The U.S. Supreme Court has denied Comcast’s petition for certiorari arising from one of the disputes at the International Trade Commission (ITC) between Rovi and Comcast regarding alleged patent infringement.
Aside from issues of mootness (the asserted patents expired while the appeal to the U.S. Court of Appeals for the Federal Circuit was pending), the dispute raises two issues concerning how to read Section 337. First, even though Comcast was not the actual importer of record, the ITC still found that Comcast was an importer (along with its customers) of the accused set-top boxes. Second, even though the set-top boxes did not infringe as they arrived into the United States, the ITC found that Comcast violated Section 337 under a theory of induced infringement. The Federal Circuit agreed with the ITC on both counts.
According to the ITC, though Section 337 does not define importation, its “plain meaning” is “the bringing of goods into the country from abroad.” The ITC noted that the Administrative Law Judge observed that the accused set-top boxes were “so tailored to Comcast’s system and requirements that they would not function within another cable operator’s system,” and that “the software at issue in the heart of th[e] investigation is attributable squarely to Comcast.” (See ITC Response to Petition for Certiorari at 16.) The ITC also noted (at 31-32) that “[t]he evidence showed that the set-top boxes were ‘designed only for Comcast’ according to precise ‘specifications and acceptability standards’; that Comcast ‘knows the imported products are manufactured abroad and imported into the United States’ for delivery to Comcast; that ‘Comcast alone controls the volume of accused products that enter the United States’; and that ‘Comcast requires Arris and Technicolor to handle importation formalities, such as fees, documentation, licenses, and regulatory approvals.’”
With regard to infringement, Comcast argued that because the set-top boxes did not infringe as they came into the United States, their importation could not violate Section 337. According to Comcast, the ITC’s power under Section 337 is limited to articles that infringe at the time of importation, not to articles that could be used to infringe later. Indeed, when Comcast disabled the functionality at issue, U. S. Customs and Border Protection allowed the same set-top boxes into the United States, according to Comcast. The ITC noted that the ITC has construed Section 1337(a)(1)(B)(i) to encompass (among other things) the “importation of goods that, after importation, are used by the importer to directly infringe at the inducement of the goods’ seller.” (See ITC Response to Petition for Certiorari at 29.) Under this reading of Section 337, the ITC found that Comcast’s customers’ use of particular functions in the accused set-top boxes infringed Rovi’s patents, and that Comcast induced that infringement. The ITC noted that direct infringement of the patents when the set-top boxes were fitted by or for Comcast was not disputed. Thus, on this factual record, the ITC found that Comcast violated Section 337 by inducing the direct infringement by its customers.
Takeaways: Companies importing products into the United States (or having products imported) should be aware of the ITC’s reading of importation and whom the ITC can find to be an importer for purposes of investigating potential Section 337 violations. Moreover, the reach of Section 337 is broader than just products that infringe at the moment of importation; post-importation infringement can also give rise to a violation of the trade law.