concluded that the remedial orders were “effectively unenforceable” because there was no domestic industry exploiting any valid claim of the patent. Even if the Commission disagreed with this conclusion, however, the ALJ recommended that the remedial orders be temporarily rescinded based on an intervening ruling in a declaratory proceeding brought by Eko Brands in the U.S. District Court for the Western District of Washington. In that case, the court granted summary judgment of non-infringement, relying in part on a different construction of the claim term “passageway” than that adopted by the ALJ in the ITC proceeding. The ALJ determined that the district court’s decision represented a “substantial change in circumstances” and that ITC precedent, while sparse (and even then, only related to invalidity, not non-infringement rulings), supported temporary rescission of the remedial orders now and permanent rescission if the district court’s decision is affirmed on appeal.
Two takeaways from the ALJ’s decision jump out: (1) the requirement that a complainant must establish that its own or a licensee’s product practices the patent-in-suit in order to satisfy Section 337’s domestic industry requirement (the so-called “technical prong”) can have significant ramifications, even on the remedy side of a 337 proceeding; and (2) district court proceedings can be used by respondents to impact Section 337 proceedings even after remedies have issued, because the ITC will defer to district court decisions on parallel issues of invalidity and infringement when considering whether to continue to enforce ITC remedial orders.