By: Alex Li and David Maiorana – In a recent Enforcement Initial Determination, ALJ Shaw held that Sony had violated previously issued cease and desist orders (“CDOs”) and determined that the appropriate penalty was a fine of $210,134 – Sony’s net profit from those sales in violation of the CDOs.  Certain Magnetic Data Storage Tapes and Cartridges Containing the Same, Inv. 337-TA-1012, Enforcement Initial Determination (July 3, 2019).

In the underlying investigation, the ITC found a Section 337 violation and issued a limited exclusion order (LEO) and CDOs against Sony.  The CDOs prohibited Sony from “importing, selling, marketing, advertising, distributing, transferring (except for exportation), and soliciting United States agents or distributors for certain magnetic data storage tapes and cartridges.”  The CDOs took effect on May 8, 2018, at the end of a sixty-day Presidential Review Period.  Almost immediately thereafter, Fujifilm filed a complaint requesting the ITC to institute a formal enforcement proceeding and alleged that Sony had violated the CDOs by continuing to sell infringing products from May 8 to May 10, 2018.

In response, Sony explained to the ITC that its sales on May 8 and May 9, 2018 were inadvertent and were mostly caused by delayed shipments that arrived at the buyers after May 7, 2018.  But ALJ Shaw noted that Sony had shipped some infringing products as late as May 7, 2018 and he reasoned that Sony “at least knew that some of its shipments would arrive after May 7, 2018, and did not prevent such shipments.”  He therefore found that Sony made these sales in violation of the CDOs.

Regarding the May 10th sale, Sony explained that it had tendered the cartridges to FedEx on May 3, 2019.  The shipment only arrived at the buyer on May 10, 2018 because the buyer had provided an incorrect shipping address when placing the order.  With respect to this sale, ALJ Shaw noted that Sony bore the risk of loss until delivery under the sales contract, and had the obligation to deliver the products by placing them at the disposal of the buyer.  Title to the products, according to ALJ Shaw, did not pass to the buyer until May 10, 2019.

ALJ Shaw therefore found Sony had violated the CDOs by selling infringing products on three separate days beyond the Presidential Review Period.  As to the appropriate penalty for the violations, ALJ Shaw found that “Sony took affirmative steps to comply with the prohibitions of the CDOs,” and the violations were “attributable to factors outside Sony’s control.”  Notwithstanding this, ALJ Shaw emphasized that, “the Commission’s authority must be vindicated.”  He determined that the appropriate penalty was $210,134, which was Sony’s net profits from the sales held to be in violations of the CDOs.


This case emphasizes the importance for respondents to be aware of their corporate activities to ensure compliance with CDOs.  While respondents rightfully focus on the LEO, CDOs can also include significant elements of the ITC remedy and, depending on the particulars of the supply chain, may in fact include the more important elements of the overall remedy.  19 U.S.C. 1337(f) authorizes the ITC to impose penalties equal to the greater of $100,000 or twice the value of the relevant articles per day in violation of a remedial order and this decision clearly demonstrates the ITC’s willingness to impose significant fines for such violations.

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Dave Maiorana is a trial lawyer with a notable combination of significant experience as a USPTO examiner along with 20 years litigating complex intellectual property matters. He has represented clients as both plaintiffs and defendants around the country and in the ITC. Dave has experience in diverse technology areas, including teeth whitening, diapers, fem care products, self-inflating tires, oxygen concentrators, flash memory, and digital cameras.