Opinion ID: 3066230
Heading Depth: 1
Heading Rank: 2

Heading: the majority’s construction

Text: The majority, the appellees, and the government read § 1337(a)(1)(B)(i) differently. They argue that the in rem nature of the Tariff Act and the in personam nature of the Patent Act are inherently incompatible. Maj. Op. at 15– 18. Because, they say, only a person, and not an article, can infringe, the majority reasons that the combination of § 1337(a)(1)(B)(i) and § 271 is necessarily ambiguous, and we must therefore defer to the Commission’s reasoned interpretation of the Tariff Act under Chevron. 3 Maj. Op. 3 The majority does not argue that the use of “arti- cles” in § 1337(a)(1)(B)(i) is so fundamentally incorrect or creates such unanticipated results as to trigger the absurdity doctrine. See, e.g., United States v. Kirby, 74 U.S. 10 SUPREMA, INC. v. ITC at 15. The majority also focuses on the history of the Tariff Act and statements made in the legislative record, arguing that a 1988 amendment to the Tariff Act ratified a consistent pre-amendment application of § 271(b) to method claims under § 1337(a)(1)(B)(i). Neither of these justifications is compelling.
The majority’s presumed ambiguity in the combination of § 1337(a)(1)(B)(i) and § 271(b) seems to be merely a means to the end to which it arrives—resort to Chevron step 2. We should not read statutes to create an ambiguity in light of clear congressional statements, even if that result may lead to what some parties consider a normatively more fair result. See, e.g., United States v. Thompson/Center Arms Co., 504 U.S. 505, 524 (1992) (White, J., dissenting) (“To conclude otherwise is to resort to ‘ingenuity to create ambiguity’ that simply does not exist in this statute.” (quoting Rothschild v. United States, 179 U.S. 463, 465 (1900))); cf. Antonin Scalia & Bryan A. Garner, Reading Law § 27 (2012) (“Hence there can be no justification for needlessly rendering provisions in conflict if 482, 486–87 (1868). The majority instead appears to be arguing that § 1337(a)(1)(B)(i) is ambiguous in this particular situation because the application of § 271(b) to post-importation conduct does not provide for a clean analogue under § 1337(a)(1)(B)(i). Maj. Op. at 15 (“Simply put, the phrase ‘articles that infringe’ does not map onto the Patent Act’s definition of infringement.”). This purported inconsistency does not prove that Congress intended to leave the interpretative decision to the Commission, it merely demonstrates congressional intent not to include such conduct under the scope of § 1337(a)(1)(B)(i). FDA v. Brown & Williamson Tobacco Corp, 529 U.S. 120, 159 (2000). SUPREMA, INC. v. ITC 11 they can be interpreted harmoniously.”) (hereinafter Scalia & Garner). Section 1337(a)(1)(B)(i) speaks in terms of “articles that—infringe.” The majority says that this is not how we naturally refer to infringement under § 271—that we normally think in terms of a person or entity doing the infringing. The majority claims that this “disparity” requires that the Commission, and not our court, resolve the “uncertainty.” Maj. Op. at 15–16. This argument— newly asserted by the government in this en banc proceeding—lacks logical grounding. Although it is people who are liable for infringement under the law, it is the underlying article or methods that are the focus of an infringement analysis. It is to the aspects of articles that are manufactured, sold, or offered for sale or methods that are “used” that an element-by-element comparison with the patent claims is made. Multiple subsections of § 271 tie conduct directly to an article. For example, § 271(a) defines infringement as conduct involving the “mak[ing], us[ing], offer[ing] to sell, or sell[ing] any patented invention.” The “patented invention” of § 271(a) is the equivalent to the “article” in § 1337(a)(1)(B)(i). In the one situation where this analogy breaks down—method claims—the Commission has not said that the statute is inexorably ambiguous, it has instead concluded that § 1337(a)(1)(B)(i) does not apply to post-importation conduct that infringes method claims. Certain Electronic Devices, 2012 WL 3246515, at . And, § 271(c) ties contributory infringement to conduct involving “a component of a patented machine, manufacture, combination or composition.” Similar to § 271(a), this “component” is the equivalent to the “article” in § 1337(a)(1)(B)(i). Section 271(b) has no similar analogue. Induced infringement focuses on conduct tied to another infringer, not to an “article,” “patented invention,” or “component.” See 35 U.S.C. § 271(b) (“Whoever actively induces infringement of a patent shall be liable as an infringer.”). 