On October 21, 2016, the Commission issued the public version of its opinion denying an emergency motion to stay the modified exclusion order entered in Marine Sonar Imaging Devices, Including Downscan and Sidescan Devices, Products Containing the Same, Inv. No. 337-TA-921 (Modification Proceeding).

The Case

As noted in our August 31, 2016, post, on December 1, 2015, the ITC issued a limited exclusion order against Respondents Garmin International, Inc. and Garmin USA, Inc. (“Garmin”) precluding the importation of marine sonar imaging devices that infringe Complainants Navico Inc. and Navico Holding AS’s (“Navico”) asserted patents. In an Opinion entered the same day, the Commission found that Navico had failed to prove that Garmin induces infringement of the asserted patents by importing stand-alone transducers, which are not incorporated into sonar imaging devices at the time of importation. The Commission also found that Garmin does not contributorily infringe the asserted patents by importing the stand-alone transducers. Accordingly, the ITC carved the stand-alone transducers out of the exclusion order.

On May 20, 2016, Navico filed a petition to modify the limited exclusion order (“LEO”) to clarify the Commission’s position with respect to the stand-alone transducers. The Commission granted Navico’s petition and added the following language to the exclusion order:

Specifically, the provisions of this Order shall not apply to standalone products (for example, a standalone transducer product) that are, or will be, both imported as standalone products and sold after importation as standalone products. By contrast, the provisions of this Order shall apply to components (for example, a transducer component) of marine sonar images devices when such components are, or will be, imported or sold after importation as part of a marine sonar imaging system covered by one or more of the claims recited above in Paragraph 1.

Modified LEO at ¶4 (emphasis added). In its petition to modify the exclusion order, Navico presented evidence that Garmin did not begin importing stand-alone transducers to be combined with sonar imaging devices into the United States until after the remedial orders initially issued. The Commission explained that this change in Garmin’s importation practices warranted modification of the exclusion order to cover the non-infringing transducer components.

On August 24, 2016, Garmin filed a motion requesting that the Commission stay, pending appeal to the Federal Circuit, enforcement of the modified LEO. In its motion, Garmin argued, inter alia, that the Commission did not follow proper procedure under the Administrative Procedure Act (“APA”) when it issued the modified LEO, that the modified LEO creates uncertainty with respect to whether individual transducers are enjoined from importation, and that its redesigned transducers do not infringe the asserted patents.

The Commission denied Garmin’s motion analyzing the facts under its four prong test for stays of remedial orders pending appeal: (1) whether the case presents an admittedly difficult legal question; (2) whether the applicant will be irreparably injured absent a stay; (3) whether the issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies. The Commission held that all four factors weighed against a stay. Of note, the Commission stated that it was permitted to modify the LEO without instituting formal proceedings under the APA. With respect to the scope of the LEO, the Commission clarified that individual transducers that are imported for the purpose of kitting with infringing sonar devices are excluded. Finally, the Commission noted that there has been no adjudication of Garmin’s redesigned products and that Garmin has not availed itself of the many options “to determine whether it may import its purported redesign products, including requesting an advisory opinion from the Commission pursuant to 19 C.F.R. § 210.79(a), seeking an official ruling from Customs pursuant to 19 C.F.R. Part 177, or awaiting Customs action on importation as a predicate for a protest under 19 C.F.R. § 1514.”

Takeaway

The Commission has only granted a stay of Section 337 remedial orders pending appeal once. In Certain Digital Models, Digital Data, and Treatment Plans for Use in Making Incremental Dental Positioning Adjustment Appliances, the Appliances Made Therefrom, and Methods of Making the Same; Inv. No. 337-TA-833, the Commission stayed its remedial orders with respect to infringing digital transmissions pending review by the Federal Circuit—orders that were ultimately overturned by the Federal Circuit in its landmark ClearCorrect opinion. When it issued the stay, the Commission recognized that the investigation presented a difficult question of law and that “most investigations do not justify a delay in effectuating statutory remedies against adjudged infringers. In those cases, the Commission’s mandate to enforce valid and infringed U.S. intellectual property rights overshadows other contentions.” Absent a unique and difficult legal issue arising from the issuance of Section 337 remedial orders, it remains unlikely that the Commission will grant a stay pending appeal.