On March 27, 2013, the International Trade Commission (the “Commission”) issued the public version of its opinion on remedy, public interest, and bond in Certain Digital Photo Frames and Image Display Devices and Components Thereof (Inv. No. 337-TA-807).
By way of background, the investigation is based on an August 24, 2011 complaint and a September 14, 2011 letter supplementing the complaint filed by Technology Properties Limited, LLC (“TPL”) alleging violation of Section 337 in the importation into the U.S. and sale of certain digital photo frames and image display devices and components thereof that infringe certain claims of its patents. See our September 23, 2011 post for more details on this investigation.
Although the original Notice of Investigation named twenty respondents, fourteen were terminated from the investigation based on consent order stipulations and settlement agreements. The remaining six respondents, Nextar Inc., WinAccord Ltd., WinAccord U.S.A., Inc., Aiptek International Inc., and Pandigital, Inc. were found to be in default (collectively, “Defaulting Respondents”). The Commission determined not to review any of the initial determinations, and requested briefing from TPL regarding its proposed remedy and bonding requirements.
According to the opinion, TPL requested a limited exclusion order (“LEO”) covering each of the Defaulting Respondents’ products, supported by the allegations set forth in its complaint. Since the Commission determined that the requirements of Section 337(g)(1) and ITC rule 210.17 (related to the requirements for relief against defaulting parties) were met, the Commission issued the requested LEO.
TPL also asked the Commission to issue cease and desist orders against each of the Defaulting Respondents. The Commission agreed, concluding that the defaulting domestic respondents maintain commercially significant inventories of the infringing products in the United States based on inference and evidence produced by TPL. Although the Commission declined to draw a negative inference against the non U.S. defaulting respondents regarding domestic inventories, TPL’s complaint included various factual allegations related to this issue. Since Section 337(g)(1) specifically states that the Commission “shall presume the facts in the complaint to be true and shall, upon request, issue a cease and desist order…,” the Commission found sufficient evidence to warrant issuing a cease and desist order against the non U.S. defaulting respondents as well.
According to the opinion, TPL argued that the LEO and cease and desist orders would have no negative impact on the public interest. The Commission agreed, noting that there is no indication that the infringing products would affect public health and welfare or competitive conditions in the United States.
Although TPL argued that importation of infringing products under bond is not permitted for defaulting respondents, the Commission determined that this is inconsistent “with the Commission’s practice of permitting importation under bond during the period of Presidential review by respondents found in default under section 337(g)” and cited to various investigations where this occurred. Therefore, the Commission concluded that all Defaulting Respondents were permitted to import products under a bond. Since there was “little or no evidence” of pricing in the record, and the various settlement agreements included different royalty rates, no “reliable price information is available” and therefore the Commission determined to set the bond in the amount of 100%.