Welcome to the latest issue of the Section 337 Update. This newsletter is designed to provide you with practical updates and developments on Section 337 proceedings before the US International Trade Commission.

In Section 337 investigations, particularly those involving process patents, requests for plant inspections are generally permitted if they are reasonable in scope and reasonable in time, place and manner.  However, in Certain Gemcitabine and Products Containing Same, Inv. No. 337-TA-766 (“Certain Gemcitabine”), the Administrative Law Judge (“ALJ”) denied complainant Eli Lilly and Company’s (“Lilly”) request for a plant inspection of respondent Jiangsu Hansoh Pharmaceutical Co., Ltd.’s (“Hansoh”) facilities to provide what Lilly asserted to be the “best” evidence of whether or not Hansoh infringes the asserted patent, which relates to a process for manufacturing gemcitabine.  The ALJ determined that Lilly’s request for a plant inspection, which was made when three months of fact discovery remained, was premature, as Lilly had failed to explore other, less burdensome means of discovery.  The ALJ’s Order is available here.

Lilly sought a plant inspection of both respondent Hansoh’s facilities that currently produce gemcitabine and those facilities that Hansoh had used in the past to manufacture gemcitabine, asserting that an inspection of Hansoh’s facilities would provide the best evidence of whether Hansoh infringes the asserted patent.  Lilly further claimed that such an inspection would not unduly burden Hansoh.

ALJs routinely allow such plant inspections when less burdensome avenues of discovery are inadequate, and if such inspections are reasonable in scope and reasonable in time, place and manner.  See Certain Sucralose, Sweeteners Containing Sucralose, and Related Intermediate Compounds Thereof, Inv. No. 337-TA-604, Order No. 31; Certain Polyethylene Terephthalate Yarn and Products Containing Same, Inv. No. 337-TA-457, Order No. 12; Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406, Order No. 108.  Under Commission Rule 210.30, a party may serve a discovery request “to permit entry upon designated land or other property in the possession or control of the party upon whom the request is served for the purpose of inspecting and measuring, surveying, photographing, testing or sampling the property or any designated object or operation thereon within the scope of § 210.27(b).”  Under Commission Rule 210.27(b), a party may obtain discovery regarding any matter that is relevant to the claim or defense of the party seeking discovery.  With regard to discovery requests seeking inspection of physical premises, federal courts “balance the degree to which the proposed inspection will aid the search for truthful information against the burdens and dangers created by the proposed inspection.”  Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406, Order No. 108.

In denying Lilly’s motion to compel a plant inspection, the ALJ reasoned that Lilly had yet to pursue other, less burdensome avenues of discovery to obtain information about Hansoh’s accused process.  Specifically, Lilly had not yet taken the deposition of any Hansoh employee regarding the process which Hansoh uses to manufacture gemcitabine.  Moreover, Hansoh had asserted that the plant inspection would be disruptive and unduly burdensome because it would cause Hansoh expense and potential danger.  The Commission Investigative Staff (“Staff”) also opposed Lilly’s request for a plant inspection as premature.  The Staff took the position that Lilly’s motion should be denied until less burdensome methods are shown to be inadequate.

The ALJ ultimately determined Lilly’s request for a plant inspection was premature, but also held that Lilly may later renew its request if it is not able to discover the information at issue through less burdensome means.  However, the ALJ emphasized that any plant inspection request must be narrowly tailored to focus on information that is relevant and material or reasonably calculated to lead to the discovery of admissible evidence.

Also in Lilly’s motion to compel discovery, Lilly sought to conduct forensic inspection of Hansoh’s original batch records which are created during the manufacturing process.  Lilly questioned whether the copies produced by Hansoh were accurate and authentic.  Both respondent Hansoh and the Staff opposed Lilly’s request to inspect the original batch records, asserting that this request was overly burdensome and unjustified at that point in the investigation, as Lilly has no factual basis to question whether the batch records produced by Hansoh were accurate and authentic.  Respondent Hansoh further argued that the Commission Rules do not allow for the testing of documents, citing Commission Rule 210.30, which states that “[a]ny party may serve on any other party a request … to … inspect and copy any designated documents … or to inspect, copy, test or sample any tangible things….” Hansoh argued for a narrow construction of this rule to allow for the inspection and copying of “documents,” while only allowing for the testing of “tangible things,” asserting that batch records are “documents,” and that the rule does not provide for the testing of documents.