12 SUPREMA, INC. v. ITC We have clarified that, in an induced infringement analysis, we focus on the conduct of the inducer and not the article itself. See DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1306 (Fed. Cir. 2006) (en banc) (“[I]nducement requires evidence of culpable conduct, directed to encouraging another's infringement, not merely that the inducer had knowledge of the direct infringer's activities.”); Warner–Lambert Co. v. Apotex Corp., 316 F.3d 1348, 1363 (Fed. Cir. 2003) (“To succeed [on a theory of induced infringement], a plaintiff must prove that the defendants’ actions induced infringing acts and that they knew or should have known their actions would induce actual infringement.” (internal quotation marks and alterations omitted)). Any consideration of the “article” in an inducement analysis comes only as part of the requisite direct infringement under § 271(a). As discussed above, the Commission has already concluded that § 1337(a)(1)(B)(i) does not premise liability on post-importation conduct found to infringe a method claim. The fact that Congress spoke in terms of “articles” instead of “infringers” in § 1337(a)(1)(B)(i) is not evidence that Congress was confused or sought to implicitly delegate the decision of what an “article—that infringes” is to the Commission. King v. Burwell, 135 S. Ct. 2480, 2488– 89 (2015) (explaining that we should not nonchalantly defer to an agency’s interpretation for questions of “deep economic and political significance” (internal citation omitted)). It, instead, indicates Congress’s determination that Customs’s decision-making at the border should be tied to a tangible object—i.e., an “article”—not an intangible consideration—i.e., the importer’s intent. Although the Commission may be required to consider the importer’s intent in its analysis, it will only be as a corollary to a finding of direct infringement at the point of importation. Under § 1337(a)(1)(B)(i), intent cannot be divorced from the direct infringement. See Limelight, 134 S. Ct. at 2118 (explaining that separating § 271(b) from § 271(a) “would SUPREMA, INC. v. ITC 13 require the courts to develop two parallel bodies of infringement law: one for liability for direct infringement, and one for liability for inducement.”). The majority continues to “fundamentally misunderstand[] what it means to infringe a method patent.” Id. at 2117. The majority counters that an unambiguous construction of the statute “to require that infringement occur at the time of importation” would produce “absurd results under the pre-1994 version of § 271(a),” because, pre1994, § 271(a) did not define importing a patented invention as an infringing act. Maj. Op. at 18. The majority, however, ignores that § 1337(a)(1)(B)(i) explicitly considers the “sale within the United States after importation,” which means that Section 337 would “have reached even garden-variety direct infringement” that occurs through infringing sales within the United States. Maj. Op. at 18. Congress also amended § 271 in 1988 by adding § 271(g) to cover the importation of an article made by a patented process as an act of infringement. Omnibus Foreign Trade & Competitiveness Act of 1988, Pub. L. No. 100– 418, § 9003, 102 Stat. 1107. And, the domestic industry was not without recourse, as it could still seek to invoke § 1337(a)(1)(A) as it had done before the 1988 Amendments because, under the majority’s interpretation, those articles would not have been “articles that—infringe” under § 1337(a)(1)(B)(i). The 1994 Amendments to § 271, as part of the legislation necessary to effectuate the Uruguay Round Agreements, Uruguay Round Agree- ments Act, P.L. No. 103–465, 108 Stat 4809 (1994), demonstrate that Congress recognized the importance of clearly tying infringement to the point of importation, strengthening both the power of the district courts and the Commission explicitly. Even if the majority’s “absurd result” theory were true, moreover, we would still be required to give effect to the language Congress chose in 1988 to describe the Commission’s current power to control imports at the point of importation. See, e.g., 14 SUPREMA, INC. v. ITC Stone v. INS, 514 U.S. 386, 397 (1995) (“When Congress acts to amend a statute, we presume it intends its amendment to have real and substantial effect.”); Bausch & Lomb, Inc. v. United States, 148 F.3d 1363, 1367 (Fed. Cir. 1998) (“A change in the language of a statute is generally construed to import a change in meaning . . . .”). “It is . . . our task to determine the correct reading” of § 1337(a)(1)(B)(i) in light of § 271, and we cannot pass this task to the Executive Branch where Congress is unambiguous. Burwell, 135 S. Ct. at 2489. Congress provided the Commission with clear instructions: the Commission may bar the importation of any articles that could be found to be infringing under the Patent Act at the time of importation. See 19 U.S.C. § 1337(a)(1)(B)(i). Claims of induced infringement predicated on the potential completion of all steps of a method claim after importing the article do not meet this requirement under the plain language of the statute. There is no need to rely on the Commission’s interpretation in light of the clear statutory language in § 1337(a)(1)(B)(i).
