Otter Prods., LLC v. United States

• Decision Date: 23 December 2014
• Docket Number: Court No. 14–00328.,Slip Op. 14–154.
• Parties: OTTER PRODUCTS, LLC, Plaintiff, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

37 F.Supp.3d 1306

OTTER PRODUCTS, LLC, Plaintiff

v.UNITED STATES, Defendant.

Slip Op. 14–154.

Court No. 14–00328.

United States Court of International Trade.

Dec. 23, 2014.

Louis S. Mastriani, Munford Page Hall, II, Paul M. Bartkowski, Beau A. Jackson, Dana L. Watts, Adduci, Mastriani, & Schaumberg LLP of Washington, D.C., and Garret A. Leach, P.C., Kirkland & Ellis LLP of Chicago, Illinois, for Plaintiff Otter Products, LLC.

Joyce R. Branda, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Amy M. Rubin, Assistant Director, Justin R. Miller, Senior Trial Counsel, Guy Eddon, Trial Attorney, Civil Division, Department of Justice, Commercial Litigation Branch, International Trade Field Office, of New York, New York, for Defendant United States. Of counsel on the briefs was Michael W. Heydrich, Office of Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection.

Christian E. Samay and Robert E. Colletti, Frommer Lawrence & Haug LLP of New York, New York, for proposed Amicus Curiae or Intervenors Speculative Product Design, LLC.

OPINION AND ORDER

BARNETT, Judge:

Plaintiff, Otter Products, LLC (“Otter”), moves pursuant to USCIT Rules 7 and 65 for a preliminary injunction enjoining U.S. Customs and Border Protection (“Customs”) from enforcing the General Exclusion Order (“GEO”) issued by the U.S. International Trade Commission (“ITC”) in Certain Cases for Portable Electronic Devices, Inv. No. 337–TA–861/867, against Otter's Symmetry Series (“Symmetry”) products. (See generally Pl.'s Mot. for TRO & Prelim. Inj. (“Pl.'s Mot.”) (ECF No. 6).) For the reasons provided below, the court denies Otter's motion and dissolves the previously issued temporary restraining order (“TRO”).

Background

On September 6, 2012, and December 26, 2012, Speculative Product Design, LLC (“Speck”), owner of U.S. Patent No. 8,204,561 (“the '561 Patent”), filed complaints with the ITC, pursuant to section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337 (2012),¹ alleging the importation of products that violated its patent. Certain Cases for Portable Electronic Devices, 78 Fed.Reg. 6834–02 (ITC Jan. 31, 2013) (Institution of Investigation); Certain Cases for Portable Electronic Devices, 77 Fed.Reg. 68,828 (ITC Nov. 16, 2012) (Institution of Investigation). The ITC consolidated the complaints into one investigation on January 31, 2013. (Pl.'s Mot. Ex. 1 at 2.) Speck did not name Otter as a respondent in either complaint. See Certain Cases for Portable Electronic Devices, 78 Fed.Reg. at 6835 ; Certain Cases for Portable Electronic Devices, 77 Fed.Reg. at 68,829. Over the course of the investigation, numerous respondents were found in default, while all active respondents were terminated from the investigation. (Pl.'s Mot. Ex. 1 at 2.) On February 21, 2014, an Administrative Law Judge (“ALJ”) issued a final initial determination and recommended the issuance of a GEO and imposition of a bond of 100 percent of entered value during the period of Presidential review. (Pl.'s Mot. Ex. 1 at 2.) The ALJ's determination did not address whether the '561 Patent was invalid. On April 11, 2014, the ITC determined not to review the ALJ's finding. Certain Cases for Portable Electronic Devices, 79 Fed.Reg. 20,228 (ITC Apr. 11, 2014) (Determination Not to Review Initial Determination).

On June 20, 2014, the ITC issued a GEO, which covers claims 4, 5, 9, and 11 of the '561 Patent. (Pl.'s Mot. Ex. 1 at 4–7(GEO).) It states, in relevant part:

Cases for portable electronic devices covered by one or more of claims 4, 5, 9, and 11 of the '561 patent are excluded from entry into the United States for consumption, entry for consumption from a foreign-trade zone, or withdrawal from a warehouse for consumption, for the remaining term of the patent, except under license of the patent owner or as provided by law.

(Pl.'s Mot. Ex. 1 at 5.) The GEO became final on August 20, 2014. See 19 U.S.C. § 1337(j).

In January 2014, six months before the ITC issued the GEO, Otter announced its Symmetry Series cases, and by March 3, 2014, the products were available for purchase throughout the United States. (See Pl.'s Mot. 4, Ex. 4.) On August 15, 2014, Customs Port of Long Beach alerted Otter that Customs was examining whether the GEO encompassed the Symmetry cases. (Pl.'s Mot. 5.) Otter soon thereafter took the following steps:

• In late August 2014, Otter met with Customs representatives to explain why it believed that the Symmetry cases did not infringe the '561 Patent and, on September 2, 2014, filed a Request for Internal Advice with Customs. (Pl.'s Mot. Ex. 6.)

• On September 3, 2014, Otter filed a Petition for Inter Partes Review of the '561 Patent with the U.S. Patent and Trademark Office, which is still pending. (Pl.'s Mot. Ex. 7.)

