[00:00:03] Speaker 00:
good morning please be seated the case before us this morning is

[00:00:27] Speaker 11:
Docket number 121170, Suprema versus ITC.

[00:00:33] Speaker 11:
Mr. Wu, when you're ready.

[00:00:39] Speaker 16:
Good morning, Your Honors.

[00:00:41] Speaker 16:
May it please the Court?

[00:00:43] Speaker 16:
My name is Darrell Wu, and I represent the appellants in this matter.

[00:00:49] Speaker 16:
At issue in this case are Suprema's fingerprint scanners and SDK.

[00:00:55] Speaker 16:
The commission below determined that none of these products directly or contributorily infringed the 3.4 patent.

[00:01:03] Speaker 16:
Suprema imports the scanners and system integrators in the United States attach them to computers like you would attach a cricket to a PC.

[00:01:12] Speaker 16:
The software alleged to run Claim19's method is run on the PC.

[00:01:16] Speaker 16:
Nothing is added to the scanners.

[00:01:19] Speaker 16:
Three of the four combinations of scanners, computers, and software programs accused of infringing Claim 19 were found by the Commission not to infringe.

[00:01:29] Speaker 16:
The common element is the scanners, and that makes them the perfect example of a staple article of commerce.

[00:01:38] Speaker 16:
You can add supremo-scanners to any customer's software, and the scanners will run the same way.

[00:01:44] Speaker 16:
The Commission, in fact, expressly found

[00:01:47] Speaker 16:
that the scanners were capable of substantial non-infringing uses.

[00:01:52] Speaker 16:
The Commission erred in finding that the supremacy of staple article scanners are articles that infringe under 337.

[00:02:00] Speaker 16:
As the Commission itself has ruled, 337's articles that infringe language refers to the status of the articles at the time of importation.

[00:02:10] Speaker 16:
as imported.

[00:02:11] Speaker 05:
Mr. Woo, this is a trade statute and its purpose is to protect owners of the United States patents.

[00:02:19] Speaker 05:
The commission found that there was direct infringement by mentalics and that's a prima intended to induce.

[00:02:30] Speaker 05:
So because this is a trade statute, can't we dispense with some of the minor technicalities of the patent law?

[00:02:37] Speaker 05:
This is a trade statute.

[00:02:39] Speaker 16:
Your honor, I agree with you that it's a trade statute.

[00:02:42] Speaker 16:
The language of the trade statute, though, is written in terms of articles that infringe, not acts that lead up to an infringement.

[00:02:51] Speaker 16:
And articles that infringe are not stable articles.

[00:02:55] Speaker 16:
My clients imported only stable articles.

[00:02:59] Speaker 16:
Nothing transformed them.

[00:03:00] Speaker 05:
There's 271B with his inducements.

[00:03:03] Speaker 16:
271B is inducement, yes, your honor, but that statute is written in terms purely of conduct, not of articles.

[00:03:12] Speaker 16:
271A and 271C refer to articles.

[00:03:16] Speaker 11:
But A and C also are really conduct, right?

[00:03:19] Speaker 11:
It's whoever sell, uses, makes.

[00:03:21] Speaker 11:
It's not articles that infringe.

[00:03:24] Speaker 11:
a person engaging in infringing conduct.

[00:03:26] Speaker 11:
Is that not correct?

[00:03:27] Speaker 16:
Well, the conduct is with reference to articles in 271A, it's articles that directly infringed, and in 271C,

[00:03:36] Speaker 16:
It's non-stable articles that are especially made for infringement.

[00:03:42] Speaker 16:
So while both statutes 337 and 271 address conduct, they also are directed to articles that are the object of the conduct.

[00:03:59] Speaker 04:
except for 271b, which is written solely in terms of... But 271b also contemplates use of articles for committing 271b infringement too, right?

[00:04:12] Speaker 16:
Well, I'm not saying that you cannot use an article as part of your inducement of infringement.

[00:04:18] Speaker 16:
All I'm saying is that under 337, which is written expressly in terms of articles that infringe, the articles have to infringe.

[00:04:26] Speaker 16:
And under 271B, yes, you can be liable for patent infringement in a district court for the acts that constitute inducement, but they are not tied at all to whatever articles you may or may not be

[00:04:41] Speaker 16:
importing or may or may not be selling.

[00:04:44] Speaker 10:
Mr. Wu, what do you think articles that infringe means at its outer limits?

[00:04:50] Speaker 10:
At its outer limits?

[00:04:50] Speaker 10:
Does it cover an article whose only use is to carry out a method, a claimed method?

[00:04:59] Speaker 16:
I think an argument could be made for that, but that is not an issue that is here because we have nothing but stapled articles.

[00:05:07] Speaker 10:
Tell me then what the outer limits are.

[00:05:10] Speaker 16:
The outer limits in our view, your honor, within the confines of this case are articles that either directly infringe or contributory infringe.

[00:05:19] Speaker 10:
What does it mean to say an article infringes?

[00:05:22] Speaker 10:
That's not 271's language.

[00:05:24] Speaker 10:
So obviously 337 refers in some way or other to 271.

[00:05:29] Speaker 10:
And the question is whether the commission here has taken a term, articles that infringe, that is not exactly what anything in 271 says and given a reasonable translation of that shorthand into something in 271.

[00:05:46] Speaker 10:
Why is their translation unreasonable?

[00:05:50] Speaker 16:
Course had long held that under 271A, an article that infringes is an article that practices every element of a patented invention.

[00:05:59] Speaker 10:
There's no pattern of usage in the history of patent talk in cases or elsewhere that uses a phrase like an extremely common shorthand, infringing articles that infringe to refer to either

[00:06:17] Speaker 10:
articles that play the 271C role or that play a particular role with respect to a MEFED claim?

[00:06:24] Speaker 16:
Not in terms of stable articles that may accompany an inducement of infringement.

[00:06:31] Speaker 16:
There are no cases that directly or even indirectly talk about the issue that we're talking about today, which is

[00:06:38] Speaker 16:
whether or not, under 337th, articles that infringe language, a staple article that was only incidental to the inducement, if at all connected to it, can be an article that infringes.

[00:06:52] Speaker 05:
Are you saying an article infringes a patent only if there's a claim to the article, a product or a composition claim to the article?

[00:07:04] Speaker 16:
What I'm saying is that a staple article is not an article that infringes.

[00:07:11] Speaker 05:
When you talk about a staple article, you're talking about 271C.

[00:07:14] Speaker 05:
271B or A don't deal with staples.

[00:07:21] Speaker 05:
But we have a method claim here, right?

[00:07:23] Speaker 16:
Yes, Your Honor, we do have a method claim.

[00:07:25] Speaker 05:
So you're saying the article doesn't infringe because there isn't a claim to the article.

[00:07:31] Speaker 16:
Well, that's also true.

[00:07:33] Speaker 16:
In fact, that's what the Commission found, that the article here, the scanners, do not infringe either contributorily or directly.

[00:07:42] Speaker 16:
And the only infringement that is found is as to the combination of the addition of the scanner to a computer that runs software.

[00:07:51] Speaker 16:
The software that actually does the method is on the computer, not on the scanner, and that is only run in the United States after importation.

[00:07:59] Speaker 16:
if at all.

[00:08:00] Speaker 11:
Is it important to you that 337 doesn't use the word youth that appears in 271?

[00:08:09] Speaker 11:
I'm sorry.

[00:08:11] Speaker 11:
337 refers to

[00:08:13] Speaker 11:
importation, sale, sale after importation, but does not refer to use.

[00:08:18] Speaker 16:
I believe that is significant, Your Honor, because if you look at the pre-1988 formulation of 337, it was written in terms of unfair acts, not in terms of articles that infringe.

[00:08:32] Speaker 16:
That was changed in 1988 to refer to articles that infringe.

[00:08:36] Speaker 16:
And the formulation that was changed was with respect to importation, sale after importation,

[00:08:43] Speaker 16:
there's one other, of an article that infringes.

[00:08:46] Speaker 16:
So yes, I agree with Your Honor that the fact that the use is not any longer part of 337 is important.

[00:08:55] Speaker 10:
Can I ask you about your focus on the time of importation and ask you to think back to the period from 1988 to 1994 before 271A had import added to it.

[00:09:07] Speaker 10:
to ask I guess the question most specifically, focus specifically on the sale before importation language of 337.

[00:09:17] Speaker 10:
Under what circumstances would an object sold before importation infringe under 271, any part of 271,

[00:09:29] Speaker 10:
at the time of importation.

[00:09:31] Speaker 10:
There's no making use sale or offer for sale in the United States at that moment.

[00:09:36] Speaker 16:
Well, it's an article that is made or manufactured that performs all the steps of a... That's not what 271A says.

[00:09:46] Speaker 10:
It says those things have to be done in the United States.

[00:09:51] Speaker 16:
Well, we're talking about

[00:09:55] Speaker 10:
a translation of a loose term into something more precise.

[00:10:02] Speaker 10:
The question is why is this outside the range of permissible translations of something that is on its face a loose shorthand.

[00:10:11] Speaker 16:
Well, that's because A and C are directed to things as opposed to conduct.

[00:10:17] Speaker 16:
There's no reference in 271B to anything but the conduct of inducing someone to infringe.

[00:10:24] Speaker 16:
In fact, you can induce someone to infringe without selling or making or using any article at all.

[00:10:32] Speaker 16:
You can instruct somebody on how to use something and thereby do somebody to infringe.

[00:10:38] Speaker 14:
Well, suppose then we had a situation in which there were instructions together with the hardware that exists here.

[00:10:45] Speaker 14:
At the time of importation, the article was combined with instructions telling people to infringe.

[00:10:53] Speaker 14:
Would that be within the statute?

[00:10:57] Speaker 16:
Well, that's not what we have here, Your Honor, but... Yeah, but you've got to answer a hypothetical.

[00:11:04] Speaker 14:
I understand.

[00:11:04] Speaker 16:
I'm trying to think about that.

[00:11:08] Speaker 16:
If someone were to package up an entire system that included all the instructions,

[00:11:15] Speaker 14:
Which is what happened in some of the past commission cases.

[00:11:21] Speaker 16:
Yes, which were also decided under the Nexus test, which is no longer in the test.

[00:11:26] Speaker 16:
But besides that, Your Honor,

[00:11:29] Speaker 16:
If it's all packaged up and it's a method claim and the method claim still doesn't happen until someone turns it on, I would argue that the method isn't practiced until it's in the United States.

[00:11:41] Speaker 14:
I have difficulty distinguishing that hypothetical from the one involving an article with no substantial non-infringing uses.

[00:11:50] Speaker 14:
It seems to me

[00:11:51] Speaker 14:
In both of those instances, it's true that the actual direct infringement doesn't occur until later, but they are also situations in which by looking at the article itself,

[00:12:02] Speaker 14:
without gathering extrinsic evidence, you can tell that there is or will be infringement.

[00:12:10] Speaker 14:
Whereas this case is somewhat different in the sense that you have to look beyond the article to determine whether there will be infringement.

[00:12:19] Speaker 14:
The sale to Medilex ultimately may involve infringement, but the sale to other people will not.

[00:12:26] Speaker 16:
Right, I think there is a distinction here.

[00:12:28] Speaker 16:
I think the hypothetical that your honor poses is a closer question.

[00:12:33] Speaker 16:
But here we don't have that situation.

[00:12:35] Speaker 16:
The stable articles are just that.

[00:12:38] Speaker 16:
They are stable articles at the time of importation.

[00:12:41] Speaker 16:
And they never changed.

[00:12:42] Speaker 16:
The software that is run to bring the system within, allegedly within claim 19, is done on the computer, and that only happens.