Failing to find a clear statement in the language of the statute that would support their interpretation of § 1337(a)(1)(B)(i), the majority relies on its own reading of the legislative history. Maj. Op. at 21–25. Putting aside the extent to which reliance on statements in legislative history have limited value when engaging in statutory interpretation, the history of the Tariff Act does not support the majority’s expansive interpretation of § 1337(a)(1)(B)(i). From its inception in 1916, the Commission administered a predecessor to modern § 1337. Section 316 of the 1922 Tariff Act declared that “unfair methods of competition and unfair acts in the importation of articles into the United States . . . the effect or tendency of which is to destroy or substantially injure an industry . . .” were SUPREMA, INC. v. ITC 15 unlawful. Ch. 386, 42 Stat. 858, 943 (1922). This presumably included patent infringement as an “unfair method of competition” or an “unfair act.” See, e.g., Frischer & Co. v. Bakelite Corp., 39 F.2d 247, 257 (C.C.P.A. 1930). Congress reenacted § 316 as § 337 in the Tariff Act of 1930. Pub. L. No. 71–361, § 337, 46 Stat. 590, 703–04 (1930). Similar to § 316, § 337 stated that “[u]nfair methods of competition and unfair acts in the importation of articles into the United States . . . the effect or tendency of which is to destroy or substantially injure an industry . . .” were unlawful. Id.; see also In re Orion Co., 71 F.2d 458, 463 (C.C.P.A. 1934) (explaining that § 316 of the Tariff Act of 1922 “was the prototype of section 337 of the Tariff Act of 1930, and is, in substance, the same”). Unsurprisingly, our predecessor court held that the prohibition on “unfair method[s] of competition” or “unfair act[s]” in § 337 also applied to patent infringement. Orion, 71 F.2d at 464–65. Section 337 remained largely unchanged until 1988, when Congress substantively amended the Tariff Act to its present form. Omnibus Foreign Trade & Competitiveness Act of 1988, Pub. L. No. 100–418, 102 Stat. 1107. In § 1342 of the Act, Congress amended § 337 to split the analysis of “unfair methods of competition and unfair acts.” Under § 1337(a)(1)(A), an exclusion order based on general unfair methods of competition and unfair acts required a finding of substantial injury to the industry, as in the 1922 and 1930 Acts, but under § 1337(a)(1)(B), an exclusion order predicated on the importation of “articles that—infringe” no longer required a showing of substantial injury to the industry. Id. § 1342, 102 Stat. at 1212. Thus, in 1988 Congress explicitly created a limited exception for imports that violated patent rights by removing the requirement of proving a substantial injury to the domestic industry. But it did not remove the focus on “articles” that was present in the 1922 and 1930 Acts; it reinforced it. 16 SUPREMA, INC. v. ITC The majority and the government rely too heavily on very general statements in the legislative history of the 1988 Act when they claim that Congress somehow meant in that Act to authorize the Commission to base exclusion orders on any possible injury to domestic industry. In particular, the majority fails to explain why, if there had been a consistent Commission practice regarding exclusion orders predicated solely on an intent to induce infringement as they claim, and the only substantive change to § 1337(a)(1)(B) was removing the domestic injury requirement, Maj. Op. at 24, Congress adopted the “articles that—infringe” moniker. Reiter v. Sonotone Corp., 442 U.S. 330, 339 (1979) (“In construing a statute we are obliged to give effect, if possible, to every word Congress used.”). The majority and the government point to a portion of the 1988 Amendments discussing congressional factfindings in support of their argument that Congress intended that § 1337(a)(1)(B) maintain a broad scope. Maj. Op. at 24–25 & n.7 (referring to this language as “consistent with Congress’ longstanding broad policy, with its broadening purpose”). Section 1341 of the 1988 Act, titled “Findings”, states that “the existing protection under section 337 of the Tariff Act of 1930 . . . is cumbersome and costly and has not provided United States owners of intellectual property rights with adequate protection . . . .” 