Federal Circuit Column

• Jurisdiction: United States,Federal
• Citation: Vol. 47 No. 2
• Publication year: 2022
• Author: Connor Houghton
• topic: Administrative Law,Patent law,Intellectual Property,Civil Procedure

FEDERAL CIRCUIT COLUMN

Connor Houghton
Reichman Jorgensen Lehman & Feldberg LLP

This article discusses the Federal Circuit's recent opinion in DBN Holding, Inc v. International Trade Commission.¹ In this precedential opinion, the Federal Circuit held that a subsequent finding of patent invalidity did not provide a basis for rescinding or modifying the International Trade Commission's imposition of over $6 million in civil penalties for a manufacturer's violation of a Commission consent order.

BACKGROUND AND PROCEDURAL HISTORY

This case has an extensive procedural history, including three prior appeals to the Federal Circuit.

The dispute began in August 2012, when BriarTek IP, Inc. ("BriarTek") sued DeLorme Publishing Company, Inc. and DeLorme InReach LLC (collectively "DeLorme"²) in ITC Investigation No. 337-TA-854,³ alleging infringement of U.S Patent No. 7,991,380 ("the '380 patent") relating to satellite-based emergency notification systems. The ITC Investigation was terminated prior to a judgment on the merits when DeLorme, over BriarTek's objection, agreed to a consent order.⁴ Under the terms of the consent order, which issued on April 5, 2013, DeLorme agreed not to sell or offer for sale after importation any products that infringed the '380 patent.⁵ On April 10, 2013, shortly after DeLorme agreed to the consent order, BriarTek filed an ITC enforcement complaint, alleging that DeLorme had violated the consent order.⁶ The enforcement proceeding was instituted on May 24, 2014, and days later, DeLorme filed a complaint in the Eastern District of Virginia on May 28, 2014, seeking a declaratory judgment of invalidity and noninfringement of the '380 patent.⁷

In June 2014, while the district court case was pending, the ITC issued a final determination in the enforcement proceeding, finding that DeLorme had violated the consent order and imposing a civil penalty of $6,242,500 for its violations.⁸ Later, on November 19, 2014, the Eastern District of Virginia granted summary judgment that the claims of the '380 patent asserted in the ITC proceeding were invalid. Both cases were subsequently appealed; while they were not consolidated, the Federal Circuit issued opinions in both cases on November 12, 2015. The Federal Circuit affirmed the district court's grant of summary judgment of invalidity of the '380 patent.⁹ At the same time, the court upheld the ITC enforcement opinion imposing civil penalties, finding that its affirmance of the district court's summary judgment of invalidity did not negate DeLorme's

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pre-invalidation violation of the consent order.¹⁰

DeLorme then petitioned the ITC to rescind or modify the civil penalty order in light of the Federal Circuit's affirmance of the district court's invalidity judgment.¹¹ The ITC denied the petition, finding that the Federal Circuit's opinion upholding the civil penalties estopped this argument.¹² DeLorme appealed again; the Federal Circuit agreed with DeLorme that res judicada did not prevent the ITC from having jurisdiction to modify or rescind the civil penalty in light of the invalidation.¹³ The Federal Circuit remanded to the ITC to decide in the first instance "whether to modify or rescind the civil penalty pursuant to 19 C.F.R. § 210.76 based on the final judgment of invalidity" of the asserted patent.¹⁴

ITC OPINION ON APPEAL

On remand, the ITC issued the opinion at issue in the instant appeal, rejecting DeLorme's argument that the civil penalty order should be rescinded and upholding the $6 million civil penalty order.¹⁵ First, the Commission considered the governing regulation, 19 C.F.R. § 210.76, finding that it contemplates modifying or rescinding certain types of ITC remedial orders, including "exclusion orders, cease and desist orders, consent orders, and seizure and forfeiture orders."¹⁶ However, according to the Commission, the rule does not contemplate modification or rescission of civil penalty orders.¹⁷ The Commission then rejected DeLorme's arguments that prior ITC case law supported modification or rescission of a consent order in light of subsequent patent invalidity findings, distinguishing those cases on the facts and the law.¹⁸

Once it determined that civil penalties could still be assessed, the ITC reviewed the six factors relevant to civil penalties ("the EPROMs factors"), which include: (1) the good or bad faith of the respondent, (2) the injury to complainant, (3) respondent's ability to pay, (4) the extent to which respondent has benefited from its violations, (5) the need to vindicate the authority of the Commission, and (6) the...