On October 1, 2015, the International Trade Commission ("the Commission") issued the public version of its opinion in Certain Toner Cartridges, and Components Thereof (Inv. No. 337-TA-918).
By way of background, the investigation is based on a complaint filed by Canon Inc., Canon U.S.A., Inc. and Canon Virginia, Inc. (collectively, "Canon") alleging violation of Section 337 in the importation into the U.S. and sale of certain toner cartridges and components thereof that infringe one or more claims of U.S. Patent Nos. 8,280,878; 8,630,564; 8,682,215; 8,676,090; 8,369,744; 8,565,640; 8,676,085; 8,135,304 and 8,688,008. See our May 8, 2014 and June 11, 2014 posts for more details on the complaint and notice of investigation ("NOI"), respectively.
The NOI named 33 companies as respondents. The ALJ terminated the investigation based on Canon's withdrawal of the complaint as to two respondents, Ninestar Image Tech, Ltd. and Seine Image Int'l Co., Ltd. See our July 10, 2014 post for more details. Canon withdrew its complaint with respect to the '744, '640, '085 and '604 patents, and the ALJ partially terminated the investigation as to same. See our August 21, 2014 post for more details. The ALJ terminated the investigation based on consent orders as to 15 respondents. See our October 13, 2014, November 3, 2014 and March 11, 2015 posts for more details. The ALJ terminated the investigation as to respondent Seine Image (USA) Co., Ltd. due to its corporate dissolution. The ALJ found ten respondents in default pursuant to Commission Rule 210.16 for failing to respond to the complaint and notice of investigation. The five remaining respondents answered the complaint and NOI but ceased actively participating in the investigation.
On May 12, 2015, the ALJ issued an initial determination ("ID") granting Canon's motion for summary determination of violations by the defaulting respondents and non-participating respondents, and recommending the issuance of a general exclusion order ("GEO") and several cease-and-desist orders ("CDOs"). On June 24, 2015, the Commission issued a notice determining to review the ID in part and, on review, to modify certain portions of the ID. The modifications did not disturb the ALJ's finding of violations as to the defaulting and non-participating respondents. The Commission requested written submissions on remedy, public interest, and bonding. See our June 24, 2015 post for more details. Only Canon and the Commission Investigative Staff ("OUII") filed submissions pursuant to the Commission notice.
According to the opinion, the Commission decided to issue a GEO based on the following: (1) some respondents failing to appear in and contest the investigation; (2) record evidence showing a high likelihood that manufacturers and resellers of accused products could circumvent a limited exclusion order ("LEO") directed only to the named respondents by replicating operations, sourcing imported accused products from domestic suppliers outside the reach of an LEO, circumventing an LEO through Internet operations, masking identifies and products sources, and using unmarked, generic and/or reseller-branded packaging; (3) undisputed record evidence showing a pattern of substantial and widespread importation and sale of infringing aftermarket toner cartridges throughout the U.S. by the defaulting respondents, the non-participating respondents, the terminated respondents, and non-respondents (e.g., due to low barriers for entry into the aftermarket toner cartridge industry); and (4) difficulty in identifying the source of infringing products, particularly those sold directly to U.S. consumers over the Internet. The Commission also adopted the ALJ's recommendation – supported by Canon and the OUII – to issue CDOs against eight domestic defaulting respondents, but not against the sole foreign defaulting respondent.
Further, the Commission agreed with Canon and the OUII that none of the four public interest factors (public health and welfare, competitive conditions in the U.S. economy, U.S. production of articles that are like or directly competitive with those subject to the investigation, and effect on U.S. consumers) raise concerns that would preclude issuance of the remedial orders in this investigation.
Finally, the Commission agreed with the ALJ and the OUII that the bond amount during the Presidential review period should be set at 100 percent of the entered value of the infringing products since they are sold for a wide range of selling prices and no reliable price differential can be determined.