102 Stat. at 1211–12. And, the majority references statements in the House Reports explaining that the purpose of the 1988 amendments was to strengthen the Tariff Act and make it more effective. Maj. Op. at 24–25 (citing H.R. Rep. No. 100–40, at 155 (1987) and H.R. Rep. No. 100–576, at 112 (1988)). Similarly, the government cites language from the Senate Report, to support the argument that the 1988 Amendments were intended to “strengthen” the enforcement of patent rights. Br. of Int’l Trade Comm’n at 13 (citing S. Rep. No. 100–71, at 128 (1987)). These statements, SUPREMA, INC. v. ITC 17 however, do not imply that Congress intended for § 1337(a)(1)(B) to cover claims of induced infringement at the time of importation when the requisite direct infringement would not occur until after importation and might never occur at all. Rather, by removing the domestic injury requirement for exclusion orders based on patent infringement, Congress eliminated one of the most “cumbersome and costly” aspects of seeking an exclusion order—proof of substantial injury to the domestic industry. 102 Stat. at 1211–12. Thus, all the statements to which the majority and government point regarding the need to strengthen protection of domestic patent rights point to the elimination of the substantial injury to domestic industry requirement; they do not justify the conclusion that Congress intended to imbue the Commission with the authority to do whatever it thinks will provide the broadest protections to patentees, regardless of its statutory charge. Statements in the legislative history should not be used to create ambiguity in an already clear statute, especially not legislative history that is as vague as that relied on by the majority here. See Milner v. Dep’t of Navy, 562 U.S. 562, 572 (2011) (“We will not take the opposite tack of allowing ambiguous legislative history to muddy clear statutory language.”). Congress strengthened the power of patent holders to assert their rights, not by expanding § 271, but by removing a procedural hurdle under § 1337(a).
The majority and the government also assert that the statutory and legislative history supports its interpretation by demonstrating Congress’s intent to continue an unbroken practice by the Commission of predicating exclusion orders on acts of induced infringement. Maj. Op. at 21–23. Specifically, it states that “Congress has not upset the Commission’s consistent interpretation of Section 337.” Maj. Op. at 23. There has been no interpre18 SUPREMA, INC. v. ITC tation of § 337 that mirrors that adopted by the majority today, however, and certainly nothing so clear that Congress should be charged with jumping in to stop it. The cases the majority cites to support the sweeping statements it makes about the Commission’s unbroken practices do not bear the weight placed on them. Indeed, the government conceded as much at oral argument. See Oral Argument at 1:12–1:13, Suprema, Inc. v. International Trade Comm’n, No. 12-1170 (en banc), available at http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20 12-1170_252015.mp3. The majority cites a single pre-1988 case in support of its “consistency theory”: Young Engineers, Inc. v. U.S. International Trade Commission, 721 F.2d 1305 (Fed. Cir. 1983). 4 Young Engineers did not involve an exclusion 4 The government relies heavily on Frischer & Co. v. Bakelite Corp., 39 F.2d 247 (C.C.P.A. 1930), to establish that the Commission had previously based exclusion orders on induced infringement. See, e.g., Br. of Int’l Trade Comm’n at 28–30, 32. Bakelite does not stand for what the government claims, however. The exclusion order in Bakelite was predicated on a finding that the imported articles were “prepared and manufactured in conformity” with the patented methods before being imported, which is consistent with the later-enacted prohibition on goods produced using patented methods prior to importation in § 1337(a)(1)(B)(ii). Id. at 507; see also In re Orion, 71 F.2d at 466–67 (finding that the import of products produced using infringing methods abroad could be considered an unfair method of competition or unfair act under the Tariff Act of 1930). Bakelite simply does not stand for the proposition