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Demystifying Appeals from the ITC to the United States Court of Appeals for the Federal Circuit

October 16, 2013

Litigation Webinar Series: INSIGHTSOur take on litigation and trial developments across the U.S.

The Honorable Paul R. MichelChief Judge, United States Court of Appeals for the Federal Circuit (Retired)

John A. DragsethPrincipal, Fish & Richardson Twin Cities

Lauren A. Degnan Principal, Fish & RichardsonWashington, D.C.

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Overview

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• Background on International Trade Commission Section 337 Investigations

• Federal Circuit’s Jurisdiction of Appeals Therefrom• Timeline of an ITC Appeal to the Federal Circuit• Interplay with ITC General Counsel• Stays Pending Appeal• Preserving Issues for Appeal• Standard of Review• Preclusive Effect of Federal Circuit Decisions• Confidentiality

Appeals from the ITC

Agenda

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• The U.S. International Trade Commission is an independent, nonpartisan, quasi‐judicial federal agency that provides trade expertise to both the legislative and executive branches of government, determines the impact of imports on U.S. industries, and directs actions against certain unfair trade practices, such as patent, trademark, and copyright infringement

• Headed by six commissioners; terms are nine years• Nominated by president and confirmed by Senate• No more than three from one political party• Chairman and vice chairman from different parties; serve two‐year terms


The International Trade Commission

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• Investigations of alleged unfair trade practice based on infringement of intellectual property rights are brought under Section 337 of the Tariff Act (19 U.S.C. § 1337)

• Purpose of Statute: To stop the importation into the U.S., the sale for importation, or the sale in the U.S. after importation of articles that infringe a valid and enforceable U.S. patent or infringe some other intellectual property right

• Remedy: Prospective relief only, no monetary damages• Exclusion orders enforced at the borders by U.S. Customs and Border

Protection• Cease and Desist Orders enforced in the U.S. by the ITC for illegal U.S. sales

activity


Section 337 of the Tariff Act

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• Complainant• Party seeking relief from the ITC• IP owner

• Respondent• Party charged with violating § 337• Alleged infringer


Players

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Private Parties

The Complainant

The Respondent

• Commissioners• Vote to institute• Review ID & make Final

Determination• General Counsel

• Makes recommendations to the Commission

• Represent the ITC on appeal

• Administrative Law Judge• Holds hearing• Makes Initial Determination on

violation & RD on remedy• OUII

• Participates in investigation


Players

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Private Parties

The Complainant

The Respondent

International Trade Commission

Commissioners General Counsel

Office of Unfair Import Investigations (OUII)

Administrative Law Judges (ALJs)

• President of the United States• Approves or disapproves of exclusion orders• Delegated to U.S. Trade Representative


Players

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Private Parties

The Complainant

The Respondent





President/U.S. Trade

Representative

• U.S. Court of Appeals for the Federal Circuit• Hears appeals from Final Determinations of the Commission under 19 U.S.C.

§ 1337


Players

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Private Parties

The Complainant

The Respondent





Federal Circuit

President/U.S. Trade

Representative

For more about INSIGHTS, visit our blog at fishlitigationblog.com.

• ALJ is required to make detailed findings of facts and conclusions of law on all contested issues and elements of a violation of Section 337, including underlying patent‐related issues such as:• Jurisdiction & Importation• Claim Construction• Infringement• Affirmative Defenses (e.g., Validity and Enforceability)• Domestic Industry (Technical and Economic)

• Final ID contains detailed legal analysis, the ALJ’s findings of facts (or citations to parties’ proposed findings), and conclusions of law


Final Initial Determination (ID) on Violation

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• Concurrently with the Final ID or within 14 days after the Final ID, the ALJ must issue the RD on remedy issues

• RD contains the ALJ’s proposed remedial orders in the event the ITC ultimately determines that there has been a violation of Section 337

• The RD must issue regardless of whether the ALJ finds a violation and usually addresses:• Exclusion Order (Limited or General); Cease & Desist Order; Certification

process• Bond amount during Presidential Review period


Recommended Determination (RD) on Remedy

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• Review of the Final ID by the Commissioners• The Commission’s decision on whether to grant a petition for review is due

no later than 60 days after service of the ID on the parties. (19 C.F.R. § 210.43(d))

• Review granted if at least one Commissioner votes to review. (19 C.F.R. § 210.44)

• If a petition for review is denied, the ALJ’s Final ID is adopted and becomes the ITC’s Final Determination. (19 C.F.R. § 210.42(h))

• At its discretion, the Commission can adopt, modify, or reverse the ALJ’s Final ID in whole or in part. Commission can also remand to the ALJ for further determination.


