ITC Monthly Wrap-Up: January 2024

January saw three new Section 337 complaints filed with the International Trade Commission (ITC):

• Capacitive Discharge Ignition Systems, Components Thereof, and Products Containing the Same, Dkt. No. 337-TA-3717
• Certain Network Equipment Supporting NETCONF, Dkt. No. 337-TA-3718
• Certain Oil Vaporizing Devices, Components Thereof, and Products Containing the Same; Dkt. No. 337-TA-3720

The Commission also instituted five investigations in January:

• Certain Furniture Products Finished with Decorative Wood Grain Paper and Components Thereof, Inv. No. 337-TA-1385
• Certain Self-Balancing Electric Skateboards and Components Thereof, Inv. No. 337-TA-1386
• Certain Electronic Computing Devices, and Components and Modules Thereof, Inv. No. 337-TA-1387
• Certain Cellular Base Station Communication Equipment, Components Thereof, and Products Containing the Same, Inv. No. 337-TA-1388
• Certain Computing Devices Utilizing Indexed Search Systems and Components Thereof, Inv. No. 337-TA-1389

This month’s ITC wrap-up focuses on an initial determination in an investigation regarding constitutional standing, which is a requirement at the Commission as in federal court. Specifically, on January 9, 2024, administrative law judge (ALJ) Moore granted respondents Mianyang BOE Optoelectronic Technology Co. Ltd., Injured Gadgets LLC, Parts4LCD, Phone LCD Parts LLC, and Wholesale Gadget Parts Inc.’s motion for summary determination and found that the complainant, Samsung Display Co., Ltd. (“Samsung Display”), lacks constitutional standing to bring and maintain a Section 337 investigation. See Certain Active Matrix Organic Light-Emitting Diode Display Panels and Modules for Mobile Devices, and Components Thereof, Inv. No. 337-TA-1351, Order No. 44 (“ID”)(Jan. 9, 2024).

In evaluating the respondents’ motion, ALJ Moore started with Commission Rule 210.12, which requires that intellectual property-based complaints “include a showing that at least one complainant is the owner or exclusive licensee of the subject intellectual property.” 19 C.F.R. § 210.12(a)(7). ID at 3. In applying that rule, the Commission evaluates constitutional standing (which requires that the complainant or plaintiff have an exclusionary right in the patent to assert it) and prudential standing (which requires that the complainant or plaintiff have all substantial rights in the patent to assert it without joining another complainant or plaintiff), based on precedent in federal courts. Id. at 3-4. In the ID, ALJ Moore noted that precedential opinions on the issue of constitutional standing can be inconsistent and confusing. Id. at 13. He then analyzed relevant Federal Circuit and District Court opinions that the parties discussed in their respective briefs.

ALJ Moore started the analysis with WiAV Solutions LLC v. Motorola Inc., 631 F.3d 1257 (Fed. Cir. 2010), which concerned the question of whether an exclusive licensee to a patent has constitutional standing. According to the Federal Circuit, “the touchstone of constitutional standing in a patent infringement suit is whether a party can establish that it has an exclusionary right in a patent that, if violated by another, would cause the party holding the exclusionary right to suffer legal injury.” Id. at 1265. In that case, the Federal Circuit held that an exclusive licensee may lack constitutional standing to sue if the infringer holds a preexisting license or can obtain a license from a third party because in such scenario, the licensee’s right in the patent is not exclusionary. Id. at 1267.

ALJ Moore then considered three District Court cases, Uniloc USA Inc. v. Apple, Inc No. C 18-00358 WHA, 2020 WL 7122617 (N.D. Cal. Dec. 4, 2020) (hereinafter, “Uniloc California”); Uniloc USA Inc. v. Motorola Mobility LLC, Civil Action No. 17-1658-CFC, 2020 WL 7771219 (D. Del. Dec. 30, 2020) (hereinafter, “Uniloc Delaware”); and Intellectual Tech LLC v. Zebra Techs. Corp., No. 6:19-cv-00628-ADA, 2022 WL 1608014 (W.D. Tex. May 20, 2022). The District Courts in those cases applied the Federal Circuit’s opinion in WiAV on the constitutional standing of exclusive licensees and held that even a patentee (or patent owner) may lack constitutional standing to sue if a third party has an unfettered right to sublicense the patents at issue. ID at 15-21. For example, according to the Uniloc California court, under the circumstances present there, the patentee could not have had “an expectation that others would not practice the [patent] and would not have been injured if and when others did so.” Uniloc California, 2020 WL 7122617, at *7. Further, the courts in the three decisions noted above considered whether the third party’s right to sublicense is “unfettered” – i.e., whether it has the “sole and absolute discretion” to grant the license. Id.; Uniloc Delaware, 2020 WL 7771219, at *6; Intellectual Tech, 2022 WL 1608014, at *7.

ALJ Moore also addressed the Federal Circuit’s dicta in Uniloc Delaware’s appeal, which affirmed the District Court’s decision based on collateral estoppel. Uniloc USA, Inc. v. Motorola Mobility LLC, 52 F.4th 1340 (Fed. Cir. 2022). In that decision, the Federal Circuit noted that “[p]atent owners and licensees do not have identical patent rights, and patent owners arguably do not lack standing simply because they granted a license that gave another party the right to sublicense the patent to an alleged infringer.” Id. at 1345. However, the court noted that it “need not resolve” the question of standing, which left the issue of the patentee’s constitutional standing up in the air. Id. In separate comments on the issue of standing, Judge Lourie reiterated that a patentee does not lose the right to sue an unlicensed infringer merely because it granted a non-exclusive license to a third party with the right to sublicense. Id. at 1351 (Lourie, J., concurring) (“The grant of a non-exclusive license with the right to sublicense, as here, gives the licensee the right to sublicense others. But the patentee still retains the right to sue unlicensed infringers.”).

After evaluating various decisions from the Federal Circuit and District Courts, ALJ Moore observed that constitutional standing requires the complainant to have suffered some injury-in-fact – i.e., a violation of its exclusionary right in the patent. ID at 22-23. Thus, ALJ Moore stated that, “if a complainant has contracted away its exclusionary rights, it does not suffer a legal injury.” Id. at 23. He further echoed other opinions that “constitutional standing . . . does not depend on labels,” such as whether the complainant is a patentee (i.e., patent owner) or exclusive licensee. Id. at 24. Thus, ALJ Moore held that even a patentee can lose constitutional standing by granting a third party the unfettered right to sublicense. Id. at 24-25. He expressed that such a result is reasonable because under such circumstances, “the patentee does not actually have the right to exclude – instead, the right to exclude is merely illusory.” Id. at 30. Applying those concepts to the facts at issue (which are highly redacted in the decision), ALJ Moore found that the complainant, Samsung Display, lacked constitutional standing to bring the investigation. Samsung Display has petitioned for review of the decision, and as of this writing, the Commission has not ruled on the petition.

The ID in the 1351 Investigation underscores the importance of evaluating constitutional and prudential standing issues in Section 337 investigations – even when the complainant is the current assignee of the asserted patents.