Court Opinion

ID: 4548637
Source: CourtListenerOpinion
Date Created: 2020-07-16 16:00:30.030264+00
Date Added: 2024-06-11T09:11:50.703637
License: Public Domain

Case: 19-2077   Document: 38    Page: 1   Filed: 07/16/2020

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

   MAYBORN GROUP, LTD., MAYBORN USA, INC.,
                Appellants

                           v.

      INTERNATIONAL TRADE COMMISSION,
                    Appellee
             ______________________

                       2019-2077
                 ______________________

    Appeal from the United States International Trade
 Commission in Investigation No. 337-TA-1092.
                 ______________________

                 Decided: July 16, 2020
                 ______________________

    JOHN STEPHEN GOETZ, Fish & Richardson P.C., New
 York, NY, for appellants.

     ROBERT JOHN NEEDHAM, Office of General Counsel,
 United States International Trade Commission, Washing-
 ton, DC, for appellee. Also represented by DOMINIC L.
 BIANCHI, WAYNE W. HERRINGTON.
                 ______________________

    Before LOURIE, LINN, and WALLACH, Circuit Judges.
 LOURIE, Circuit Judge.
Case: 19-2077    Document: 38     Page: 2    Filed: 07/16/2020

 2                                MAYBORN GROUP, LTD.   v. ITC

      Mayborn Group, Ltd., and Mayborn USA, Inc.,
 (collectively, “Mayborn”) appeal from a decision of the
 United States International Trade Commission (the
 “Commission”), denying its petition for rescission of a
 general exclusion order prohibiting importation of products
 that infringe U.S. Patent 8,028,850 (the “’850 patent”).
 Certain Self-Anchoring Beverage Containers, Inv. No. 337-
 TA-1092, USITC Pub. 4984, 2019 WL 2174055, at *1 (May
 17, 2019) (Rescission Petition) (“Decision”). Because the
 Commission did not err in denying the petition, we affirm.
                        BACKGROUND
     The Complainants own the ’850 patent, which discloses
 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 sur-
 face.” ’850 patent, Abstract. The seal is broken when the
 handle is lifted, and a user can move the container nor-
 mally. Figure 1 illustrates an embodiment of the inven-
 tion:

 J.A. 1338. As the details of the claims are not material to
 this decision, we omit them here.
    In 2017, Alfay Designs, Inc., Mighty Mug, Inc., and
 Harry Zimmerman (the “Complainants”), filed a complaint
 at the Commission against several respondents, not
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 MAYBORN GROUP, LTD.   v. ITC                               3

 including Mayborn. The complaint alleged infringement of
 the ’850 patent, among others, and sought a general exclu-
 sion order (“GEO”) barring importation of infringing goods
 by any party.
      The Commission instituted an investigation, and the
 administrative law judge initially determined that the two
 remaining respondents—those with whom the Complain-
 ants had not settled—were in default and infringed claim
 1 of the ’850 patent. Certain Self-Anchoring Beverage Con-
 tainers, Inv. No. 337-TA-1092, USITC Pub. 4984, 2018 WL
 4357626, at *2, *8–10 (Aug. 27, 2018) (Initial). The default-
 ing respondents did not raise any invalidity challenge. The
 ALJ also recommended that the Commission grant a GEO
 because it was “difficult to gain information about the en-
 tities selling infringing self-anchoring beverage contain-
 ers,” and numerous entities were importing self-anchoring
 beverage containers, making it “nearly impossible to iden-
 tify the sources of the[] products.” Id. at *12. The Commis-
 sion concluded that the ALJ’s finding of infringement was
 correct and issued the GEO. Certain Self-Anchoring Bev-
 erage Containers, Inv. No. 337-TA-1092, USITC Pub. 4984,
 2018 WL 6716888, at *3 (Dec. 18, 2018) (Final).
     The Complainants notified Mayborn of the Commis-
 sion’s then-ongoing investigation in October 2018. May-
 born took no action during the course of the proceedings.
 In early 2019, the Complainants notified Mayborn and its
 retail partners that Mayborn’s products infringed the ’850
 patent in violation of the GEO. The Complainants also in-
 timated that they were “working with special agents from
 [Customs & Border Protection (“CBP”)] in the enforcement
 of the [GEO] and in the identification of persons who are
 evading or violating the GEO.” J.A. 1857–58.
     In response, Mayborn petitioned the Commission to re-
 scind its GEO pursuant to its power under 19 U.S.C.
 § 1337(k)(1), which allows the Commission to rescind or
 modify an order if “the conditions which led to such
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 4                                MAYBORN GROUP, LTD.   v. ITC

