DeLorme Publ'g Co. v. Int'l Trade Comm'n

• Decision Date: 12 November 2015
• Docket Number: No. 2014–1572.,2014–1572.
• Citation: 805 F.3d 1328,117 U.S.P.Q.2d 1141
• Parties: DeLORME PUBLISHING COMPANY, INC., DeLorme Inreach LLC, Appellants v. INTERNATIONAL TRADE COMMISSION, Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

805 F.3d 1328

117 U.S.P.Q.2d 1141

DeLORME PUBLISHING COMPANY, INC., DeLorme Inreach LLC, Appellants

v.INTERNATIONAL TRADE COMMISSION, Appellee.

No. 2014–1572.

United States Court of Appeals, Federal Circuit.

Nov. 12, 2015.

Peter J. Brann, Brann & Isaacson, Lewiston, ME, argued for appellants. Also represented by Stacy O. Stitham, David Swetnam–Burland.

Clint A. Gerdine, Office of the General Counsel, United States International Trade Commission, Washington, DC, argued for appellee. Also represented by Dominic L. Bianchi, Wayne W. Herrington.

Before MOORE, REYNA, and TARANTO, Circuit Judges.

Opinion

Opinion for the court filed by Circuit Judge MOORE.

Opinion dissenting-in-part filed by Circuit Judge TARANTO.

MOORE, Circuit Judge.

DeLorme Publishing Company, Inc. and DeLorme InReach LLC (collectively, “DeLorme”) appeal from a decision by the International Trade Commission (“Commission”) (1) finding that DeLorme violated a consent order by selling InReach 1.5 and SE devices containing imported components, and (2) imposing a civil penalty of $6,242,500. Certain Two–Way Global Satellite Communication Devices, System and Components Thereof, Inv. No. 337–TA–854 (Enforcement), Comm'n Op. (June 17, 2014) (J.A. 40–90) (“Comm'n Op.”). We affirm.

Background

In September 2012, the Commission instituted an investigation to determine if DeLorme was violating section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337, by importing, selling for importation, or selling after importation “certain two-way global satellite communication devices, system and components thereof” that allegedly infringed claims 1, 2, 5, 10–12, and 34 of BriarTek IP, Inc.'s U.S. Patent No. 7,991,380. Certain Two–Way Global Satellite Communication Devices, System and Components Thereof, Inv. No. 337–TA–854, Notice of Institution of Investigation (Sept. 17, 2012) (J.A. 420–22). The '380 patent is directed to emergency monitoring and reporting systems comprising a user unit and a monitoring system that communicate through a satellite network. The accused products included DeLorme's InReach 1.0 and 1.5 satellite-communication devices, as well as the software and service plan used with the devices.

In April 2013, the Commission terminated the investigation based on entry of a consent order proposed by DeLorme. Certain Two–Way Global Satellite Communication Devices, System and Components Thereof, Inv. No. 337–TA–854, Termination of Investigation (Apr. 5, 2013) (J.A. 1505–06). In the consent order, DeLorme agreed to the following:

Upon entry of the proposed Consent Order, DeLorme shall not import into the United States, sell for importation into the United States, or sell or offer for sale within the United States after importation any two-way global satellite communication devices, system, and components thereof, that infringe claims 1, 2, 5, 10–12, and 34 of the '380 Patent after April 1, 2013, until the expiration, invalidation, and/or unenforceability of the '380 Patent.

Certain Two–Way Global Satellite Communication Devices, System and Components Thereof, Inv. No. 337–TA–854, Consent Order ¶ 1 (April 5, 2013) (J.A. 1507–09) (“Consent Order”).

On May 24, 2013, the Commission instituted an enforcement proceeding based on BriarTek's allegations that DeLorme violated the Consent Order by, inter alia, selling InReach 1.5 and SE devices containing imported components. Four days later, DeLorme filed an action against BriarTek in the United States District Court for the Eastern District of Virginia, seeking declaratory judgment of noninfringement and invalidity of the '380 patent. While the district court action was pending, the Commission issued a decision in the enforcement proceeding (1) finding that DeLorme violated the Consent Order, and imposing a civil penalty of $6,242,500. Comm'n Op. at 1–2. DeLorme appeals. We have jurisdiction under 19 U.S.C. § 1337(c) and 28 U.S.C. § 1295(a)(6).

