Opinion ID: 622473
Heading Depth: 3
Heading Rank: 1

Heading: Factors Considered

Text: In considering the penalty for violation of the Commission's orders, the ALJ and the full Commission applied the factors summarized in San Huan New Materials High Tech, Inc. v. International Trade Commission, 161 F.3d 1347, 1362 (Fed.Cir. 1998), viz., (1) the good or bad faith of the respondent; (2) any injury due to the infringement; (3) the respondent's ability to pay the assessed penalty; (4) the extent to which the respondent benefitted from its violations; (5) the need to vindicate the authority of the Commission; and (6) the public interest. Final Det'n 17-18. In determining whether there was good or bad faith, the Commission applied the criteria in Certain Erasable Programmable Read Only Memories (EPROMs), Inv. No. 337-TA-276, 1991 ITC LEXIS 1311, at  (Aug. 1, 1991) and Certain Agricultural Tractors Under 50 Power Take-Off Horsepower, Inv. No. 337-TA-380, 1999 ITC LEXIS 260, at ,  (Aug. 18, 1999). The ALJ pointed to Ninestar's false compliance statements, under oath, that they believe that substantially all of such cartridges were of U.S. origin and therefore not covered products. EID 80. This belief was contravened by the testimony at the hearing, where Ninestar U.S. vice president William Dai testified: Q. Sir, when you signed this compliance statement, you did not believe that substantially all of the remanufactured cartridges which Ninestar U.S. had imported or sold in the United States after the date of the cease and desist order were of U.S. origin and, therefore, not covered products, isn't that true? A. No, what I said just now was I didn't knowor I don't know. Q. Don't know what? A. I mean, I didn't know where the empties used for producing the remans came from, that I didn't know. Id. The Commission found that Ninestar continued the importation and sales of the infringing ink cartridges with knowledge that the products were the subject of exclusion and cease and desist orders, that Ninestar deliberately evaded the Commission's orders, and that [t]he record is replete with evidence of bad faith. Final Det'n 24, 35. The ALJ based the sanction assessment on Ninestar United States subsidiaries' electronic records between October 23, 2007 (four days after issuance of the cease and desist orders) and May 5, 2008. These records showed that the infringing products were imported on fifteen days and sold on 187 days. The ALJ did not count records from other sources, such as customers, that showed additional sales not in the subsidiaries' electronic records. The ALJ found that the importation and sales were made in deliberate and knowing violation of the Commission's orders, and levied the maximum statutory penalty of $100,000 per day. EID 122-24. The full Commission, while remarking on the egregious bad faith of the violations, reduced the penalty to $55,000 per day, stating that the reduced amount was commensurate with the sales violations and the lost sales of Epson, and the bond that should have been posted during the Presidential review period. Final Det'n 44-45. The Commission stated that [t]he combined penalty of $11,110,000 should be sufficient to deter future violations by the Ninestar Respondents and others considering violating the Commission's orders. Id. The Commission observed that Ninestar has the ability to pay substantial penalties and that Ninestar did not introduce accounting records or demonstrate any reason why the maximum penalties should not be imposed. Final Det'n 31. The Commission points to Ninestar's knowledge of its violation and the fraudulent actions taken to evade compliance. The Commission referred to the harm to domestic industry due to the magnitude of the infringing operations. The Commission found the amount of the penalty to be comparable to the lost sales to the patentee, found to exceed nine million dollars. Final Det'n 45. The Commission points out that the statutory penalty is designed to serve as a deterrent, because [t]he public interest is not served if intellectual property rights are not respected, and the imposition of a penalty that is substantial enough to deter future violations is in the public interest. Final Det'n 38. If the only consequence of ignoring the Commission's orders were payment of a modest fee if caught, the statutory purpose of deterring unfair trade practices would fail, for the Commission has no other remedy. The Commission's penalty was within the Commission's authority, and in accordance with the legislative purpose. Abuse of discretion has not been shown in the imposition of a penalty and its amount.