796 F.3d 1338 (Fed. Cir. 2015), 2012-1170, Suprema, Inc. v. ITC

Docket Nº:2012-1170
Citation:796 F.3d 1338
Party Name:SUPREMA, INC., MENTALIX INCORPORATED, Appellants v. INTERNATIONAL TRADE COMMISSION, Appellee, CROSS MATCH TECHNOLOGIES, INC., Intervenor
Attorney:DARRYL MICHAEL WOO, Vinson & Elkins LLP, San Francisco, CA, argued for appellants. Also represented by ILANA RUBEL, BRYAN ALEXANDER KOHM, DAVID MICHAEL LACY KUSTERS, HEATHER N. MEWES, ERIN SIMON, Fenwick & West, LLP, San Francisco, CA; JAE WON SONG, Mountain View, CA; BRADLEY THOMAS MEISSNER, Sea...
Judge Panel:Before PROST, Chief Judge, NEWMAN, LOURIE, DYK, O'MALLEY, REYNA, WALLACH, TARANTO, CHEN, and HUGHES, Circuit Judges.[*] OPINION filed by Circuit Judge REYNA. Dissenting opinion filed by Circuit Judge DYK. Dissenting opinion filed by Circuit Judge O'MALLEY, with whom PROST, Chief Judge, LOURIE and...
Case Date:August 10, 2015
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 1338

796 F.3d 1338 (Fed. Cir. 2015)

SUPREMA, INC., MENTALIX INCORPORATED, Appellants

v.

INTERNATIONAL TRADE COMMISSION, Appellee, CROSS MATCH TECHNOLOGIES, INC., Intervenor

2012-1170

United States Court of Appeals, Federal Circuit

August 10, 2015

          Appeal from the United States International Trade Commission in Investigation No. 337-TA-720.

         DARRYL MICHAEL WOO, Vinson & Elkins LLP, San Francisco, CA, argued for appellants. Also represented by ILANA RUBEL, BRYAN ALEXANDER KOHM, DAVID MICHAEL LACY KUSTERS, HEATHER N. MEWES, ERIN SIMON, Fenwick & West, LLP, San Francisco, CA; JAE WON SONG, Mountain View, CA; BRADLEY THOMAS MEISSNER, Seattle, WA.

         CLARK S. CHENEY, Office of the General Counsel, United States International Trade Commission, Washington, DC, argued for appellee. Also represented by DOMINIC L. BIANCHI, ANDREA C. CASSON, CLINT A. GERDINE, WAYNE W. HERRINGTON.

         MAXIMILIAN A. GRANT, Latham & Watkins LLP, Washington, DC, argued for intervenor. Also represented by CLEMENT J. NAPLES, New York, NY; GABRIEL BELL, BERT C. REISER, JENNIFER HALBLEIB, Washington, DC.

         MARK R. FREEMAN, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, argued for amicus curiae United States. Also represented by JOYCE R. BRANDA, SCOTT R. MCINTOSH.

         JAMES ALTMAN, Foster, Murphy, Altman & Nickel, PC, Washington, DC, for amicus curiae American Intellectual Property Law Association. Also represented by F. DAVID FOSTER.

         J. MICHAEL JAKES, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Washington DC, for amicus curiae Intellectual Property Owners Association. Also represented by HERBERT CLARE WAMSLEY, JR., Intellectual Property Owners Association, Washington, DC; PHILIP STATON JOHNSON, Johnson & Johnson, New Brunswick, NJ; KEVIN H. RHODES, 3M Innovative Properties Company, St. Paul, MN.

         CONSTANTINE L. TRELA, JR., Sidley Austin LLP, Chicago, IL, for amicus curiae Microsoft Corporation. Also represented by RICHARD ALAN CEDEROTH, DAVID T. PRITIKIN, Chicago, IL; BRIAN R. NESTER, RYAN C. MORRIS, Washington, DC; THOMAS ANDREW CULBERT, DAVID E. KILLOUGH, Microsoft Corporation, Redmond, WA.

         JOHN THORNE, Kellogg, Huber, Hansen, Todd, Evans & Figel, PLLC, Washington, DC, for amici curiae Dell Inc., Adobe Systems, Inc., Ford Motor Co., Hewlett-Packard Co., LG Display Co., Ltd., LG Electronics, Inc., Netflix, Inc., Samsung Electronics Co., Ltd., SAP America, Inc. Also represented by AARON M. PANNER, MELANIE L. BOSTWICK.

         DARYL JOSEFFER, King & Spalding LLP, Washington, DC, for amicus curiae Google Inc. Also represented by ADAM CONRAD, Charlotte, NC; SUZANNE MICHEL, Google Inc., Washington, DC.

         ERIC JAY FUES, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Washington, DC, for amicus curiae International Trade Commission Trial Lawyers Association. Also represented by T. CY WALKER, Kenyon & Kenyon LLP, Washington, DC.

         JOHN D. HAYNES, Alston & Bird LLP, Atlanta, GA, for amici curiae Nokia Corporation, Nokia USA, Inc. Also represented by ADAM DAVID SWAIN, Washington, DC.

         Before PROST, Chief Judge, NEWMAN, LOURIE, DYK, O'MALLEY, REYNA, WALLACH, TARANTO, CHEN, and HUGHES, Circuit Judges.[*] OPINION filed by Circuit Judge REYNA. Dissenting opinion filed by Circuit Judge DYK. Dissenting opinion filed by Circuit Judge O'MALLEY, with whom PROST, Chief Judge, LOURIE and DYK, Circuit Judges, join.

