Recent Federal Circuit Decision Limits ITC Authority to Block Importation of Goods Used to Infringe U.S. Patents

Last month, the Federal Circuit Court of Appeals issued an opinion that could have a significant impact on patent owners who seek International Trade Commission (ITC) exclusion orders to block the importation of goods used to infringe their patents.  In a 2-1 decision in Suprema, Inc. v. ITC, the Court held that the ITC cannot exclude goods from importation to the U.S. solely on the basis that the supplier of the goods actively induces parties in the U.S. to use the goods to infringe a U.S. patent.  Suprema, Inc. v. ITC, Case No. 2012-1170 (Slip Op. December 13, 2013).

The majority held that under the relevant statutes, the ITC only has the authority to block the importation of infringing articles.  The majority reasoned that articles that may be used to infringe a patent by persons in the U.S. are not infringing at the time of importation, and are thus outside of the exclusion order authority of the ITC.

The relevant patent claims in Suprema were method of use claims for detecting finger print images and their quality based on shape and area.  Suprema is a Korean company that manufactures scanning systems for capturing finger prints.  Another company, Mentalix, imported the Suprema scanners into the U.S. and then integrated the scanners with software allegedly used to infringe the patent claims.  As a result, the patent claims were only directly infringed once someone used the integrated software with the scanner to scan and detect finger print images, which occurred only after the scanners have arrived in the U.S. The Federal Circuit majority held that at the time the articles were imported, they were not “infringing articles” because no direct infringement had yet occurred.  The majority held that Section 19 U.S.C. § 1337(a)(1)(B)(i) “leaves the [ITC] powerless to remedy acts of induced infringement” in those situations where “the attendant direct infringement of the claimed method does not occur until post importation.”  Slip Opinion at 13.

One issue that remains cloudy after Suprema concerns contributory infringement. Under the patent statute, a supplier of an article that is especially adapted to perform a patented method and which has no substantial non-infringing uses can be liable for contributory infringement.  In a footnote, the majority suggested that its holding would not affect the application of contributory infringement to articles that are used to contributorily infringe a patent claim.  Slip Opinion at 21 n.4.  However, as noted by the dissent, the reasoning of the majority would seem to equally apply to claims of contributory infringement because at the time of importation, no act of direct infringement has occurred, and therefore, there are no “infringing articles” to exclude.  Dissent Opinion at 13 (“Whether obtaining a remedy for [contributory] method patent infringement continues to be viable at the [ITC] remains to be seen, in light of the majority’s broad holding that ‘there are no “’articles . . . that infringe’” at the time of importation when direct infringement has yet to occur.’”).

What does this mean for patent holders?

Many inventions can only be defined by a method of use claim.  This happens, for example, when an inventor develops a new use for an existing piece of equipment.  Suprema suggests that the ITC will not be able to exclude the importation of such equipment even if the overseas manufacturer and the U.S. importer specifically conspire to cause customers to infringe a patented method in the U.S. by using the imported equipment.

Patent owners are not completely without recourse, because they can sue the U.S. importer and downstream suppliers in federal court for acts of induced infringement occurring in the U.S. However, the ITC is typically a much faster procedure that allows a patent holder to seek relief in one consolidated proceeding against many foreign suppliers. Thus, Suprema could significantly diminish the usefulness of the ITC for some patent holders.

Given Suprema’s holding, it will be important to include apparatus claims–even if the real novelty lay in a method of use—in patent applications so the ITC has a basis to exclude infringing goods.  In some cases this is easier than it sounds because the novelty of an invention may not be readily definable in terms of an apparatus.  Wherever possible, claims should be drafted that capture the apparatus features that allow the method of use to be implemented.  Unfortunately, such apparatus claims are often much narrower in scope than corresponding method of use claims.

Notably, in Suprema the patent holder had some apparatus claims and those were found valid and infringed.  As to those claims, the ITC’s exclusion order was upheld.  However, because they had some restrictive apparatus limitations, the number of products that those claims ultimately excluded was less than what would have been excluded had the method of use claims provided a viable basis for exclusion.

One additional strategy that may have helped the patent holder would have been to draft apparatus claims that describe the scanner hardware in broad general terms and which also describe the scanner as being programmed to carry out the method steps.  This may have provided the patent holder with broader apparatus claims that were more commensurate in scope with its method of use claims, and hence, may have led to the exclusion of a greater number of Suprema’s scanners.