[00:12:51] Speaker 14:
Do we know what percentage of the imports of the hardware go to Medalex and what percentage go to other people?

[00:13:00] Speaker 16:
I don't have that figure.

[00:13:02] Speaker 16:
All I know is that the complainants in this case accused four such combinations of systems.

[00:13:09] Speaker 16:
Three of the four were found not to infringe.

[00:13:12] Speaker 09:
Councilor, you've argued to us the relationship of 271 to 337, and you've also referenced legislative history.

[00:13:23] Speaker 09:
So are you saying that the statute is ambiguous on its face?

[00:13:29] Speaker 16:
I am not, Your Honor.

[00:13:30] Speaker 16:
The statute is not ambiguous.

[00:13:31] Speaker 09:
Why would you argue legislative history to us if that's the case?

[00:13:34] Speaker 16:
Well, that is a backdrop and a part to respond to.

[00:13:39] Speaker 16:
uh... appellee's arguments about the legislative history i don't think it's ambiguous at all well then let me ask you, does 337 define what articles that infringe means?

[00:13:50] Speaker 16:
no but uh... that doesn't make it an ambiguous statute this court the 337 itself does not provide that definition correct?

[00:14:00] Speaker 09:
that's correct your honor does 271 provide that definition?

[00:14:03] Speaker 09:
it does not so are we dealing are we starting off here with an ambiguous

[00:14:09] Speaker 09:
statute and the real question here is whether the commission's interpretation of that statute is reasonable or not under a Chevron doctrine.

[00:14:19] Speaker 16:
It's common for statutes not to define every single term in the statute.

[00:14:23] Speaker 16:
And this court, using tools of standards, tools of statutory construction, can accurately construe those terms on the face of the record, on the face of the statute, without referencing it.

[00:14:37] Speaker 09:
But once we take that road and we're using those tools, dictionaries, and even going further and looking at other law, other statutes,

[00:14:46] Speaker 09:
arguing the relationship back to the statute at hand, or even going and looking at legislative purpose, doesn't that all point to ambiguity?

[00:14:57] Speaker 16:
no it does not your honor.

[00:14:59] Speaker 16:
It's common for courts to construe terms in a contract or in a statute and do that using the standard tools.

[00:15:08] Speaker 16:
Chevron deference only gets involved when the court is unable to do that function.

[00:15:14] Speaker 16:
In this case the court is able to do that function and in fact so did the commission.

[00:15:19] Speaker 16:
The commission did that in certain electronic devices.

[00:15:21] Speaker 09:
I'm assuming we would find that the statute is ambiguous.

[00:15:25] Speaker 09:
What's your argument to the argument that the ITC determination was reasonable?

[00:15:37] Speaker 09:
The interpretation of 337 was reasonable.

[00:15:42] Speaker 16:
The interpretation is not a reasonable one because it's not grounded in the statutory language.

[00:15:47] Speaker 16:
In fact, it runs counter to the statutory language which requires articles that infringe.

[00:15:52] Speaker 16:
It is a limiting term, not a descriptive one.

[00:15:55] Speaker 16:
And the way that the commission wants to read the statute actually eliminates the phrase that infringes and turns it into something like used to infringe or acts that might infringe and involve an article.

[00:16:12] Speaker 16:
And that's not how the statute reads.

[00:16:14] Speaker 16:
If Congress had wanted to include liability and articles that don't infringe, encompass 271B expressing, they could have done that.

[00:16:25] Speaker 16:
They could have imported 271B and made reference to it.

[00:16:29] Speaker 16:
They could have written.

[00:16:30] Speaker 09:
Isn't that where the ambiguity lies?

[00:16:33] Speaker 09:
I said, is that not where the ambiguity lies?

[00:16:37] Speaker 09:
Congress could have also, when it passed a different

[00:16:41] Speaker 09:
at the different stages of different trade acts, it could have also expressly said that ITC may not rely on induced theory of inducement in order to find infringement.

[00:16:53] Speaker 16:
Well, that is not necessarily the case, Your Honor, because the language is written in terms of articles that are French, and Congress could well have decided to do it differently.

[00:17:08] Speaker 05:
Isn't your thought that the word articles is not ambiguous, especially in the context of a claim to a method?

[00:17:15] Speaker 16:
No, an article is an article.

[00:17:19] Speaker 16:
That's very clear.

[00:17:20] Speaker 16:
I think what we're struggling with here is that the claim, in this case, is a method claim that is only practiced in the United States after importation.

[00:17:32] Speaker 16:
As you pointed out earlier, Your Honor, it's a trade statute.

[00:17:38] Speaker 16:
We're talking about articles that infringed

[00:17:40] Speaker 16:
at the time of importation.

[00:17:42] Speaker 14:
We have to look at the article rather than the article coupled with some other conduct by the importer.

[00:17:51] Speaker 16:
Right, you need to look at the article.

[00:17:53] Speaker 16:
Again, the change in the statute in 1988 was a change away from

[00:18:01] Speaker 16:
Acts of the importer to articles that infringed.

[00:18:06] Speaker 16:
So yes, you look at the articles that infringed.

[00:18:10] Speaker 16:
I think I'm not sure I answered your question.

[00:18:13] Speaker 04:
Sorry, is it your view that the 1988 amendment restricted the scope of what the ITC can do in terms of blocking imports?

[00:18:21] Speaker 16:
No, it changed the scope.

[00:18:23] Speaker 16:
It didn't necessarily reduce the scope.

[00:18:25] Speaker 16:
It's an apples and oranges kind of comparison.

[00:18:28] Speaker 04:
What if we were to believe that the ITC did have an established practice of holding induced infringers viable and blocking those type of articles under a 271b theory before 1988?

[00:18:43] Speaker 04:
Then I guess it would be your view that the 1988 amendment necessarily restricted the powers of the ITC.

[00:18:51] Speaker 16:
Well, no, Your Honor, because the pre-1988 statute had an additional limitation, which was unfair acts that could include inducement, but there was an additional requirement of substantial injury to a U.S.

[00:19:04] Speaker 16:
industry.

[00:19:05] Speaker 16:
That was taken away and replaced with

[00:19:08] Speaker 16:
the importation of articles at the fringe.

[00:19:11] Speaker 16:
So again, it's an apples and oranges.

[00:19:14] Speaker 04:
Right, but in terms of 271 theories, you would say that the 88 amendments retained the 271A and 271C theory, but removed and excluded the 271B theory.

[00:19:29] Speaker 16:
Is that right?

[00:19:30] Speaker 16:
Yes, Your Honor, because the focus was changed from the actions of the actor to the articles at the fringe.

[00:19:37] Speaker 16:
And it's totally consistent with the whole scheme of enforcement of 337, which is to enforce via the Customs and Border Protection Agency.

[00:19:49] Speaker 16:
How are they going to divine the hidden intent of a person importing a staple article into the United States?

[00:19:58] Speaker 16:
You could have two different importers, one who was, in this case, who is alleged to have induced

[00:20:05] Speaker 16:
by supplying an SDK and helping, somehow helping, the alleged direct infringer integrate public software into this system while not knowing of the patent that's being infringed, but supposedly being willfully blind to that.

[00:20:25] Speaker 15:
And... Preston does that all the time in the false statement cases.

[00:20:29] Speaker 15:
They look at intent.

[00:20:34] Speaker 15:
That may be true, Your Honor, but no one can certify, in this case, the order says... You asked a hypothetical or rhetorical question, how contestants divine intent.

[00:20:46] Speaker 15:
They do it all the time in the criminal cases.

[00:20:48] Speaker 16:
They do it in criminal cases, yes, Your Honor, but in this case, they're looking at two articles that are identical.

[00:20:55] Speaker 16:
They're staple articles of commerce.

[00:20:57] Speaker 16:
And the exclusion order in this case says that the articles that infringe are excluded.

[00:21:06] Speaker 10:
Well, if the exclusion order were written more precisely to say, no discretion on customs bar, customs must

[00:21:17] Speaker 10:
allow in, not exclude, these designated items as long as the importer certifies the lack of any knowledge of downstream use to practice a patent.

[00:21:34] Speaker 16:
Well, I don't think that really helps us in this case, Your Honor, because no one could ever make that certification, because according to the Commission's view... They can certify about what they know.

[00:21:45] Speaker 16:
No, in this case they would have to certify what they don't know, because... I'm sorry, you can do that too.

[00:21:53] Speaker 10:
usually know both what I know and what I don't know.

[00:21:59] Speaker 16:
You can't not know of the 344 patent.

[00:22:03] Speaker 16:
You can't say that you don't know about the 344 patent because the minute you say that you don't know about it, you know about it.

[00:22:08] Speaker 10:
I'm sorry, the certification would be I'm not importing this.

[00:22:12] Speaker 10:
I have a customer.

[00:22:14] Speaker 10:
I have no knowledge that that customer is going to put it to

[00:22:18] Speaker 10:
a use under the 344.

[00:22:22] Speaker 16:
And how could I ever be sure of that, number one?

[00:22:25] Speaker 16:
And again, the way that my client was charged in this case, it was charged with under a willful blindness theory, which had them

[00:22:35] Speaker 16:
had the liability to be based on not knowing of the 344 patent, but somehow being willfully blind to it.

[00:22:42] Speaker 11:
Isn't it a fact that the Commission found not only that there was no actual knowledge of the 344 patent, but there was no actual knowledge of how Mentalix intended to use the product?

[00:22:52] Speaker 11:
In other words, that your client had no knowledge of the fact that the software was going to be manipulated in such a way that it would actually practice the method.

[00:23:03] Speaker 11:
That is true, Your Honor.

[00:23:04] Speaker 11:
So then with respect to this remedy concept that puts you in a position where even if you certified truthfully, you could be subject to contempt if the commission felt that you were willfully blind.

[00:23:16] Speaker 16:
That's correct.

[00:23:17] Speaker 16:
And that's another problem with this particular case, Your Honor.

[00:23:21] Speaker 16:
The willful blindness in this case was based on four unreasonable assumptions.

[00:23:30] Speaker 16:
One, that somehow my client acquired this foreign version of the other side's product.

[00:23:37] Speaker 16:
to avoid knowing of the patent numbers, but none of the products were marked, so there's no way that that could have been any avoidance.

[00:23:47] Speaker 16:
The commission points to copying the patent features, but there was no copying of the patent features.

[00:23:53] Speaker 16:
My client's products were found not to directly or contributory infringe.

[00:23:56] Speaker 16:
They successfully designed around it.

[00:23:58] Speaker 16:
They went to the failure to hire counsel, and there was no reason to hire counsel.

[00:24:04] Speaker 16:
In April of 2008, my clients contacted a Korean lawyer, never heard back from them, decided in September to do their own search.

[00:24:14] Speaker 16:
They found one patent, the 5-6-2 patent.

[00:24:16] Speaker 16:
didn't find the 344, didn't know about it, but there was no reason to go any further.

[00:24:21] Speaker 16:
Why?

[00:24:21] Speaker 16:
Because they concluded correctly, the commission agrees, they didn't infringe the 562.

[00:24:27] Speaker 16:
The 562 itself, had they read the whole thing,

[00:24:30] Speaker 16:
didn't mention the 344 patent, only application.

[00:24:33] Speaker 16:
So why would you trace down an application on a patent that you already concluded you didn't infringe?

[00:24:40] Speaker 16:
And then there's this temporal impossibility where the alleged wrongdoing that we're supposedly blinding ourselves to is Ventalix's infringement, the combination of the scanners with some software program that we don't know about,

[00:24:53] Speaker 16:
And then, somehow, we've supposedly undertaken these acts prior to that with some future foreknowledge that somehow, metallics might infringe through the patent.

