Suprema v. ITC: Induced Infringement Of A Method Patent Supports A Section 337 Violation

On August 10, 2015, the en banc United States Court of Appeals for the Federal Circuit held that articles that do not directly infringe until after they have been imported into the United States may nonetheless qualify as "articles ... that infringe" that can be excluded from entry by the United States International Trade Commission pursuant to 19 U.S.C. § 1337. Suprema, Inc. v. U.S. Int'l Trade Comm'n, No. 2012-1170, slip op. (Fed. Cir. Aug. 10, 2015). Under the facts of this case, importation of a device that is programmed after importation is subject to ITC relief, as programmed, based on induced infringement of method claims. The decision confirms that direct infringement of patented methods and indirect infringement based on active inducement remain viable theories for seeking relief under Section 337. And the decision reaffirms the rights of United States intellectual property rights holders, who can pursue aggressive unfair trade remedies against domestic acts of infringement that use imported articles, consistent with the Commission's longstanding practice and its mandate to protect intellectual property rights at United States borders. But, because Supreme Court review of the Suprema decision remains possible, this may not be the last word on the subject.

Background

Section 337 is one of several United States trade laws directed to unfair import practices. Among other things, Section 337 defines certain unlawful acts relating to articles imported into the United States that infringe a United States patent, specifically "[t]he importation into the United States, the sale for importation, or the sale within the United States after importation ... of articles that ... infringe a valid and enforceable United States patent...." 19 U.S.C. § 1337(a)(1)(B)(i) (emphasis added). Patent holders seeking relief under Section 337 may file a complaint with the Commission, and the Commission then determines whether to institute an investigation based thereon. If the Commission finds a violation, it may issue prospective relief, including exclusion orders that direct United States Customs and Border Protection ("Customs") to bar infringing articles from entry into the United States, as well as cease and desist orders that prohibit domestic distribution of infringing articles. The Suprema investigation started as a typical Section 337 case, in which the patent holder sought relief against a foreign manufacturer and a domestic importer of infringing products. Complainant Cross Match Technologies, Inc. ("Cross Match") owns the rights to several patents relating to fingerprint scanning technology, including United States Patent No. 7,203,344 ("'344 patent"). In its May 2010 complaint, Cross Match accused respondents Suprema, Inc. ("Suprema") and Mentalix, Inc. ("Mentalix") of violating Section 337 through their activities relating to certain fingerprint scanners imported into the United States, which Cross Match alleged to infringe its patent rights. Suprema, a Korean company, manufactured scanners and sold them to Mentalix, an American company. Suprema also supplied a software development kit ("SDK") for creating customized operating software. Mentalix bought scanners from Suprema and imported them into the United States. Then, Mentalix programmed the scanners using the SDK, and resold them in the United States. In June 2010, the Commission instituted a Section 337 investigation based on Cross Match's complaint. The presiding Administrative Law Judge ("ALJ") found that the accused fingerprint scanners, when programmed by Mentalix in the United States using Suprema's software kit, practiced all of the limitations of one method claim recited in the '344 patent. Based on that infringement finding, the ALJ issued an Initial Determination of a violation of Section 337, and recommended issuance of a limited exclusion order that barred Suprema's accused scanners from entry into the United States. The ALJ also issued a cease and desist order preventing Mentalix from distributing the scanners in the United States. In June 2011, the Commission reviewed the ALJ's Initial Determination regarding direct and indirect infringement of the '344 patent. The Commission found that Mentalix directly infringed the '344 patent by programming Suprema's scanners and then using them inside the United States. The Commission also found that Suprema knew of (or was willfully blind to) the existence of the '344 patent, and actively induced Mentalix's direct infringement when it collaborated "with Mentalix to import the scanners and to help adapt Mentalix's [] software to work with Suprema's imported scanners and SDK to practice ... the '344 patent." (Slip op. at 10.) The Commission determined that the appropriate relief was a limited exclusion order covering the infringing scanners, related software, and products containing the same that were made outside the United States by or on behalf of the respondents. Suprema and Mentalix appealed. In December 2013, a divided panel of the Federal Circuit vacated the Commission's findings of infringement. The majority decision, authored by Judge O'Malley, held that the statutory language of Section 337specifically, "articles ... that infringe"imposes "a temporal requirement and that infringement must be measured...