Delorme v. ITC: Federal Circuit Upholds $6.2 Million Penalty For Consent Order Violation Despite Finding Patent Invalid

On November 12, 2015, a divided Federal Circuit panel upheld enforcement of the ITC's $6.2 million civil penalty against DeLorme Publishing Company, Inc. and DeLorme inReach LLC. It did so despite the fact that, in an order issued the same day, the same panel affirmed a district court ruling that the patent-in-suit is invalid.

The patent, U.S. Patent No. 7,991,380, claimed a two-way global satellite emergency monitoring and reporting system comprised of two major components: a user unit and a monitoring system. The ITC had found that DeLorme violated a consent order that prohibited its importation of satellite communication devices and components until the expiration or invalidation of the patent. Although the claims were subsequently invalidated in a district court proceeding, the Federal Circuit held that, because the consent order "unambiguously" indicated that the effect of invalidation would apply prospectively, the penalty must be upheld.

We reported on the oral argument in a post dated October 23, 2015, here:

Background

In Certain Two-Way Global Satellite Communication Devices, System and Components Thereof, Inv. No. 337-TA-854, complainant BriarTek IP, Inc. accused its competitor DeLorme of violating Section 337 by infringing BriarTek's '380 patent. BriarTek alleged that DeLorme's inReach messaging devices infringed the '380 patent when used with other components of the patented system. DeLorme resolved the ITC investigation through a consent order in which it agreed not to import or sell after importation "any two-way global satellite communication devices, system, and components thereof, that infringe claims 1, 2, 5, 10-12, and 34 of the '380 patent after April 1, 2013, until the expiration, invalidation, and/or unenforceability of the '380 patent."

Immediately following entry of the consent order and termination of the investigation, BriarTek filed an enforcement complaint on April 10, 2013. The enforcement proceeding challenged DeLorme's domestic assembly of its inReach devices using various imported components. One model was assembled almost entirely from imported parts: an Iridium modem and antenna, a keypad, a battery and the plastic housing. A second model used only two imported components: the plastic housing and a clip to hold the device on a user's belt. None of these components was alleged, by itself, to infringe. Following discovery and an evidentiary hearing before the ALJ, the Commission issued an opinion and order on...