[00:25:07] Speaker 16:
That isn't willful blindness.

[00:25:08] Speaker 16:
Your Honor, I see that I'm missing my rebuttal time.

[00:25:11] Speaker 11:
Why don't we hear from the other side?

[00:25:13] Speaker 11:
Thank you.

[00:25:16] Speaker 11:
Now the other side.

[00:25:18] Speaker 11:
We've got three people arguing and you've divided your time, 13, 12, and five.

[00:25:24] Speaker 11:
We're going to run the clock for each of you individually, hoping for a little self-policing in that regard.

[00:25:30] Speaker 11:
So I wanted to proceed, Mr. Cheney.

[00:25:33] Speaker 02:
Thank you, Chief Judge Prost, distinguished judges, may it please the Court.

[00:25:37] Speaker 02:
My name is Clark Cheney, and I represent the Commission in this matter.

[00:25:40] Speaker 14:
I believe that the Court... Can I ask you a question about the past Commission practice?

[00:25:45] Speaker 14:
Because I'm struck by your claim that this is consistent with what the Commission's done in the past.

[00:25:54] Speaker 14:
And I don't see that.

[00:25:56] Speaker 14:
I do see the Commission in past cases having issued exclusion orders based on

[00:26:03] Speaker 14:
products that have no substantial non-infringing uses.

[00:26:08] Speaker 14:
I see cases where the Commission has said if it's imported with the instructions telling you to infringe, that that can be the subject of exclusion order.

[00:26:18] Speaker 14:
I do not see any cases that go beyond that and I believe that your description of the Young and Bakelite cases suggesting otherwise not correct.

[00:26:30] Speaker 14:
Which case do you rely on that goes beyond what I just described?

[00:26:36] Speaker 14:
That is, no substantial non-imprisoning uses and imported with instructions.

[00:26:41] Speaker 14:
I think the Bakelite case is consistent with the Commission's... No, the Bakelite case, the inducement relates to trademark infringement, not to patent infringement.

[00:26:53] Speaker 02:
There is a finding in... The Bakelite case involved method claims and claims to a specific apparatus, a cigarette holder and pipe stems.

[00:27:03] Speaker 02:
So there were actual apparatus claims at issue there.

[00:27:06] Speaker 14:
That may be, but the part that you quote relates to trademark infringement, not patent infringement, correct?

[00:27:14] Speaker 02:
I disagree.

[00:27:15] Speaker 02:
My reading of the case may be different, Your Honor, but I think what the court was saying in Bakelite was we have a patent owner who has a cause of action for the sale of these pipe stems and cigarette holders in the United States.

[00:27:31] Speaker 02:
But the appellant in that case argued that the mere importer shouldn't have to proceed against the sellers of those items, that there should be a remedy that could occur at the border.

[00:27:46] Speaker 02:
And the commission and then this court's predecessor adopted the reasoning in the Supreme Court's Henry v. Vick case.

[00:27:54] Speaker 14:
Was that a case where there were no substantial non-impringing uses?

[00:27:59] Speaker 02:
That wasn't relevant because it was an apparatus claim.

[00:28:04] Speaker 02:
So the items being sold in the United States met every element of the claims, but there was no way under the current patent law as it existed at that time to reach the importer because the importer was not directly infringing.

[00:28:20] Speaker 02:
At that time, infringement was only made to use itself.

[00:28:23] Speaker 14:
So the article being infringed directly in infringement method, I mean a device patent.

[00:28:29] Speaker 02:
It did and then the question was, could you find liability?

[00:28:33] Speaker 14:
My question is, can you point me to any past case where the Commission

[00:28:38] Speaker 14:
went beyond the situation where there was direct infringement of the article, or the article was imported with instructions to infringe, or there were no substantial non-impringing leases.

[00:28:52] Speaker 14:
I'm not aware of any cases.

[00:28:53] Speaker 02:
I will never be able to point to a case involving inducement where there was not direct infringement, because the commission will always find direct infringement.

[00:29:00] Speaker 14:
No, no, no, that's not going to answer my question.

[00:29:02] Speaker 14:
In the past, all of these cases that you cite, it seems to me, involve situations of which there's reduced cases that involve no substantial non-printing uses or imported with instructions.

[00:29:16] Speaker 02:
Is that not accurate?

[00:29:17] Speaker 02:
I don't think so.

[00:29:18] Speaker 02:
I direct, Your Honor, to the chemiluminescent devices case decided by Judge Loughran in 1991.

[00:29:24] Speaker 02:
That was a case that was relied upon the commission in the electronics devices case.

[00:29:30] Speaker 02:
Those were necklaces that glowed in the dark and one of the asserted method claims was activating the necklace so that it would glow in the dark.

[00:29:41] Speaker 02:
Judge Luttrey specifically addressed that.

[00:29:42] Speaker 05:
One of my problems is that the commission really didn't analyze

[00:29:46] Speaker 05:
It simply said there was direct infringement and there was inducement.

[00:29:52] Speaker 05:
But how do you deal with the point that there was not an article that infringed a patent?

[00:30:00] Speaker 05:
This is a method patent and the article was imported.

[00:30:04] Speaker 05:
But you don't infringe a method patent except by use of the article and that occurred after importation.

[00:30:18] Speaker 05:
The commission didn't analyze the statute.

[00:30:21] Speaker 02:
I have two responses to that, Your Honor.

[00:30:24] Speaker 02:
One of them relates to a question by Judge Toronto to my opponent earlier about whether in colloquial patent speak, I think it was the term that was used.

[00:30:33] Speaker 02:
Patent talk.

[00:30:34] Speaker 02:
Patent talk.

[00:30:36] Speaker 02:
Do we speak of articles used to infringe method claims as infringing articles?

[00:30:42] Speaker 05:
Mr. Cheney, I used to write patent claims.

[00:30:44] Speaker 05:
People who write patent claims and analyze patent issues are very precise.

[00:30:50] Speaker 05:
You don't infringe a patent on an article or a product or a composition of matter unless the claim reads on the item.

[00:31:02] Speaker 05:
This is a method patent.

[00:31:04] Speaker 05:
Patent people do not use language with imprecision.

[00:31:10] Speaker 02:
I'm sorry, I didn't mean to imply that we could get by with imprecise language.

[00:31:16] Speaker 02:
I do recognize, Your Honor, that a method is a claim to a method means that the invention is the process and the test for infringement is whether use of the

[00:31:29] Speaker 02:
invention is proven by every step of the process being carried out.

[00:31:34] Speaker 02:
The commission does not disagree.

[00:31:35] Speaker 05:
And the statute doesn't deal with that.

[00:31:37] Speaker 05:
The statute deals with an article.

[00:31:41] Speaker 05:
An article that infringes.

[00:31:43] Speaker 05:
And an article infringes only if there's a claim to the article.

[00:31:47] Speaker 05:
And this is a method patent.

[00:31:48] Speaker 02:
Well, the question becomes, where we have an American inventor or any inventor that is protected by an American patent,

[00:31:56] Speaker 02:
Can there be an unfair trade practice based on the importation of articles that infringes on the rights of that inventor?

[00:32:05] Speaker 02:
And there can be, and the commission is repeatedly recommending that there can be.

[00:32:09] Speaker 11:
We're doing a statutory interpretation here.

[00:32:11] Speaker 11:
The amendments in 1988 were meant to move away from the pure unfair practices jurisdiction of the ITC.

[00:32:20] Speaker 11:
It changed it.

[00:32:21] Speaker 11:
broadened its jurisdiction in some ways, and it made it very clear what its jurisdiction was.

[00:32:27] Speaker 11:
So the statute itself says, articles that infringe.

[00:32:30] Speaker 11:
It speaks in the present tense.

[00:32:33] Speaker 11:
The commission specifically addressed that language and said, the articles must infringe at the time of importation.

[00:32:40] Speaker 11:
Is the commission backing off of its own interpretation of that?

[00:32:44] Speaker 02:
Certainly not.

[00:32:45] Speaker 02:
And I hope I can explain this temporal argument that I think is very central to this appeal.

[00:32:52] Speaker 02:
My opponent, I think, imagines that the adjudication of this case occurred at the time that the first scanner was imported and sitting on a dock in the United States before any other subsequent acts had occurred.

[00:33:07] Speaker 02:
But that's not why the Commission instituted the investigation.

[00:33:13] Speaker 02:
The commission instituted an investigation based on a complaint, a very detailed complaint, that scanners were coming into the United States that were being used to directly infringe a method, something to which an inventor had a right in the United States.

[00:33:29] Speaker 02:
And this trade practice was infringing on that inventor's right.

[00:33:34] Speaker 11:
But the commission already had a ruling on the books that said, we don't do direct infringement of method claims.

[00:33:41] Speaker 11:
Right?

[00:33:42] Speaker 02:
The commission was very mindful that Section 337 cannot extend the patent laws of the United States.

[00:33:50] Speaker 02:
And so the commission was not going to call something infringement that, as Judge Laurie recognized, a district court would not call infringement.

[00:33:59] Speaker 02:
So for example, selling an article that may be used to perform a method is not infringement.

[00:34:06] Speaker 02:
However, selling an article that may be used to perform a method with the intent that someone infringed someone else's method claim, that is infringement.

[00:34:16] Speaker 02:
When that occurs, the article used in that process is an infringing article.

[00:34:24] Speaker 02:
It would be no different in a district court case.

[00:34:26] Speaker 02:
It would be no defense for someone accused of inducement of infringement to come before the court and say, I'm not liable because when I fold this article to party X, no infringement had occurred.

[00:34:40] Speaker 02:
So you can't hold me liable.

[00:34:41] Speaker 02:
That's not how those cases are adjudicated.

[00:34:44] Speaker 02:
This case was not brought before the direct infringement happened.

[00:34:47] Speaker 14:
This case was brought after the direct... But you can tell by looking at the article whether there will be infringement or not.

[00:34:52] Speaker 14:
Some of the imports

[00:34:54] Speaker 14:
may ultimately infringe in some knock.

[00:34:57] Speaker 14:
So you can't tell by looking at the article, right?

[00:35:00] Speaker 02:
Correct, which is an enforcement issue that the Commission has encountered again and again.

[00:35:04] Speaker 02:
The sealed air case addresses this very issue.

[00:35:06] Speaker 14:
And what you've done in this exclusion order is cover every piece of hardware imported by Suprema regardless of what's going to happen to it, right?

[00:35:17] Speaker 02:
No, no, no what the Commission's order is specific to Suprema and mental X and their products But it says the Suprema can import this hardware, right?

[00:35:30] Speaker 11:
It blocks all the scanners.

[00:35:32] Speaker 11:
It blocks the scanners It doesn't say you can't sell the mental X. It says you can't bring these scanners into the United States and it has a card out

[00:35:43] Speaker 02:
if Suprema can show?

[00:35:45] Speaker 11:
Well, not really.

[00:35:47] Speaker 11:
If you look at the language, it's quite an exciting paragraph.

[00:35:50] Speaker 11:
It uses the word discretion twice and may several times.

[00:35:53] Speaker 11:
I read it, and maybe I'm wrong, that it's completely within the discretion, which I assume is unreviewable discretion, of the border patrol agent under procedures it establishes.

[00:36:04] Speaker 11:
I don't know what those procedures are.

[00:36:05] Speaker 11:
Perhaps they're written somewhere to decide whether or not it wants to certify or not.

[00:36:11] Speaker 11:
So, am I misreading it, that the border agent has the complete discretion to say, I don't want to certify, forget it?

