It’s All in the Timing: ITC Reaffirms Practice of Suspending Enforcement of Remedial Orders After PTAB Invalidates Asserted Patent Claims
Time to read: 10 mins
On September 8, 2020, the U.S. International Trade Commission (“ITC” or “Commission”) in Certain Unmanned Aerial Vehicles & Components Thereof (“Unmanned Aerial Vehicles”)1 for the first time suspended remedial orders in toto based on a final written decision from the Patent Trial and Appeal Board (“PTAB”) finding the relevant claims of the asserted patent unpatentable.2 Although ITC-watchers have hailed Unmanned Aerial Vehicles as “groundbreaking” and “a major development.”
But these reactions overstate the case. As the Commission noted in its opinion, its decision to suspend enforcement builds upon its existing case law. Twice before the ITC has partially suspended enforcement of remedial orders to account for specific patent claims deemed unpatentable in a PTAB final written decision that preceded the ITC’s final determination.3 While those suspensions of enforcement lacked practical effect since the PTAB decisions did not impact other asserted patents infringed by the same accused products, this was happenstance. The result in Unmanned Aerial Vehicles flows logically from the analysis contained in the ITC’s earlier cases.
Moreover, on the whole, the ITC’s growing case law provides useful guidance for when and how it will address PTAB unpatentability decisions regarding patents at issue in ITC remedial orders:
- If the PTAB decision issues before the ITC’s final determination, then the ITC will suspend enforcement of any exclusion orders it issues as to the relevant patent claims;
- Conversely, if the PTAB decision follows the ITC’s final determination, the ITC will decline to stay or suspend its exclusion orders pending Federal Circuit review of the PTAB decision.
This case law thus reemphasizes the importance of timing in Section 337 in relation to related IPR proceedings pending before the PTAB.
ITC Decisions Suspending Enforcement of Remedial Orders
The ITC’s suspension of remedial orders in Unmanned Aerial Vehicles conforms with its past practice. In Certain Three-Dimensional Cinema Systems & Components Thereof (“3D Cinema Systems”), the ITC found a violation of Section 337 based on infringement of three patents.4 One of those patents, however, was challenged in a PTAB inter partes review proceeding, resulting in a final written decision finding the relevant claims unpatentable.5 In terms of the ITC’s 3D Cinema Systems investigation, the PTAB’s decision came after the ALJ’s initial determination but before the Commission’s final determination. Although the ITC declined to find issue preclusion based on the PTAB decision,6 it nevertheless suspended enforcement of its remedial orders as to the patent claims at issue in the PTAB’s decision,7 with remedial orders as to the other two asserted patents going into effect.
Similarly, in Certain Magnetic Tape Cartridges & Components Thereof (“Magnetic Tape Cartridges”), the ITC suspended enforcement of remedial orders as to one claim from one of two asserted patents after the PTAB found that claim unpatentable after the ALJ’s initial determination but before the ITC’s final determination.8 Like 3D Cinema Systems, suspending enforcement had “no practical effect” because the PTAB’s decision implicated only one of the asserted patents.9 Notably, the Commission distinguished the legal standard for suspending enforcement of its remedial orders, which “derive[s] from the Commission’s ‘broad discretion in selecting the form, scope and extent of the remedy,’” from the standard for a stay pending appeal, under which the party requesting the stay bears the burden of showing that the circumstances warrant one.10
ITC Decisions Declining to Stay Enforcement of Remedial Orders Pending Appeal of PTAB Unpatentability Decisions
In contrast with these decisions, the Commission has declined to stay or temporarily rescind remedial orders based on a subsequent decision by the PTAB finding asserted claims unpatentable.11 In Certain Network Devices, Related Software & Components Thereof (“Network Devices”), the Commission rejected a respondent’s request to suspend or stay enforcement of remedial orders based on a PTAB final written decision of unpatentability.12 Noting Section 337’s lack of a provision “for suspending remedial orders subsequent to their issuance,”13 the Commission considered whether to temporarily rescind its remedial orders. It decided that under Section 337, the PTAB’s “final written decisions do not constitute a changed circumstance such that the remedial orders should be rescinded. . . .”14 The Commission also declined to stay its remedial orders,15 concluding that the respondent failed to satisfy the traditional four-prong test from Standard Havens Products, Inc. v. Gencor Industries. Inc.16 Although the Commission stated that it could take no action until the Patent Office canceled the claims at issue, it ultimately suspended its remedial orders after the Federal Circuit affirmed the PTAB’s decision.17
Likewise, in Certain Road Construction Machines & Components Thereof (“Road Construction Machines”), the Commission rejected the respondents’ renewed motion to stay remedial orders based on a PTAB final written decision finding the asserted claims unpatentable because it did not constitute changed circumstances.18 In denying the motion, the Commission explained that such decisions “are neither final nor binding” and thus are “insufficient to support a likelihood of success on the merits,”19 warranting a stay.
