On November 18, 2016, ALJ Theodore R. Essex issued Order No. 9 and Order No. 10 in Certain Air Mattress Bed Systems and Components Thereof (Inv. No. 337-TA-999).
By way of background, this investigation is based on a complaint filed by Select Comfort and Select Comfort SC Corporation (collectively, “Select Comfort”) alleging violation of Section 337 by Respondents Responsive Surface Technology LLC and Elements of Rest, Inc. (collectively, “ReST”), and American National Manufacturing, Inc. and Dires LLC d/b/a Personal Comfort Bed (collectively, “ANM”) in the importation into the U.S. and sale of certain air mattress bed systems and components thereof that infringe one or more claims of U.S. Patent Nos. 6,804,848 (“the ’848 patent”) and 7,389,554 (“the ’554 patent”). See our April 20, 2016 and May 23, 2016 posts for more details on the complaint and Notice of Investigation, respectively.
According to Order No. 9, Select Comfort and ReST filed a joint motion to terminate the investigation as to the ’554 patent based on a consent order stipulation. ANM did not oppose the motion. Select Comfort and ReST entered into a consent order stipulation in which ReST agreed not to sell for importation, import, or sell after importation in the U.S. any air-supported sleep systems that infringe the asserted claims of the ’554 patent, and represented that no such products are presently inventoried in the U.S. Having found that the consent order stipulation complies with the requirements of Commission Rule 210.21(c)(3), ALJ Essex granted the motion.
According to Order No. 10, Select Comfort moved to terminate the investigation in its entirety based on a settlement agreement with ReST regarding the ’848 patent, and withdrawal of the complaint as to ANM. ReST did not oppose the motion, but ANM did, on the grounds that (1) Select Comfort filed a baseless complaint, and its misuse of Commission resources must be investigated; (2) ANM must complete important third-party discovery; and (3) if termination is granted, then it should be under certain terms and conditions.
ANM’s argument that Select Comfort misused Commission resources is based on assertions that (1) the infringement allegations are baseless, and (2) Select Comfort is trying to hide allegedly damaging discovery relating to validity and enforceability from a foreign third party. The ALJ rejected these arguments, noting that no initial determination on violation had issued, and that Commission Rules permit Select Comfort to exercise the right to withdraw its complaint at any time without good cause. Further, ALJ Essex found ANM’s speculation as to the motivation behind Select Comfort’s withdrawal of the complaint unpersuasive, and observed that ANM failed to point to any Commission or ALJ decision, or Commission Rule, that examines the motivation behind a complainant’s withdrawal of the complaint as relevant to the motion to terminate. The ALJ also stated that if the infringement allegations were so baseless as to warrant sanctions, then ANM should have immediately brought it to the ALJ’s attention rather than waiting to raise the matter only when faced with termination of the investigation. In addition, ALJ Essex rejected ANM’s reliance on discovery it hoped to obtain from a Canadian third party that supposedly manufactured prior art products which Select Comfort allegedly failed to disclose to the PTO. The ALJ found that Select Comfort’s infringement allegations and the manner in which the accused products function are distinct from the validity and enforceability of the asserted patents, and that “the lack of discovery in one area (validity and enforceability) is irrelevant to the other area (infringement)” for purposes of the bad faith analysis presented by ANM. Thus, according to ALJ Essex, “[w]hether Select Comfort is trying to hide damaging discovery is irrelevant.”
Finally, the ALJ rejected ANM’s arguments that termination should be with prejudice, and that either (1) Select Comfort should be ordered to jointly stipulate to the use of documents and testimony from this investigation in a related proceeding, or (2) all confidential documents and testimony that do not fall with Commission Rule 201.6(a) should be de-designated. First, the ALJ explained that the Commission does not terminate investigations with or without prejudice based on withdrawal of the complaint. Second, ALJ Essex noted that ANM failed to specify any actual “related proceeding,” and instead appeared to simply want a “blanket” request for any proceedings that may come along that could be related. The ALJ stated that if ANM seeks to use discovery from this investigation in other proceedings, it can move at the appropriate time as provided for in the Commission Rules. Accordingly, Select Comfort’s motion was granted and the investigation was terminated in its entirety.