[00:36:22] Speaker 02:
The discretion to allow certification is within customs

[00:36:26] Speaker 02:
I'm not a customs lawyer so I'm not sure but what I do know about customs law is that any importer that has goods turned away at the border has a course of action they can file a customs protest

[00:36:44] Speaker 02:
that can be resolved either at custom.

[00:36:46] Speaker 11:
But see, you told us before, you referred to the fact that it's comparable to district courts, and I think one of the arguments made by the amici on your side is that the commission, assuming we find the statute ambiguous, the commission's construction is reasonable because this is something district courts do.

[00:37:03] Speaker 11:
Well, district courts, as you well know, we've got an Article 3 judge.

[00:37:06] Speaker 11:
He decides the remedy and he enforces it in an adversarial posture.

[00:37:11] Speaker 11:
His decision, her decision, is reviewable by three of us, maybe under abuse of discretion.

[00:37:17] Speaker 11:
And I'm having a hard time seeing how the Commission's implementation of this

[00:37:21] Speaker 11:
is reasonable given we're looking at what I perceive is unreviewable discretion by a border patrol agent.

[00:37:29] Speaker 11:
And even if he exercises the discretion to allow certification, he or she gets to decide whether to certify.

[00:37:35] Speaker 11:
And it also concludes by saying they may require persons who provided the certification

[00:37:42] Speaker 11:
to furnish records or analyses necessary to substantiate the certification.

[00:37:49] Speaker 11:
Does that include legal arguments, or is that purely factual?

[00:37:53] Speaker 02:
It does include legal arguments.

[00:37:55] Speaker 11:
So the Border Patrol person is going to unreviewably review legal arguments made by the parties with regard to contributory infringement, inducement, et cetera?

[00:38:08] Speaker 11:
Is that the way the system works?

[00:38:12] Speaker 15:
Can't the importer bring an A action in the Court of International Trade?

[00:38:17] Speaker 15:
Absolutely.

[00:38:18] Speaker 15:
There is complete judicial review for any good excluded at the US border.

[00:38:22] Speaker 15:
And I think I know the Court of International Trade is repealable by this Court.

[00:38:30] Speaker 02:
It is.

[00:38:31] Speaker 02:
Your Honor, I do know that Customs employs patent attorneys.

[00:38:34] Speaker 02:
And there's one sitting in the courtroom today that works with importers to adjudicate these issues.

[00:38:40] Speaker 14:
But do you aim for parallelism to what a district court can do, but a district court in these circumstances couldn't enjoin all imports of the scanners, right?

[00:38:52] Speaker 14:
It could only enjoin imports of scanners that would be used to infringe.

[00:38:58] Speaker 02:
A district court would have broad discretion to fashion a remedy to

[00:39:02] Speaker 02:
to remedy whatever was found to violate.

[00:39:04] Speaker 02:
It may be that that remedy would need to exclude all scanners because the importer has a proven mens rea, that they're going to do this again and again.

[00:39:13] Speaker 11:
But you conceded before that a district court cannot enforce an action for induced infringement until direct infringement has occurred.

[00:39:22] Speaker 02:
Correct.

[00:39:23] Speaker 02:
And neither would the commission find violations that could do so.

[00:39:25] Speaker 11:
So how could you say a district court could say, well, you've done it in the past.

[00:39:28] Speaker 11:
I think you're going to do it again?

[00:39:30] Speaker 11:
The district court couldn't do that.

[00:39:32] Speaker 02:
District courts, I'm aware of district court cases, one escapes me, the name of it right now, but where they enter injunctions, for example, saying you can't sell this product with these instructions.

[00:39:46] Speaker 02:
or you can't sell this product.

[00:39:48] Speaker 14:
But that's different.

[00:39:49] Speaker 14:
The question is whether they can enjoin all scanners because some of them might be used in an infringing manner.

[00:39:56] Speaker 02:
And if that's the court's concern here, the appropriate response for the court is not to redefine what a violation of Section 337 may encompass, but rather to remand to the commission with further instructions to fashion an appropriate remedy.

[00:40:13] Speaker 11:
Don't you think it's important that

[00:40:15] Speaker 11:
337 uses the phrase articles that infringe.

[00:40:18] Speaker 11:
It has omitted concepts of use from it that 271A has.

[00:40:22] Speaker 11:
And then when you turn to 271B, it doesn't say that your bad thoughts or your bad inducements are infringing acts.

[00:40:34] Speaker 11:
It creates a fiction and says once there's direct infringement, you will be treated as an infringer.

[00:40:40] Speaker 11:
That's very different than articles that infringe.

[00:40:44] Speaker 02:
Isn't it?

[00:40:45] Speaker 02:
I think that the intent of the drafters of 271B is clear, that those who induce infringement are infringers.

[00:40:53] Speaker 11:
Judge Rich said you would be treated as infringers.

[00:40:57] Speaker 02:
Judge Rich specifically addresses that phrase and he says there was no intent for any different kind of liability but to hold inducers as infringers.

[00:41:08] Speaker 02:
I don't see a distinction there.

[00:41:11] Speaker 02:
I also know that there are all kinds of unfair trade practices that involve intent, and they are adjudicated all the time.

[00:41:23] Speaker 02:
Criminal elements, as Judge Wallach pointed to, are adjudicated with intent by customs.

[00:41:29] Speaker 02:
You could have torsious interference of business relations through an importing trade.

[00:41:34] Speaker 02:
That would require an intent element.

[00:41:37] Speaker 02:
I don't see the mere fact that there is an intent element of this unfair trade practice to be per se outside the scope of 337.

[00:41:47] Speaker 02:
More importantly, I think that Congress

[00:41:50] Speaker 02:
understood that any trade practice that infringed upon the right of a patent holder through importation where there's sufficient proof of that infringement should be remedial under Section 337.

[00:42:09] Speaker 09:
Let's go back to the discussion regarding the enforcement aspects of 337.

[00:42:14] Speaker 09:
Isn't it the case that in the finding of any exclusion, whether it's a limited or a general exclusion, that protests will develop and people will fight the exclusion order and there is a legal process by which to follow that protest.

[00:42:34] Speaker 09:
Now, it's not the case that these type of protests arise only in the instance of an induced infringement, correct?

[00:42:42] Speaker 02:
That is correct.

[00:42:44] Speaker 02:
Customs handle all kinds of protests.

[00:42:46] Speaker 02:
I want to mention a couple of other factual things.

[00:42:49] Speaker 09:
Before you do that, let me also point out that the person who decides this case is not a border agent, someone who is trying to keep undocumented workers from entering.

[00:43:01] Speaker 09:
It's a custom specialist.

[00:43:03] Speaker 09:
And aren't these specialists

[00:43:05] Speaker 09:
experts in the particular product that they're looking at.

[00:43:08] Speaker 09:
and having to deal with?

[00:43:09] Speaker 02:
Yes, Customs has established what they call Centers for Excellence that have labs and testing for different kinds of electronic devices, different kinds of pharmaceuticals.

[00:43:19] Speaker 02:
They have spectrographs to inspect chemicals.

[00:43:22] Speaker 02:
They employ engineers.

[00:43:24] Speaker 02:
They have patent attorneys.

[00:43:25] Speaker 02:
So there is a whole system for enforcement at Placer.

[00:43:28] Speaker 02:
They consult with the Commission if they have questions about the scope of an order.

[00:43:32] Speaker 09:
So this process for issuing exclusionary orders,

[00:43:35] Speaker 09:
goes all the way back to the origins of the 337.

[00:43:41] Speaker 02:
That's correct.

[00:43:42] Speaker 02:
And in this case, Your Honor, the Commission gets a letter from Customs if a shipment is turned away based on our exclusion order.

[00:43:49] Speaker 02:
No shipments in three years that this order has been in place have been turned away.

[00:43:54] Speaker 02:
No one has tried to import a scanner for non-infringing use and been turned away.

[00:43:58] Speaker 02:
It hasn't happened.

[00:44:00] Speaker 02:
The other point I would make in terms of enforcement, if the appellant has a problem with the scope of the order, it can come to the commission.

[00:44:07] Speaker 02:
It can get an advisory opinion to say that this activity that we want to engage in is beyond the scope of the order.

[00:44:14] Speaker 02:
It can get a modification of the order based on certain circumstances.

[00:44:17] Speaker 11:
But the scope of the order was debated at the original panel level and the commission defended the scope of the order and said we're allowed to exclude everything.

[00:44:25] Speaker 11:
The commission... So it's not like the commission was open to that analysis for that discussion.

[00:44:30] Speaker 11:
I respectfully... It's nice that they invite that discussion now, but they didn't agree to that discussion at the time of the panel.

[00:44:37] Speaker 02:
Those regulations have long been in existence in the Commission's rules.

[00:44:41] Speaker 02:
Many appellants, many respondents take advantage of them every day.

[00:44:46] Speaker 02:
There are currently cases pending in the Commission asking for advice on the scope of our orders.

[00:44:51] Speaker 14:
Let me give you a hypothetical.

[00:44:52] Speaker 14:
Suppose somebody imports a thousand bicycles and bicycles themselves don't infringe.

[00:44:58] Speaker 14:
But they could be combined with a particular kind of tire that would make the item infringing.

[00:45:04] Speaker 14:
And that will depend on what happens at the time of the purchase.

[00:45:10] Speaker 14:
Does the commission claim that under those circumstances it could have an exclusion order with respect to all the bicycles?

[00:45:17] Speaker 02:
No.

[00:45:18] Speaker 02:
Because the commission, if the commission were to do that, the commission would be extending the patent law.

[00:45:23] Speaker 02:
Because the scenario that you described would not constitute infringement.

[00:45:27] Speaker 02:
Someone selling a bicycle that's capable of substantial non-infringing use is not infringing.

[00:45:32] Speaker 02:
But if the bicycle is true here, that's the problem.

[00:45:37] Speaker 02:
The difference here is intent, Your Honor.

[00:45:40] Speaker 02:
There's an intent and a collaboration.

[00:45:43] Speaker 02:
supported by substantial evidence that Suprema and Mentalist worked together to create an FBI-compliant encounter.

[00:45:49] Speaker 14:
Well, supposing my hypothetical there was an intent to tell some people that they could combine the bicycle with the tires that would render the whole thing infringing, then you could exclude all the bicycles?

[00:46:03] Speaker 02:
You could exclude the bicycles from that importer, the one that had the intent to cause the infringement.

[00:46:08] Speaker 14:
To cause the infringement, even though that happens in some small number of cases.

[00:46:14] Speaker 02:
If the bicycle seller intends that, and I don't think that's different.

[00:46:17] Speaker 14:
Even though it's a small number of cases.

[00:46:19] Speaker 02:
You exclude all the bicycles.

[00:46:22] Speaker 02:
Because the bicycle seller intends to infringe someone's patent right.

[00:46:27] Speaker 02:
And when that occurs, there is liability under section 271.

[00:46:31] Speaker 15:
And the bicycle seller can then come back in and show non-infringing use, can it not?

[00:46:36] Speaker 02:
Yes, or the bicycle seller could put a label on its bike saying, don't use this bike with these tires.

[00:46:42] Speaker 02:
I'm not a customs patent attorney, but I imagine that a customs patent attorney is going to find that persuasive evidence that you don't intend that bicycle to be used with those tires.

[00:46:52] Speaker 04:
I believe you were saying there's a certification process, right?

[00:46:55] Speaker 04:
There is.

[00:46:57] Speaker 04:
If you were to write supremant certification here for it to be able to continue importing these scanners, what would that certification say?

