A Case Study on US 337 Investigation: ROKU, INC v. International Trade Commission, Universal Electronics, Inc.

Chapter 4 of Title 19 of the United States Code embodies the content of the U.S. Tariff Act of 1930. In particular, 19 USC §1337 regulates unfair practices in import trade, including patent infringement.

?

1. Basic content of Article 1337

19 USC §1337 ("Section 1337" or "1337") defines the importation of patent-infringing products into the U.S. as an unfair practice in import trade, and the International Trade Commission ("ITC") can commence an investigation against such importation upon request from a complainant (usually a patent holder) under this provision ("337 investigation").

This section designates as unlawful the importation, sale for importation, and sale in the U.S. market after importation by owners, importers, or recipients of articles infringing a U.S. patent.

?

1337 requires the complainant to meet the "domestic industry" requirements, that is, the complainant must have an existing or emerging domestic industry in the United States for the patent-protected products, also known as the "domestic industry products".

?

1337 further stipulates that whether an industry exists depends on whether economic limb of the domestic industry requirements is fulfilled. This requires the complainant to have sufficient investment in the United States with respect to the domestic industry products, such as in plant and equipment, employment of labor or capital, or exploitation of the asserted intellectual property rights.

?

The case analyzed below involves the specific application of Section 1337 in the context of patent infringement, including issues like the complainant’s standing to make a complaint, domestic industry requirements, and the patent invalidity defense.

?

2. ROKU, INC v. International Trade Commission, Universal Electronics, Inc.

?

Universal Electronics, Inc. ("Universal") is the rightsholder of patent no. US10593196B (the "Patent"). The Patent is intended to solve the incompatibility of communication protocols among different TV and video devices. Users can use a universal control engine to connect and scan different target devices to determine the communication protocols they use. Universal has developed a software called "QuickSet" based on the Patent to be installed in multiple smart TVs.

?

Upon notice that Roku imported some TV products that infringed the Patent, Universal filed a complaint with the ITC. The ITC launched a 337 investigation and finally determined that Roku violated Section 1337 by importing patent-infringing products. Roku appealed to the Federal Circuit Court of Appeals.

?

First, Roku argued that Universal was not the owner of the Patent, relying on an assignment agreement signed between the inventor of the Patent and Universal in 2004. Roku considered this agreement was only a promise to assign the inventor’s rights to Universal in the future, rather than an actual assignment of those rights.

?

However, the court considered another agreement signed in 2012 to be an assignment of the Patent’s ownership, and that the inventor did not make any new creative contribution to the Patent thereafter. Therefore, the court held that the inventor had assigned his entire rights in the Patent to Universal. Universal, as the rightsholder of the Patent, had the right to file a complaint under 1337.

?

Second, Roku argued that Universal’s complaint did not fulfil the economic limb of the domestic industry requirement. Universal relied on its investments in QuickSet to show the requisite investment; however, Roku considered that the inquiry should be focused on the specific domestic industry products, namely certain Samsung TVs, rather than the QuickSet software.

?

The court invoked InterDigital Commc’ns, LLC v. ITC, 707 F.3d 1295, 1303-04 (Fed. Cir. 2013), saying that precedent does not require expenditure in whole products themselves, but rather investment in the exploitation of the intellectual property. If a subset of the product exploits the intellectual property, investment on the subset can be used to prove fulfilment of the economic limb of the domestic industry requirement. As the intellectual property at issue was practised by QuickSet, which was a subset of the whole product, Universal could use its investment in QuickSet to meet the economic limb of the domestic industry requirements of Section 1337.

?

Third, Roku argued that the Patent was not inventive. However, the court considered that Roku failed effectively to challenge the ITC’s findings that a combination of two references failed to disclose one limitation of the Patent and Roku’s argument about secondary considerations was meritless. Therefore, the court upheld the ITC’s determination that the Patent was inventive.

?

Based on the above, the Federal Circuit Court of Appeals upheld the ITC’s decision. The full text of the court’s decision can be seen at: https://cafc.uscourts.gov/opinions-orders/22-1386.OPINION.1-19-2024_2255688.pdf

?

3. Brief comments

?

Under US law, the inventor rather than the employer is presumed to be the owner of a patent application. If the employer wants to become the owner of the patent application or the patent once granted, it should sign an assignment agreement with the inventor in a timely manner. An effective assignment agreement should not stop at a promise level, but should make an effective present assignment of rights from the inventor to the employer so as to entitle the employer to take any enforcement action.

?

Moreover, it appears from the court’s decision that a complainant may use either the domestic industry product or a subset thereof to meet the economic limb of the domestic industry requirement in an ITC investigation. The ITC found certain Samsung TVs were the domestic industry products, but did not rely on these Samsung TVs in deciding whether the domestic industry requirement was met or not. Instead, the court allowed the complainant to use investments on its QuickSet software, which was only part of the domestic industry product, to prove fulfillment of the requirement.

?

In this case, the asserted claims of the Patent were all product claims, and the alleged infringing products were products, too. QuickSet, however, is computer software rather than a product. Although it may be an essential portion of the claimed invention of the Patent, that does not make it practise any claimed invention of the Patent.

?

The test for ‘practising’ a patent is essentially the same as it is for infringement, except that it involves comparing the complainant's (or licensee's) ‘domestic industry product’ to one or more claims of the patent involved. Alloc, Inc. v. Int'l Trade Comm'n, 342 F.3d 1361, 1375 (Fed. Cir. 2003)”, ITC Opinion in the Matter of Certain Wet Dry Surface Cleaning Devices, Investigation No. 337-TA-1304.

?

It looks from the court's decision that direct infringement was claimed by Universal. “To prove direct infringement, the rightsholder must establish that at least one claim of the asserted patent reads onto the alleged infringing product or process; Advanced Cardiovascular Sys., Inc. v. Scimed Life Sys., Inc., 261 F.3d 1329, 1336 (Fed. Cir. 2001).?Each limitation in a patent claim is important and essential to the determination of infringement; London v. Carson Pirie Scott & Co., 946 F.2d 1534, 1538 (Fed. Cir. 1991), ITC Opinion in the Matter of Certain Wet Dry Surface Cleaning Devices, Investigation No. 337-TA-1304.

?

In this case, QuickSet may well correspond to the "executable instructions" part of claim 1, but did not embody each and every limitation of claim 1. Only when QuickSet was installed in the Samsung TVs could it be said that the Samsung TVs practised at least one whole patent claim.

?

It could be seen as somewhat ill-founded for the ITC and the court to deem QuickSet alone as practising the Patent.? Conversely, it could be argued based on this decision that the ITC has widened the domestic industry requirements of the 337 investigations by broadening admissible investment proof from the whole domestic industry product to a subset thereof.

?