The U.S. Court of Appeals for the Federal Circuit upheld a determination of the International Trade Commission (ITC) that it was not required to apply the four-factor eBay test when determining if an exclusion order is justified. Spansion, Inc. et al. v. Int’l Trade Comm’n, Case Nos. 09-1460, -1461, -1462, -1465 (Fed. Cir., Dec. 21, 2010) (Linn, J.).

Appellee Tessera filed a complaint against multiple respondents alleging infringement of two patents by certain semiconductor chips and products containing those chips. The ITC found that the appellants had committed both direct and contributory infringement. During the pendency of the investigation, the U.S. Patent and Trademark Office (USPTO), based on an ex parte reexamination requested by a third party, began reexamination of both patents. The appellants argued that the ongoing reexamination mitigated against issuing an exclusion order under the four-factor eBay test (see IP Update, Vol. 9, No. 5). The Commission disagreed, ruling that the eBay factors were irrelevant to its analysis of whether an exclusion order was proper, and issued limited exclusion and cease-and-desist orders.

In addition to advocating that the appeals court reverse the determinations of infringement and validity, the appellants argued that the ITC had improperly failed to take into account the eBay factors when determining if a limited exclusion order would be consistent with the public interest. The Federal Circuit disagreed, finding that actions were materially different from proceedings before a district court and that the eBay factors were inapplicable. In particular, the Court found that the Commission is required to issue an exclusion order upon finding a violation—unless one of the statutorily listed public interest factors dictate otherwise—and that the legislative history of §337 indicated that injunctive relief was intended to be the normal remedy for a violation. This, the Court explained, was different than the remedies available when proceeding before a district court, where monetary damages were available and injunctive relief was to be exercised “in accordance with the principles of equity … on such terms as the court deems reasonable.”

Practice Note: The Federal Circuit opinion is likely to maintain the position of the International Trade Commission as the venue of choice for plaintiffs considering suit against defendants that import products into the United States and that are seeking maximum leverage through a speedy trial and ease of obtaining injunctive-type relief.