Federal Circuit No 2012-1170

In a split opinion, the Federal Circuit holds that the ITC lacked authority to issue an exclusion order against importation of fingerprint scanners made by Korean company Suprema because the scanners only infringed Cross Match’s method patent after they were imported and combined with Mentalix’s software. The ITC’s determination based on induced infringement was vacated because there were no articles directly infringing at the time of importation, and thus no induced infringement had occurred at that moment. 

The ITC found that induced infringement as specified by 35 USC § 271(b) could form the basis of a 19 USC § 1337 violation. However, the Federal Circuit interpreted § 1337 as requiring “articles that infringe” at the time of importation. Because it was not disputed that the scanners had other substantial non-infringing uses, the ITC’s exclusion order relied on the intent of the alleged inducer to encourage infringement after importation. But based on the facts of this case, the Federal Circuit determined that the statutory grant of authority in § 1337 cannot extend to the conduct proscribed in § 271(b) where the acts of underlying direct infringement occur post-importation. 

While at first glance the decision appears to severely limit the ITC’s ability to combat unfair trade based on indirect infringement, the majority emphasized that contributory infringement remains a viable cause of action at the ITC. In contributory infringement cases, the accused product must have no substantial non-infringing uses and, therefore, could be said to infringe (or contribute to infringement) at the time of importation. The ruling may be grounded on the practical fact that the US Customs and Border Protection agency could determine from inspection of an imported article whether it necessarily directly infringes a method claim. However, a determination of induced infringement cannot be easily made based on the subjective intent of the importer at the point of importation.