“Apple’s ways present a helpful roadmap for litigants who face the specter of an exclusion order threatening to bar key merchandise from the USA and who’re unable or unwilling to barter a settlement.”
Late final yr, , the USA Worldwide Commerce Fee (ITC) announced that it will problem a restricted exclusion order (LEO) and stop and desist order (CDO) towards Apple, Inc. prohibiting Apple from importing and promoting its Apple Watch (Collection 6 and seven) merchandise in the USA. The case was Certain Light-Based Physiological Measurement Devices and Components Thereof, Investigation No. 337-TA-1276 (“Mild-Based mostly Physiological Measurement Units”), a “Part 337” patent infringement investigation earlier than the ITC that was initiated by Masimo Company. Including insult to damage, the ITC refused to remain these remedial orders pending attraction, placing at fast threat continued gross sales of the Apple Watch in the USA. These selections despatched shock waves throughout each the tech business and the authorized group. The ITC meant enterprise, and never even the Apple Watch—a massively profitable shopper product marketed by a flagship U.S. firm—may escape the Fee’s strong jurisdiction.
Maybe this outcome shouldn’t have been as startling because it appeared on the time. For a number of years, towards a number of adversaries, Apple had been battling a potential Apple Watch ban on a number of fronts—together with the ITC, a number of U.S. District Courts, and the USA Patent and Trademark Workplace’s Patent Trial and Attraction Board (PTAB). And whereas Apple had managed to influence the ITC to droop enforcement of an Apple Watch exclusion order in a previous ITC continuing towards AliveCor, Inc. initiated in 2021—Certain Wearable Electronic Devices With ECG Functionality and Components Thereof, Investigation No. 337-TA-1266 (“Wearable Digital Units”)—Apple would have wanted to win nearly each intermediate battle in these Apple Watch wars to emerge unscathed. That was a tall order below any circumstances.
However nonetheless, Apple has soldiered on, refusing to concede. Certainly, in a spirited effort to keep away from or mitigate the impression of an ITC exclusion order on its Apple Watches, Apple has engaged within the full gamut of defensive maneuvers. Apple’s ways—a few of which have been acquainted to skilled IP litigators, a few of which have taken paths maybe much less well-trodden—present a helpful roadmap for litigants who face the specter of an exclusion order threatening to bar key merchandise from the USA and who’re unable or unwilling to barter a settlement. Key components of Apple’s defensive ways are mentioned under.
Vigorous Litigation of the Public Curiosity Elements
Beneath 19 U.S.C. § 1337(e), the ITC is empowered to problem exclusion orders “except, after contemplating the impact of such exclusion upon the general public well being and welfare, aggressive circumstances in the USA economic system, the manufacturing of like or straight aggressive articles in the USA, and United States customers, it finds that such articles shouldn’t be excluded from entry.” These components are usually known as the “public curiosity components,” and in idea the statutory provision requires the ITC to contemplate whether or not such components override a personal complainant’s curiosity in IP enforcement. The ITC considers such components each on the pre-institution stage and within the context of issuing a Closing Willpower. See, e.g., 19 C.F.R. §§ 210.8(b), (c) & 210.50(a). In follow, nevertheless, reduction has hardly ever been withheld on this foundation, and events to Part 337 investigations usually deal with the general public curiosity as an ancillary problem requiring much less consideration.
However in each Wearable Digital Units and Mild-Based mostly Physiological Measurement Units, Apple acknowledged that it had doubtlessly meritorious public curiosity arguments. Apple constructed thorough evidentiary data and argued strenuously that exclusion of the Apple Watches at problem, which embody telecommunications, well being and wellness, health monitoring, and placement monitoring options, can be averse to the general public well being and welfare and dangerous to U.S. customers. Though the ITC in the end decided to problem remedial orders regardless of Apple’s public curiosity arguments, it agreed to tailor these orders to allow exemptions for service, restore, and alternative of infringing Apple Watches. See usually Wearable Digital Units, Comm’n Op., slip op. at 70–82 (Jan. 20, 2023); Mild-Based mostly Physiological Measurement Units, Comm’n Op., slip op. at 76–118 (Nov. 14, 2023). These exemptions had been necessary first steps in decreasing the adversarial impression that any ITC remedial orders might need within the market.
