§ 337
Subscribe to § 337's Posts

Nailed It: Expert Must at Least Meet Ordinary Skill Level to Testify from POSITA Perspective

Addressing a US International Trade Commission (ITC) decision finding a § 337 violation as to one patent but no violation as to four other patents, the US Court of Appeals for the Federal Circuit reiterated that a technical expert must at least meet the level of ordinary skill in the art of the asserted patents to testify from the perspective of a person of ordinary skill in the art (POSITA), whether for claim construction, validity or infringement. Kyocera Senco Indus. Tools Inc. v. ITC, Case Nos. 20-1046, -2050 (Fed. Cir. Jan. 21, 2022) (Moore, C.J.; Dyk, Cunningham, JJ.)

In 2017, Kyocera filed a complaint at the ITC seeking a § 337 investigation based on infringement allegations for six patents directed to battery-powered gas spring nail guns. The investigation was assigned to the Chief Administrative Law Judge (ALJ), who, in the context of a Markman order, adopted Koki Holdings America Ltd.’s uncontested level of skill in the art as including “experience in powered nailer design.” After claim construction, Kyocera dropped one patent from the investigation and went forward with infringement under the doctrine of equivalents as the sole basis for violation for four other patents.

Prior to the evidentiary hearing, Koki moved to exclude Kyocera’s expert’s testimony due to their admission during deposition that they did not have the experience in powered nailer design required by the adopted level of ordinary skill in the art. The Chief ALJ held that the Federal Circuit’s decision in AquaTex Indus. v. Techniche Sols. expressly required that Kyocera’s expert’s testimony be excluded as to infringement under the doctrine of equivalents but permitted the expert to testify as to literal infringement on one patent and on claim construction. After the evidentiary hearing, the Chief ALJ issued an initial determination that relied, in part, on Kyocera’s expert to find a particular element satisfied on the one remaining patent where literal infringement was asserted, but ultimately found no infringement due to other claim limitations. The Chief ALJ’s noninfringement decision as to the one remaining patent was then overturned on review by the full ITC, which found a § 337 violation and issued a limited exclusion order.

Kyocera appealed the Chief ALJ’s exclusion of its expert’s testimony on doctrine of equivalents, and Koki cross-appealed on the Chief ALJ’s decision to allow Kyocera’s expert to testify as to literal infringement and claim construction. The Federal Circuit reversed the ITC’s decision, holding that it was error to permit any infringement testimony from Kyocera’s expert and explaining that a witness must at least have ordinary skill in the art to offer testimony from the perspective of a skilled artisan for claim construction, validity or infringement, whether literal or under the doctrine of equivalents.

Alexander Ott was a member of Koki’s ITC trial team and the Federal Circuit appeal team in this case.




Employment Agreement Assignment Provisions Don’t Reach Post-Employment Inventions

The US Court of Appeals for the Federal Circuit rejected a biotechnology company’s argument that assignment provisions in its employment agreements granted ownership rights in post-employment inventions. Bio-Rad Laboratories, Inc. v. Int’l Trade Comm’n, Case No. 20-1785 (Fed. Cir. Apr. 29, 2021) (Taranto, J.)

10X filed an International Trade Commission (ITC) complaint against Bio-Rad, alleging that Bio-Rad’s microfluidic systems infringed 10X’s gene sequencing patents. Bio-Rad raised an affirmative defense alleging that it co-owned the asserted patents because two of the named inventors, formerly employed by Bio-Rad and its predecessor QuantaLife before forming 10X, conceived the ideas embodied in the patents while they were still employed by Bio-Rad. The two inventors had executed employment agreements, including provisions requiring disclosure and assignment of intellectual property created during their employment with Bio-Rad. The two inventors left Bio-Rad and formed 10X several months before the earliest conception date of the asserted patents.

The ITC administrative law judge rejected Bio-Rad’s co-ownership defense, concluding that Bio-Rad had not shown the inventive concept of the asserted patents was conceived before the inventors left Bio-Rad. The administrative law judge also found that Bio-Rad infringed 10X’s patents and that 10X satisfied the technical domestic industry requirement by practicing the asserted patents. The ITC affirmed the administrative law judge’s determinations and also found that the asserted claims were not invalid for indefiniteness. Bio-Rad appealed.

Bio-Rad argued, among other things, that the ITC erred in not finding co-ownership of the asserted patents based on the assignment provisions. Bio-Rad also contended that during their employment at Bio-Rad, the two inventors had conceived the ideas that contributed to the inventions reflected in the 10X patents, and the invention assignment provisions of their employment agreement required assignment of their interest to Bio-Rad.