Appeal Round 1 – Petition of the Final ID

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• President has 60 days to review ITC’s determination of violation and approve or disapprove the remedy for policy reasons

• Delegated to U.S. Trade Representative• Cannot modify; can only approve or disapprove• Rarely occurs

• Only six times in over 600 Section 337 investigations, and three of those disapprovals resulted in the remedy being modified

• August 2013 Samsung/Apple case was first time since 1987• Standard essential patents


Appeal Round 2 – Presidential Review

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Round 3 – Appeal to the Federal Circuit

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• Federal Circuit has jurisdiction to review Final Determinations of the ITC under § 337• Final determinations of no violation of § 337• Exclusion orders under § 337(d)• Grant or denial of preliminary relief under § 337(e)• Cease and desist orders under 337(f)(1), civil penalties under 337(f)(2)• Default under 337(g)

• Special cases where Federal Circuit has jurisdiction• Orders equivalent to a final determination, see ImportMotors, Ltd. V. U.S. Int’l

Trade Comm’n, 530 F.2d 940 (CCPA 1976)• For example, terminations of investigations in favor of arbitration, see InterDigital

Commc’ns, LLC v. Int’l Trade Comm’n, 718 F.3d 1336 (Fed. Cir. 2013)• Modifications to exclusion orders, see Allied Corp. v. U.S. Int’l Trade Comm’n, 850

F.2d 1573, 1580 (Fed. Cir. 1988)


Federal Circuit Jurisdiction

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• Federal Circuit lacks jurisdiction over:• Non‐final determinations• Advisory opinions• ALJ determinations on which the Commission takes no position

• General Elect. Co. v. Int’l Trade Comm’n, 692 F.3d 1218 (Fed. Circ. 2012) (withdrawing previous opinion’s criticizing the ITC’s practice of removing issues from judicial review by taking no opinion on the ID’s treatment of them)

• Decisions by USTR to disapprove an exclusion order• Non‐adverse determinations

• Beloit Corp. v. Valmet OY, 742 F.3d 1421 (Fed. Cir. 1984) (noting that party who “won on the basic and dispostivie ‘no violation’ decision [noninfringement] . . . has no basis whatsoever for appeal”)


Federal Circuit Jurisdiction

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1/1/00 Notice of Appeal

1/15/00 Appeal Docketed

3/16/00 Appellant (Blue) Brief Due

4/28/00 Appellee/Intervenor Briefs (Red) Due

5/10/00 Reply (Gray) Brief Due

6/3/00 Appendix Due

9/1/00 Oral Argument

2/15/01 Rehearing Petition Due

1/1/01 Opinion Issues

Federal Circuit Appeal Timeline(no extensions & no cross‐appeals = 12‐13 months)

ITC Appeal Timeline(6.5 months)

Day 1 Final ID

12 Working Days Appeals to Comm’n

60 Calendar Days Comm’n Decides

60 Calendar Days Notice of Appeal Due

60 Calendar Days Comm’n Decision Due

60 Calendar Days President Considers Exclusion Order

• After the ALJ issues a final ID, losing parties must file their petitions for Commission review within 12 calendar days.• The response is due within eight calendar days from service of any petition.

• The commission will determine weather to review the ALJ’s decision within 60 calendar days of its issuance.

• If commission decides to review, then Final Determination is due 60 days from that decision.

