By Brian Craig, J.D.
The U.S. International Trade Commission lacks statutory authority to consider a patent invalidity challenge outside of an investigation or enforcement proceeding.
The U.S. International Trade Commission properly issued a general exclusion order barring the importation of any goods that infringe a patent for a self-anchoring beverage container, the U.S. Court of Appeals for the Federal Circuit has held. While a company that imports products that potentially infringe the patent has standing to challenge the Commission’s decision, the Commission lacks statutory authority to consider a patent invalidity challenge outside of an investigation or enforcement proceeding. The Federal Circuit concluded that an invalidity challenge is not a permissible basis in a party’s petition for rescission or modification of a general exclusion order issued by the Commission (Mayborn Group, Ltd. v. ITC , July 16, 2020, Lourie, A.).
Alfay Designs, Inc., Mighty Mug, Inc., and inventor Harry Zimmerman (collectively, the "Complainants") filed a complaint with the Commission alleging infringement of U.S. Patent 8,028,850 (the ’850 patent) and sought a general exclusion order. The ’850 patent relates to a self-anchoring beverage container that prevents spills by anchoring the container to a surface by means of a flexible nonporous base member adapted to seal to a reference surface. The Commission entered a general exclusion order barring importation of infringing goods by any party. The Complainants notified Mayborn Group, Ltd. of the Commission’s then-ongoing investigation. Mayborn took no action during the course of the proceedings. The Complainants then notified Mayborn and its retail partners that Mayborn’s products infringed the ’850 patent in violation of the general exclusion order. In response, Mayborn petitioned the Commission to rescind its general exclusion order arguing that the ’850 patent is invalid. The Commission denied Mayborn’s petition, holding that a petitioner’s asserted discovery of invalidating prior art after the issuance of a general exclusion order is not a changed condition. Mayborn appealed the decision of the Commission arguing that the Commission erred in rejecting its petition for rescission. The Commission contended that Mayborn lacks standing.
Standing. The Federal Circuit first held that Mayborn has standing to appeal the Commission's decision as a company that imports products that potentially infringe the patent. Mayborn showed that it has suffered an injury in fact as a result of the general exclusion order. Mayborn imports products that potentially infringe the ’850 patent and therefore violate the general exclusion order. It is unnecessary for the Commission to have already barred importation of Mayborn’s products for Mayborn to have standing to appeal the Commission’s decision. Mayborn’s injuries are likely redressable. The relief Mayborn seeks would remove the threat of enforcement against Mayborn by the U.S. Customs and Border Protection or in further proceedings at the Commission.
Patent invalidity challenge. The Federal Circuit then considered the merits of the patent invalidity challenge and concluded that the Commission lacks statutory authority to consider an invalidity challenge outside of an investigation or enforcement proceeding. Patent invalidity is an affirmative defense to an action for infringement in district court or before the Commission. The Federal Circuit agreed with the Commission that Mayborn’s invalidity challenge is not a permissible basis for it to petition for rescission or modification of the general exclusion order. The Commission may only act pursuant to powers granted to it by Congress. Because Mayborn’s petition did not raise an invalidity defense in the course of an investigation or enforcement proceeding, the Commission lacked the authority to adjudicate its invalidity challenge.
Public interest. The Federal Circuit also rejected Mayborn’s assertion that the Commission failed to heed its own regulation by not considering the merits of its petition, and that the public interest lies in resolving patent validity. Pursuant to 19 C.F.R. § 210.76(a)(1), a person may petition for rescission or modification of an exclusion order when the person "believes that changed conditions of fact or law, or the public interest, require that an exclusion order … be modified or set aside." The Federal Circuit held that a petitioner’s invalidity challenge is not, on its face, a changed condition and is thus not a proper basis for a petition to rescind or modify an exclusion order. The ’850 patent has not been held to be invalid, which would indeed be a changed condition. The regulation’s invocation of the public interest does not grant the agency a "roving commission," nor can it be interpreted to greatly expand the limited nature of the statutory authority granted to the Commission. Therefore, the Federal Circuit affirmed the Commission’s entry of thegeneral exclusion order.
This case is No. 19-2077.
Attorneys: John Stephen Goetz (Fish & Richardson P.C) for Mayborn Group Ltd. and Mayborn USA Inc. Robert John Needham for the USITC.
Companies: Mayborn Group Ltd.; Mayborn USA, Inc.
MainStory: TopStory Patent FedCirNews GCNNews
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