August 10, 2015

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RECORDERdaily at www.therecorder.com Ruling Strengthens ITC’s Hand in Patent Cases Scott Graham n en banc Federal Circuit panel bench, was joined by Obama appointees dominated by , Richard Taranto, Raymond appointees on Monday deferred Chen and Todd Hughes, plus Reagan to the U.S. International Trade appointee . Patent cases Commission on its handling of don’t typically break down along the lines of inducedA infringement claims. presidential appointment, but the newer Judge Jimmie Reyna wrote for a 6-4 panel appointees may be signaling a court more Judge Jimmie V. Reyna, United States Court that the ITC is empowered to block imports willing to extend so-called Chevron of Appeals for the Federal Circuit of fingerprint scanners that were later deference to executive-agency decisions. J. Albert Diaz combined in the United States with software The court also on Monday summarily interpretation for 35 years. “The commission’s in ways that infringe method patents held by affirmed three decisions of the Patent Trial consistency supports the reasonableness of Cross Match Technologies Inc. and Appeal Board. its interpretation,” Reyna wrote. A three-judge panel had previously held O’Malley is the other Obama appointee Finnegan, Henderson, Farabow, Garrett & that because Section 337 of the Tariff Act of who participated in the Suprema decision. Dunner partner Eric Fues, who contributed 1930 blocks “articles that … infringe” a She was joined by Chief Judge an amicus curiae brief for the International patent, it covered only imports that infringed and Federal Circuit veterans Alan Lourie and Trade Commission Trial Lawyers at the time of importation. But the en banc Timothy Dyk. Judges Kimberly Moore and Association, said the ruling also removes U.S. Court of Appeals for the Federal Circuit Kara Stoll did not participate. some clouds around contributory ruled that Section 337’s application is not Cross Match is a small company that infringement that the three-judge panel’s crystal clear in these circumstances. manufactures fingerprint scanners used by U.S. decision had created. “Because Section 337 does not answer the Customs, among others. Suprema Inc. was O’Malley was the author of that panel question before us, the commission’s importing scanners made abroad that were decision, and on Monday she led the four interpretation of Section 337 is entitled to sometimes combined in the U.S. with software, dissenters. The Federal Circuit and the ITC are deference,” Reyna wrote in Suprema v. ITC. made by a company called Mentalix Inc., that going further than they have in the past, she Latham & Watkins partner Maximilian captured data from the images and filtered it. argued, because Suprema neither embedded Grant, who had the winning argument for While the case was pending en banc, the software in the scanners nor sold it separately. Cross Match, said the decision restores the Federal Circuit requested the views of the Chevron deference “is not to be used as a ordinary practice of the ITC for many years Justice Department, which said the ITC’s substitute for statutory interpretation,” she before the 2013 panel decision. It’s important, approach was “reasonable, consistent with wrote. “This is especially true where, as here, he said, because it’s not hard to imagine the text and history of the Tariff Act, and the interpretation proffered by the agency companies—such as smartphone makers for entitled to deference.” ‘makes scant sense.’ “ one example—taking advantage by importing Monday’s majority mostly agreed. The use Assisting Grant on the briefs were Latham hardware, then letting third parties install of the present tense “articles … that infringe” partners Clement Naples, Bert Reiser, counsel software that leads to infringement. in the Tariff Act is ambiguous, Reyna wrote. Gabriel Bell and associate Jennifer Halbleib. Judge Kathleen O’Malley dissented. Under the Patent Act, “articles” by themselves Vinson & Elkins partner Darryl Woo “Although the majority says it is concerned never infringe—it’s the act of making, using or argued the appeal for Suprema. Clark Cheney about importers taking advantage of an selling them. Under Suprema’s interpretation, of the ITC’s Office of the General Counsel apparent gap in the statute, any gaps should Section 337 would not bar “even garden-variety argued for the commission. Mark Freeman be filled by Congress, not by us or the direct infringement,” he wrote, and Congress argued for the Justice Department. commission,” she wrote. Patent holders in could not have intended that. Contact the reporter at [email protected]. such circumstances are “still well protected” Rather, banning articles that have been by bringing infringement actions in district part of inducement as an unfair trade act “is Reprinted with permission from the August 10, 2015 edition court, she contended. consistent with the statutory phrase ‘articles of THE RECORDER © 2015 ALM Media Properties, LLC. All rights reserved. Further duplication without permission Reyna, who practiced international trade that infringe.’ “ is prohibited. For information, contact 877-257-3382 or law before his 2011 appointment to the Moreover, the ITC has followed a similar [email protected]. # 501-08-15-02