• Timing of appeal to the Federal Circuit• If no violation found: within 60 days of the Commission’s decision• If violation found: within 60 days after the Presidential review

• Briefing schedule• 60 days to file appellant’s brief• 40 days to file appellee’s brief and inventor’s brief• 14 days to file appellant’s reply


Timeline of an ITC Appeal

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• Oral argument is typically two‐three months after briefing is completed• Federal Circuit’s decision

• If affirmed without opinion, two‐seven days• Otherwise, typically two‐six months for a decision

• Rehearing• Petitions must be filed within 45 days after entry of judgment

• In total, the average ITC appeal takes 15 months from docketing to disposition—the longest out of any type of appeal on the Federal Circuit docket• See http://www.cafc.uscourts.gov/images/stories/the‐

court/statistics/Median_Disposition_Time_Table_2003‐2012.pdf• Expedited Appeals

• A party may move under Federal Circuit Rule 27 to expedite the appeal• A party may also self‐expedite the appeal by filing its briefs early


Timeline of an ITC Appeal

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• Parties on Appeal• Losing party before the Commission is the Appellant• The Commission is the Appellee

• General Counsel represents the Commission• Winning party before the Commission is an Intervenor

• Must file a motion to intervene• Routinely granted; rarely opposed

• Sometimes Two Appeals• One where the Complainant is the Appellant and the Respondent is the

Intervenor• A parallel appeal where the Respondent is the Appellant and the Complainant is

the Intervenor• Not consolidated because they are not true cross‐appeals • Deemed related by the clerk’s office and usually heard by the same panel


Interplay with the ITC General Counsel

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• Briefing• Appellee allowed 14,000 words in red brief• Intervenor allowed 14,000 words in green brief• Appellee and Intervenor typically coordinate

• Oral Argument• Time is split by agreement• Intervenor may file a motion for additional time• Appellee and Intervenor typically coordinate the argument


Interplay with the ITC General Counsel


• ITC exclusion orders can be stayed pending appeal• Motion not ripe until after Presidential Review period• Motions for a stay of an exclusion order pending appeal are

subject to the same requirements for stays of a district court injunction pending appeal

• Four‐factor test:• “(1) whether the stay applicant has made a strong showing that he is likely

to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.” Standard Havens Prods., Inc. v. Gencor Indus., Inc., 897 F.2d 511, 513 (Fed. Cir. 1990)


Stays Pending Appeal

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• Example: Kyocera Wireless Corp. v. Int’l Trade Comm’n, 545 F.3d 1340 (Fed. Cir. 2008)• Appeal from the Qualcomm/Broadcom 543 investigation• Obtained a stay of the ITC’s limited exclusion as to LG and other handset

manufacturers• The court found a stay was warranted because the handset manufacturers

“have shown a substantial case on the merits and . . . the harm factors weigh in their favor”

• The court denied a stay as to Qualcomm


Stays Pending Appeal

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• “A party’s failure to file a petition for review of an initial determination shall constitute abandonment of all issues decided adversely to that party in the initial determination.” 19 C.F.R. § 210.43(b)(4)• Failure to petition waives the issue before the Commission and on subsequent

appeal to the Federal Circuit• Applies even if the party prevailed overall before the ALJ

• See § 210.43(b)(2) on “contingent” petitions for review

• Any issues not raised and any arguments not relied upon in the petition for review are also waived. § 210.43(b)(2)

• See Finnigan Corp. v. Int'l Trade Comm'n, 180 F.3d 1354, 1362 (Fed.Cir.1999) (“A party seeking review in this court of a determination by the Commission must ‘specifically assert’ the error made by the ALJ in its petition for review to the Commission.”)


Preserving Issues

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• Cross‐Appeals / Intervention• No cross‐appeals• Rather, the prevailing party should move to intervene under FRAP 15(d) to

preserve alternative grounds of affirmance.• Surface Tech., Inc. v. Int’l Trade Comm’n, 780 F.2d 29 (Fed. Cir. 1985) (An

intervenor “may raise any claim in support of the ITC’s determination of no violation.”).

