Imports that Induce Subsequent Infringement are (Again) Subject to the Authority of the ITC
Can the International Trade Commission (ITC) offer trade relief when the importation of goods is not an act of direct infringement, but rather induces a subsequent act of infringement? In its 2011 determination that Supreme and Mentalix infringed, the ITC did just that. On appeal, in a revised en banc decision, the Federal Circuit has now deferred to the ITC’s interpretation of its authority.
The Federal Circuit’s recent decision, captioned Suprema vs. ITC, is notable for several reasons:
First, this recent decision overturns a Federal Circuit panel decision from December 2013 finding that, where direct infringement occurred after importation, relief from the ITC was not possible. That panel interpreted “articles that infringe,” as recited in 19 U.S.C. § 1337(a)(1)(B)(i) (“Section 337”), to mean “only those articles that infringe when they are being imported.” In so doing, it ignored many prior decisions involving such allegations and looked to the language of 35 U.S.C. § 271. It found that only the subsections relating to direct and contributory infringement prohibited conduct tied to an article. It also pointed to the ITC’s refusal to investigate complaints premised on allegations of direct infringement of method claims occurring post-importation. It then interpreted Section 337’s grant of authority over “articles that infringe” as excluding authority over acts of importation that induce infringement. The recent Federal Circuit opinion has thus eliminated an almost two-year old decision that significantly curtailed the authority of the ITC.
Second, the Federal Circuit did not conduct its own analysis but rather deferred to the ITC’s long-standing assessment under the two-step Chevron doctrine. It first found that the language of the statute was ambiguous in reciting “articles that infringe,” and that this phrase did not “unambiguously exclude inducement of post-importation infringement.” It secondly found that the ITC’s interpretation was consistent with the statute’s text, policy, and legislative history, and therefore subject to deference. In so doing, the Federal Circuit noted that induced infringement is one kind of infringement, and “when it is accomplished by supplying an article, the article supplied can be called an “article that infringes.” The Federal Circuit also acknowledged that Congress enacted Section 337 with the intent of giving the ICT broad enforcement authority to remedy unfair acts and competition in the importation of goods, and further acknowledged that the ITC has exercised its authority over acts of importation deemed to be inducing infringement for some 35 years, with the Federal Circuit affirming such determinations. The Federal Circuit has thus re-established the status quo with respect to the scope of the ITC’s authority.
Third, the decision here affirms – and may publicize – the availability of the ITC as a potential forum for relief against parties that perform patented methodologies using imported goods, where the provision of the imported goods induces the infringing act. Such parties may include domestic software providers that rely upon imported hardware devices, domestic manufacturers using patented processes that incorporate imported components, domestic health care providers using imported devices to perform patented treatments, and the like. Thus, we may see more investigations at the ITC that encompass imported components in a wider variety of patented methods.
In view of this decision, patentees may want to reconsider the ITC as a forum for enforcement. Companies that rely on imports may want to consider whether the provision of the imported goods might be deemed an act of inducement that would subject them to the ITC’s authority.