The Federal Circuit affirmed the ITC. On the co-inventorship issue, the Court adopted the ITC’s conclusion and found that Bio-Rad had no ownership interest in the asserted patents, explaining that the assignment provisions did not apply to ideas developed during employment solely because the ideas ended up contributing to a post-employment patentable invention. The Court found that the language was limited to a grant of actual intellectual property, i.e., subject matter protectable as a patent created during the term of employment with Bio-Rad. The Court reasoned that a person’s work that contributes, even significantly, to a later patentable invention does not create protectable intellectual property until a patentable invention is made, and that therefore, the assignment provisions did not reach the ideas that Bio-Rad alleged were conceived during the inventors’ Bio-Rad employment.

The Court also noted policy reasons for limiting the reach of the assignment provisions, including the difficult compliance issues raised by requiring assignment of rights in post-employment inventions. The Court explained that such provisions might deter a former employee from pursuing work related to their prior work, or deter a potential future employer from hiring that individual to work in an area similar to that in which they had prior experience. The Court also agreed with the ITC’s conclusion that [...]

Continue Reading




Significant Third-Party Discovery Too Complex for ITC Early Disposition Program

The US International Trade Commission (ITC) denied a proposed respondent’s request to use the early disposition program to determine whether a complainant met the domestic industry requirement in a Section 337 investigation. The ITC concluded that the issues proposed for resolution were too complex to be decided within 100 days of institution because significant third-party discovery was likely necessary. Certain Video Processing Devices, Components Thereof, and Digital Smart Televisions Containing Same, Comm’n Order, USITC Inv. No. 337-TA-1222 (Oct. 14, 2020).

The early disposition program aims to limit unnecessary litigation and save time and resources for litigants and the ITC by resolving obvious and fatal deficiencies in a complainant’s case before the parties embark on a full Section 337 investigation. The program provides for an initial determination by the presiding administrative law judge within 100 days of institution on potentially dispositive issues. The administrative law judge may hold expedited hearings and stay discovery of any other issues during the pendency of the 100-day proceeding. The ITC has indicated that appropriate issues for resolution include domestic industry, importation, standing and patent subject matter eligibility.

Complainant DivX, LLC, a video software technology company, relied on its licensee’s assembly of smart TVs in the United States to satisfy the domestic industry requirement. Proposed respondent Realtek Semiconductor Corporation, a chipmaker for consumer electronics, argued that DivX would be unlikely to meet the domestic industry requirement because DivX’s licensee stopped identifying several of its products as “Assembled in the USA” to avoid deceiving consumers in connection with a petition filed before the Federal Trade Commission. Realtek also argued that DivX could not identify smart TVs as the domestic industry product for purposes of the economic prong and a different video processor product for purposes of the technical prong. Realtek sought to resolve these issues through the early disposition program, and DivX opposed. Although neither party raised the issue of third-party discovery, the ITC denied Realtek’s request because such discovery was likely necessary, making adjudication within 100 days impracticable.

Practice Note: The ITC places great emphasis on the expeditious adjudication of Section 337 investigations because of the ITC’s statutory mandate to complete them at the earliest practicable time. The early disposition program builds on that mandate and can provide an even speedier timeframe by streamlining and resolving dispositive issues within 100 days of institution. A proposed respondent should consider requesting early disposition for clear weaknesses in a complainant’s case where the issue to be decided is not complex and does not require significant discovery. While the ITC does not grant use of the early disposition program often, where it has done so, several cases have ended with withdrawal of the complaint or termination before a hearing.




Non-Respondent’s Product Cannot Be Adjudicated for Infringement in Context of General Exclusion Order

The US International Trade Commission issued a general exclusion order (GEO) excluding from entry into the United States products infringing patents directed to luxury vinyl tile, but vacated findings in the Initial Determination (ID) adjudicating infringement for products belonging to entities not named as respondents in the investigation. The Commission explained that a finding should not be made as to whether a non-respondent’s product infringes a patent in the context of a GEO, but instead the analysis should be limited to whether the “alleged” infringement supports a finding that there is a pattern of violation of Section 337. Certain Luxury Vinyl Tile and Components Thereof, USITC Inv. No. 337-TA-1155, Comm’n Op. (Oct. 5, 2020).

