When Is A Rule A Rule? American And Canadian Approaches

Authored by: Adam D.H. Chisholm, Jessica Rose, Student-at-Law and Jonathan W. Hugg1

A recent decision of the United States Court of Appeals for the Federal Circuit provides an opportunity to contrast how American and Canadian courts respond to the failure of a tribunal to comply with its own procedural rules. Align Technology Inc. v. International Trade Commission2 vacated and remanded a decision of the International Trade Commission ("Commission") because it was contrary to the Commission's Rules of Practice and Procedure. This article examines the basis for that decision and compares it to recent jurisprudence of Canada's highest court.

The Align Consent Order

In 2006, Align filed a complaint with the Commission alleging that OrthoClear was infringing its patents and using its trade secrets. OrthoClear and Align came to a global settlement whereby OrthoClear assigned its complete intellectual property portfolio over to Align. The two companies agreed to enter a Consent Order and jointly file to end the Commissioner's investigation into the issue.3

The Consent Order prohibited OrthoClear from importing particular dental appliances into the United States.4 It also prevented OrthoClear from aiding and abetting the sale and importation of infringing products into the United States.5

The ALJ's Order Dismissing The Intervenors' Motion

Align suspected that OrthoClear was violating the Consent Order and filed a new complaint with the Commission for a proceeding to enforce the Consent Order.6 The Commission began an investigation in the enforcement proceeding.

At the outset, the Commission sought a ruling that the conduct alleged - importation of digital data sets - was within the scope of the Consent Order. The Commission sought this ruling as an "initial determination".7

The Administrative Law Judge (ALJ) considered the scope of the Consent Order and sought briefing on the issue. Meanwhile, Intervenors, third-parties who were alleged to have violated the Consent Order by aiding and abetting, filed a motion with the ALJ to terminate the Commission's investigation alleging the conduct was outside of the consent order.8

The ALJ determined that the alleged conduct did fall within the Consent Order. However, the ALJ did not issue an "initial determination" as sought by the Commission. Instead, the ALJ issued an Order dismissing the Intervenors' motion to terminate the proceedings and scheduled the matter for trial.

The Commission revised the ALJ's Order and terminated the enforcement proceeding.

The Court of Appeals Overturns the Commission's Review

Align appealed the Commission's termination of the enforcement proceeding. At issue before the Court of Appeals of the Federal Circuit was whether the Commission properly reviewed the ALJ's Order. The Commission's Rules of Practice and Procedure explicitly distinguished between rulings made as "initial determinations" and "orders". The Commission was only permitted to review initial determinations.

The Court of Appeals noted that it must overturn any finding or conclusion that was "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law."9 Accordingly, the Court of Appeals held that the Commission could not review the ALJ's Order. This was because the Order was not an "initial determination" which could have been reviewed by the Commission.

The Commission argued that it had discretion to construe the ALJ's Order as an initial determination. However, the Court of Appeals disagreed. The Commission's rules explicitly stated that a denial of a motion...