Submitting Immediate IPR Petitions and Searching for Stays and/or Suspensions of ITC Remedial Orders
Difficult asserted patents in parallel inter partes evaluate (IPR) proceedings earlier than the PTAB has lengthy been customary follow for defendants in patent infringement lawsuits. By legislation, IPR petitions should be filed inside one yr of an infringement go well with having been filed in U.S. District Courtroom. 35 U.S.C. § 315(b). Furthermore, petitioning delays could cause the PTAB to discretionarily deny establishment below Fintiv. See Apple Inc. v. Fintiv, Inc., IPR2020-00019, Order, slip op. at 5–6 (PTAB Mar. 20, 2020) (precedential) (Paper No. 11). However within the context of an expedited ITC continuing—which by statute is required to conclude “on the earliest practicable time,” 19 U.S.C. § 1337(b)(1), and usually takes 15 months or much less—any IPR petition should be filed completely instantly if a celebration is to have any hope of securing a PTAB determination earlier than the ITC acts.
Apple’s ways in Wearable Digital Units illustrate why. In that continuing, AliveCor had filed its Criticism asserting claims from three totally different patents on April 20, 2021, and the investigation was instituted on Could 20, 2021. Solely weeks after the ITC’s establishment, on June 9, 2021, Apple was capable of file a number of IPR petitions with the PTAB looking for invalidation of the asserted claims from all three patents. Even so, the PTAB didn’t problem Closing Written Choices in Apple’s favor till December 6, 2022—lower than per week earlier than the ITC’s December 12, 2022, goal date for completion of its investigation. See Apple, Inc. v. AliveCor, Inc., IPR2021-00970, Closing Written Choice (Dec. 6, 2022) (Paper No. 43); Apple, Inc. v. AliveCor, Inc., IPR2021-00971, Closing Written Choice (Dec. 6, 2022) (Paper No. 42); Apple, Inc. v. AliveCor, Inc., IPR2021-00972, Closing Written Choice (Dec. 6, 2022) (Paper No. 43). This time crunch pressured Apple to hurry to the ITC the very subsequent day and file an Emergency Movement disclosing the PTAB invalidations and looking for suspension of any ITC remedial orders or a keep of the investigation pending any appeals of the PTAB rulings. See Wearable Digital Units, Emergency Mot. to Droop Any Treatment or Prolong the Goal Date and Keep Proceedings (Dec. 7, 2022).
When the ITC issued its Closing Willpower shortly thereafter, though it discovered sure patent claims legitimate and infringed by Apple and issued an LEO treatment barring the importation and sale of Apple Watches, it agreed with Apple that enforcement of its remedial orders must be suspended till the PTAB’s rulings had been resolved on attraction. See Wearable Digital Units, Comm’n Op., slip op. at 85–87 (Dec. 22, 2022). AliveCor’s appeals stay pending, and the ITC’s suspension of its remedial orders stays in place.
Product Redesigns and Rule 177 Proceedings Earlier than CBP’s EOE Department
After the ITC points a remedial order, the order should be enforced by the Exclusion Order Enforcement Department (EOE) of the U.S. Customs and Border Safety (CBP). Relatedly, 19 C.F.R. Half 177 is a CBP regulation usually allowing importers or different events to request a proper administrative ruling from CBP that contemplated transactions can be lawful and permitted sooner or later. See, e.g., 19 C.F.R. §§ 177.1–177.10 (collectively, “Rule 177 proceedings”). Within the context of EOE’s enforcement of ITC remedial orders and associated patent infringement points, EOE will entertain Rule 177 requests looking for an adjudication of whether or not a redesigned product can be topic to an ITC exclusion order or whether or not it’s non-infringing and thus its future importation can be permissible. EOE prefers that these proceedings be carried out on an inter partes foundation, with a brief interval of discovery in regards to the redesigned merchandise, adopted by exchanges of briefing, oral shows, and an EOE written determination.