• Other potential sources of waiver• Arguments not raised in a party’s opening brief. See Becton Dickinson & Co.

v. C.R. Bard, Inc., 922 F.2d 792, 800 (Fed. Cir. 1990) (“[A]n issue not raised by an appellant in its opening brief . . . is waived.”); but see id. (noting that “[t]his practice . . . may as a matter of discretion not be adhered to where ... it would result in basically unfair procedure”).


Preserving Issues

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• Other potential sources of waiver• Arguments raised only in footnotes. e.g., Otsuka Pharm. Co. v. Sandoz, Inc., 678

F.3d 1280, 1294 (Fed. Cir. 2012) (“Arguments raised only in footnotes . . . are waived.”)

• Arguments raised only in non‐argument sections of a brief. e.g., Kao Corp. v. Unilever U.S., Inc., 441 F.3d 963, 973 n.4 (Fed. Cir. 2006) (“Neither the statement of the issues presented, nor the summary of the argument, nor the argument section [of the appellant’s brief] sets forth any substantive discussion of claim construction. We therefore decline to consider any challenge to the district court’s claim construction.”)

• “Skeletal” or underdeveloped arguments at any stage in the litigation; see, e.g., SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312, 1320 (Fed. Cir. 2006) (“‘A skeletal argument . . . does not preserve a claim . . . . Judges are not like pigs, hunting for truffles buried in briefs.’”) (quoting United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991))


Preserving Issues

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• Factual findings are reviewed for “substantial evidence” • Substantial evidence is “such relevant evidence as a reasonable mind might

accept as adequate to support a conclusion.” Consolidated Edison Co. v. NLRB, 305 U.S. 197 (1938).

• Discretionary remedy determinations are reviewed to determine whether they are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” 5 U.S.C. § 706(2)(A) • Example: In Spansion, Inc. v. Int’l Trade Comm’n, 629 F.3d 1331 (Fed. Cir.

2010), the Federal Circuit held that a challenge to the ITC’s consideration of the public interest factors under § 337(d)(1) in issuing a limited exclusion order was subject to review under the arbitrary or capricious standard.


Standard of Review


• Questions of Law• In general, questions of law are reviewed without deference.

• Statutory Interpretation• Statutory interpretation, a question of law, generally reviewed de novo.• However, “[d]eference must be given to an interpretation of a statute by the

agency charged with its administration.” Corning Glass Works v. U.S. Int’l Trade Comm’n, 799 F.2d 1559, 1565 (Fed. Cir. 1986).

• Because the ITC is charged with administering § 337, its interpretation of its provisions are entitled to Chevron deference.

• The ITC is not charged with administering the patent laws, so its interpretations of the Patent Act receive no deference.

• Regulations• The ITC’s interpretation of its own regulations will be upheld “unless it is plainly

erroneous or inconsistent with the regulation.” See Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945).


Standard of Review

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• The Commission’s patent‐based determinations do not bind other tribunals • No deference; Commission administers trade laws, not patent laws• Patent‐based determinations affirmed by the Federal Circuit do not have

preclusive effect, though legal determinations of the Federal Circuit may have stare decisis effect unless there are “thoroughly justified grounds” for departing from a prior holding. See Texas Instruments Inc. v. Cypress Semiconductor Corp., 90 F.3d 1558, 1569 (Fed. Cir. 1996) (quoting S. Rep. No. 93‐1298, at 196 (1974)).

• Patent determinations only; unfair trade practice and trademark infringement determinations are res judicata.


Preclusion

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• Example 1: Patent Validity• An ITC determination that a patent is valid, affirmed by the Federal Circuit,

follows the general rule and has no preclusive effect in district court • What about a finding of invalidity?

• The same rule applies: no preclusion. See In re Convertible Rowing Exerciser Patent Litig., 903 F.2d 822 (Fed. Cir. 1990); In re Convertible Rowing Exerciser Patent Litig., 721 F. Supp. 596 (D. Del. 1989)


Preclusion

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• Example 2: Claim Construction• District courts have varying approaches to Federal Circuit claim construction

decisions rendered on appeal from the ITC• Thomson Consumer Elecs., Inc. v. Innovatron, S.A., 3 F. Supp.2d 49, 51 (D.D.C.