 exclusion from entry or order no longer exist.” Mayborn
 argued that this requirement was satisfied because it con-
 tends claim 1 of the ’850 patent is invalid under 35 U.S.C.
 §§ 102, 103.
     The Commission denied Mayborn’s petition, holding
 that a petitioner’s asserted discovery of invalidating prior
 art after the issuance of a GEO is not a changed condition
 under § 1337(k)(1). Decision, 2019 WL 2174055, at *2.
     This appeal, challenging the denial of the petition, fol-
 lowed. We have jurisdiction pursuant to 28 U.S.C.
 § 1295(a)(6).
                         DISCUSSION
     Our review of the Commission’s final determination of
 a Section 337 violation is governed by the standards of the
 Administrative Procedure Act.        19 U.S.C. § 1337(c);
 Ajinomoto Co. v. Int’l Trade Comm’n, 597 F.3d 1267, 1272
 (Fed. Cir. 2010). Under 5 U.S.C. § 706, we review the Com-
 mission’s legal determinations de novo and its factual find-
 ings for substantial evidence. Converse, Inc. v. Int’l Trade
 Comm’n, 909 F.3d 1110, 1115 (Fed. Cir. 2018) (citing Cisco
 Sys., Inc. v. Int’l Trade Comm’n, 873 F.3d 1354, 1360–61
 (Fed. Cir. 2017)). Statutory interpretation is a question of
 law, generally reviewed de novo, Power Integrations, Inc. v.
 Semiconductor Components Indus., LLC, 926 F.3d 1306,
 1313–14 (Fed. Cir. 2019) (citing Unwired Planet, LLC v.
 Google Inc., 841 F.3d 1376, 1379 (Fed. Cir. 2016)), but we
 review the Commission’s interpretation of § 1337 under the
 Chevron framework, Suprema, Inc. v. Int’l Trade Comm’n,
 796 F.3d 1338, 1345–46 (Fed. Cir. 2015) (en banc).
     Mayborn argues that the Commission erred in reject-
 ing its petition for rescission, and the Commission contends
 that Mayborn lacks standing to appeal the Commission’s
 denial of its petition. We first address the Commission’s
 argument.
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 MAYBORN GROUP, LTD.    v. ITC                                  5

                           I. Standing
     The Commission asserts that Mayborn lacks standing
 to appeal from the Commission’s decision because Mayborn
 continues to import the accused products and thus lacks
 the requisite injury. In the Commission’s view, Mayborn’s
 evidence of injury pertains to actions of the Complain-
 ants—insofar as they have threatened to enforce the GEO
 against Mayborn and its retail partners—and has nothing
 to do with the Commission or its decision not to rescind the
 GEO.
     Mayborn responds that it has been injured by the Com-
 plainants’ efforts to assert the GEO, specifically by losing
 revenue while retailers suspended sales of its products. It
 further maintains that the Complainants’ threat to seek
 enforcement of the GEO at the Commission creates a harm
 that is both imminent and real.
      We agree with Mayborn that it has standing to appeal.
 “[A]ny person” may petition the Commission for rescission
 or modification of an exclusion order, subject to certain con-
 ditions. 19 C.F.R. § 210.76(a)(1). Nonetheless, a party
 seeking judicial review of a Commission determination
 must establish that it presents a case or controversy for
 which the federal courts have jurisdiction under Article III
 of the United States Constitution. See Phigenix, Inc. v. Im-
 munogen, Inc., 845 F.3d 1168, 1171 (Fed. Cir. 2017) (citing
 Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016); Hol-
 lingsworth v. Perry, 570 U.S. 693, 704 (2013)). A party has
 Article III standing to appeal from a decision of an admin-
 istrative agency when it has: (1) suffered a particularized,
 concrete injury in fact that is (2) fairly traceable to the chal-
 lenged conduct of the defendant and is (3) likely to be re-
 dressed by a favorable judicial decision. Spokeo, 136 S. Ct.
 at 1547; Consumer Watchdog v. Wis. Alumni Research
 Found., 753 F.3d 1258, 1261 (Fed. Cir. 2014).
    Mayborn has shown here that it satisfies these require-
 ments and thus has Article III standing to maintain its
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 6                                 MAYBORN GROUP, LTD.   v. ITC

