ITC Monthly Wrap-Up: January 2023

The U.S. International Trade Commission’s Foray Into District Court Litigation

In addition to its typical operations this January, the U.S. International Trade Commission also found itself in the unusual position of moving to intervene in litigation from the District of Delaware between Siemens Industry Software, Inc., and Bell Semiconductor, LLC. On December 29, 2022, Siemens moved to enjoin Bell from participating in two Section 337 investigations pending before the Commission and other District Court litigation.ⁱ In the two Section 337 investigations—Certain Electronic Devices, Semiconductor Devices, and Components Thereof, Inv. No. 337-TA-1340 (“the 1340 investigation”); and Certain Semiconductor Devices Having Layered Dummy Fill, Electronic Devices, and Components Thereof, Inv. No. 337-TA-1342 (“the 1342 investigation”)—Bell alleged Seimens’ customers infringed certain patents related to Seimens’ software tools.ⁱⁱ Seimens argued the court should enjoin the investigations under the “customer-suit exception” and marched through the relevant factors.ⁱⁱⁱ

On January 17, 2023, the Commission moved to intervene.^iv The Commission signaled its opposition to the injunction in its motion.^v The Commission argued that Seimens failed to avail itself of the opportunity to intervene in these investigations directly under 19 C.F.R. § 210.19.^vi Instead, according to the ITC’s motion, Seimens filed its complaint in the District of Delaware and then waited nearly a month to move for a preliminary injunction.^vii The Commission argued against the injunction because it would “substantially interfere with the Commission’s ability to conduct those investigations” and “would stunt the participation of the very party alleging a violation of section 337.”^viii

The Commission also touted its expertise in adjudicating patent cases and emphasized that a District Court may benefit from this expertise at the conclusion of an investigation under 28 U.S.C. § 1659(b).^ix The Commission explained it has conducted over 1000 investigations with nearly all involving allegations of patent infringement.^x Further, the Commission is staffed with nearly three dozen attorneys with technical degrees who participate in its investigations, including Office of Unfair Import Investigations, and as attorney advisors to the administrative law judges.^xi Consequently, through its motion, the Commission reiterated the practice of litigants moving to stay District Court litigation while an investigation is pending rather than the other way around.

Indeed, complainants in Section 337 investigations commonly file parallel District Court litigation. Often the allegations in both venues involve the same patents and claims. When this occurs, the defendant in the District Court—who is the respondent in the Section 337 investigation—may move to stay the District Court litigation “with respect to any claim that involves the same issues involved in the proceeding before the Commission[.]”^xii Upon a timely request, the “district court shall stay [the litigation], until the determination of the Commission becomes final[.]”^xiii This is known as the mandatory stay provision.^xiv Its purpose is apparent: “the purpose of the statute is to avoid duplicative proceedings.”^xv For this reason, the record created before the Commission is provided to the District Court and is admissible.^xvi

Although uncommon, the Commission is not a stranger to District Court litigation. From time to time, the Commission intervenes in District Court litigation to address the same issue. The Commission’s record so far is strong. In nearly all cases, the Commission has successfully intervened to oppose injunctions similar to the request in Siemens Industry Software Inc. See Hyundai Motor Am., Inc. v. Direct Techs. Int'l, Inc., No. 3:17-CV-732-MOC-DSC, 2019 WL 3403370, at *3 (W.D.N.C. July 26, 2019) (“[E]very federal court presented with a motion under similar circumstances has refused to enjoin the ITC proceeding in favor of a parallel district court case.”); see also Hoist Fitness Sys., Inc. v. TuffStuff Fitness Int'l, Inc., No. 5:17-CV-01388-AB-KK, 2018 WL 8222261, at *1 (C.D. Cal. Dec. 20, 2018) (“TuffStuff has pointed to no authority by which a district court may enjoin a litigant from pursuing parallel proceedings before the ITC in the circumstances here.”); Kaisha v. Bombardier, Inc., No. SA CV 00-549 DOC, 2001 WL 1388911, at *3 (C.D. Cal. Mar. 9, 2001) (“[T]he Court is bound by the statutory provisions and its understanding that it cannot interfere with the statutory duties of the ITC under these facts.”); Texas Instruments Inc. v. Tessera, Inc., 192 F.R.D. 637, 641 (C.D. Cal. 2000) (“[T]here has been no convincing demonstration that the statutorily authorized ITC investigation should be obstructed by enjoining the ITC Complaint[.]”); In re Convertible Rowing Exerciser Patent Litig., 616 F. Supp. 1134, 1139, 1144-45 (D. Del. 1985) (“As a consequence, the All Writs Act provides no basis upon which to exercise jurisdiction and the Court is left without power under these circumstances to directly enjoin, suspend or stay the ITC investigation.”).^xvii

To conclude the January 2023 edition, the Commission also conducted its routine business. The Commission issued an opinion in Certain Wearable Electronic Devices with ECG Functionality and Components Thereof, Inv. No. 337-TA-1266 (Jan. 20, 2023), in which it discussed various methods of evaluating the “significance” of a Complainant’s domestic industry under subsections 337(a)(3)(A), (B). The Commission also instituted three new Section 337 investigations: Certain Active Matrix Organic Light-Emitting Diode Display Panels And Modules For Mobile Devices, And Components Thereof; Inv. No. 337-TA-1351; Certain Integrated Circuits, Components Thereof, and Products Containing the Same; Inv. No. 337-TA-1350; and Components for Certain Environmentally-Protected LCD Digital Displays and Products Containing Same; Inv. No. 337-TA-1349.

ⁱ Siemens Industry Software Inc., Case No. 1:22-cv-01569-CFC, D.I. 17 at 1 (D. Del. Dec. 29, 2022)

ⁱⁱ D.I. 17 at 3.

ⁱⁱⁱ D.I. 17 at 2-5

^iv Siemens Industry Software Inc. v. Bell Semiconductor, LLC, Case No. 1:22-cv-01569-CFC, D.I. 26 (D. Del. Jan. 17, 2023).

^v Siemens Industry Software Inc., Case No. 1:22-cv-01569-CFC, D.I. 26 at 1.

^vi Id. at 7.

^vii Id.

^viii Id.

^ix Id. at 3.

^x Id.

^xi Id. at 3-4.

^xii 28 U.S.C § 1659(a).

^xiii Id.

^xiv See, e.g., Arris Solutions, Inc. v. Sony Interactive Entertainment LLC, 2017 WL 4536415, at *1 (N.D. Cal., Oct. 10, 2017) (“[S]uch a stay is mandatory under 28 U.S.C. § 1659(a).”).

^xv In re Princo Corp., 486 F.3d 1365, 1368 (Fed. Cir. 2007).

^xvi 28 U.S.C § 1659(b).

^xvii The Federal Circuit affirmed an injunction prohibiting a party from participating in a Section 337 investigation only when a preexisting forum selection clause required resolution in a District Court. See Gen. Protecht Grp., Inc. v. Leviton Mfg. Co., Inc., 651 F.3d 1355, 1365-55 (Fed. Cir. 2011) (holding forum selection clause stating “any dispute between the Parties relating to or arising out of this [Settlement Agreement] shall be prosecuted exclusively in the United States District Court for the District of New Mexico” precluded litigation in the ITC).