1998) (“[I]n practical terms the stare decisis effect of appellate review of the ITC construction would have near‐preclusive effect.”)

• Alloc, Inc. v. Norman D. Lifton Co., 2007 WL 2089303, at *11 (S.D.N.Y. July 18, 2007) (“strong presumption of correctness”)

• Minnesota Mining and Mfg. Co. v. Beautone Specialties Co., 117 F. Supp. 2d 72, 83 (D. Mass. 1999) (no preclusive effect)

• The Federal Circuit has not itself addressed the issue


Preclusion

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• Commission determinations may be persuasive in district court litigation• Apple, Inc. v. Motorola Mobility, Inc., No. 11‐cv‐178, 2012 WL 5416941 (W.D.

Wisc. Oct. 29, 2012) (noting that “findings by the commission can be considered by district courts for their persuasive value” and allowing parties to present evidence and arguments at trial relating to a commission decision)

• Fuji Photo Film Co. v. Jazz Photo Corp., 173 F. Supp. 2d 268 (D.N.J. 2001) (affording “both the factual and legal findings” of the ITC and the Federal Circuit on appeal “persuasive value only”)


Preclusion

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• ITC proceedings under § 337 are subject to administrative protective orders that tightly restrict disclosure of confidential business information• Severe sanctions for violating orders, including permanent disqualification

from practicing in any capacity before the Commission under 19 C.F.R. § 201.15(a) for serious violations; see 19 C.F.R. 201.34(c)

• When briefs at the Federal Circuit contain material subject to a protective order, the party filing the brief must file two sets of briefs—a confidential set in which the confidential material is highlighted or bracketed, and a nonconfidential set from which the confidential material is deleted; see Fed. Cir. R. 28(d)


Confidentiality

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• Pay careful attention to confidentiality markings in all filings• Under‐designation of confidential material could result in sanctions for a

violation of the ITC’s protective order; see 19 C.F.R. § 207.100• Over‐designation could result in sanctions for a violation of Federal Circuit

Rule 28(d); see In re Violation of Rule 28(d), 635 F.3d 1352 (Fed. Cir. 2011) (imposing sanctions for “extensive confidentiality markings pertaining to case citations, direct quotations from published opinions of the cases cited, and legal argument, none of which appear to fall under the protective order entered by the district court”)

• Confidentiality at oral argument• Federal Circuit is reluctant to close the courtroom for oral argument• Expect questions regarding designation of confidential information• The court’s opinions are public


Confidentiality

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INSIGHTS Litigation Webinar Series

Our INSIGHTS webinar series is the upshot of the litigation group’s deep experience in a multitude of forums in the United States–from the International Trade Commission to the Delaware Court of Chancery to the Eastern District of Texas, and more. In this series, we explore cases and trends that are shaping the legal landscape, and we provide a window into the ways that we think about information and intelligence to formulate crucial litigation strategies.

fishlitigationblog.com/webinars


Questions?

Thank You!

Fish & Richardson extends a special thank‐you to The Honorable Paul R. Michel

Lauren DegnanPrincipal, Fish & Richardson(202) 626‐[email protected]

John DragsethPrincipal, Fish & Richardson(612) 337‐[email protected]

Please send your NY CLE forms or questions about the webinar to Ellen at [email protected].

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© Copyright 2013 Fish & Richardson P.C. These materials may be considered advertising for legal services under the laws and rules of professional conduct of the jurisdictions in which we practice. The material contained in this presentation has been gathered by the lawyers at Fish & Richardson P.C. for informational purposes only, is not intended to be legal advice and does not establish an attorney‐client relationship. Legal advice of any nature should be sought from legal counsel. Unsolicited e‐mails and information sent to Fish & Richardson P.C. will not be considered confidential and do not create an attorney‐client relationship with Fish & Richardson P.C. or any of our attorneys. Furthermore, these communications and materials may be disclosed to others and may not receive a response. If you are not already a client of Fish & Richardson P.C., do not include any confidential information in this message. For more information about Fish & Richardson P.C. and our practices, please visit www.fr.com.

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