YBM Magnex, Inc. v. International Trade Com'n

• Decision Date: 27 May 1998
• Docket Number: No. 97-1409,97-1409
• Citation: 145 F.3d 1317,46 USPQ2d 1843
• Parties: YBM MAGNEX, INC. (Successor in interest to Crucible Materials Corporation), Appellant, v. INTERNATIONAL TRADE COMMISSION, Appellee, San Huan New Materials High Tech, Inc., Ningbo Konit Industries, Inc., and Tridus International, Inc., Intervenors.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1317

145 F.3d 1317

46 U.S.P.Q.2d 1843

YBM MAGNEX, INC. (Successor in interest to Crucible Materials Corporation), Appellant, v. INTERNATIONAL TRADE COMMISSION, Appellee San Huan New Materials High Tech, Inc., Ningbo Konit Industries, Inc., and Tridus International, Inc. Intervenors.

No. 97-1409.

United States Court of Appeals Federal Circuit.

May 27, 1998.

Rehearing Denied; Suggestion for Rehearing In Banc

Declined Aug. 21, 1998.

Darrel C. Karl, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, of Washington, DC, argued for appellant. With him on brief were Ford F. Farabow, Jr., Wayne W. Herrington, and Michael J. Flibbert.

Jay H. Reiziss, Attorney, Office of General Counsel, U.S. Intern. Trade Commission, of Washington, DC, argued for appellee. With him on brief were Lyn M. Schlitt, General Counsel, and James A. Toupin, Deputy General Counsel.

Gary M. Hnath, Venable, Baetjer, Howard & Civiletti, LLP, of Washington, DC, argued for intervenors.

Before RICH, Circuit Judge, SMITH, Senior Circuit Judge, and NEWMAN, Circuit Judge.

PAULINE NEWMAN, Circuit Judge.

This appeal arises from a proceeding to enforce a Consent Order issued in Investigation No. 337-TA-372, conducted under 19

U.S.C. § 1337, Section 337 of the Tariff Act of 1930 as amended, relating to Certain Neodymium-Iron-Boron Magnets, Magnet Alloys, and Articles Containing Same. YBM Magnex, successor in interest to Crucible Materials Corporation (hereinafter YBM), appeals the decision of the United States International Trade Commission, ¹ reinterpreting and effectively modifying the Consent Order entered into with the three respondents that appear in this appeal as Intervenors (San Huan New Materials High Tech, Inc., Ningbo Konit Industries, Inc., and Tridus International, Inc.). We reverse the Commission's decision, for it was based on an incorrect interpretation and application of precedent.

BACKGROUND

YBM is the owner of United States Patent No. 4,588,439 entitled "Oxygen Containing Permanent Magnet Alloy" (the '439 patent), directed to permanent magnet alloy compositions consisting of at least one rare earth element, iron, and boron, and containing specified amounts of oxygen. Such magnets without the increased oxygen content are described as exhibiting poor stability under conditions of high humidity and warm temperature, for they absorb and react with hydrogen present in the atmosphere, and physically degrade. According to the '439 patent, adjusting the oxygen content of the magnet alloy results in improved stability in warm, humid conditions. The relevant claims of the '439 patent are:

1. A permanent magnet alloy consisting essentially of, in weight percent, 30 to 36 of at least one rare earth element, 60 to 66 iron, 6,000 to 35,000 ppm oxygen and balance boron.

2. The alloy of claim 1 wherein at least one of said rare earth elements is neodymium.

3. The alloy of claim 1 wherein at least one of said rare earth elements is dysprosium.

YBM charged that the importation by eight respondents of certain neodymium-iron-boron-oxygen permanent magnets infringed the '439 patent, literally and under the doctrine of equivalents.

After various proceedings, the three respondent/intervenors entered into a Consent Order and the investigation was terminated as to them. They agreed not to infringe the '439 patent, the Consent Order including the following provisions:

(1) The Respondents shall not sell for importation, import into the United States or sell in the United States after importation ... neodymium-iron-boron magnets which infringe any of claims 1-3 of the '439 Patent, or articles or products which contain such magnets, except under consent or license from Crucible;

. . . . .

(7) Respondents ... shall be excluded from any further remedial action taken by the Commission in this investigation. Nothing in this Consent Order, however, shall be construed as precluding further remedial action by the Commission in its investigation, including the grant of a general exclusion order covering all magnets or products containing magnets which are not subject to this Order.

. . . . .

(9) This investigation is hereby terminated with respect to San Huan, Ningbo and Tridus, and San Huan, Ningbo, and Tridus are hereby dismissed as named Respondents in this investigation; provided, however, that enforcement, modification, or revocation of the Consent Order shall be carried out pursuant to Subpart I of the Commission's Rules of Practice and Procedure, 19 C.F.R. Part 210.

Certain Neodymium-Iron-Boron Magnets, Magnet Alloys, and Articles Containing Same, Inv. No. 337-TA-372 (Int'l Trade Comm'n Oct. 11, 1995) (Consent Order).