that an exclusion order can be issued on the basis of induced infringement where the underlying direct infringement of a SUPREMA, INC. v. ITC 19 order predicated exclusively on a finding of induced infringement. The Commission issued an exclusion order both because of a finding of direct infringement due to the importation of an infringing product, and induced infringement on the basis of the importer providing “training and assistance to [ ] customers in the use of the inserts in accordance with the patented methods.” In re Certain Molded-In Sandwich Panel Inserts and Methods for Their Installation, USITC Inv. No. 337–TA–99, 218 U.S.P.Q. 832, at  (April 9, 1982), aff’d, Young Eng’rs, 721 F.2d at 1317. The Commission also concluded that the inserts at issue were not staple goods, and justified the exclusion order on a finding of contributory infringement. Id. We affirmed those findings without analysis of the Commission’s power to justify exclusion orders solely on a finding of induced infringement. Young Eng’rs, 721 F.2d at 1317. Young Engineers does not evidence that we have “consistently affirmed the Commission’s determination that a violation of Section 337 may arise from an act of induced infringement.” Maj. Op. at 25. At best, Young Engineers and Bakelite, see supra note 4, stand for the uncontroversial premise that the Commission can exclude either: (1) articles made using a patented method overseas pre-importation; or (2) non-staple goods imported into the United States on the basis of a finding of direct and induced infringement. In either situation, a Customs agent is not required to divine the importer’s intent to determine if there would be a potential downstream direct infringement. The direct infringement either already occurred prior to importation (and is statutorily covered under § 1337(a)(1)(B)(ii)) or the good itself could not be used in a non-infringing manner. This is a far cry from method claim occurs after importation, and might not occur at all. Unsurprisingly, the majority does not even attempt to rely on Bakelite. 20 SUPREMA, INC. v. ITC establishing a consistent agency practice of which Congress necessarily would have been aware in 1988, as the majority proclaims. Maj. Op. at 21–23. Standard Oil Co. v. Nippon Shokubai Kagaku Kogyo Co., 754 F.2d 345 (Fed. Cir. 1985) does not alter this analysis. In Standard Oil, we analyzed when the period for laches would begin to run for claims of induced infringement: at the time of the direct infringement or at the time of the inducing act. Id. at 348–49. We concluded that laches barred recovery because the specific intent to induce existed prior to the six-year period for laches, even though the subsequent direct infringement occurred during the laches period. Id. Standard Oil does not annunciate a rule that induced infringement occurs at the time of the inducing act, see Maj. Op. at 20—we held instead that, once the direct infringement occurs, the liability for induced infringement is traced back to the inducing act. Id.; see also Nat’l Presto Indus., Inc. v. W. Bend. Co., 76 F.3d 1185, 1196 (merely holding that there must be a direct infringement for liability under § 271(b) to exist). Nothing in Standard Oil alters the fact or requirement that there must be an underlying direct infringement for there to be induced infringement. Limelight, 134 S. Ct. at 2117. There is simply no evidence of any pre-1988 Commission practice equivalent to the Commission’s actions here. Even if reliance on congressional silence were ever a strong reed upon which to premise statutory interpretation, 5 the majority cannot rely on Congress’s purported 5 The Supreme Court has recognized that, absent circumstances not present here, congressional silence is, at best, a tenuous ground upon which to justify a particular statutory construction. See Cmty. for Creative NonViolence v. Reid, 490 U.S. 730, 749 (1989) (“Ordinarily, SUPREMA, INC. v. ITC 21 desire to continue a consistent past agency practice to bolster its statutory construction when the only consistent agency practice was the agency’s failure to assert § 337 against importers of staple goods based solely on the intent to induce infringement of method claims postimportation.
