Supreme Court Declines Case Involving Domestic Industry Requirement of Section 337

10/15. The Supreme Court denied certiorari in Nokia v. USITC, a Section 337 exclusion case involving wireless phones. See, October 15 Orders List [15 pages in PDF] at page 13.

This lets stand the August 1, 2012 opinion [35 pages in PDF] and January 10, 2013 opinion [49 pages in PDF] of the U.S. Court of Appeals (FedCir). The Court of Appeals held that the domestic industry requirement of Section 337 does not require domestic manufacture, and that mere licensing may suffice. Had the Supreme Court granted certiorari, and reversed, this would have reduced the volume of patent cases filed with the U.S. International Trade Commission (USITC) by patent assertion entities.

InterDigital filed a complaint with the USITC alleging that Nokia violated 19 U.S.C. § 1337 by importing into the US phones that infringe its U.S. Patent Nos. 7,190,966 and 7,286,847, both of which are titled "Method and Apparatus for Performing an Access Procedure". InterDigital sought an exclusion order blocking imports of certain Nokia phones.

The USITC found the patents were not infringed. InterDigital appealed to the Court of Appeals. The three judge panel issued its divided opinion on August 1, 2012. It held that the USITC erred in construing certain critical claim terms in both patents, reversed the USITC's order finding no infringement, and remanded.

That August opinion focused on the issue of infringement. Only four pages addressed the domestic industry requirement. The Court of Appeals held that InterDigital satisfied the domestic industry requirement. It held that patent licensing alone can constitute a domestic industry.

Nokia petitioned for rehearing, which was denied on January 10, 2013. The three judge panel also issued a second opinion on January 10, focusing on Nokia's domestic industry argument.

Subsection 1337(a)(1) provides that it is unlawful, among other things, to import into the US articles that infringe a valid and enforceable U.S. patent.

But then, subsection 1337(a)(2) provides that this exclusion applies "only if an industry in the United States, relating to the articles protected by the patent, copyright, trademark, mask work, or design concerned, exists or is in the process of being established."

Also, subsection 1337(a)(3) provides that "an industry in the United States shall be considered to exist if there is in the United States, with respect to the articles protected by the patent, copyright, trademark, mask work, or design concerned--
  (A) significant investment in plant and equipment;
  (B) significant employment of labor or capital; or
  (C) substantial investment in its exploitation, including engineering, research and development, or licensing."

The Court of Appeals held that "section 337 makes relief available to a party that has a substantial investment in exploitation of a patent through either engineering, research and development, or licensing. It is not necessary that the party manufacture the product that is protected by the patent, and it is not necessary that any other domestic party manufacture the protected article."

The Court of Appeals continued that "As long as the patent covers the article that is the subject of the exclusion proceeding, and as long as the party seeking relief can show that it has a sufficiently substantial investment in the exploitation of the intellectual property to satisfy the domestic industry requirement of the statute, that party is entitled to seek relief under section 337."

Finally, "section 337 protects American industries, including American industries that are built on the exploitation of intellectual property through engineering, research and development, or licensing."

Judge Newman dissented.

Nokia filed a petition for writ of certiorari.

Amicus Briefs. Hewlett Packard (HP) filed an amicus curiae brief [PDF] urging the Supreme Court to grant certiorari.

It decried the proliferation of Section 337 actions brought by patent assertion entities (PAEs), the expanding role of the USITC, and the use these actions as an "end-run around general principles of patent law", such as the Supreme Court's 2006 opinion in eBay v. MercExchange, 547 U.S. 388. See also, story titled "Supreme Court Rules on Availability of Injunctive Relief in Patent Cases" in TLJ Daily E-Mail Alert No. 1,371, May 16, 2006.

HP wrote that the USITC's "growing usurpation of the federal courts' authority over patent disputes warrants this Court’s immediate attention. Congress gave the federal courts exclusive jurisdiction over the Patent Act, and the ITC jurisdiction over various trade disputes. Although some overlap between the two is inevitable, the ITC, with the Federal Circuit’s blessing, has now reached well beyond its statutory role of protecting American industries and jobs from unfair trade practices. Indeed, by eliminating the statutory requirement that a complainant demonstrate a domestic industry tied to ``articles protected by the patent,´´ as opposed to mere licensing alone, the ITC has transformed itself into a general patent enforcement venue for routine disputes that should be heard in a federal court."

ZTE filed an amicus curiae brief in which it too urged the Supreme Court to grant certiorari, and reverse the Court of Appeals.

Samsung filed an amicus curiae brief urging that certiorari be granted. It wrote that "Section 337 was not intended to provide an alternative forum for patent litigation. Instead, it provides an important and powerful trade remedy available only to domestic industries that themselves invest in the use of the intellectual property that is being unfairly used in foreign imports. This limitation on the ITC’s authority -- known as the ``domestic industry´´ requirement -- ensures that the agency remains ``fundamentally a trade forum, not an intellectual property forum.´´" (Citations omitted.)

Dell also filed an amicus curiae brief urging that certiorari be granted. It lamented that the USITC "has become the Nation’s most popular patent forum, based on an improper expansion of its jurisdiction to encompass claims by entities that neither manufacture patented products nor enable others to develop such products but that instead extract license payments from companies using technology developed independently."

