Expanded Powers of the USITCSeptember 3, 2015

Under 19 U.S.C. §1337(b)(1) the U.S. International Trade Commission (USITC) is authorized to investigate allegations of unfair trade acts in the importation of articles that infringe a valid United States patent.  If a violation of the statute is found, the USITC issues an exclusion order that bars the importation of some or all of the infringing products and may issue a related cease and desist order unless the Commission finds that certain public interest factors militate against such remedy.

The Federal Circuit, sitting en banc, recently issued a decision in Suprema, Inc. v. USITC. In the holding, the Federal Circuit overturned a prior decision, and granted the USITC the power to block importation of products based upon a theory of induced infringement. The recent decision now provides the USITC the ability to exclude products from being imported to the U.S. even if the imported product itself does not infringe a U.S. patent.

Based on past decisions by the Federal Circuit, the USITC’s power had been limited to excluding products from importation if they infringed a U.S. patent at the time of importation. This provided potential infringers with a means to get around an exclusion order from the USITC related to infringing products. For example, if a patented product included multiple components or features, a potential infringer could have the components imported to the U.S. separately to avoid exclusion by the USITC, then assemble the components to create an infringing product once in the U.S.

In Suprema, Inc. v. USITC, Cross Match Technologies, Inc., owned several patents related to a fingerprint-scan system and methodology that included both hardware and software components. Suprema, Inc., was manufacturing the hardware abroad and then importing it to the U.S. Once the hardware reached the U.S., Mentalix, Inc., would install software to create a product that infringed Cross Match’s patents. Upon review, the USITC determined that the package sold in the U.S. by Mentalix, including Suprema imported hardware and Mentalix software, did in fact infringe the Cross Match patents. The issue however was what to do about the imported hardware from Suprema. It was clear that the hardware was being used to infringe upon a U.S. patent, but the USITC had been unable to stop the importation of the hardware by Suprema because the hardware itself did not infringe the Cross Match patent.

The Federal Circuit decided to grant the USITC expanded power to exclude imported goods based on the theory of induced infringement. This allows the USITC to block the importation of goods, like those imported by Suprema, based on the theory that the goods will be used by another to infringe a U.S. Patent, even though the imported goods do not infringe at the time of importation.

This case highlights a loophole in patent law by which an entity may have potentially avoided liability for infringement in the past by importing non-infringing goods that would eventually be used to directly infringe a U.S. patent post-importation. Going forward, if this decision is upheld, the expanded power granted to the USITC by the Federal Circuit may prove to be a useful tool for preventing infringement in the U.S., by excluding products before they even enter the country.

The full opinion may be found here.