 appeal. First, Mayborn has shown that it has suffered an
 injury in fact as a result of the GEO. Mayborn imports
 products that potentially infringe the ’850 patent and
 therefore violate the GEO. As an initial matter, and con-
 trary to the Commission’s arguments, it is unnecessary for
 the Commission to have already barred importation of
 Mayborn’s products for Mayborn to have standing to ap-
 peal the Commission’s decision. Cf. JTEKT Corp. v. GKN
 Automotive LTD., 898 F.3d 1217, 1220 (Fed. Cir. 2018)
 (holding that an inter partes review petitioner may appeal
 the Board’s decision on showing “that it is engaged or will
 likely engage ‘in an activity that would give rise to a possi-
 ble infringement suit’” (quoting Consumer Watchdog, 753
 F.3d at 1262) (alteration omitted)).
      As the Commission acknowledges, Commission Br. 7,
 17, CBP may at any moment determine that Mayborn’s
 products violate the GEO and halt their importation.
 § 1337(d)(1). Mayborn understandably sees this, or an en-
 forcement action by the Commission, as a real threat to its
 business. VastFame Camera, Ltd. v. Int’l Trade Comm’n,
 386 F.3d 1108, 1113, 1116 (Fed. Cir. 2004) (permitting the
 Commission to conduct enforcement proceedings). The
 threat of injury is not merely conjectural, as Mayborn has
 lost sales and incurred costs stemming from the Complain-
 ants’ threats to assert the GEO, with attendant reputa-
 tional injury, market share loss, and damage to Mayborn’s
 brand and its relationships with retailers. Mayborn Open-
 ing Br. 13–17; Commission Br. 17; cf. E.I. DuPont de
 Nemours & Co. v. Synvina C.V., 904 F.3d 996, 1005 (Fed.
 Cir. 2018). Thus, given the strong possibility the Commis-
 sion or CBP might act to enforce the GEO at any time and
 Complainants’ ongoing efforts to assert the GEO against
 Mayborn, Mayborn has alleged that the GEO has injured
 it in a “particularized” and “concrete” manner.
     The Commission’s chief argument is that this injury is
 not traceable to the Commission but instead to the Com-
 plainants. The Commission adds that the Complainants’
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 MAYBORN GROUP, LTD.   v. ITC                                7

