By: Levent Hergüner and Ryan McCrum – In an earlier post related to this investigation (here), we discussed the ITC’s recommendation that a general exclusion order issue for products infringing Complainant National Products Inc.’s (“NPI”) patents after all named respondents were found in default.  ALJ Bullock determined that a general exclusion order was appropriate because the anonymity involved made it near impossible to identify the source of infringing products.  See Certain Mounting Apparatuses For Holding Portable Electronic Devices And Components Thereof, Inv. No. 337-TA-1086, Order 15 (November 28, 2018).  Notably, he denied to extend the general exclusion order to NPI’s fifth patent (U.S. Patent No. 8,544,161) because there was no evidence that direct infringement had occurred.

On December 10, 2018, NPI petitioned for review of the initial determination’s finding of no direct infringement of the fifth patent, which claimed a method for mounting a portable device.  On March 18, 2019, the ITC issued a notice to (1) review-in-part the initial determination; (2) reverse and remand portions of the initial determination; and (3) extend the target date for completion of the investigation due to the federal government shutdown.  The notice stated that the Commission reviewed the finding that NPI did not establish direct infringement of the fifth patent by substantial, reliable, and probative evidence and decided to reverse that finding.

In the accompanying order, the Commission stated that it found enough evidence of direct infringement after considering the record in the investigation, NPI’s petition, and OUII’s response.  The Commission cited the Federal Circuit’s holding in Lucent Technologies, Inc. v. Gateway, Inc. that “a finding of infringement can rest on as little as one instance of the claimed method being performed during the pertinent time period.”  580 F.3d 1301, 1317 (Fed. Cir. 2009).  The Commission found that there was sufficient circumstantial evidence of actual use by others.  NPI’s expert testified that use of respondents’ accused products necessarily infringed the patent because their only use was to hold a portable device, such as a cellular phone, in an infringing manner.  The initial determination also concluded that “the only way in which to use the ’161 accused products to hold a portable electronic device is to perform the method steps recited in claim 1 of the ’161 patent.”  The Commission highlighted that the product listing depicted a cellphone inserted between the arms of the mounting device and customers comments referred to sales within the United States.  Accordingly, the Commission found that the record evidence was sufficient to establish direct infringement in view of Federal Circuit precedent and the initial determination’s findings.

The Commission remanded the case to the ALJ to make factual and legal findings with respect to NPI’s remaining assertions of induced and contributory infringement.  The Commission also extended the target date for the investigation to June 6, 2019, after accounting for tolling due to the government shutdown in December 2018 and January 2019.

Takeaway

This case highlights the risk associated with defaulting in an ITC investigation and demonstrates that complainants can successfully petition for review of initial determinations, even against defaulting respondents.

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Ryan McCrum, who co-chairs the Firm's intellectual property ITC practice, has nearly 20 years of experience handling high-stakes patent litigation. He has led teams from the initial filing of a complaint all the way through jury and bench trials. He has extensive experience examining witnesses of all types at trial, arguing claim construction and summary judgment hearings, and handling matters through appeal.