New Complaint Claims Sales Operation as Domestic Industry

The ITC received a new Section 337 complaint on October 7 captioned Argon Plasma Coagulation System Probes, Their Components, and Other Argon Plasma Coagulation System Components For Use Therewith. The complaint was filed by Erbe (a German medical device maker) and accuses Olympus (a Japanese medical device maker) of infringing four utility patents and one design patent related to a specific type of endoscopic probe used in medical procedures to treat various gastrointestinal disorders.

The two companies both appear to be foreign multinationals that design and manufacture their products abroad to sell in numerous national markets. Erbe’s U.S.–based investments it claims establish the existence of a domestic industry (as required by Section 337) are limited to sales and support activities. The complaint specifically mentions configuring products, training customers, and employing “customer service personnel to answer questions regarding product solutions and manage demonstration equipment.” These activities do not appear to be more extensive than what would be necessary for any foreign business to import and sell medical devices in the United States.

The complaint also accuses Olympus of engaging in a variety of anticompetitive behaviors, including offering kickbacks to doctors and unfairly bundling different products it sells to hospitals. Despite describing these activities in detail, Erbe’s complaint doesn’t actually claim that such activity forms the basis of Section 337 violation.

Erbe could theoretically have made an antitrust-based claim that Olympus violated Section 337 by engaging in non-IP-related “unfair methods of competition.” Perhaps they chose not to in light of the additional burden required in such cases under Section 337(a)(1)(A) to prove that the accused imports have caused substantial injury to a domestic industry. In any event, since it didn’t follow through with a complete claim for relief, Erbe’s antitrust allegations are probably irrelevant.

Passive-Aggressive Consent Order Stipulation

Back in April, Lighting Sciences Group submitted a particularly sprawling, 152-page complaint captioned Light-Emitting Diode Products, Systems, and Components Thereof. As noted by one of the named respondents, “LSG’s Complaint asserts eight separate patents with 60 asserted claims and names ten Respondent groups. . . . [And] the allegations therein relate to different technologies, different accused products on several levels of the supply chain, and different types of alleged unfair acts.” The ITC ultimately instituted three separate investigations based on that one complaint.

It’s inevitable when dealing with a far-reaching complaint like this that only some of the claims become central to the dispute while others end up being significantly less important. Belonging in the latter category is LSG’s non-patent-based claim that two of the respondents (GE and Leedarson) engaged in false advertising by importing some light bulbs bearing an Energy Star label despite allegedly not meeting the requirements of the Energy Star standard.

Leedarson responded to this allegation by arguing the the ITC lacks jurisdiction to adjudicate questions of compliance with Energy Star requirements, which must be handled by the EPA and the FTC through processes that the complainant had not taken advantage of. Leedarson also noted that the accused products were last manufactured and imported in 2015, but that LSG’s allegation is that the bulbs don’t meet the heightened requirements established by 2017 amendments to the Energy Star standard.

Rather than make substantive arguments like Leedarson, GE just submitted a proposed Consent Order declaring unilateral surrender.

In 2016, Respondents ceased importation of the 25037 SKU bearing the Energy Star® logo. Respondents do not maintain any inventory in the United States of the 25037 SKU bearing the Energy Star® logo. Accordingly, in an effort to streamline the Investigation, Respondents agree that upon entry of the proposed Consent Orders by the Commission, Respondents will not sell for importation, import into the United States, or sell in the United States after importation, directly or indirectly, or aid, abet, encourage, participate in, or induce the sale or importation of the 25037 SKU bearing the Energy Star® logo.

This is the legal equivalent of “sure, whatever.” The respondent has agreed not to do what it’s already not doing and doesn’t want to waste time and money defending itself in pointless litigation.

GE loses nothing and the ITC is spared having to adjudicate a kitchen-sink complaint that had nothing to do with the parties’ underlying patent dispute.

And LSG gains nothing either. Indeed, all of the respondents could agree to stop importing all of the accused products and LSG would still gain nothing, because it is a licensing company using ITC litigation simply to add pressure for a cash settlement in a dispute that is already being heard in federal district court.

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