 views concerning whether Mayborn’s products violate the
 GEO are irrelevant, as it is CBP and the Commission that
 decide whether to exclude specific products under a GEO.
     We disagree with the Commission on this point. May-
 born’s injuries stem from its risk of infringing the ’850 pa-
 tent, the consequences of which are heightened by the
 existence of the GEO. See 19 C.F.R. § 12.39(b)(1) (the Com-
 mission “may direct” CBP to exclude products “violating or
 suspected of violating section 337”). The Complainants
 may have brought the GEO to the attention of Mayborn
 and its commercial partners, but it is the Commission that
 has issued the GEO, and it retains the ability to enforce,
 modify, or rescind it. See 19 U.S.C. § 1337(k)(1). Thus,
 Mayborn’s injuries may be fairly traced to the conduct of
 the Commission.
      Finally, Mayborn’s injuries are likely redressable. The
 relief Mayborn seeks—an invalidity judgment and rescis-
 sion of the GEO—would remove the threat of enforcement
 against Mayborn by CBP or in further proceedings at the
 Commission. We therefore conclude that Mayborn has Ar-
 ticle III standing to appeal from the Commission’s decision.
                          II. Merits
     Mayborn argues that the Commission erred in holding
 that an invalidity challenge is not a proper basis for a peti-
 tion for rescission or modification of an exclusion order un-
 der § 1337(k)(1).       Mayborn also asserts that the
 Commission failed to heed its own regulation, 19 C.F.R.
 § 210.76, by not considering the merits of its petition, and
 that the public interest lies in resolving patent validity.
     The Commission responds that Mayborn’s invalidity
 challenge is not a changed condition under § 1337(k)(1)—
 unlike a subsequent final judgment of invalidity or license
 agreement between the affected parties—and the Commis-
 sion therefore had no obligation to consider the substance
 of Mayborn’s petition. The Commission also maintains
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 8                                 MAYBORN GROUP, LTD.   v. ITC

 that it lacks statutory authority to consider an invalidity
 challenge outside of an investigation or enforcement pro-
 ceeding, regardless of Mayborn’s insistence that the public
 interest generally lies in doing so.
      Patent invalidity is an affirmative defense to an action
 for infringement in district court or before the Commission.
 35 U.S.C. § 282(b); see Guangdong Alison Hi-Tech Co. v.
 Int’l Trade Comm’n, 936 F.3d 1353, 1359 (Fed. Cir. 2019)
 (citing One-E-Way, Inc. v. Int’l Trade Comm’n, 859 F.3d
 1059, 1062 (Fed. Cir. 2017)). All factual propositions and
 inferences underlying an invalidity defense must be proven
 by clear and convincing evidence. Microsoft Corp. v. i4i
 Ltd. P’ship, 564 U.S. 91, 95 (2011).
      But we agree with the Commission and conclude that
 Mayborn’s invalidity challenge is not a permissible basis
 for it to petition for rescission or modification of the GEO.
 The Commission may only act pursuant to powers granted
 to it by Congress. See Kyocera Wireless Corp. v. Int’l Trade
 Comm’n, 545 F.3d 1340, 1355 (Fed. Cir. 2008) (“The ITC is
 a creature of statute, and must find authority for its actions
 in its enabling statute.”). Under § 1337(b), the Commission
 is empowered to investigate violations of § 1337(a), which
 prohibits, among other things, “the importation into the
 United States, the sale for importation, or the sale within
 the United States after importation” of articles that “in-
 fringe a valid and enforceable United States patent.” The
 Commission is also permitted under § 1337(b) to conduct
 proceedings to enforce an existing exclusion order.
 VastFame, 386 F.3d at 1113. The Commission may also
 rescind or modify an exclusion order when “the conditions
 which led to such exclusion . . . no longer exist,” or when a
 party previously adjudged in violation of § 1337(a) petitions
 for a “determination that the petitioner is no longer in vio-
 lation of [Section 337].” 35 U.S.C. § 1337(k).
     The Commission correctly denied Mayborn’s petition
 for two independent reasons. First, the Commission may
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 MAYBORN GROUP, LTD.   v. ITC                                9