• On September 4, 2014, Otter filed with the ITC a Request for an Advisory Opinion that Otter's products fall outside the scope of the GEO.² (Pl.'s Mot. Ex. 8.)

• On September 16, 2014, Otter filed a motion with the ITC to stay enforcement of the GEO with respect to Otter's Symmetry cases. (Pl.'s Mot. Ex. 9.) The court is not aware of any action having been taken on that motion.

• On September 17, 2014, Otter appealed the final determination of the ITC, Certain Cases for Portable Electronic Devices, 79 Fed.Reg. 20,228, which led to the issuance of the GEO, to the Federal Circuit. See generally Otter Prods., LLC v. ITC, No. 14–1840 (Fed.Cir. filed Sept. 17, 2014).

On September 19, 2014, Customs issued Notices of Redelivery, directing Otter to redeliver imported Symmetry cases covered by sixteen separate entries. (Pl.'s Mot. Ex. 11.) On September 24, 2014, Otter moved the Federal Circuit to stay the enforcement of the GEO as to imports of Otter's products. (Pl.'s Mot. Ex. 12.)

That same day, Otter filed protests of Customs' Notices of Redelivery. (Pl.'s Mot. Ex. 14.) On September 26, 2014, before the ITC had filed a responsive brief at the Federal Circuit to Otter's motion to stay, Customs issued a ruling, in response to Otter's September 2, 2014, Request for Internal Advice. In the ruling, Customs stated that, pursuant to 19 C.F.R. § 177.7,³ it would not respond to Otter's Internal Advice Request and would not enforce the GEO against Otter because Otter's appeal, Otter Prods., LLC, No. 14–1840 (Fed.Cir. filed Sept. 17, 2014), was pending before the Federal Circuit and “concerns the claim construction of the '561 patent and whether [cases for] portable electronic devices imported by [Otter] are covered by the claims of the '561 patent such that they are subject to exclusion from entry.” HQ H257012 (Sept. 26, 2014) (“the 012 Ruling”). On September 29, 2014, Customs canceled the Notices of Redelivery and, the following day, at Customs' request, Otter withdrew its protest. (Pl.'s Mot. Exs. 16–17.)

In opposition to Otter's motion to stay before the Federal Circuit, the ITC cited the 012 Ruling and argued that Otter faced no imminent harm or, in the alternative, that the motion was moot. (Pl.'s Mot. Ex. 18.) On October 20, 2014, the Federal Circuit denied Otter's motion to stay, simply stating that Otter “failed to carry its burden in seeking a stay.” Otter Prods., LLC, No. 14–1840 (Fed.Cir. Oct. 20, 2014).

That same day, Speck requested a ruling from Customs as to whether Otter's Symmetry cases are subject to exclusion from entry pursuant to the GEO. Notwithstanding its decision in the 012 Ruling, this time Customs found that it was “not precluded by 19 C.F.R. § 177.7(b) from ruling on the instant [Otter] ‘Symmetry’ electronic device cases because the issue of whether these products infringe the '561 patent is not before the CAFC” in Otter's appeal. HQ H258492 (Nov. 4, 2014) (“the 492 Ruling”). After determining that Otter's Symmetry products infringed certain claims in the '561 Patent, Customs ruled that Otter's Symmetry products fell “within the scope of the ITC's general exclusion order ... and may not be entered for consumption into the United States.” Id. Customs subsequently issued a new series of Notices of Redelivery⁴ to Otter covering twenty separate entries of Symmetry portable electronic device cases on November 6, 2014. (Pl.'s Mot. Ex. 23.)

Otter filed a protest against the Notices of Redelivery on November 7, 2014. (Pl.'s Mot. Ex. 24.) In its protest, Otter presented three arguments: (1) Otter's Symmetry cases are not covered by the GEO because they do not infringe the relevant claims of the '561 Patent ; (2) the claims of the ' 561 Patent listed in the GEO are invalid; and (3) Customs' ruling is inappropriate because infringement and the validity of the '561 Patent are currently at issue in Otter's appeal before the Federal Circuit. (Pl.'s Mot. Ex. 24 at 7–9.) That same day, Otter filed another motion to stay before the Federal Circuit, which the court construed as a motion for reconsideration and denied on November 11, 2014.Otter Prods., LLC, No. 14–1840 (Fed.Cir. Nov. 11, 2014).

On November 10, 2014, Otter requested that Customs immediately withdraw the 492 Ruling and filed a Request for Reconsideration of the ruling on November 14, 2014. (Pl.'s Mot. Exs. 25–26.) Customs affirmed the ruling on December 10, 2014. HQ H259071 (Dec. 10, 2014) (“the 071 Ruling”). In the 071 Ruling, Customs found that 19 C.F.R. § 177.7(b) did not preclude Customs from issuing a ruling because Customs' review of the Federal Circuit docket and its view of the “statutory interplay and relevant precedent does not establish that the court will adjudicate the infringement issue during the appeal or whether [Otter] even has standing to raise this issue or bring the appeal.” Id. at 9. Moreover, Customs determined that it did not possess authority to determine the validity of the '561 Patent. Id. at 15. Finally, Customs limited its infringement analysis to Otter's Symmetry cases for iPhones, even though it has excluded and demanded redelivery of all Symmetry cases.⁵ See id.

Otter's protest was deemed denied, pursuant to 19 CFR § 174.21(b)...