The ITC instituted an investigation against multiple respondents. The administrative law judge granted summary determination of violation by certain defaulting respondents and recommended a GEO. Unlike limited exclusion orders (LEO), which only prohibit infringing goods imported by a named respondent in an investigation, GEOs prohibit entry of the infringing products regardless of the source. GEOs are issued when necessary to prevent circumvention of an LEO or when there is a pattern of violation and it is difficult to identify the source of infringing products. In connection with the request for a GEO in this investigation, the complainants accused two additional products from non-respondents of infringement. In the ID, the administrative law judge analyzed the two products and determined that they infringed the asserted patents.

The Commission determined to review the ID in part. On review, the Commission determined that a GEO was appropriate, but vacated the findings of the ID that adjudicated infringement of the asserted patents by the two products belonging to the non-respondents. The Commission explained that in considering a GEO, a finding should not be made as to whether a non-respondent’s product infringes a patent and instead the analysis should be limited to whether there is a pattern of violation of Section 337. The Commission therefore vacated the infringement findings to avoid confusion and possible prejudice to the non-respondents in future proceedings.

Practice Note: A GEO is an attractive remedy for companies confronted by widespread infringement by imported products originating from sources that are difficult to identify or companies that dissolve and re-emerge as new entities and can therefore circumvent an LEO. The Commission has now made it easier to obtain a GEO because “alleged” infringement by products from a non-respondent can be used to show a pattern of violation warranting a GEO without a full adjudication of infringement for those products.




Unnamed Respondent Has Standing to Seek Rescission of ITC General Exclusion Order

The US Court of Appeals for the Federal Circuit affirmed a US International Trade Commission (ITC) decision denying a petition for rescission of a general exclusion order (GEO) prohibiting importation of products accused of patent infringement, because a post-investigation invalidity attack is not a changed condition warranting rescission. Mayborn Grp., Ltd. v. Int’l Trade Comm’n, Case No. 19-2077 (Fed. Cir. July 16, 2020) (Lourie, J.).

Several parties filed a complaint at the ITC against several respondents, not including Mayborn Group, Ltd., and Mayborn USA, Inc. The complaint alleged infringement of a patent disclosing a self-anchoring beverage container that prevents spills. The complainants sought a GEO barring importation of infringing goods by any party, including unnamed respondents such as Mayborn. In contrast to GEOs, limited exclusion orders only prohibit infringing goods imported by named respondents in an investigation. The ITC instituted an investigation, and the administrative law judge determined that two respondents were in default and liable for unfair acts (patent infringement) in connection with importation. The defaulting respondents did not raise any invalidity challenge during the investigation. On the administrative law judge’s recommendation, the ITC issued a GEO.

Following issuance of the GEO, Mayborn continued to import potentially infringing products. The complainants notified Mayborn that they were working with US Customs and Border Protection (CBP) to enforce the GEO against Mayborn’s importations. In response, Mayborn petitioned the ITC to rescind the GEO pursuant to its power to rescind or modify an order if there is a change in the conditions that led to the GEO. Mayborn argued that the “changed condition” requirement was satisfied because it contends the asserted claims are invalid.. The ITC denied Mayborn’s petition, holding that a petitioner’s asserted discovery of invalidating prior art after the issuance of a GEO was not a changed condition. Mayborn appealed, arguing that the ITC erred in rejecting its request for rescission. The ITC alleged that Mayborn lacked standing to appeal because Mayborn’s alleged injury stemmed from the complainants’ threat to enforce the GEO rather than any act by the ITC.

The Federal Circuit affirmed, finding that Mayborn’s post-investigation invalidity challenge was not a basis for rescission of the GEO. The Court first addressed the ITC’s standing argument, and determined that Mayborn had standing because it was injured by the GEO and the GEO was enforced by the ITC. The ITC or CBP could act to enforce the GEO at any time. Mayborn had also lost sales and incurred other harm stemming from the complainants’ threats to assert the GEO, including reputational injury, market share loss and damaged business relationships. Standing did not require the ITC to have already barred importation of Mayborn’s products.

After finding that Mayborn had standing, the Federal Circuit determined that Mayborn’s invalidity challenge was not a permissible basis to seek rescission of the GEO for two reasons. First, although patent invalidity is an affirmative defense to patent infringement, the ITC is constrained to adjudicating patent validity only when a respondent raises an invalidity defense during an [...]

Continue Reading




BLOG EDITORS

STAY CONNECTED

TOPICS

ARCHIVES