In Mild-Based mostly Physiological Measurement Units, on October 26, 2023, the ITC announced that it was issuing a Closing Willpower discovering Apple in violation of Part 337 and issued an LEO and CDO. Because it had achieved in reference to Wearable Digital Units, Apple had filed quite a few IPR petitions difficult Masimo’s asserted patents, however this time Apple had been unsuccessful for probably the most half. Thus, though Apple once more tried to remain enforcement of the remedial orders, the ITC did not see any justification for that step and rejected Apple’s request. See Mild-Based mostly Physiological Measurement Units, Order Denying Respondent’s Mot. to Keep Remedial Orders (Dec. 20, 2023).
However Apple had been anticipating this eventuality and had developed modifications to its Apple Watch merchandise that, Apple contended, constituted design-arounds to the Masimo asserted patents. Accordingly, on October 27, 2023—someday after the ITC’s announcement of its remedial orders—Apple submitted a letter to CBP requesting a Rule 177 ruling that its modified Apple Watches had been non-infringing and might be imported and offered. On January 12, 2024, EOE issued its Rule 177 ruling discovering that the Apple Watch modifications rendered the merchandise non-infringing and would fall outdoors the scope of the ITC’s remedial orders, allowing continued importation and gross sales in the USA. See EOE Ruling Letter, HQ H335304 (Jan. 12, 2024).This was one other crucial victory for Apple.
Appeals to the Federal Circuit and Accompanying Motions to Keep
In Mild-Based mostly Physiological Measurement Units, the ITC’s LEO issued on October 26, 2023. Notably, nevertheless, the ITC additionally decided that it will impose no bond requirement on Apple’s persevering with imports of Apple Watches in the course of the 60-day interval of Presidential evaluate below 19 U.S.C. § 1337(j). See Mild-Based mostly Physiological Measurement Units, Comm’n Op., slip op. at 119–23 (Nov. 14, 2023). This meant that Apple had a 60-day grace interval—i.e., till December 26, 2023—earlier than the ITC’s remedial orders would take impact towards the accused Apple Watches. However after December 26, 2023, and no less than till EOE authorized Apple’s redesigns, Apple had an issue.
Apple appealed the ITC’s Closing Willpower to the Federal Circuit and, to bridge the hole between the conclusion of the 60-day interval of Presidential evaluate and the forthcoming EOE Rule 177 ruling, Apple filed two Emergency Motions on December 26, 2023 (the identical day that the Federal Circuit docketed its attraction and the identical day that the 60-day interval of Presidential evaluate got here to an finish). First, Apple sought a keep of any enforcement of the ITC’s remedial orders pending decision of its attraction. See Appellant Apple, Inc.’s Non-Confidential Emergency Mot. to Keep Enforcement of ITC’s Orders Pending Evaluation, Apple Inc. v. Int’l Commerce Comm’n, No. 24-1285, ECF No. 7 (Fed. Cir. Dec. 26, 2023) (“Movement to Keep”). Second, Apple requested a right away interim keep of enforcement whereas the Federal Circuit adjudicated the Movement to Keep (“Movement for Interim Keep”). See Appellant Apple Inc.’s Non-Confidential Emergency Mot. for an Instant Interim Keep Pending Disposition of Mot. for Keep Pending Attraction, Apple Inc. v. Int’l Commerce Comm’n, No. 24-1285, ECF No. 5 (Fed. Cir. Dec. 26, 2023).
The subsequent day, on December 27, 2023, the Federal Circuit promptly granted the Motion for Interim Stay and directed the government to not implement the ITC’s remedial orders on a short lived foundation. See Apple Inc. v. Int’l Commerce Comm’n, No. 24-1285, Order, ECF No. 19 (Fed. Cir. Dec. 27, 2023). Though the Federal Circuit later denied Apple’s Movement to Keep on January 17, 2024, see Apple Inc. v. Int’l Trade Comm’n, No. 24-1285, Order, ECF No. 33 (Fed. Cir. Jan. 17, 2024), Apple had succeeded in making certain continued importations and gross sales of accused Apple Watches till after the EOE had issued its Rule 177 ruling on January 12, 2024.
In the meantime, Apple’s Federal Circuit attraction on the deserves stays pending. An Apple victory on attraction, in fact, would imply that Apple’s redesigns can be pointless, and Apple may proceed with enterprise as standard. Apple’s aggressive defensive ways would have succeeded fully.
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Creator: Frank-Peters
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