[00:47:06] Speaker 02:
It would say, we are importing these scanners for sale to parties other than mental health.

[00:47:12] Speaker 02:
That would be one way that it would be outside the scope of our order.

[00:47:16] Speaker 02:
Or we are importing this for sale for use of some function that didn't cover the method steps of claim 19.

[00:47:23] Speaker 02:
I want to clarify for Judge Dyke that in the record of A200313,

[00:47:28] Speaker 02:
It states that all Suprema scanners sold by mentalists have the infringing software, every single one.

[00:47:35] Speaker 04:
What is the commission's view about electronic transmissions?

[00:47:38] Speaker 04:
Are those imports in the sense that, let's say there's a party in Canada and it's transmitting to 5,000 different individuals in the United States some software?

[00:47:50] Speaker 04:
And then once that software gets loaded onto a computer, let's say for a moment that that's patent eligible and let's assume for the moment that that causes a direct infringement.

[00:48:03] Speaker 04:
Would the commission go after that electronic transmitter or that person that's transmitting the software from Canada to the United States?

[00:48:16] Speaker 04:
I assume customs wouldn't have a role in policing that.

[00:48:22] Speaker 02:
I suspect Your Honor is referring to another case that's pending before this Court.

[00:48:26] Speaker 06:
Just ask me a hypothetical.

[00:48:32] Speaker 02:
So, to the extent that it relates to this case, the Commission is

[00:48:44] Speaker 02:
not going to interpret its statute in a way that would extend the patent law to the United States.

[00:48:51] Speaker 02:
And I'm not sure that I can say more than that.

[00:48:54] Speaker 02:
I think that that case that is very close to your hypothetical is probably better addressed in the briefing of another commission attorney that is dedicated to that case.

[00:49:07] Speaker 02:
We'll get an answer then?

[00:49:10] Speaker 02:
I assure you we will have an answer.

[00:49:14] Speaker 11:
Well, to a little fault of your own, you've grossly exceeded your allotted time.

[00:49:20] Speaker 11:
We're 10 minutes over.

[00:49:22] Speaker 11:
And we do want to hear, though, from Mr. Grant and Mr. Freeman.

[00:49:26] Speaker 11:
So we'll start your clock with the previously allotted 12 minutes, but hope that in the absence of questions, you'll give back some time.

[00:49:34] Speaker 12:
Thank you.

[00:49:35] Speaker 12:
May it please the court that the exclusion order in this case doesn't cover all

[00:49:38] Speaker 12:
all scanners.

[00:49:39] Speaker 12:
It covers all infringing scanners.

[00:49:41] Speaker 12:
And the distinction between the two would be no different than if an exclusion order was issued to a category of products and one person got a license and another didn't.

[00:49:48] Speaker 05:
But there are no infringing scanners.

[00:49:50] Speaker 05:
There isn't a claim to the scanner.

[00:49:52] Speaker 05:
Isn't that right?

[00:49:53] Speaker 12:
Well, Your Honor, your point is a good one, but it proves too much.

[00:49:56] Speaker 12:
If method claims are not actionable under Section 337, and if we strictly apply the phrase articles that infringe to Section 271,

[00:50:03] Speaker 12:
there is no liability for any infringement.

[00:50:06] Speaker 05:
We have to read the statute and besides you consume mentally.

[00:50:11] Speaker 12:
We do read the statute, Your Honor, and the question is what is meant by articles that infringe?

[00:50:16] Speaker 12:
The Supremas argument proves too much.

[00:50:18] Speaker 12:
If that's merely limited to a specific device that's infringing in and of itself, I would fear that not only does it not comply with 271B, it doesn't comply with 271C, and it doesn't even comply with 271A, which attaches liability to persons.

[00:50:33] Speaker 12:
So what the Commission has done here in affecting the congressional purpose of this statute

[00:50:38] Speaker 12:
was in translating what articles that infringe means to attach the sort of liability that's appropriately implemented by section 271.

[00:50:45] Speaker 11:
Don't you think it was interesting that neither the parties before the ALJ nor the ALJ thought that this theory of infringement liability was the viable one under 337?

[00:50:57] Speaker 11:
The ALJ specifically found that mentalics

[00:51:01] Speaker 11:
directly infringed and tried to use the old, now discarded, nexus theory to impose liability.

[00:51:06] Speaker 11:
Then the commission came up with this idea of induced infringement on its own.

[00:51:11] Speaker 11:
So neither the parties nor the ALJ thought this was a viable approach.

[00:51:16] Speaker 12:
I'm not sure I agree with that, but in any case, this course is sitting in review of the commission's opinion and not the arguments that were necessarily made below.

[00:51:22] Speaker 11:
But it does tell you something about whether or not this was a well-established

[00:51:26] Speaker 11:
permanently entrenched concepts.

[00:51:29] Speaker 12:
I disagree, Your Honor.

[00:51:30] Speaker 12:
To the extent the court is saying that certain electronic devices clarify the nexus rule, what certain electronic devices make clear was that whatever nexus attaches or is appropriate for liability under induced infringement, that nexus, the nexus that is statutorily defined by 271, is the nexus that matters and not some different nexus that the IPC may come up.

[00:51:53] Speaker 11:
So the way to read it...

[00:51:55] Speaker 11:
the Commission said that Nexus has to be at the time of importation.

[00:51:59] Speaker 11:
No, no.

[00:52:00] Speaker 12:
It says the status of the article at the time of importation, but it also goes on to say that the statutorily defined theories of indirect infringement appropriately reach activities without resorting to the concept of Nexus.

[00:52:12] Speaker 11:
That comes from that opinion.

[00:52:12] Speaker 11:
But that comes from a footnote where what they were talking about, they specifically were talking about contrived.

[00:52:18] Speaker 12:
But they expressly said, they may have been talking about, for sure, but they were also talking about induced infringement.

[00:52:26] Speaker 12:
And they specifically say, articles that infringe is a reference to status at the time of importation.

[00:52:31] Speaker 11:
Thus, the infringement, be it direct or indirect, must be based on... They refer to the concept of indirect, but then they specifically talk about articles that have, talk about articles that relate to whether or not they have

[00:52:45] Speaker 11:
substantial non-infringing uses or not.

[00:52:48] Speaker 11:
And they specifically say where there's no substantial non-infringing uses, that that kind of indirect infringement can meet this test of

[00:52:57] Speaker 11:
at the time of importation?

[00:52:58] Speaker 12:
I respectfully disagree, Your Honor.

[00:53:00] Speaker 12:
Just like the Supreme Court said in Grokster in the context of copyright, it's not just the importation itself.

[00:53:08] Speaker 12:
It's distribution of a tool that's intended for importing use.

[00:53:11] Speaker 12:
And if it's the case that we're defining articles that infringe in this enormously

[00:53:16] Speaker 12:
narrow manner, then there's no way to logically distinguish contributory infringement.

[00:53:21] Speaker 12:
There's no way to logically distinguish better crimes.

[00:53:24] Speaker 14:
But that's in the sense that in the contributory infringement situation where there are no substantial non-infringing uses, you can tell that from looking at the article.

[00:53:35] Speaker 14:
And what you're saying here is that the Commission has the authority to enter an exclusion order by looking to conduct beyond the article that's imported.

[00:53:46] Speaker 12:
That's absolutely the case, Your Honor.

[00:53:48] Speaker 12:
It'd be no different if some articles were licensed and some articles weren't.

[00:53:51] Speaker 12:
The ones that are licensed aren't infringing and are importable.

[00:53:54] Speaker 12:
And that kind of distinction between the two that the Customs makes has nothing to do with violation and everything to do with remedy.

[00:54:00] Speaker 12:
And I want to answer your question, Your Honor, because you have a...

[00:54:03] Speaker 14:
But the rec seems to me rather broad in the sense that if the article may be put to an infringing use after it's imported, the commission is saying, well, in all of those cases, even though the article itself may or may not infringe, we can grant a remedy, right?

[00:54:21] Speaker 12:
That's not true, Your Honor.

[00:54:21] Speaker 12:
The exclusion order is limited to infringing articles.

[00:54:25] Speaker 12:
And in this particular case, the fact of this case, the record will show the percentage of imported articles

[00:54:30] Speaker 12:
that went to Mentalix and were used for infringing use with an excess of 95%.

[00:54:36] Speaker 12:
So the vast majority of importation occurred here.

[00:54:38] Speaker 11:
The ones that went to Mentalix, not the ones that went to everybody else.

[00:54:42] Speaker 11:
Well, everybody else... Evidence is also clear that Mentalix was a small percentage of the sales.

[00:54:47] Speaker 11:
That's incorrect, Your Honor.

[00:54:48] Speaker 11:
Of all the particular scanners.

[00:54:49] Speaker 12:
That's incorrect, Your Honor.

[00:54:50] Speaker 12:
Mentalix was the vast majority in excess of 95% of the supreme scanners that were imported into the United States.

[00:54:57] Speaker 12:
And those other ones were the small fries by comparison.

[00:55:00] Speaker 12:
So in this case, it was the vast majority.

[00:55:03] Speaker 12:
And in essence, the concerns here about remedy distinct from violation are concerns that are appropriately delegated to the commission for enforcement.

[00:55:12] Speaker 12:
And what the commission attorney, my brother, said faithfully was,

[00:55:15] Speaker 12:
The way these things actually work is they're self-enforcing.

[00:55:19] Speaker 12:
There has been no apparent demand for importation of non-infringing versions of the software.

[00:55:24] Speaker 14:
Would it make a difference if the imports to Menelix were 1%?

[00:55:29] Speaker 12:
No, Your Honor, I don't think it would make a difference.

[00:55:33] Speaker 14:
Even though 99% of the imports are non-infringing, they can bar the imports because 1% of them might be used in an infringing manner.

[00:55:40] Speaker 12:
No, not might be used.

[00:55:41] Speaker 12:
They're only barring the ones that will be used.

[00:55:43] Speaker 12:
And as a practical matter, the way that's handled is through the actual handling of the certifications that are done.

[00:55:48] Speaker 12:
It would be no different, Your Honor, than if somebody sued 10 respondents

[00:55:52] Speaker 12:
found out a finding of infringement and got an exclusion order, then 99 of them took licenses.

[00:55:57] Speaker 12:
That exclusion order still applies and is still applied faithfully by the Cousins Bureau to the remaining ones that remain infringing.

[00:56:04] Speaker 12:
And the 90% that aren't would successfully come into this country subject to a certification.

[00:56:10] Speaker 12:
And I would submit, Your Honor, that the culpable

[00:56:14] Speaker 12:
intent that's associated with 271B should make it more inclined to be enforced in these circumstances, not less.

[00:56:21] Speaker 11:
You rely heavily on Chevron.

[00:56:23] Speaker 11:
Tell me what you describe ambiguity to be and where you think ambiguity arises.

[00:56:29] Speaker 12:
Sure, Your Honor.

[00:56:30] Speaker 12:
To the extent the court believes that articles that infringe isn't a reference to the definition of infringement that's found in 271 A, B, and C, I believe it's not ambiguous.

[00:56:41] Speaker 12:
But to the extent the court doesn't believe that articles that infringe means any type of infringement that's associated and described in 271 A, B, and C, then that's what's ambiguous.

[00:56:52] Speaker 11:
Wait a minute.

[00:56:52] Speaker 11:
So you're saying if the court disagrees with you, that's an ambiguity?

[00:56:58] Speaker 12:
Well, Your Honor, I think the court would be disagreeing with itself.

[00:57:04] Speaker 12:
So the court in, for example, Lucent Technologies talking about products associated with induced infringement called them the infringing software products.

