New Complaint

On August 9, the ITC received a new Section 337 complaint from Innovation Sciences, a patent licensing company that has spent the last few years asserting numerous patents related to smart home products against Amazon and a number of other device makers in federal court.

The entity has sued numerous device makers and home security companies over the last four years, with most lawsuits resulting in findings of non-infringement or invalidity. Yet it seems Innovation Sciences holds still more patents it is willing to assert in whatever forum it can.

This ITC complaint (vaguely captioned Wireless Communication Devices and Related Components Thereof) names HTC and Resideo, which makes Honeywell-brand smart home hubs and sensors. The asserted patents describe the use of a wireless device to communicate with and control other devices. These patents may suffer from the same weaknesses and deficiencies as the complainant’s previously asserted patents.

As a nonpracticing entity, the complainant is hoping to rely on the investments of a third-party licensee to satisfy the domestic industry requirement of Section 337. This practice of establishing domestic industry by subpoena has become an increasingly common tactic for licensing companies to get around Congress’s intent that Section 337 would empower the ITC “to adjudicate trade disputes . . . on behalf of an industry in the United States.”

In this case, the company being hauled to the agency as a domestic industry is LG, who manufactures washing machines in the United States, some of which can connect to the internet through a wifi network. These washing machines certainly do not compete with HTC phones or Honeywell home security devices. But as long as they practice at least one claim of each asserted patent, the Commission will likely allow the complainant to appropriate LG’s washing machine business to pretend that an exclusion order in this investigation would serve the interests of a domestic industry.

Request not to institute

The Commission is still considering whether to institute an investigation based on a complaint filed by New U Life against a group of companies the dietary supplement seller claims are operating as a “patent cartel.” The proposed respondents in Exogenous Beta-Hydroxybutyrate have submitted a request that the ITC not institute the investigation, which they describe as “deeply flawed on many levels.”

The product is made domestically and the Complaint is devoid of any relevant facts as to what ingredients are actually imported.

. . .

The only injury Complainant claims to have suffered is that it was supposedly “forced to take expensive measures (including filing IPR2019-01141 and this Complaint)” in response to receiving two cease and desist letters from proposed respondents.

. . .

Any injury that Complainant could have suffered from the receipt of two cease and desist letters would not be caused by unfair imports, or any imports at all.

. . .

The act of sending two cease and desist letters to an infringer does not constitute unlawful antitrust conduct under a rule of reason, per se, or any other recognized antitrust law.

. . .

The doctrines of “patent misuse” and “patent exhaustion” are affirmative defenses, not causes of action that can be affirmatively pled.

As noted in a previous post, antitrust-based Section 337 complaints are rare and difficult to succeed at. This complaint from New U Life seems like a poor candidate to break the trend.

Final Initial Determination

A Final Initial Determination of no violation was recently issued by the administrative law judge in Strontium-Rubidium Radioisotope Infusion Systems (Inv. 1110). The investigation involved machines used to infuse rubidium, a radioactive substance, into patients during a PET scan. Complainant Bracco holds a series of patents for an infusion system that automatically checks to ensure that patients are not accidentally infused with strontium, a much more dangerous chemical used to create rubidium in the infusion machine. The ALJ found no violation after determining that all three of the patents asserted against respondent Jubilant were invalid as obvious.

The patent owner had argued that respondents should not be allowed to challenge the validity of the patents under a theory of assignor estoppel. Generally, a person or entity that previously held rights under the patent and assigned those rights to someone else is not permitted to challenge the validity of the patent in subsequent litigation. The ALJ in this investigation refused to apply the rule of assignor estoppel where Bracco’s argument was that Jubilant employed one the patents’ named inventors who had earlier assigned her rights to Bracco.

But the ALJ also said that even if Jubilant had been prohibited from challenging the validity of the patent, he could still find the patent invalid because the ITC’s Office of Unfair Import Investigations, which participated in the case and sided with Jubilant on the validity issue, was not prohibited from making such a challenge. If this reasoning is applied in other cases, it would give ITC litigants an odd advantage to bypass a variety of rules against inequitable conduct in litigation whenever ITC staff agree with the substance of their argument. An advantage that would not be available in most ITC investigations—only those to which OUII is assigned to participate—and never available in district court.

Termination with Consent Order

The ITC has terminated its investigation in LED Packages Containing PFS Phosphor (Inv. 1156) after complaint GE and respondent Cree reached a settlement. The products at issue in the case were LED light bulbs meant for commercial use and capable of efficiently producing the best of color of light to make products look nicer on a shelf.

The parties’ settlement resulted in a consent order. The ITC issues consent orders when a respondent voluntarily promises not to import the accused articles so long as the asserted patents remain valid and enforceable. Violating a consent order can result in fines and penalties similar to violating an exclusion order.

This particular settlement happened so quickly, the investigation was over before it really began. While the complaint was filed in April (concurrently with a lawsuit in district court) and the Commission’s final determination to terminate the investigation was issued four months later in August, the respondent never even submitted an official answer to the complaint and the investigation was only active (from institution to stay of the procedural schedule) for 11 days.

Featured Publications