Source: https://www.ropesgray.com/en/newsroom/alerts/2019/01/Fed-Circ-Medical-Device-IP-Case-Highlights-ITC-Tools
Timestamp: 2019-04-19 16:17:11+00:00

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This article by partner Matthew Rizzolo and associate Jolene Wang was published by Law360 on January 29, 2019.
In a precedential opinion, the Federal Circuit on Dec. 7, 2018, reversed the final determination of the U.S. International Trade Commission that Laerdal Medical Corp. failed to plead its trade dress claims with adequate detail, and vacated the ITC’s decision that no relief was warranted for those claims. The Federal Circuit remanded the case for the ITC to evaluate public interest concerns and, if none existed, to issue the appropriate remedy. The decision demonstrates the value of the ITC for intellectual property rights holders seeking to combat a wide variety of intellectual property infringement, particularly in instances where one or more of the potential respondents may not appear in the ITC to defend against the infringement claims.
The ITC instituted an investigation as to a subset of Laerdal’s claims — specifically its trade dress claims, one patent claim, two copyright claims and one trademark claim. After none of the respondents appeared or responded to the notice of investigation, on Oct. 20, 2016, Laerdal moved for an order requiring the respondents to show cause as to why they should not be found in default under 19 U.S.C. § 1337(g)(1). The administrative law judge granted this order to show cause, and after no response or acknowledgement of the order by any respondent, the ALJ issued an initial determination finding all respondents in default.
Laerdal then modified its requested relief from a general exclusion order to immediate entry of limited exclusion orders (and cease-and-desist orders, where appropriate) against the defaulting respondents in response to the ALJ’s initial determination. In response to a request from the ITC, Laerdal and the ITC’s Office of Unfair Import Investigations, both provided briefing on remedy, the public interest, and bond, and submitted proposed remedial orders. Both responded that public interest factors did not preclude relief and requested a 100 percent bond rate, a cease-and-desist order against the sole domestic respondent, and limited exclusion orders for all respondents. Laerdal and the ITC staff also indicated that because the requirements of § 1337(g)(1) were satisfied, the ITC must presume the facts alleged in the complaint to be true and issue an exclusion order, cease and desist order, or both, unless such relief was precluded by public interest concerns.
On June 14, 2017, the ITC issued its final determination, granting Laerdal limited exclusion orders against three respondents and a cease-and-desist order against one respondent, all based on Laerdal’s patent and trademark claims. However, the ITC issued no relief on Laerdal’s trade dress and copyright claims, finding Laerdal’s allegations in those claims inadequate on the grounds that even if the pleaded facts were presumed true, Laerdal failed to show that any respondent violated § 1337 with respect to the alleged trade dresses and copyrights.
Laerdal appealed only the ITC’s determination of its trade dress claims, arguing that the ITC acted in violation of § 1337(g)(1) by terminating the investigation and issuing no relief for its trade dress claims against defaulting respondents.
According to Laerdal, the ITC acted outside the scope of its authority by revisiting the sufficiency of the complaint after institution of the investigation.
This decision provides clear guidance for Section 337 proceedings at the ITC when one or more respondents fails to respond to the complaint: Once an investigation has been instituted, as long as all of the prerequisites of the § 1337(g)(1) are satisfied, then the ITC is required to grant relief (such as a limited exclusion order) against the defaulting respondents, subject only to overriding public interest concerns. For parties considering filing Section 337 complaints with the ITC, this decision highlights the value of the ITC as an effective forum for protecting a variety of intellectual property rights and combating them relatively swiftly and severely against unresponsive or dilatory parties.
In particular, because of its ability to issue wide-ranging exclusionary relief enforced by U.S. Customs and Border Protection, the ITC is a popular forum in which to combat infringement by foreign entities large and small. In many cases, respondents — especially small, foreign entities — may not appear to defend against the complaint. The Federal Circuit’s decision in Laerdal dictates that absent overriding public interest concerns, which are rarely an issue in most cases, a respondent’s failure to appeal will result in an exclusion order barring its infringing goods from the U.S. This is an extremely powerful remedy, and could be obtained in a matter of months after the complaint is filed.
Furthermore, Laerdal underlines the importance of sufficiently alleging the elements of a violation of Section 337 in your ITC complaint. Here, while the Federal Circuit reversed the ITC’s decision not to award relief on the trade dress claims, the ITC’s decision to decline to institute on certain of the patent, trademark and copyright claims was not questioned. In fact, the Federal Circuit expressly noted that “[i]f a violation is not pleaded adequately in the complaint, the Commission can decline institution and dismiss the complaint, thereby never implicating relief under subsection (g)(1) — or any other subsection.”8 If Laerdal had properly pled these other claims, the relief it could have obtained in the ITC would have been even broader.
1 Complaint at ¶¶ 1, 16–22, Certain Carbon Spine Board, Cervical Collar and Various Med. Training Manikin Devices, and Accompanying Product Catalogues, Product Inserts, Literature and Components Thereof, Inv. No. 337-TA-1008 (Mar. 21, 2006).
2 Id. at ¶¶ 23, 462.
3 19 U.S.C. § 1337(g)(1).
4 Laerdal Med. Corp. v. ITC , No. 2017-2445, slip op. at 7 (Fed. Cir. Dec. 7, 2018).
8 Id. at 9. The ITC’s discretion to decline to institute an investigation is currently the subject of a separate appeal at the Federal Circuit; the appeal was argued in June 2018 but the court has yet to issue its opinion. Amarin Pharma, Inc. v. ITC, No. 2018-1247 (argued June 8, 2018).

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