Discussion

We review the Commission's legal determinations in an enforcement proceeding without deference and its factual determinations for substantial evidence. uPI Semiconductor Corp. v. Int'l Trade Comm'n, 767 F.3d 1372, 1377 (Fed.Cir.2014). “This court must affirm a Commission determination if it is reasonable and supported by the record as whole, even if some evidence detracts from the Commission's conclusion.” Id. Consent orders are interpreted as contracts. Id. Contract interpretation is a question of law. Id. We review interpretation of a contract or consent order de novo. Id. Patent infringement, whether direct or indirect, is a question of fact. i4i Ltd. v. Microsoft Corp., 598 F.3d 831, 850 (Fed.Cir.2010). We review claim construction de novo except for subsidiary facts based on extrinsic evidence, which we review for clear error. Teva Pharm. USA, Inc. v. Sandoz, Inc., ––– U.S. ––––, 135 S.Ct. 831, 841–42, –––L.Ed.2d –––– (2015). We review the Com-mission's imposition of a civil penalty under 19 U.S.C. § 1337(f)(2) for abuse of discretion. Ninestar Tech. Co. v. Int'l Trade Comm'n, 667 F.3d 1373, 1380 (Fed.Cir.2012).

I.

The Commission determined that DeLorme violated the Consent Order with regard to claims 1 and 2 of the '380 patent. It found that DeLorme (1) assembled the accused InReach 1.5 devices by converting previously imported devices and (2) assembled the accused InReach SE devices using, inter alia, imported plastic housing components. It determined that “[u]nder the terms of the Consent Order, DeLorme violates the order if, after entry of the order, it imports, sells for importation, or sells or offers for sale within the United States after importation any infringing two-way global satellite communication devices, system, or components thereof.” Comm'n Op. at 2. It concluded that DeLorme induced infringement and violated the Consent Order by selling the newly accused devices with instructions to use them in a manner that infringed claims 1 and 2 of the '380 patent. While it concluded that DeLorme also induced infringement by activating previously sold InReach devices, such infringement “did not equate to” a violation of the Consent Order.Id. at 24–25.

DeLorme argues that even if the devices infringed the claims, the Consent Order did not preclude DeLorme from selling domestically manufactured devices containing imported, noninfringing components. It argues that the terms of the Consent Order instead prohibited DeLorme from using imported components only if the components themselves infringed. It argues that the Commission “rewrote” the Consent Order to “prohibit not just the use of imported, infringing, components, but also the use of any imported components.” Appellants' Br. 23. It argues that the Commission's interpretation of the Consent Order exceeded its authority to block importation of only “articles that ... infringe.” 19 U.S.C. § 1337(a)(1)(B)(i).

We agree with the Commission that DeLorme violated the Consent Order by selling InReach 1.5 and SE devices containing imported components with instructions for its customers to use the devices in an infringing manner. The Consent Order provided that DeLorme could not import, sell for importation, or sell or offer for sale after importation “any two-way global satellite communication devices, system, and components thereof, that infringe claims 1, 2, 5, 10–12, and 34 of the '380 Patent.” Consent Order ¶ 1. Under these terms, DeLorme was precluded from selling infringing devices containing imported components with instructions to infringe.

DeLorme's remaining arguments against the Commission's finding that it violated the Consent Order are unpersuasive. For example, the claims are not limited as proposed by DeLorme, and substantial evidence supports the Commission's finding of infringement. Under the Supreme Court's recent decision in Commil USA, LLC v. Cisco Systems, ––– U.S. ––––, 135 S.Ct. 1920, 1928, 191 L.Ed.2d 883 (2015), a good-faith belief in the patent's invalidity was not a defense to induced infringement. Thus, the Commission did not err in its conclusion that DeLorme violated the Consent Order.

II.

The Commission imposed a civil penalty under 19 U.S.C. § 1337(f)(2) of $27,500 per day for 227 violation days, for a total of $6,242,500. Section 1337(f)(2) provides:

Any person who violates an order issued by the Commission under paragraph (1) after it has become final shall forfeit and pay to the United States a civil penalty for each day on which an importation of articles, or their sale, occurs in violation of the order of not more than the greater of $100,000 or twice the domestic value of the articles entered or sold on such day in violation of the order. Such penalty shall accrue to the United States and may be recovered for the United States in a civil action brought by the Commission in the Federal District Court for the District of Columbia or for the district in which the violation occurs....

Our court held in San Huan New Materials High Tech, Inc. v. International Trade Commission, that the Commission has the authority to issue § 1337(f)(2) civil penalties for violation of a consent order. 161 F.3d 1347, 1362 (Fed.Cir.1998).

The Commission based its penalty determination in this case on the six “EPROM factors” adopted by this court: (1) the good or bad faith of the respondent, (2) the injury to the public, (3) the respondent's ability to pay, (4) the extent to which the respondent has benefited from its violations, (5) the need to vindicate the authority of the Commission, and (6) the public interest. Comm'n Op. at 27, 42–50 (citing, e.g., Certain Erasable Programmable Read Only Memories (EPROMs), Inv. No. 337–TA–276 (Enforcement), Comm'n Opinion (July 19, 1991)); see also San Huan, 161 F.3d at 1362. The Commission noted that the penalty was slightly more than a quarter of the statutory maximum of $100,000 per day. See 19 U.S.C. § 1337(f)(2). It found that the penalty was “appropriately proportionate to the value that the violative InReach devices bring to DeLorme” and consistent with the...