The ALJ granted Lilly’s request for forensic testing of Hansoh’s original batch records, finding that Lilly had a sufficient justification for questioning the authenticity of the batch records produced by Hansoh.  This justification was based on Lilly’s assertion that the process described in the batch records is not economically feasible, and that Hansoh had not produced critical information corroborating use of its process.  The ALJ stated that the forensic testing would not be unduly burdensome for Hansoh, and such testing would not harm or destroy the documents.  Furthermore, the ALJ did not agree with respondent Hansoh’s narrow construction of Commission Rule 210.30, and held that batch records are “tangible things” and may be subject to testing.

Along with Lilly’s motion to compel discovery, Lilly also filed a motion for presumption of infringement, under 35 U.S.C. § 295, of respondent Hansoh’s process for manufacturing gemcitabine.  Under Section 295 of the Patent Act, a court may presume infringement of a process patent if the court finds that: (1) a substantial likelihood exists that the product was made by the patented process; and (2) that the plaintiff has made a reasonable effort to determine the process actually used in the production of the product and was unable so to determine, the product shall be presumed to have been so made, and the burden of establishing that the product was not made by the process shall be on the party asserting that it was not so made.  The ALJ ultimately declined to impose this presumption of infringement sought by Lilly, determining that Lilly had not followed all avenues of discovery likely to uncover Hansoh’s process, and thus, had not made a reasonable effort to determine the process accused of infringement.  The fact that Lilly sought both a plant inspection and a forensic inspection of original batch records concurrently with seeking the imposition of this presumption of infringement was a factor weighing against granting Lilly’s request for presumption of infringement.

Practice Tips:

  • A request for a plant inspection and/or inspection of batch records may weigh against a request for a presumption of infringement pursuant to 35 U.S.C. § 295, when these requests are made concurrently.
  • A request for a plant inspection may be denied if the party seeking the request has not made adequate attempts to pursue less burdensome avenues of discovery to obtain information, such as depositions.
  • Documents, such as batch records, do constitute “tangible things” under Commission Rule 210.30, and thus may be subject to testing.

Plant Inspection Decisions in Section 337 Proceedings

Below please find examples of decisions regarding plant inspection issued in other Section 337 proceedings:

  • Inv. No. 337-TA-604, Certain Sucralose, Sweeteners Containing Sucralose, and Related Intermediate Compounds Thereof – The ALJ granted in part complainant’s motion to compel complete inspections of respondents’ sucralose manufacturing facilities, granting the plant inspections, but limiting the scope of these inspections by imposing specific parameters.  Specifically, all samples taken from the plant inspections were limited to the sub-processes that were specifically identified and accused with respect to a particular respondent, and complainants were required to identify, to the extent possible, the sampling points prior to the inspection.  The ALJ’s Order is available here.
  • Inv. No. 337-TA-556, Certain High-Brightness Light Emitting Diodes and Products Containing Same –  The ALJ ordered the production by respondent of photographs depicting each stage of its manufacturing process and a witness who would authenticate the photographs and explain the process steps depicted, as such materials may be useful in the disposition of complainant’s motion to compel a plant inspection. The ALJ’s Order is available here.
  • Inv. No. 337-TA-406, Certain Lens-Fitted Film Packages – The ALJ found that respondent had demonstrated good cause for the issuance of a protective order barring complainant from inspecting respondent factories that formerly supplied the accused product because the complainant did not establish that the inspections of the former suppliers’ factories appeared to be reasonably calculated to lead to the discovery of admissible evidence.  The ALJ further found that the complainant failed to address the burden to the respondent and former suppliers if those inspections were to proceed, as well as the dangers created by such inspections.  The ALJ’s Order is available here.

We will periodically provide you updates on developments relating to Section 337 litigation.