Unmanned Aerial Vehicles Fits Within the ITC’s Previous Framework for Suspending Enforcement Based on PTAB Unpatentability Decisions
Unmanned Aerial Vehicles fits comfortably within the framework established by decisions discussed above. That investigation concerned allegations of infringement of three patents, including U.S. Patent No. 9,260,184 (the “’184 patent”). Seven months after the ITC instituted the investigation on October 2, 2018, the PTAB instituted an inter partes review proceeding directed to the ’184 patent on May 22, 2019.20 After an evidentiary hearing, the ALJ issued an initial determination finding the respondents violated Section 337 by infringing claim 1 of the ’184 patent; the ALJ found no violation as to the other two asserted patents.21 While both parties’ petitions to the Commission for review remained pending, the PTAB issued its a final written determination finding the ’184 patent’s claims unpatentable.22 After respondents’ counsel notified the Commission of the PTAB decision, the Commission asked the parties to brief the effect of the decision on the ITC investigation, “including any impact on the issuance of relief.”23
On review, the Commission found the respondents violated Section 337 by infringing two patent claims—claims 1 and 2 of the ’184 patent—and issued limited exclusion and cease-and-desist orders.24 But the Commission suspended enforcement of those remedial orders based on the PTAB’s final written decision finding claims 1 and 2 unpatentable. In doing so, the ITC recognized the PTO as “the lead agency in assessing patentability, or validity, of proposed or issued claims” and Congress’s goal for IPRs to provide “a quick, inexpensive, and reliable alternative to district court litigation to resolve questions of patent validity.”25 The ITC also noted its past determinations regarding PTAB unpatentability decisions. In particular, it distinguished Network Devices because it concerned a PTAB final written decision that followed after the ITC had issued remedial orders, as opposed to cases like 3D Cinema Systems and Magnetic Tape Cartridges in which the remedial orders preceded PTAB unpatentability decisions.
Although the ITC’s suspension of enforcement of remedial orders in Unmanned Aerial Vehicles seems momentous, it nestles snugly within the ITC’s case law. As that case law makes clear, timing is everything. The ITC has greater discretion under Section 337 to take account of PTAB decisions regarding unpatentability before it has issued remedial orders and thus has taken heed of such decisions. By contrast, once the ITC has issued remedial orders, it has less discretion to stay or suspend enforcement, as it evaluates subsequently issued PTAB unpatentability decisions under Section 337’s “changed circumstances” standard or Standard Havens’ four-pronged test. Thus, in such cases, the ITC typically will wait for Federal Circuit review of the PTAB decision and possibly for Patent Office cancellation of any relevant patent claims before suspending or rescinding remedial orders.
The timing of Section 337 investigations vis-à-vis the PTAB is all the more important given the ITC’s practice of declining to stay investigations based on co-pending IPR petitions and proceedings. While the Commission has acknowledged the Patent Office’s role as “the lead agency” for questions of patent validity, per Congress’s directives the Commission “shall investigate any alleged violation” of Section 337 and “shall conclude” such investigations “at the earliest practicable time . . .”26 The horse race regarding patent validity between ITC and PTAB that results from Section 337’s and the America Invents Act’s mandates should seem familiar to Section 337 practitioners: patent complainants have incentives to move things quickly and to minimize delays, while patent respondents generally seek a more deliberate pace. Unmanned Aerial Vehicles did not so much create this horse race as further clarify the stakes.
September 18, 2020
1 Inv. No. 337-TA-1133, Comm’n Op. (Pub. Version) (Sept. 8, 2020).
2 Id. at 35-38; see also SZ DJI Technology Co. v. Autel Robotics USA, LLC, IPR2019-00343, Patent 9,260,184, Final Written Decision Determining All Challenged Claims Unpatentable (May 21, 2020).
