On August 27, 2018, ALJ Bullock issued an Initial Determination granting Complainants’ motion for summary determination – finding a violation of section 337 and issuing a General Exclusion Order (“GEO”). Certain Self-Anchoring Beverage Containers, Inv. No. 337-TA-1092 (Order No. 15).
The Complainants Harry Zimmerman, Alfray Design, Inc., and Mighty Mug, Inc. (“Complainants”) initially requested an investigation be instituted against eight Respondents. The investigation involved two patents (U.S. Patents No. 8,028,850 (the “’850 patent”) and U.S. Patents No. 8,757,418 (the “’418 patent”)) and a registered trademark (U.S. Trademark Registration No. 4,191,803 (the “’803 registration”)) related to the “Mighty Mug,” a beverage container that does not tip over and spill its contents. During the course of the investigation, Complainants withdrew their claims with respect to the ’418 patent and the ’803 registration.
Most of the Respondents settled with Complainants. The remaining Respondents (DevBattles, an Ukrainian company, and OUOH, an Chinese company) were both in default. On May 25, 2018, Complainants moved for summary determination, “seeking a finding of a violation of section 337 and requesting entry of a general exclusion order” based on the ’850 patent.
In the Initial Determination, ALJ Bullock found that defaulting Respondents infringed the ’850 patent, and that Complainants satisfied the domestic industry requirement because the “Mighty Mug” practiced the ’850 patent and the Complainants made significant investments in plants, equipment, and labor in the United States.
ALJ Bullock also suggested the issuance of a GEO because he found the requirements of 19 U.S.C. 1337(d)(2) were met. Specifically, ALJ Bullock found that a GEO was necessary to prevent circumvention of a limited exclusion order, and that there was a widespread pattern of violation and it was difficult to identify the source of the infringing products.
Three factors contributed to the determination that a limited exclusion order would likely be subject to circumvention. First, the evidence reviewed by ALJ Bullock indicated that many companies selling the products used false and non-existent addresses making them difficult or impossible to find. For example, some of the listed addresses were in residential blocks in foreign countries, some operated out of or listed an address that actually belonged to another entity, and when calling some of the Respondents, the person answering the phone either did not know the company, was evasive, or just hung up. Second, anonymous online sales supported a likelihood of circumvention. The infringing products were mostly sold through Amazon and eBay, and the named “seller” did not correlate to the source of the infringing products. Finally, the defaulting Respondents have ignored the ITC investigation, suggesting that they would not abide by any limited exclusion order issued by the Commission.
With respect to the widespread pattern of violation and the difficulty involved with identifying the source of the infringing products, there are also three factors supporting ALJ Bullock’s determination. First, the infringing products were available for purchase from many online sources, and “the numerous online sales of infringing imported goods can constitute a pattern of violation.” Second, the infringing products were sold under many different names. Third, it was nearly impossible to identity the sources of the infringing products as evidenced by the difficulty in locating and serving the Respondents.
This general exclusion order issued by ALJ Bullock is a reminder that, in certain circumstances, the ITC may issue a general exclusion order if it finds a limited exclusion order would be insufficient to protect a complainant’s domestic industry. A limited exclusion order remains the default remedy, but complainants should seek a general exclusion order in appropriate circumstances.