On July 29, 2013, the International Trade Commission (the “Commission”) issued the public version of its opinion on remedy and bond in Certain Toner Cartridges and Components Thereof (Inv. No. 337-TA-829).
By way of background, the investigation is based on a January 23, 2012 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, including but not limited to photosensitive drums, that infringe one or more claims of U.S. Patent Nos. 5,903,803 and 6,128,454. See our January 25, 2012 post for more details.
As summarized in the opinion, sixteen respondents were found in default, the complaint was withdrawn as to one respondent, and all other remaining respondents were terminated by consent order. Canon filed a motion for summary determination that it satisfied the economic prong of the domestic industry requirement, together with a later motion for summary determination of violation with respect to the defaulting respondents. ALJ David P. Shaw granted these motions and issued an initial determination (“ID”) on violation together with his recommendation that a general exclusion order (“GEO”) and cease and desist orders (“CDO”) be issued with an imposition of a 100 percent bond. See our March 6, 2013 and March 18, 2013 posts for more details.
According to the opinion, the Commission determined not to review the ID granting summary determinations and solicited submissions on remedy, the public interest, and bond. The Commission received submissions from Canon, the Commission Investigative Staff (“OUII”), and several non-parties.
The Commission determined that a GEO directed to all defaulting respondents was appropriate. The GEO prohibits the entry of infringing toner cartridges and components thereof into the United States. The Commission explained that the factual requirements for issuance of a GEO were met because the evidence showed that the defaulting respondents typically do business under multiple names and change corporate profiles, making it possible to circumvent a limited exclusion order. Canon also was able to prove a widespread pattern of infringement combined with difficulty in identifying the source of the infringing products.
The Commission also determined to issue CDOs against both the foreign and domestic respondents ordering the defaulting respondents to cease and desist from importing, selling, marketing, advertising, distributing, transferring, and soliciting U.S. agents and distributors for infringing products. The Commission found that Canon was able to prove that the foreign defaulting respondents maintain domestic inventories and are part of a common enterprise together with the domestic defaulting respondents. As such, a CDO against all defaulting respondents was appropriate.
The Commission explained that, as argued by Canon and the OUII, the remedial orders in this investigation would not harm the public interest, as there was no evidence that domestic demand could not be met by Canon.
Lastly, the Commission determined to impose a 100 percent bond as reliable price information was not available (since Canon was unable to obtain discovery from the defaulting respondents), and the information that was available showed a wide variety of prices. As such, a 100 percent bond was most appropriate to account for the various price differentials between the respondents.