         

         OPINION BY: REYNA

          OPINION

         Reyna, Circuit Judge.

          Section 337 of the Tariff Act of 1930, codified at 19 U.S.C. § 1337 (" Section 337" ), declares certain acts unlawful. Among them is importing " articles that . . . infringe a valid and enforceable United States patent." 19 U.S.C. § 1337(a)(1)(B)(i). The International Trade Commission (" Commission" ) interpreted this provision to cover importation of goods that, after importation, are used by the importer to directly infringe at the inducement of the goods' seller. A majority panel of this court disagreed, reasoning that there are no " articles that infringe" at the time of importation when direct infringement does not occur until after importation. Suprema, Inc. v. Int'l Trade Comm'n, 742 F.3d 1350, 1352 (Fed. Cir. 2013). In doing so, the panel effectively eliminated trade relief under Section 337 for induced infringement and potentially for all types of infringement of method claims.

         We granted en banc rehearing and vacated the panel decision, 2014 WL 3036241, and we now uphold the Commission's position. We conclude that because Section 337 does not answer the question before us, the Commission's interpretation of Section 337 is entitled to Chevron deference. We hold that the Commission's interpretation is reasonable because it is consistent with Section 337 and Congress' mandate to the Commission to safeguard United States commercial interests at the border. Accordingly, we return the case to the panel for further proceedings consistent with this opinion.

         I. Background

         This case comes before us on appeal from a final determination by the Commission, finding a violation of Section 337 by Suprema, Inc., and Mentalix, Inc., in Certain Biometric Scanning Devices, Components Thereof, Associated Software, and Products Containing the Same, Inv. No. 337-TA-720. Section 337 authorizes the Commission to investigate allegations of unfair trade acts in the importation of articles that infringe a valid United States patent. 19 U.S.C. § 1337(b)(1). If a violation of the statute is found, the Commission issues an exclusion order that bars the importation of some or all of the infringing products and may issue a related cease and desist order unless the Commission finds that certain public interest factors militate against such remedy. Id. § 1337(d).

         In May 2010, Cross Match Technologies, Inc. (" Cross Match" ) filed a complaint with the Commission, alleging infringement of four patents owned by Cross Match involving certain fingerprint scanning devices. The Commission found the scanners to be manufactured by Suprema abroad, and imported into the United States by both Suprema and Mentalix. Mentalix subsequently combined the scanners with software, and used and sold the scanners in the United States.

         Cross Match is the assignee of several patents covering technology used in biometric imaging scanners including U.S. Patent Nos. 7,203,344 (" the '344 patent" ), the only patent relevant to this appeal. The claims of the '344 patent are drawn to fingerprint scanning systems and methods that generate a fingerprint image, process that image to identify key regions, and determine image quality. Claim 19, the sole claim remaining in this appeal, recites:

19. A method for capturing and processing a fingerprint image, the method comprising:

(a) scanning one or more fingers; (b) capturing data representing a corresponding fingerprint image; (c) filtering the fingerprint image; (d) binarizing the filtered fingerprint image; (e) detecting a fingerprint area based on a concentration of black pixels in the binarized fingerprint image; (f) detecting a fingerprint shape based on an arrangement of the concentrated black pixels in an oval-like shape in the binarized fingerprint image; and (g) determining whether the detected fingerprint area and shape are of an acceptable quality.

         '344 patent col. 19 ll. 24-37.

         Suprema, Inc., is a Korean company that makes hardware for scanning fingerprints, including its RealScan line of fingerprint scanners. Suprema sells the scanners to Mentalix, Inc.1 The scanners are not standalone products. To function, they must be connected to a computer, and that computer must have custom-developed software installed and running. Suprema does not make or sell this software. Instead, it ships each scanner with a " software development kit" (" SDK" ) that is used for developing custom programs that control the functions of its scanners. The SDK comes with an instruction manual that explains how programs can be written to take advantage of scanner functionality.

         Mentalix, Inc., is an American company that purchases Suprema's scanners and imports those scanners into the United States. It writes custom software, called FedSubmit, which uses Suprema's SDK to control and operate the scanners. Mentalix then bundles its software with the scanners and resells the bundle within the United States.

         The Commission instituted an investigation of Suprema's accused scanners in June 2010 pursuant to 19 U.S.C. § 1337(a)(1)(B)(i). 75 Fed.Reg. 34482-83 (June 17, 2010). Section 337(a)(1)(B)(i) declares unlawful the importation, sale for importation, or sale within the United States after importation of articles that infringe a valid and enforceable United States patent. An administrative law judge (" ALJ" ) construed certain terms of claim 19 of the '344 patent and then conducted a thorough infringement analysis, expressly finding that each of the limitations of claim 19 was practiced by the accused products. See J.A. 123-32. On the basis of that finding, the ALJ determined that several Suprema scanners, the RealScan-10, RealScan-D, RealScan-10F, and RealScan-DF, directly infringe claim 19 of the '344 patent when used with the SDK kits and Mentalix's FedSubmit software. J.A. 133.

         Based on the finding that the '344 patent was infringed, the ALJ issued a Final Initial Determination that there had been " a violation of section 337 in the importation into the United States, sale for importation, and sale within the United States after importation of certain biometric scanning devices" and " associated software." J.A. 205. The ALJ recommended that a limited exclusion order issue that would bar Suprema's infringing scanners from entering the United States.2 Id. The ALJ further recommended that a...

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