Our post-1988 case law provides no better support for the majority’s interpretation. Although it is unclear which cases the majority believes supports its view, as it cites only two in passing, the government points to two cases that they argue demonstrate the Commission’s reliance on § 271(b) in an exclusion order: Alloc, Inc. v. International Trade Commission, 342 F.3d 1361 (Fed. Cir. 2003), and Kyocera Wireless Corp. v. International Trade Commission, 545 F.3d 1340 (Fed. Cir. 2008). Br. of Int’l Trade Comm’n at 33 n.8. But neither case required us to determine if an exclusion order could be predicated solely on an intent to induce infringement. In Alloc, the Commission found no infringement, either direct or indirect, in imported flooring products, and we affirmed that determination. 342 F.3d at 1366–68, 1375. After construing the claims at issue, we agreed with the Commission that there was no evidence of direct infringement. Id. at 1373. As for induced infringement, we noted that the basis for the allegation of inducement was installation instructions included in the packaging at the time of importation. Id. at 1373–74. In a short discussion of induced infringement, we found “no reason to ‘Congress’ silence is just that — silence.”) (quoting Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 686 (1987)); Johnson v. Trans. Agency, 480 U.S. 616, 672 (1987) (Scalia, J., dissenting). 22 SUPREMA, INC. v. ITC disturb the administrative judge’s conclusion on induce- ment” specifically because “the administrative judge found no evidence of direct infringement.” Id. at 1374. Alloc does not demonstrate our approval of the Commission’s use of induced infringement to justify the exclusion order in the circumstances here, however; our silence there was not nearly as deafening as the government believes. That case did not involve uncertainty as to future infringement, and there was no challenge to the Commission’s authority regarding inducement claims. At best, we merely overlooked this issue in our analysis, and “I see no reason why [we] should be consciously wrong today because [we were] unconsciously wrong yesterday.” Massachusetts v. United States, 333 U.S. 611, 639–40 (1948) (Jackson, J., dissenting); cf. Vizio, 605 F.3d at 1343 (declining to analyze the Commission’s authority to base an exclusion order on induced infringement because “[a]ppellants do not challenge the Commission’s finding of infringement”); see also Maj. Op. at 25 (“Prior to this case, none of our reviews of the Commission’s determinations have questioned the Commission’s authority to investigate and find a violation of Section 337 predicated on an act of induced infringement.”). Kyocera also fails to provide any support for an interpretation of § 1337(a)(1)(B)(i) that would include induced infringement of method claims for potential postimportation direct infringement. Similar to Alloc, there was no challenge to the Commission’s authority regarding induced infringement allegations; we assumed without deciding that an exclusion order could be predicated on a finding of induced infringement under § 1337(a)(1)(B)(i). Kyocera, 742 F.3d at 1353–54; see also ERBE El- ektromedizin GmbH v. Int’l Trade Comm., 566 F.3d 1028, 1037 (Fed. Cir. 2009) (affirming Commission’s determination of no direct infringement, and therefore concluding there was “no basis for finding induced or contributory infringement,” without analyzing the Commission’s SUPREMA, INC. v. ITC 23 authority under § 1337(a)(1)(B)(i) to enter an exclusion order due to induced infringement). Our only discussion of induced infringement involved a short statement remanding the case to the Commission to perform the correct analysis under § 271 after we had altered the specific intent analysis in DSU. Kyocera, 742 F.3d at 1354. Importantly, our appellate review in Kyocera did not involve allegations of inducement predicated on potential post-importation direct infringement. See In the Matter of Certain Baseband Processor Chips and Chipsets, Transmitter & Receiver (Radio) Chips, Power Control Chips, & Products Containing Same, USITC Inv. No. 337TA-543, 2006 WL 3920334, at  (Oct. 10, 2006) (finding that Qualcomm “induces infringement of the apparatus claims” of U.S. Patent No. 6,714,983, but that “Broadcom has not proved that Qualcomm induced infringement of the method claims of the ’983 patent”). To the contrary, Kyocera involved the importation of wireless devices that were programmed to operate in an infringing manner prior to being imported. Id. at 1346 (noting that the Commission only excluded devices from manufacturers who “purchase[d] and incorporate[d] Qualcomm chips into their mobile wireless devices outside the United States, and then imported them into the United States for sale”). Although the Commission relied on an induced infringement theory for infringement of apparatus claims, the imported articles directly infringed at the time of importation. They were the quintessential “articles that—infringe.”