[00:57:14] Speaker 12:
In power integrations, this court called it the portion of infringing products not imported in the United States.

[00:57:20] Speaker 12:
In laser dynamics, it talked about the infringing.

[00:57:22] Speaker 11:
Let's go back to my question, because it's really important.

[00:57:25] Speaker 11:
Sure.

[00:57:27] Speaker 11:
The government's brief tries a little bit to explain where the ambiguity comes from, but nowhere else.

[00:57:34] Speaker 11:
You just say, it's ambiguous because we don't agree.

[00:57:37] Speaker 11:
That's not an ambiguity.

[00:57:39] Speaker 11:
So tell me where the ambiguity is.

[00:57:41] Speaker 12:
I disagree, Your Honor.

[00:57:42] Speaker 12:
The ambiguity, to the extent it arises from anywhere, arises from the interpretation, which I would submit is an erroneous interpretation of articles that infringe.

[00:57:50] Speaker 12:
The way that that statute has been interpreted for all time prior to 1988 was that precisely these kinds of acts of induced infringement are subject to a remedy.

[00:58:00] Speaker 12:
And the 1988 amendments were not intended to do anything other than strengthen that by replacing a finding of injury

[00:58:07] Speaker 12:
for statutory intellectual property.

[00:58:09] Speaker 11:
So the answer to my question is, the ambiguity is that we don't agree with you, or that the panel didn't agree with you.

[00:58:15] Speaker 12:
I don't think that's the correct way to characterize it, Your Honor.

[00:58:17] Speaker 12:
I think the statute is clear on its face.

[00:58:19] Speaker 12:
And to the extent it's not clear on its face, the commission's interpretation of any perceived ambiguity is the reasonable one.

[00:58:25] Speaker 01:
Sir, to cut through all of the debate, you're telling us that if it's feasible to select and implement a remedy for established infringement,

[00:58:36] Speaker 01:
then that really is what one looks for.

[00:58:40] Speaker 12:
I'm not sure if I understand the court's question.

[00:58:43] Speaker 12:
The interpretation that was applied or that's advocated by Suprema for articles that infringe would exclude not merely induced infringement, it would exclude contributory infringement, it would exclude infringement of method claims

[00:58:56] Speaker 12:
And it would arguably not cover the exclusion of an apparatus that's coming across the border because there is no infringement of the apparatus.

[00:59:06] Speaker 12:
The apparatus arises from someone who sells or enforces it.

[00:59:09] Speaker 01:
So there is no article that infringes strictly defined under 271B or A or C. Remedy for future industry or whatever else might be involved that if it is feasible to determine

[00:59:25] Speaker 01:
whether there is induced infringement, whether there is ultimate infringement after importation, that that really is what one needs to look for in order to determine whether there might be exclusion or whether the patentee might need to look elsewhere.

[00:59:42] Speaker 12:
If I understand the court's question, to the extent the question is just about whether it's a practical enforceable, that's a separate question than the one that's before the court at the moment.

[00:59:51] Speaker 12:
The question now is whether induced infringement constitutes a violation.

[00:59:54] Speaker 12:
The perspective question about whether an exclusion order is appropriately enforceable, et cetera, is not the issue that's precisely before the court and certainly seems to me like one where the commission is due ample discretion in its actual implementation of the remedies that Congress has given it in order to enforce the intent of Section 337.

[01:00:13] Speaker 04:
Mr. Grant, I think at one point earlier you were making a distinction between a violation statute and a remedy statute.

[01:00:20] Speaker 04:
Is 337 a remedy statute or is it a violation liability statute?

[01:00:27] Speaker 12:
Well, 337 defines what constitutes a violation and this question and debate that we're having today has to do with whether induced infringement satisfies a question of violation.

[01:00:37] Speaker 04:
So part of the trouble I'm having with your position is that

[01:00:41] Speaker 04:
We are looking to past acts of direct infringement that have been induced by Suprema to conclude that Suprema's scanners that are being imported today, that arrive today, are acts of induced infringement.

[01:01:00] Speaker 04:
Do you understand my concern?

[01:01:02] Speaker 12:
Let me see if I can get at it, Your Honor.

[01:01:03] Speaker 12:
The entire remedy of Section 337, not dissimilar from an injunction, is a prospective remedy.

[01:01:10] Speaker 12:
So by definition, we have to be attempting to stop culpable conduct that occurs in the future.

[01:01:15] Speaker 04:
But I don't think that... But that's a remedy statute or a form of statutory relief.

[01:01:22] Speaker 04:
And you were saying that 337 is really more about liability.

[01:01:27] Speaker 12:
If I understand the court's question, so then let me see if I can formulate it.

[01:01:31] Speaker 12:
So Section A of Section 337 has to do with Unfair Trade Act.

[01:01:34] Speaker 12:
Section B of Section 337 has to do with violations based on statutory intellectual property rights.

[01:01:41] Speaker 12:
And what that said was that for statutory intellectual property rights, we're going to strengthen the existing protections

[01:01:47] Speaker 12:
We're not going to make you show remedy, because effectively, by violating a statutory intellectual property right, we can assume injury.

[01:01:54] Speaker 12:
And that's precisely the case here.

[01:01:56] Speaker 12:
That part of the statute has to do with the finding of violation.

[01:01:59] Speaker 12:
I believe that that phrase, articles that infringe, was intended to be at least coextensive, if not broader, than the definition of violation that's found in 271A, B, and C. Indeed, in order to determine whether an article infringes, we have to look at the patent act

[01:02:16] Speaker 12:
and determine that.

[01:02:17] Speaker 12:
Now, the remaining portions of Section 337 have to do with the remedy and the remedial intent of Congress in terms of the remedies that are available.

[01:02:25] Speaker 12:
But it's a totally distinction between an impersonal, not just remedy, but an impersonal way to address who's infringing is defined by a person.

[01:02:35] Speaker 11:
And what do you do?

[01:02:36] Speaker 11:
But the Supreme Court said in Agamai that the infringement occurs when direct infringement occurs.

[01:02:42] Speaker 11:
You have to have direct infringement before you can have induced infringement.

[01:02:46] Speaker 11:
And in this particular case, if it's true that all of these scanners that are a good portion of these scanners are being sold to Mentalix, there is a district court remedy.

[01:02:55] Speaker 11:
I know you say that somehow district courts are not good enough, but there is a district court remedy that could bar Mentalix from using any of those scanners or from purchasing any of them.

[01:03:05] Speaker 12:
But that remedy is an important different one, and Congress intended to provide this remedy to patent holders in the United States.

[01:03:12] Speaker 12:
So for example, while an injunction could issue against Suprema to the extent Suprema sent those scanners to an independent third party distributor, they could come in that way.

[01:03:21] Speaker 12:
And to be clear, Suprema has no U.S.

[01:03:23] Speaker 12:
affiliate.

[01:03:24] Speaker 12:
There's no U.S.

[01:03:25] Speaker 12:
entity that's directly affiliated with Suprema.

[01:03:28] Speaker 12:
And indeed, part of the benefits, the practical benefit of Section 337 in this action had to do with the fact that we had in-rem jurisdiction.

[01:03:35] Speaker 11:
And we were able- It doesn't matter if Suprema does it through a third-party entity if the people they're selling it to are not allowed to use it, right?

[01:03:43] Speaker 12:
But the exact same thing, so that the injunction issues against mental health and Suprema merely provide those same scanners to a separate distributor in the United States.

[01:03:51] Speaker 12:
And the entire purpose of this statute was intended to be able to stop that at the border in an effective way.

[01:03:57] Speaker 12:
The Commission's opinion faithfully applies the text of Section 337 to implement Congress's intention to stop at the border all forms of infringement

[01:04:05] Speaker 04:
not just some forms, including inducement, the opinion should be affirmed.

[01:04:18] Speaker 04:
271A, 271B, 271C.

[01:04:19] Speaker 04:
Correct.

[01:04:20] Speaker 12:
And 271G, for example.

[01:04:22] Speaker 12:
271G.

[01:04:23] Speaker 12:
So 271G was actually covered by the Act before 271G existed.

[01:04:28] Speaker 12:
And so when Congress added 271G to the Patent Act, that occurred about 40 years after that same prohibition was applied in Section 337.

[01:04:39] Speaker 12:
So to the extent that there's this question about whether the Patent Act and the Trade Act.

[01:04:45] Speaker 11:
The court rejected that.

[01:04:47] Speaker 11:
That's why Congress amended the statute.

[01:04:49] Speaker 12:
The Congress amended the statute because after affirming it several times, then the court reversed itself.

[01:04:54] Speaker 12:
And what Congress said was that was an improper interpretation of its statute.

[01:04:57] Speaker 11:
So in the bill this is... No, it didn't.

[01:04:59] Speaker 11:
It amended the statute.

[01:05:00] Speaker 11:
It might not have.

[01:05:01] Speaker 11:
The Supreme Court says there's a gap in the statute.

[01:05:04] Speaker 11:
That's the way it's supposed to work.

[01:05:05] Speaker 11:
There's a gap in the statute so Congress goes in and amends the statute.

[01:05:10] Speaker 12:
The legislative history expressly says that the amendment came about because the court reversed itself, changing its prior rulings.

[01:05:18] Speaker 12:
That's what's set forth in the statute of history.

[01:05:20] Speaker 11:
OK.

[01:05:21] Speaker 11:
Thank you.

[01:05:22] Speaker 11:
Thank you, Your Honor.

[01:05:27] Speaker 11:
We're now about 14 minutes over, but we're going to give you your five minutes, and we're able to subsidize Mr. Rue if he needs to keep the time even.

[01:05:38] Speaker 13:
Thank you, Madam Chief Judge.

[01:05:40] Speaker 13:
May it please the court, I'm Mark Freeman for the United States.

[01:05:42] Speaker 13:
We appreciate the chance to address the court this morning.

[01:05:45] Speaker 13:
my time could be given back.

[01:05:47] Speaker 13:
If there are no further questions, I'd be glad to give it up.

[01:05:49] Speaker 13:
I just want to address.

[01:05:50] Speaker 03:
I have a question for you.

[01:05:51] Speaker 03:
Yeah, thanks.

[01:05:52] Speaker 03:
So putting aside the context of this amendment, the legislative history, all of that, if Congress had wanted to amend the statute to focus specifically on articles important, to keep it in line with kind of anti-dumping, kind of railing duty things, where they exclude or put tariffs on

[01:06:14] Speaker 03:
on goods that violate those orders.

[01:06:16] Speaker 03:
What language other than articles that are in French would it have used?

[01:06:22] Speaker 13:
If I understand the question correctly, because Section 337 is an in rem proceeding,

[01:06:29] Speaker 13:
You have to speak in terms of the articles.

[01:06:32] Speaker 13:
It wouldn't make sense to address just intellectual property infringement by speaking in terms of the conduct.

[01:06:40] Speaker 13:
And that is why this statute is ambiguous.

[01:06:42] Speaker 13:
That is why it was necessary for the Commission to apply its interpretive judgment.

[01:06:47] Speaker 03:
I guess what I'm getting at is, if Congress had a different intent, and I understand you have arguments for the Congress, but if Congress really had intended only to exclude articles, to limit it basically to direct infringement, wouldn't articles that infringe be the language they use?

[01:07:05] Speaker 13:
No, in fact, this is not a point we made in our brief, and it may be a little bit to follow an oral argument, but I think there's a textual basis to conclude that Congress is exactly the opposite of that, Your Honor.

[01:07:14] Speaker 13:
In 337A1B1 and 2, right?

[01:07:19] Speaker 13:
B1 says articles that infringe.

