ITC Has Jurisdiction Over Allegations of Induced Infringement of Method Claims

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Federal Circuit Review – Issue No. 64-02
ITC Has Jurisdiction Over Allegations of Induced Infringement of Method Claims

Suprema, Inc. v. ITC, No. 2012-1170, 2015 U.S. App. LEXIS 13929 (Fed. Cir. Aug. 10, 2015) (En banc, Before Prost, C.J.; Newman, Lourie, Dyk, O’Malley, Reyna, Wallach, Taranto, Chen, and Hughes, J.) (Opinion for the court, Reyna, J.).  Click Here for a copy of the opinion.

Cross Match Technologies, Inc. (“Cross Match”) sued Mentalix Incorporated (“Mentalix”), a domestic importer of fingerprint scanners, for allegedly infringing claim 19 of its U.S. Patent 7,203,344 (“the ’344 patent”).  Cross Match also sued Suprema, Inc. (“Suprema”), the Korean developer of the imported scanners.  Claim 19 of the ’344 patent is directed to “[a] method for capturing and processing a fingerprint image.” Cross Match alleged that the two companies infringed claim 19 when Suprema’s scanners were used with Mentalix software after importation into the U.S. The International Trade Commission (“ITC”) agreed, finding that  the Mentalix software, as used on the scanners, directly infringed claim 19, and that Suprema induced the infringement by actively encouraging combining the  Mentalix software with its scanners. Further, importation of the scanners violated Section 337 of the Tariff Act of 1930 (“Section 337”). The ITC issued a limited exclusion order “covering infringing scanners, associated software, and products containing the same that were manufactured overseas by or imported by or on behalf of Suprema or Mentalix, or any entity affiliated with either company.” Mentalix and Suprema appealed the ITC’s findings of direct and indirect infringement, and requested that the ITC’s limited exclusion order be vacated.

The Federal Circuit at first reversed the ITC’s decision, reasoning that “Section 337’s language, ‘articles that infringe, is a temporal requirement and that infringement must be measured at the time of importation.” Here, the ITC lacked authority under Section 337 to issue an exclusion order “predicated on induced infringement” because the imported scanners were “not in an infringing state upon importation.” Cross Match and the ITC petitioned for a rehearing en banc.

The Federal Circuit took the case en banc, and overturned the panel decision. The Court reviewed the ITC’s interpretation of Section 337 pursuant to the Chevron framework.  Under Chevron step one, the Court found that the phrase “articles that infringe” does not “narrow the provision to exclude inducement or post-importation infringement, but instead introduces “textual uncertainty.” As Congress has not yet provided “unambiguous resolution” to the scope of “articles that infringe,” the Court proceeded to the second Chevron step.  Under Chevron step two, the Court deemed that the ITC’s interpretation of Section 337 was reasonable because it was “consistent with the statutory text, policy, and legislative history of Section 337,” as “Section 337 contemplates that infringement may occur after importation.” Further, the panel’s interpretation of Section 337 would unnecessarily “eliminate relief for the unfair trade act and induced infringement” by allowing foreign entities “to circumvent Section 337 by importing articles in a state requiring post-importation combination or modification before direct infringement could be shown.”

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