In Certain Three-Dimensional Cinema Systems and Components Thereof, Inv. No. 337-TA-939, the ITC for the first time suspended enforcement of a remedial order in view of a Patent Trial and Appeal Board Final Written Decision of unpatentability after inter partes review even though the ITC itself had found the patent valid and infringed. The ITC’s recently-issued opinion explaining the basis for the suspension sheds light on the potential impact of post-grant review proceedings on future Section 337 cases.
In particular, the ITC does not have a favorable view of issue preclusion (i.e. collateral estoppel) arguments based on IPR rulings. While it found the accused infringer (respondent) had not shown that the necessary issue preclusion prerequisites were met, the ITC also recited the “well-known” exception to issue preclusion where different burdens of persuasion apply. The ITC stated that the respondent had not adequately addressed the applicability of the exception in view of the fact that a PTAB petitioner has a lesser burden than a respondent challenging patent validity before the ITC.
The ITC also rejected respondent’s arguments based on the effect of the PTAB’s findings on the merits of the ITC case as unpersuasive because many findings “were made in the context of the PTAB’s analysis and denial of [the patent owner’s] motion to amend,” where the burden is on the patent owner to prove patentability. The Commission also noted that “the evidence and arguments considered by both tribunals do not appear to be entirely the same,” including evidence that the patent owner’s “domestic industry products practice at least one asserted claim” of the patent at issue in the PTAB proceeding, which “supports a different conclusion than the PTAB with respect to secondary considerations.”
Despite rejecting the arguments for the preclusive effect or persuasiveness of the PTAB’s IPR ruling, the ITC nevertheless determined to suspend the remedy based on its “broad discretion in selecting the form, scope and extent of the remedy.” The ITC noted that discretionary suspension was warranted in light of the “advanced posture of the IPR proceeding” and because the suspension would have no practical effect given that all of the products would still be subject to exclusion based on the ITC’s violation finding with respect to two other patents.
The ITC’s reliance on its remedial discretion rather than on issue preclusion or other legal doctrines makes its holding less significant for future cases than it otherwise might have been. Nevertheless, certain dicta in the opinion may have more significance than the holding. First, the opinion throws cold water on the possibility of staying an ITC investigation based on a parallel IPR proceeding in the PTAB, noting “the statutory mandate to complete section 337 investigations expeditiously.” Second, the opinion leaves open the option to “take appropriate” action upon conclusion of any appeal. The opinion’s recitation of the Federal Circuit’s holding in Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330 (Fed. Cir. 2013) that there is no distinction in the effect on a litigation “between a final, affirmed court decision determining invalidity and a final, affirmed PTO decision determining invalidity,” followed by reference to the ITC’s own practice of modifying remedial orders after invalidity holdings by district courts, signals that the Commission may ultimately modify its remedial orders in this and potentially other investigations in deference to an affirmed IPR decision. If so, IPRs may take on increased importance as a strategy for parrying ITC remedial orders.