In a much-anticipated ruling, the U.S. International Trade Commission (ITC) has declined to issue an exclusion order barring hoverboards from the U.S. market, finding that the popular consumer items did not infringe the claims of the patent asserted against them.
The investigation, captioned Certain Motorized Self-Balancing Vehicles, Inv. No. 337-TA-1000, was instituted in May 2016 based on a complaint filed on behalf of Razor USA LLC of Cerritos, California and Inventist, Inc. and Shane Chen, both of Camas, Washington. The notice of institution named twenty-eight companies, most of whom allegedly imported the infringing product, and others (such as the Internet supersite, Alibaba) who were allegedly indirectly involved in importation. Only eight of these companies remained in the case through the hearing before Chief Administrative Law (ALJ) Judge Bullock. The others were either terminated from the investigation based on consent orders or were found in default for failing to appear.
On May 26, 2017, the ALJ issued his decision. He found that Alibaba is not an agent of the other respondents and therefore is not within the jurisdiction of section 337. The ALJ also found that none of the respondents’ accused products infringe the patent, but that all of the defaulting respondents’ accused products infringe the asserted patent based on taking the allegations in the complaint as true. Finally, the ALJ held that the Complainants’ own products did not practice the asserted claims of the patent; therefore, the so-called “technical prong” of Section 337’s domestic industry requirement (that there be a U.S. industry in “articles protected by the patent”) was not satisfied.
On review, the Commission took no issue with the ALJ’s findings that the Complainants’ products did not practice the patent or that the products of the non-defaulting respondents do not infringe. However, the Commission vacated the ALJ’s infringement findings regarding the defaulting respondents. The Commission’s Notice explained that Section 337 provides specific “conditions and procedures applicable for issuing a default remedy” but that the finding that Complainants failed to satisfy the domestic industry requirement mooted any need to consider remedies against the defaulting respondents. In other words, absent a domestic industry, there was no statutory right to a remedy, and the defaulting respondents’ products therefore could not be barred. As for Alibaba, the Notice states that the Commission is taking no position on the ALJ’s finding that the Commission has no jurisdiction over Alibaba. By taking no position, the Commission has immunized the question of jurisdiction over Alibaba from any appeal because the Federal Circuit will not review an issue on which the Commission takes no position.