 only adjudicate patent validity when an invalidity defense
 is raised by a respondent in the course of an investigation
 or an enforcement proceeding pursuant to § 1337(b). That
 did not occur here as Mayborn was not a party to the pro-
 ceeding. This court has carefully considered the Commis-
 sion’s power to adjudicate patent validity, first granted to
 it by Congress in the Trade Act of 1974, Pub. L. No. 93-618,
 88 Stat. 1978 (1975), and we have long held that the Com-
 mission lacks authority to do so “when no defense of inva-
 lidity has been raised.” Lannom Mfg. Co. v. Int’l Trade
 Comm’n, 799 F.2d 1572, 1580 (Fed. Cir. 1986). In Lannom,
 this court explained that § 1337(c) was enacted to abrogate
 precedent that barred the Commission from addressing a
 respondent’s invalidity defense. Id. at 1576–79; see also
 § 1337(c) (allowing a respondent to present “[a]ll legal and
 equitable defenses” in the course of an investigation au-
 thorized under § 1337(b)). Since Mayborn’s petition did not
 raise an invalidity defense in the course of an investigation
 or enforcement proceeding under § 1337(b), the Commis-
 sion lacked the authority to adjudicate its invalidity chal-
 lenge.
     Furthermore, subsection (k)(1) does not permit an end-
 run around this rule. 19 C.F.R. § 210.76(a)(1) interprets
 the statute to allow a person to petition for rescission or
 modification of an exclusion order when the person “be-
 lieves that changed conditions of fact or law, or the public
 interest, require that an exclusion order . . . be modified or
 set aside.” A petitioner’s invalidity challenge is not, on its
 face, a changed condition under § 1337(k)(1) and is thus not
 a proper basis for a petition to rescind or modify an exclu-
 sion order. The ’850 patent has not been held to be invalid,
 which would indeed be a changed condition.
     While Mayborn argues that the “public interest” gener-
 ally lies in “resolving questions of patent validity,” May-
 born Opening Br. 43–44 (quoting Cardinal Chem. Co. v.
 Morton Int’l, Inc., 508 U.S. 83, 100 (1993) (internal quota-
 tion marks omitted)), the “public interest” in § 210.76(a)(1)
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 10                                MAYBORN GROUP, LTD.   v. ITC

 must be interpreted consistently with § 1337(k)(1), which
 only allows a petition that alleges changed conditions. Sec-
 tion 210.76(a)(1), consistent with § 1337(k)(1), thus re-
 quires a petitioner to show a change in the “public interest”
 conditions that led the Commission to issue the exclusion
 order in the first place. These public interest conditions
 are enumerated in Section 337 itself. Under § 1337(d)(1),
 the Commission must enter an exclusion order upon a find-
 ing of a violation “unless, after considering the effect of
 such exclusion upon the public health and welfare, compet-
 itive conditions in the United States economy, the produc-
 tion of like or directly competitive articles in the United
 States, and United States customers” the Commission con-
 cludes the articles should not be excluded. None of those
 conditions has been shown here.
     Here, as in many similar situations, the regulation’s
 invocation of the public interest does not grant the agency
 a “roving commission,” A.L.A. Schechter Poultry Corp. v.
 United States, 295 U.S. 495, 551 (1935) (Cardozo, J., con-
 curring) (citation omitted), nor can it be interpreted to
 greatly expand the limited nature of the authority granted
 to the Commission in Section 337, see, e.g., Kyocera, 545
 F.3d at 1355. Mayborn did not argue in its petition that
 the public interest conditions listed in § 1337(d)(1) had
 changed since the Commission issued the GEO, and its con-
 tention that the public interest favors its invalidity chal-
 lenge is therefore meritless.
     Mayborn also compares its invalidity challenge to the
 Commission’s practice of rescinding exclusion orders once
 the patent at issue has been found invalid or unpatentable,
 but its analogy is inapt. A patent claim is extinguished
 upon a final judgment of invalidity or a final decision of
 unpatentability, and “[i]t is well established that an injunc-
 tion must be set aside when the legal basis for it has ceased
 to exist.” ePlus, Inc. v. Lawson Software, Inc., 789 F.3d
 1349, 1354 (Fed. Cir. 2015). The Commission’s practice is
 consistent with this principle and § 1337(k)(1), which
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 MAYBORN GROUP, LTD.   v. ITC                                11

 allows rescission of an exclusion order upon a changed con-
 dition of law. In contrast, the legal status of the ’850 patent
 is unaffected by Mayborn’s wish to present an invalidity
 challenge. See Roper Corp. v. Litton Sys., Inc., 757 F.2d
 1266, 1270 (Fed. Cir. 1985) (“A patent is born valid. It re-
 mains valid until a challenger proves [its invalidity].”).
                         CONCLUSION
     We have considered the parties’ further arguments but
 find them unpersuasive. The decision of the Commission
 is
                         AFFIRMED