Sunday, March 17, 2013

Patents Sneak into the Court of International Trade

I have been sitting on Corning Gilbert for a while. But, it is time we tackle it.

First some background. I fascinated by intellectual property law and initially planned to practice in that area. I even spent a little time in a firm doing copyright work. But, I had the great opportunity to clerk at the Court of International Trade and never looked back. Except that I did manage to get an LL.M. in Intellectual Property Law. Today, I get to exercise that knowledge and interest in cases involving the border enforcement of intellectual property rights by U.S. Customs and Border Protection. That almost always means copyright and trademarks. But, there are occasions when patent issues creep out of the International Trade Commission and into the Ports or the Court of International Trade. Corning Gilbert is one of those.

The case involves a decision by Customs and Border Protection to exclude certain coaxial cables from the commerce of the United States on the grounds that the connectors are within the scope of a General Exclusion Order ("GEO") issued by the International Trade Commission. The GEO prohibits the entry of merchandise infringing claims 1 or 2 of this patent (click to see what we're talking about).

When Customs excluded the goods, the importer filed an administrative protest with an Application for Further Review. That resulted in a ruling and a denied protest. The denied protest is appealable to the Court of International Trade, which is exactly what Corning Gilbert did.

In Court, there were three issues. First, whether the ruling Customs issued is entitled to judicial deference. In customs cases involving a denied protest, a ruling may be entitled to deference if it is logical, consistent, and otherwise has the power to persuade the Court. In this case, the Court did not find the ruling to be persuasive and gave it no deference. The reasons for this are quite technical and relate to the nature of the original action at the ITC.

A domestic rights holder can bring an action in the ITC to prevent the importation of merchandise that infringes a patent, trademark, copyright, or certain other rights. These are brought under 19 U.S.C. § 1337 and they are called "337 cases." In the vast majority of 337 cases, the ITC hears patent-related cases. If the rights holder is successful, the ITC can issue an Exclusion Order to preclude the importation of the subject merchandise. However, in other case, the ITC may provide broader relief and grant a General Exclusion Order covering infringing merchandise in general. A GEO covers goods the ITC specifically found to be infringing and other infringing goods. The decision as to what other goods are infringing is left to Customs and Border Protection, which has to enforce the order. In this case, Corning Gilbert was not a party to the 337 action and its merchandise was never considered by the ITC. Further, when Customs reviewed the merchandise, it did not do a thorough analysis of the patent claims (the legal definition of the invention) to determine whether the Corning Gilbert merchandise infringed. Consequently, the Court of International Trade found the CBP ruling to be unpersuasive.

The second step in the Court's analysis was to construe the patent claims to determine exactly what is protected. That is a necessary step before deciding whether the imported goods infringe the protected invention. In this case, the Court found that the critical element of the invention was a cylindrical body member of the relevant coaxial connector.

 


Finally, the Court had to determine whether the imported merchandise infringed the patent. Finding that the imported merchandise does not include a deformable cylindrical body member as described in the properly construed patent claims, the Court concluded that the imported goods do not infringe the patent. Consequently, Customs improperly excluded the goods from the U.S.

There are a couple of things that follow from this case worth noting. First, the actual patent holder was not involved. This is because the case arises out of a denied protest. The importer made the protest and became the plaintiff. Customs denied the protest and became the defendant. The only role for the patent holder would be as an amicus third party, which did not happen in this case.

Second, note that the importer may have benefited from not participating in the ITC proceeding. Had it done so, the ITC might have rules specifically with respect to its products. That would have made the CBP ruling far more persuasive and might have turned the case. That raises a question as to whether the best strategy for an importer might be to ignore the ITC and fight the good fight with Customs and in the CIT. I don't know the answer to that, but I suspect we will find out over time.

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