[01:07:21] Speaker 13:
B2 is the provision from the 1940s that parallel to 271G.

[01:07:26] Speaker 13:
If you look at the language of that provision, it says products made overseas by processes that are, quote, covered by the claims of a United States patent, valid and enforceable United States patent.

[01:07:39] Speaker 13:
covered by the claims of, unambiguously means direct infringement.

[01:07:43] Speaker 13:
There is some other way.

[01:07:45] Speaker 13:
Congress had that language in front of it when it was writing 337A1B1.

[01:07:48] Speaker 13:
And if they had meant to say direct infringement only, they could have simply said, articles that are covered by the claims of a valid and enforceable United States patent.

[01:07:59] Speaker 11:
And is that different?

[01:08:00] Speaker 11:
Articles that infringe?

[01:08:01] Speaker 11:
Isn't that the definition?

[01:08:03] Speaker 11:
No.

[01:08:03] Speaker 11:
What is the difference between articles that infringe

[01:08:06] Speaker 11:
what you've posited.

[01:08:08] Speaker 13:
When Congress uses different language, we assume they meant something different by it, and infringe is of course defined in 271, that is, the caption of section 271 is infringement of patent, and it is not just A, but B and C as well.

[01:08:22] Speaker 14:
Doesn't the use of the word article suggest that you can determine the infringement by looking at the article, rather than looking at the article and combining it with some other conduct by the importer,

[01:08:33] Speaker 14:
that's outside of the importation?

[01:08:37] Speaker 13:
Your Honor, I think the answer to that is no.

[01:08:39] Speaker 13:
And let me explain, because I agree with you that it's an important point.

[01:08:43] Speaker 13:
I think it is commonplace under Section 337 that the Commission, in order to determine whether there's been a violation, has to look outside of the article itself.

[01:08:51] Speaker 13:
Say, for example, the provision I just mentioned, products made overseas pursuant to a patent, the process patented in the United States.

[01:09:00] Speaker 14:
There may well be, and in fact the court- That's specific in the statute.

[01:09:03] Speaker 13:
But again, Your Honor, this court in the Seale-Aire case talked about this.

[01:09:07] Speaker 13:
Whether the product coming across the border was made pursuant to a process patented in the United States or not will be impossible to determine from looking at that product itself.

[01:09:18] Speaker 05:
That's why 271G reversed the burden of proof.

[01:09:21] Speaker 05:
put the burden on the importer to prove otherwise.

[01:09:25] Speaker 13:
In district court cases, that's correct.

[01:09:27] Speaker 13:
And it's not difficult to think of other circumstances where this would be true.

[01:09:33] Speaker 14:
I'm not talking about sort of a glance at the article and you can tell whether it's infringing.

[01:09:38] Speaker 14:
What I'm saying is

[01:09:40] Speaker 14:
doesn't suggest that an examination of the article or a testing of the article or look at the history of the article suggests that it's going to be an infringement without looking for intent or actions by the importer

[01:09:54] Speaker 14:
apart from the importation that somehow would create an infringement.

[01:09:58] Speaker 13:
Well, sure, sure.

[01:09:59] Speaker 13:
I mean, in fact, I think frankly, once the court acknowledges you have to look at the history of the article that's not written on the article.

[01:10:05] Speaker 13:
So we're already looking outside of the thing in front of the customs official.

[01:10:08] Speaker 13:
But even as to intent, I mean, take business tort, take antitrust violations, take passing off.

[01:10:15] Speaker 13:
The commission has to determine intent.

[01:10:18] Speaker 13:
And to your question earlier about the scope of the exclusion order in this case, paragraph one of the exclusion order defines the articles that are excluded as the article that infringed.

[01:10:28] Speaker 13:
So a sale by Suprema to Mark Freeman Associates does not infringe because they've not been found who have engaged in an intentional scheme to induce direct infringement by me.

[01:10:43] Speaker 13:
The final point I'm going to make is simply that article that infringes

[01:10:47] Speaker 13:
it had no meaning under section 271 and congress intended the commission in the first instance to ascribe conduct from the patent laws to the article.

[01:10:56] Speaker 13:
They had to do that.

[01:10:58] Speaker 13:
It is the commission's judgment in the first instance about how to do that and the only question ought to be whether it was reasonable of them to conclude that what congress meant was articles that infringed are those for which liability could be imposed under the patent act.

[01:11:13] Speaker 10:
Can I just ask a question?

[01:11:15] Speaker 10:
On page 17 of your brief, you cite the same three cases that one of your colleagues recited.

[01:11:23] Speaker 10:
I suspect he was reading from everyone.

[01:11:26] Speaker 10:
They're all relatively recent.

[01:11:28] Speaker 10:
I'm pretty focused on the question whether this non-271 precise phrase, articles that infringe or infringing articles,

[01:11:41] Speaker 10:
had any history of usage that covered the kind of thing at issue here as a shorthand let's call it a staple article with respect to a method claim.

[01:11:58] Speaker 10:
I think you understand the shorthand.

[01:11:59] Speaker 13:
I do understand the shorthand, your honor.

[01:12:01] Speaker 13:
And I guess what I have to say is this.

[01:12:05] Speaker 13:
The question ought to be whether it was unreasonable of the commission to think that we could ascribe to

[01:12:12] Speaker 13:
the articles, the intent of a person who is an importer as part of an importer scheme.

[01:12:19] Speaker 13:
No one doubts that in a district court you can go after an importer for intending to induce the infringement of a United States method patent and that

[01:12:28] Speaker 13:
In that sort of circumstance, the district court could impose an injunction if they found the inducement against the importation and to calculate remedies.

[01:12:36] Speaker 13:
And we would talk, as we did in the cases that Your Honor mentions, about how much per infringing article.

[01:12:40] Speaker 13:
And that would be a perfectly reasonable and linguistically natural way to speak of it.

[01:12:44] Speaker 13:
And I think that linguistically reasonable, I think the relevance of the cases that you mentioned is only that

[01:12:50] Speaker 13:
The commission's conclusion here is consistent with the ordinary way in which we use the English language.

[01:12:56] Speaker 14:
None of those earlier cases involved a finding of infringement based on inducement except where the article had no substantial non-impringing uses or it was imported with instructions to infringe.

[01:13:10] Speaker 13:
Your Honor, I don't see a principal difference.

[01:13:13] Speaker 14:
If we conclude... But is my statement about the cases correct?

[01:13:17] Speaker 13:
I believe that is correct to my knowledge, but once one acknowledges that the importation of an article with instructions written on it about how to use it to infringe is inducement.

[01:13:29] Speaker 13:
Of course, that's how we would deal with it in a district court.

[01:13:32] Speaker 13:
And if the commission can remedy that,

[01:13:34] Speaker 13:
then there's nothing in the statute.

[01:13:35] Speaker 13:
That means the commission has properly construed an article that... Well, that may be, but in terms of drawing on historical practice, what the commission has done here is something that... And I think the relevance of historical practice is only a let's not miss the forest for the trees point, okay?

[01:13:49] Speaker 13:
If we just back up here,

[01:13:51] Speaker 13:
The express purpose of the 1988 legislation is not statutory history or legislative history.

[01:13:57] Speaker 13:
This is in the statute itself.

[01:13:59] Speaker 13:
We reproduced in our brief at page 8 an actual finding of the purpose.

[01:14:02] Speaker 05:
The patent law is all about trees, not forests.

[01:14:06] Speaker 13:
Your Honor, I think that the Supreme Court would say that statutory interpretation is about forests and not trees and if we, there's no way to read 337A1B1 consistent with

[01:14:21] Speaker 13:
the expressed findings of Congress reproduce the page 8 of our brief and come to the conclusion that they felt it advocated.

[01:14:28] Speaker 11:
Thank you.

[01:14:30] Speaker 11:
Thank you.

[01:14:32] Speaker 11:
Mr. Woof, so we're about 17 minutes ahead.

[01:14:37] Speaker 11:
I guess I'm a chief judge in training.

[01:14:40] Speaker 11:
I guess my experiment on self-regulation did not work out as well as I expected.

[01:14:44] Speaker 11:
In any event, we will add that on to your time, and hopefully if there are no questions, that will not be necessary.

[01:14:52] Speaker 11:
So please proceed.

[01:14:53] Speaker 16:
Thank you, Your Honor.

[01:14:56] Speaker 16:
I'm not quite sure where to begin.

[01:14:58] Speaker 16:
It seems to me that I've heard a lot of things that trouble me greatly.

[01:15:04] Speaker 16:
One is Appellee's insistence that there be some deference over the commission in this instance.

[01:15:10] Speaker 16:
And I keep not hearing the first step of that deference.

[01:15:17] Speaker 16:
The first step of that deference is that the statute has to be ambiguous on its face.

[01:15:22] Speaker 16:
And you only give deference to the agency if that's the situation.

[01:15:27] Speaker 16:
And this court is unable to use

[01:15:32] Speaker 16:
standard tools of statutory construction to construe the statute.

[01:15:36] Speaker 11:
Well, on that point, maybe you can respond a little to Judge Lee's question to Mr. Freeman, which is, Mr. Freeman responded, if Congress had really intended to limit it to articles that infringe, how would they have said it?

[01:15:50] Speaker 11:
What is your view of that?

[01:15:52] Speaker 11:
Is there another way they would have said it other than the way they said it, i.e.

[01:15:56] Speaker 11:
articles?

[01:15:57] Speaker 16:
I can't think of any, Your Honor.

[01:16:00] Speaker 16:
Articles that infringe are just that.

[01:16:05] Speaker 09:
There are tangible things that infringe a patent under... Doesn't that mean that Congress left it to the discretion of the Commission to determine what articles that infringe is?

[01:16:15] Speaker 16:
No, Your Honor, it meant that courts can construe that statute just like the Commission can.

[01:16:22] Speaker 16:
There is no prior Commission determination to which to give deference because the Commission has not interpreted articles that infringe in the context of a staple article in inducement context.

[01:16:37] Speaker 16:
Every decision that they cite to it has been in the context of either the pre-88 version of the statute or with the now-discarded statute.

[01:16:49] Speaker 09:
That is interpreted to mean that you can bring an inducement action under 337.

[01:16:57] Speaker 16:
I think, I'm not ruling out newsman actions under 337 categorically, because if they involve an article that infringes, then I think yes, it falls within the statutory scope.

[01:17:09] Speaker 09:
Let me limit my statement to involving method claims.

[01:17:14] Speaker 16:
Well, method claims have always been treated differently by the law, and the latest pronouncements

[01:17:22] Speaker 16:
hold that method claims are not infringed until they're actually performed.

[01:17:28] Speaker 16:
And if that performance is not done by the article or done until it's in the United States, that is not something that's within the scope of 337.

[01:17:36] Speaker 16:
The other point I wanted to raise and it's... Any other intellectual property rights that Congress wrote out?

[01:17:48] Speaker 16:
I can't think of any, Your Honor.

[01:17:50] Speaker 16:
In response to Mr. Grant's and the cross-match's position that 337 includes all of 271, including G, that runs counter to the statutory language of 337.

[01:18:03] Speaker 16:
337

[01:18:06] Speaker 16:
itself in A1B2 specifically addresses 271G liability.

[01:18:15] Speaker 16:
It says it prohibits the importation of articles that are made, and I'm paraphrasing, by means of a process covered by the claims of a United States patent.

[01:18:27] Speaker 16:
That's what 271G covers.

[01:18:31] Speaker 16:
237A1B1 were read to be inclusive of all of 271 as they contend, then B2 would be surplusage, it would be not necessary.

[01:18:47] Speaker 16:
That is another reason why their construction is incorrect.