The investigation continued as to the remaining respondents. The administrative The ALJ's Determinations duly became the holding of the Commission according to 19 C.F.R. § 210.42(h)(2); see Notice Not to Review Initial Determination, 61 Fed.Reg. 6863 (Feb. 22, 1996). The Commission issued a general exclusion order that included the following provisions:

law judge issued Final Initial and Recommended Determinations of violation of Section 337, Certain Neodymium-Iron-Boron Magnets, Magnet Alloys, and Articles Containing Same, USITC Pub. 2964, Inv. No. 337-TA-372 (May 1996) (Final Initial and Recommended Determinations, Dec. 11, 1995), in which the ALJ found that the '439 patent was infringed by various articles, either literally or under the doctrine of equivalents. In finding literal infringement the ALJ took into account that the instrument that was used to measure oxygen content of the magnet alloy had a precision of ±150 ppm. The ALJ also found that magnet alloys having an oxygen content between 5,450 ppm and 6,000 ppm infringed under the doctrine of equivalents.

1. Neodymium-iron-boron magnets and magnet alloys covered by claims 1, 2, or 3 of U.S. Letters Patent 4,588,439, are excluded from entry for consumption into the United States for the remaining term of the patent, except under license of the patent owner or as provided by law.

2. Notwithstanding paragraph 1 of this Order, nothing in this Order shall apply to [San Huan, Ningbo, or Tridus] pursuant to paragraph 7 of the Consent Order issued by the Commission on October 11 and 12, 1995.

Certain Neodymium-Iron-Boron Magnets, Magnet Alloys, and Articles Containing Same, USITC Pub. 2964, Inv. No. 337-TA-372 (May 1996) (Order, Mar. 29, 1996).

On March 4, 1996 YBM filed an enforcement complaint against the three respondents who had entered into the Consent Order, charging that they had violated its terms by continuing to import and sell infringing magnets. While the enforcement proceeding was pending, the Federal Circuit on June 11, 1996 decided Maxwell v. J. Baker, Inc., 86 F.3d 1098, 39 USPQ2d 1001 (Fed.Cir.1996), cert. denied, --- U.S. ----, 117 S.Ct. 1244, 137 L.Ed.2d 327 (1997). In its opinion the court stated that "subject matter disclosed but not claimed in a patent application is dedicated to the public." 86 F.3d at 1106, 39 USPQ2d at 1006. The three respondents then argued that Maxwell had changed the law and now barred application of the doctrine of equivalents to those magnets whose oxygen content was in the range between 5,450 and 6,000 ppm, because this range was disclosed but not claimed in the '439 patent. The respondents argued that this subject matter must now be deemed dedicated to the public, and beyond the reach of the patentee on any theory of equivalency.

After a four day trial on the issues of the asserted violation of the Consent Order, including argument of the interpretation and application of Maxwell, the ALJ held that the three respondents had violated the Consent Order in bad faith by continuing infringement after entering into the Consent Order. The ALJ held that Maxwell did not foreclose, as a matter of law, application of the doctrine of equivalents to encompass oxygen contents of 5,450 to 6,000 ppm. The ALJ explained, citing Graver Tank and Federal Circuit precedent, that earlier decisions of precedential force ² held that subject matter that was disclosed in the specification but not claimed may be the basis of a finding of equivalency, and that Maxwell was directed to its facts and did not overturn all precedent on application of the doctrine of equivalents. The ALJ found, in accordance with the prior determination, that magnets having oxygen contents in the range of 5,450-6,000 ppm infringed the '439 patent under the doctrine of equivalents. Certain Neodymium-Iron-Boron Magnets, Magnet Alloys, and Articles Containing Same, Inv. No. 337-TA-372 (Int'l Trade Comm'n Jan. 17, 1997) (Recommended Determination).

The Commission rejected the ALJ's Recommended Determination with respect to the interpretation of Maxwell. The Commission held that Maxwell established a new rule of law, and that the doctrine of equivalents can no longer be applied to reach subject matter that is disclosed in the patent but not claimed. Describing Maxwell as a "significant change[ ] in relevant decisional law," the Commission held that magnet alloys with oxygen content below 6,000 ppm can not infringe the '439 patent by application of equivalency. The Commission held that the outstanding Consent and exclusion orders do not prevent the importation and sale of such magnets. YBM appeals the Commission's decision ³ with respect to the interpretation of Maxwell to bar application of the doctrine of equivalents to these articles. The three Intervenors have separately appealed other issues arising from these proceedings, in an appeal not now before us.

DISCUSSION

Rulings of law by the Commission receive plenary review on appeal. Modine Mfg. Co. v. International Trade Com'n, 75 F.3d 1545, 1549, 37 USPQ2d 1609, 1611 (Fed.Cir.1996). The meaning or interpretation of precedent is a question of law, South Park Independent School Dist. v. United States, 453 U.S. 1301, 1304-05, 102 S.Ct. 1, 69 L.Ed.2d 1007 (1981), and the Commission's determination thereof is given de novo...