3 See, e.g., Certain Magnetic Tape Cartridges & Components Thereof, Inv. No. 337-TA-1058, Comm’n Op. (Pub. Version) at 62-63 (Apr. 9, 2019); Certain Three-Dimensional Cinema Sys. & Components Thereof, Inv. No. 337-TA-939, Comm’n Op. (Pub. Version) at 60 (July 21, 2016); see also 5 U.S.C. § 705 (“When an agency finds that justice so requires, it may postpone the effective date of action taken by it, pending judicial review.”).
4 Inv. No. 337-TA-939, Comm’n Op. at 1.
5 Id. at 5.
6 Id at 53–56 (Aug. 23, 2016) (citing B&B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 1299 (2015)). The Commission concluded issue preclusion based on a PTAB Final Written Decision did not apply and recognized “[o]ne of the exceptions to the general rule of issue preclusion is whether the ‘party against whom preclusion is sought had a significant heavier burden of persuasion with respect to the issue in the initial action than in the subsequent action…or the adversary has a significantly heavier burden than in the first action.” Id. at 53-54 (quoting Restatement (Second) of the Law of Judgments § 28 and B&B Hardware, Inc., at 1306). First, “[t]he PTAB and the Commission apply different legal standards for claim construction. The PTAB gives a patent claim its ‘broadest reasonable construction in light of the specification,’ 37 C.F.R. § 41.100, whereas the Commission applies the standard set forth by Phillips under which claims are construed in view of the claim language, the specification, and the prosecution history, 415 F.3d at 1317-18.” Id. Second, “[a] petitioner before the PTAB bears the burden of proving unpatentability of a patent claim by a preponderance of the evidence” whereas “a respondent challenging a patent before the Commission bears the burden of proving invalidity by clear and convincing evidence.” Id.
7 Id. at 60-61.
8 Inv. No. 337-TA-1058, Comm’n Op. at 62-63.
10 Id. at 61-62 (citing Three-Dimensional Cinema, Comm’n Op. at 60 (citing Viscofan, S.A. v. Int’l Trade Comm’n, 787 F.2d 544, 548 (Fed. Cir. 1986))).
11 See, e.g., Certain Network Devices, Related Software & Components Thereof (“Network Devices”), Inv. No. 337-TA-945, Comm’n Op. (Pub. Version) (Aug. 16, 2017); Certain Road Construction Machs. & Components Thereof, Inv. No. 337-TA-1088, Comm’n Order (Jan. 31, 2020).
12 Inv. No. 337-TA-945, Comm’n Op. at 12 (Aug. 16, 2017).
13 Id. at 9, n.15.
14 Id. at 9-14 (citing 19 U.S.C. § 1337(k); 19 C.F.R. § 210.76(a)).
15 Id. at 18-19.
16 897 F.2d 511 (Fed. Cir. 1990); see also Network Devices, Inv. No. 337-TA-945, Comm’n Op. at 18-19 (“The traditional four-prong test for determining whether a stay is warranted includes: (1) likelihood of success on the merits, (2) irreparable harm to the movant in the absence of a stay, (3) balance of harms, and (4) consideration of the public interest.” (citing Standard Havens, 897 F.2d at 512)).
17 Inv. No. 337-TA-945, Comm’n Order (Apr. 5, 2018).
18 Inv. No. 337-TA-1088, Comm’n Order at 1 (Jan.31, 2020).
19 Id. at 5 (citations omitted).
20 Inv. No. 337-TA-1133, Comm’n Op at 2; see also SZ DJI Technology Co. v. Autel Robotics USA, LLC, IPR2019-00343, Patent 9,260,184, Final Written Decision Determining All Challenged Claims Unpatentable at 2 (May 21, 2020).
21 Inv. No. 337-TA-1133, Initial Determination (March 2, 2020).
22 Inv. No. 337-TA-1133, Respondent’s Letter from S. Brittingham, Esq. to Secretary Barton (May 29, 2020); see also SZ DJI Technology Co. v. Autel Robotics USA, LLC, IPR2019-00343, Patent 9,260,184, Final Written Decision Determining All Challenged Claims Unpatentable (May 21, 2020).
23 Inv. No. 337-TA-1133, Comm’n Notice at 3 (June 9, 2020).
24 Inv. No. 337-TA-1133, Comm’n Op. at 39.
25 Id. at 37-38 (citing S. REP. NO. 110-259, at 20 (2008); Three-Dimensional Cinema Sys., 2016 WL 7635412 at *32 (citing H.R. REP. NO. 112-98, at 48 (2011))).
26 19 U.S.C. § 1337(b)(1).