InterDigital Communications, LLC v. Int’l Trade Comm’n

The U.S. Court of Appeals for the Federal Circuit has concluded that it has jurisdiction to hear an appeal from a determination made by the U.S. International Trade Commission (ITC) to terminate a § 337 investigation as to a respondent based on an arbitration agreement. InterDigital Communications, LLC v. Int’l Trade Comm’n, Case No. 2012-1628 (Fed. Cir., June 7, 2013) (Prost, J.) (Lourie, J., dissenting). Addressing the merits of the arbitration claim at issue, the Federal Circuit found that the ITC’s termination was erroneous because the claim for arbitration was “wholly groundless.”

InterDigital filed a complainant against LG Electronics and other respondents alleging a violation of § 337 based on the importation of 3G wireless products that infringed certain InterDigital patents. LG sought to terminate the investigation on the basis that its accused products were covered by a prior license agreement, and that agreement included a clause requiring any dispute arising under the agreement to be resolved through arbitration. Applying the two-part test articulated by the Federal Circuit in Qualcomm v. Nokia, the ITC administrative law judge found that the parties clearly delegated the question of arbitrability to the arbitrator, and that LG’s request for arbitration was not “wholly groundless.” The ITC determined not to review this finding and terminated the investigation as to LG. InterDigital appealed this determination to the Federal Circuit.

As a threshold issue, the Federal Circuit addressed whether it has jurisdiction to hear the appeal. The Federal Circuit’s jurisdictional statute broadly provides the court with exclusive jurisdiction to hear appeals of any “final determinations of the United States International Trade Commission relating to unfair practices in import trade, made under § 337.” Section 337, in turn, lists various ITC determinations for which a party may seek appellate review. Relevant to this appeal was the language in § 337(c) providing a right to appeal “a final determination of the Commission under subsection (d), (e), (f), or (g) of this section.” The subsections referenced in that provision relate to ITC determinations on whether or not to issue an exclusion order or cease-and-desist order. The ITC and LG argued that the termination of LG from the underlying investigation did not constitute a final determination on the merits under subsection (d), (e), (f) or (g), but rather was a termination based on an arbitration agreement in accordance with subsection (c) of the statute.

The majority in the Federal Circuit panel disagreed with the ITC’s and LG’s position that § 337(c) only permitted appeals of final decisions on the merits. Relying upon prior decisions in which the court addressed its appellate jurisdiction over ITC determinations, the majority noted that a party may appeal an ITC order that is not a final decision on the merits if “its effect upon appellants is the equivalent of a final determination.” The panel majority also relied upon the strong presumption that Congress intends judicial review of administrative action, and the legislative history of the 1994 amendment to § 337(c) indicating that Congress “intended to bring ITC practice under § 337 into closer conformity with district court practice” under the Federal Arbitration Act.

Judge Lourie dissented from this jurisdictional holding, finding that the statutory language is clear that a termination due to an arbitrability agreement is a termination “without . . . a determination” and thus could not be appealed.