Dell continued that "Patent assertion has become a big business. Patent Assertion Entities or ``PAEs´´ are companies that buy patents and assert them against operating companies. Prior to 2006, no ITC investigation had been initiated by a PAE. By 2012, PAEs were responsible for almost half the respondents named in ITC cases." (Footnote omitted.)

This case is Nokia, Inc., et al. v. U.S. International Trade Commission, Supreme Court of the U.S., Sup. Ct. No. 12-1352, a petition for writ of certiorari to the U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 2010-1093. The Court of Appeals heard an appeal from the U.S. International Trade Commission, Inv. No. 337-TA-613. Chief Justice Roberts and Justice Breyer took no part in the consideration or decision of this petition.

See also, story titled "Federal Circuit Rules on Domestic Industry Requirement of Section 337" in TLJ Daily E-Mail Alert No. 2,512, January 20, 2013.

Supreme Court Denies Certiorari in Sony Computer Entertainment v. 1st Media

10/15. The Supreme Court denied certiorari in Sony Computer Entertainment v. 1st Media, a patent infringement case involving the doctrine of inequitable conduct, which can be applied to render a patent unenforceable. See, October 15 Orders List [15 pages in PDF] at page 3.

This lets stand the September 13, 2012 opinion [17 pages in PDF] of the U.S. Court of Appeals (FedCir) in this case. It also leaves untouched the Federal Circuit's 2011 divided en banc opinion [88 pages in PDF] in Therasense v. Becton, Dickinson & Co., 649 F.3d 1276.

The issue that the Supreme Court ducked is what constitutes intent to deceive the U.S. Patent and Trademark Office (USPTO or PTO) for the purpose of the doctrine of inequitable conduct.

The Solicitor General submitted an amicus curiae brief urging the Supreme Court to deny certiorari.

1st Media is the assignee of U.S. Patent No. 5,464,946 titled "System and apparatus for interactive multimedia entertainment". It filed a complaint in the U.S. District Court (DNev) against Sony Computer Entertainment America LLC, Electronic Arts, Inc., Harmonix Music Systems, Inc., and Viacom Inc. alleging patent infringement. Defendants asserted the defense of inequitable conduct during prosecution of the patent.

The District Court found that the named inventor and his attorney withheld from the USPTO three material references and information about USPTO rejections in two related prosecutions. The District Court held the patent unenforceable for inequitable conduct.

The Court of Appeals reversed because the District Court made no finding, and there was no evidence in the record demonstrating, that the patent applicant or prosecutor had made a deliberate decision to withhold prior art references from the USPTO.

In Therasense, the Court of Appeals reversed the District Court's finding of inequitable conduct "Because the district court did not find intent to deceive under the knowing and deliberate standard set forth in this opinion". The Court of Appeals explained that "specific intent to deceive" the USPTO is required, and that gross negligence or negligence under a should have known standard does not satisfy this intent requirement.

It wrote that on remand, the District Court "should determine whether there is clear and convincing evidence demonstrating" that the relevant persons knew of certain European Patent Office (EPO) briefs, "knew of their materiality, and made the conscious decision not to disclose them in order to deceive the PTO."

This case is Sony Computer Entertainment v. 1st Media, LLC, Supreme Court of the U.S., Sup. Ct. No. 12-1086, on petition for writ of certiorari to the U.S. Court of Appeals for the Federal Circuit, App. Ct. No. 2010-1435. The Court of Appeals heard an appeal from the U.S. District Court of the District of Nevada, D.C. No. 07-CV-1589. See also, Supreme Court's docket.

More Supreme Court Orders

10/15. The Supreme Court denied certiorari in Fox Group v. Cree, Sup. Ct. No. 12-1378, a patent infringement case involving method and apparatus for making silicon carbide crystal, a semiconductor that is used in high temperature and high power electronics such as light sources, power diodes, and photodiodes. See, October 15 Orders List [15 pages in PDF] at page 3. This lets stand the November 28, 2012 opinion [27 pages in PDF] of the U.S. Court of Appeals (FedCir), App. Ct. No. 2011-1576. The Court of Appeals heard an appeal from the U.S. District Court (EDVa), D.C. No. 10-CV-0314. See also, Supreme Court's docket.

10/15. The Supreme Court denied certiorari in Sprint v. Central Telephone of Virginia and Dixie-Net Communications v. BellSouth, an telecommunications interconnection contract dispute. See, October 15 Orders List [15 pages in PDF] at page 13. This lets stand the April 29, 2013 opinion of the U.S. Court of Appeals (4thCir), which affirmed the judgment of the U.S. District Court (EDVa) in favor of CenturyLink. This case is Sprint Communications, et al. v. Central Telephone of Virginia, et al., Sup. Ct. No. 13-141 and Dixie-Net Communications, Inc. v. BellSouth Telecommunications, Sup. Ct. No. 13-152, petitions for writ of certiorari to the U.S. Court of Appeals for the 4th Circuit, App. Ct. No. 12-1322. The Court of Appeals heard an appeal from the U.S. District Court for the Eastern District of Virginia, D.C. No. 3:09-cv-00720-REP.