Violation of ITC Consent Order Can Be Based on “Infringement” of Invalid Claims
Reviewing the International Trade Commission’s (ITC or Commission) finding of a violation of a consent order, a divided panel of the U.S. Court of Appeals for the Federal Circuit concluded in a subsequent finding that the patents for which the violation was asserted were invalid did not require either the violation or fine to be overturned. DeLorme Publishing Co. et al. v. Int’l Trade Comm’n, Case No. 14-1572 (Fed. Cir., Nov. 12, 2015) (Moore, J.) (Taranto, J., dissenting in part).
The case arose from a Commission enforcement action based on a consent order entered into by appellant DeLorme in April 2013, in which it agreed not to import products that infringed the claims of a patent owned by BriarTek IP “until the expiration, invalidation, and/or unenforceability of the [. . . ] Patent.” One month later, BriarTek complained that DeLorme was violating the consent order by importing non-infringing components, which were then turned into infringing products. The Commission began an enforcement proceeding, found there was a violation and fined DeLorme over $6 million. DeLorme appealed. In parallel with the enforcement proceeding, DeLorme filed a declaratory judgment action seeking invalidation of all claims asserted at the Commission. After the Commission’s ruling, the district court granted summary judgment that all of the claims which DeLorme was accused of infringing at the ITC were invalid. BriarTek appealed, and the district court’s ruling was sent to the same panel.
DeLorme made two arguments on appeal: that the consent order did not reach importation of non-infringing products which became infringing after importation and that the subsequent district court invalidity ruling nullified the consent order. The panel disagreed with both arguments.
As for the importation argument, the panel found that the consent order prohibited the “sale or offer for sale after importation” of products that infringed BriarTek’s patents, and that was sufficiently broad to reach DeLorme’s conduct. As for the nullification argument, the panel found that the language allowing for importation “until invalidation…of the Patent” was prospective-looking, not retroactive, and therefore until there was a final ruling on invalidity DeLorme could be found in violation of the consent order.
Ironically, the panel also unanimously upheld the district court’s finding that the claims on which the violation was based were invalid. However, the majority also noted that “[b]ecause our concurrently issued affirmance … is still reviewable, the Consent Order continues to be binding on DeLorme even now” and upheld the Commission’s fine.
Judge Taranto dissented based on the panel’s affirmance of the district court invalidity ruling arguing that the case should be remanded to the Commission for consideration of whether the invalidity finding should have an effect on the fine for violation.