[01:18:52] Speaker 16:
Mr. Chaney made reference to the fact that no scanners have been turned away by customs since this decision has come down.

[01:19:02] Speaker 16:
Well, that's not before this court, among other things.

[01:19:04] Speaker 16:
It's not part of the record.

[01:19:05] Speaker 16:
But even if it were true, it's also consistent with the fact that, as you might expect, my client may be afraid to import something where the order says you cannot import devices that infringe claim 19.

[01:19:16] Speaker 16:
And you can see the confusion there because the devices already have been determined not to infringe claim 14, excuse me, claim 19.

[01:19:26] Speaker 16:
There is a certification procedure that you can employ where you certify that the products are not excluded, that these products are not excludable products, but how do you do that when you can't know what's going to be done with them?

[01:19:47] Speaker 16:
The process, in effect, if you read it the way the commission wants to read it, requires that my client, the Suprema client,

[01:19:54] Speaker 16:
has to investigate every instance of their purchaser's conduct.

[01:20:03] Speaker 16:
In this case, it might be possible if there are a handful, but what if we're talking about a consumer good that's sold on a shelf?

[01:20:11] Speaker 16:
You sell a staple article on the shelf, you don't know whether somebody is going to use it in an infringing manner or not.

[01:20:17] Speaker 16:
That's why the district courts talk about enjoining the conduct of inducement but not enjoining the sale of the staple article.

[01:20:25] Speaker 16:
And what the commission wants to do is to expand beyond what the district courts can do under 271B and exclude articles that are not infringing, that are staple articles that have substantial non-infringing uses by their own admission.

[01:20:45] Speaker 01:
But you wouldn't draw any line when we're told that 95% are in fact used under the patent.

[01:20:54] Speaker 01:
You think that that should be treated the same way as if it were 5%?

[01:20:58] Speaker 16:
I don't think that the number is a situation, Your Honor.

[01:21:02] Speaker 16:
It's a situation of- We're always drawing lines with numbers.

[01:21:06] Speaker 01:
I mean, there are differences.

[01:21:08] Speaker 01:
It's the basis of

[01:21:10] Speaker 01:
the law, you try and see where the lines, where the difference is, where the balance shifts, but you are telling us that that's inappropriate.

[01:21:19] Speaker 16:
Well, it's only inappropriate in this instance because the statute doesn't draw that distinction.

[01:21:25] Speaker 16:
It draws the distinction.

[01:21:26] Speaker 01:
Well, that's why we're here.

[01:21:27] Speaker 01:
Perhaps it should.

[01:21:29] Speaker 16:
Well, and I guess what I'm suggesting, Your Honor, is that because the statutory language does not draw that distinction, it's not something that we should consider.

[01:21:39] Speaker 16:
It may be something that you might think about as a policy consideration, but it's not something that's drawn to the statute itself.

[01:21:47] Speaker 16:
The statute itself is very clear that it's... What way is that?

[01:21:50] Speaker 09:
Because you leave it up to the Commission discretion to determine that type of decision-making?

[01:21:56] Speaker 16:
as to whether or not the percentage of products are going to, are being combined in a way.

[01:22:05] Speaker 16:
Well, we ought to actually, that of course assumes that they are being combined in a way in which we haven't really touched on.

[01:22:14] Speaker 16:
There's another facet of our appeal which is that the statute, or excuse me, the patent is not infringed at all.

[01:22:23] Speaker 16:
Claim 19 is very clear that it requires

[01:22:26] Speaker 16:
area detection and shape detection, neither of which is supported by the evidence in the case.

[01:22:33] Speaker 16:
There's no evidence that that's any shape detection.

[01:22:36] Speaker 09:
I asked you before, and now we've heard a lot of argument, but I asked you, is there anywhere in 337 that defines articles that infringe?

[01:22:46] Speaker 09:
Is there anything in the PAN Act that defines articles that infringe in this context?

[01:22:50] Speaker 09:
And your answer before was no.

[01:22:52] Speaker 09:
I'm assuming it's still no.

[01:22:55] Speaker 09:
My question is, what's this entire argument about?

[01:22:58] Speaker 09:
Is it not that we're seeking to define what articles that infringe means?

[01:23:04] Speaker 09:
And doesn't that mean that what we're dealing here, what we have here, is an ambiguity?

[01:23:11] Speaker 09:
We don't know what it means, and this court has been called en banc to determine what articles that infringe means.

[01:23:20] Speaker 16:
Start at the beginning of your question, Your Honor.

[01:23:23] Speaker 16:
The words, articles that infringe, those words are not found in 271.

[01:23:29] Speaker 16:
But the only way to read it correctly is to determine what are articles that infringe.

[01:23:34] Speaker 09:
But we've already departed from the words from the face of the statute.

[01:23:39] Speaker 09:
I mean, we've already, so if what I hear you saying correct is that we've answered the first step of Chevron.

[01:23:47] Speaker 09:
Isn't it time to move to the second step and ask,

[01:23:49] Speaker 09:
Is the ITC's determination in this case reasonable?

[01:23:53] Speaker 09:
Is its interpretation of the statute a reasonable interpretation?

[01:24:00] Speaker 16:
And it is not a reasonable interpretation and I don't think we've moved beyond the first step because

[01:24:04] Speaker 16:
It's only where a statute is ambiguous, and by definition, under Chevron, that means that applying standard tools of statutory construction to the courts cannot... No, it means whether the statute answers

[01:24:19] Speaker 09:
directly the question that's before us.

[01:24:26] Speaker 16:
Like I said at the beginning, Your Honor, it's common for statutes not to define every single term within... In a fine share run, that is what we look at.

[01:24:36] Speaker 09:
I mean, we're faced with this issue all the time in this court in interpreting statutes.

[01:24:41] Speaker 09:
And when the first step is to look at the statute and say, does the statute answer the question that's before us?

[01:24:47] Speaker 09:
Here, we've been jumping from one act to another.

[01:24:51] Speaker 09:
We've discussed legislative purpose.

[01:24:54] Speaker 09:
We've discussed legislative history.

[01:24:57] Speaker 09:
Isn't it time to move on to the second step?

[01:24:59] Speaker 09:
And that's whether the ITC's interpretation of the statute is a reasonable one or not.

[01:25:04] Speaker 16:
And I think not, but to answer the question of whether it's reasonable, it is not a reasonable construction, because it reads out the phrase that and replaces it.

[01:25:15] Speaker 09:
Suppose, isn't there another way of looking at this?

[01:25:17] Speaker 09:
Instead of going to 271, let's go to unfair trade acts.

[01:25:21] Speaker 09:
The ICC has determined that induced infringement under 337 is an unfair trade act.

[01:25:29] Speaker 09:
Is that an unreasonable interpretation?

[01:25:33] Speaker 16:
I'm sorry, that 337 is an unfair trade act?

[01:25:37] Speaker 09:
An infringement that's been caused by inducement under 337 is an unfair trade act.

[01:25:43] Speaker 16:
And that is specifically set out in the statutory language of A1B1?

[01:25:48] Speaker 09:
If anything, I mean, when you look at the statute, it says unfair trade act, then it goes on to say what those acts are.

[01:25:57] Speaker 09:
So isn't another way of looking at this question is to look at the act itself

[01:26:03] Speaker 09:
and to say, could not the IPC reasonably determine that the definition of articles that infringe constitute an unfair trade act?

[01:26:16] Speaker 16:
It's not a reasonable construction for the Commission to look at the words, articles that infringe when those words and that part of the statute that deals with patent infringement is specifically set out differently or separately from the general section that talks about unfair trade acts.

[01:26:39] Speaker 16:
and talk specifically about articles that infringed and reading out the part that says that infringed.

[01:26:45] Speaker 16:
But that's an unreasonable reading of the statute.

[01:26:51] Speaker 16:
Nothing in legislative history, nothing in the 271 statute or 337 statute

[01:26:58] Speaker 16:
says that you should transform a staple article as it is imported across the border into something that is an article that infringes merely because it is being used in connection with an alleged inducement.

[01:27:12] Speaker 16:
There are no cases on that and there's no statutory authority or legislative authority for that.

[01:27:32] Speaker 16:
To sum up, Your Honor, there was no 337 violation at the Suprema.

[01:27:40] Speaker 16:
It only imported staple articles, not articles that infringed.

[01:27:44] Speaker 16:
The only basis of liability was inducement, which is based purely on conduct and not tethered to the importation of any infringing article.

[01:27:53] Speaker 16:
The Commission itself determined that Suprema's products were staple articles by finding they did not entrench when combined with three of four other software programs.

[01:28:04] Speaker 16:
There is no basis to be forward to the Commission's interpretation as including staple articles as having a nexus to inducement.

[01:28:11] Speaker 16:
In fact, I don't think the Commission has, in any of their papers, really articulated what they mean by articles that infringed.

[01:28:18] Speaker 16:
They've never really construed it given a definition.

[01:28:21] Speaker 16:
And why?

[01:28:22] Speaker 16:
Because every time you think about extending it beyond the articles themselves, you're inextricably led to the Nexus Doctrine, which the Commission itself says is inappropriate.

[01:28:33] Speaker 16:
The Commission itself says you must, in determining whether or not there's been a 337 violation, you must

[01:28:40] Speaker 16:
all the statutory requirements of 337.

[01:28:44] Speaker 16:
That is not done when all you're doing is saying that there is a nexus to the alleged infringement.

[01:28:55] Speaker 16:
And even if the text or language were ambiguous again, which I think it's not the interpretation that read out the phrase that infringed and convert this limiting phrase into one that is not only not limiting but includes stable articles that are not infringing articles.

[01:29:16] Speaker 16:
It can't be a reasonable construction given.

[01:29:19] Speaker 09:
Under 271.

[01:29:22] Speaker 09:
An article itself cannot infringe, correct?

[01:29:28] Speaker 09:
The statute speaks to whosoever.

[01:29:33] Speaker 16:
There's an action and then there's the object.

[01:29:36] Speaker 09:
Have you ever known of an article that can import itself?

[01:29:40] Speaker 16:
No, Your Honor, I don't.

[01:29:42] Speaker 09:
So somebody's got to do it.

[01:29:43] Speaker 16:
Somebody has to do it.

[01:29:44] Speaker 16:
And 337 is also written in terms of an action and then an object upon which you are acting.

[01:29:52] Speaker 16:
The action in this case in 337 is about importing, failing after importation and so forth.

[01:29:58] Speaker 16:
And you're right, articles don't import themselves.

[01:30:03] Speaker 16:
I want to stress that there was no 337 violation as to metallics.

[01:30:09] Speaker 16:
The only conduct that was claimed to infringe was the method claim of 19 that was the use of publicly available NIST software in conjunction with the staple article scanners.

[01:30:22] Speaker 16:
This was purely domestic conduct that is not within the reach of 337.

[01:30:26] Speaker 16:
I want to clarify that the scanners

[01:30:29] Speaker 16:
at issue here are attached to a PC like a printer.

[01:30:35] Speaker 16:
Nothing was added to the scanner.

[01:30:36] Speaker 16:
The software routines that are claimed to be infringed run only on the computer.

[01:30:41] Speaker 16:
Any scanner could be attached to the PC.

[01:30:44] Speaker 16:
And that's why, in fact, they are safe articles and should not be excluded.

[01:30:49] Speaker 11:
And I thank you for the question.

[01:30:51] Speaker 11:
Thank you.

[01:30:52] Speaker 11:
We thank our council and the case is submitted.

[01:30:54] Speaker 11:
That concludes our proceedings for this morning.

[01:30:57] Speaker 07:
All rise.