Federal Circuit sends IP case back to USITC
The US Court of Appeals for the Federal Circuit partly reversed, vacated, and remanded a US International Trade Commission (ITC) decision in a trade dress dispute on Friday, December 7.
Laerdal Medical, a manufacturer of medical equipment and provider of medical training products, filed a complaint against 11 respondents at the ITC in 2016.
The respondents were allegedly infringing Laerdal’s copyright, and patent, trademark and trade dress rights by importing or selling spine boards, cervical collars, CPR masks, training manikins, and accompanying product materials.
Laerdal asked the ITC for an exclusion order and cease-and-desist orders.
None of the respondents participated in the proceedings, and the ITC issued an initial determination which found all of them to be in default.
At this point, Laerdal modified its requested relief from a general exclusion order to immediate entry of limited exclusion orders.
In 2017, the commission issued its final determination. It granted limited exclusion orders against three respondents and a cease-and-desist order against one respondent, all based on the patent and trademark claims.
However, the ITC did not issue any relief in relation to the copyright and trade dress complaints, as Laerdal’s allegations in relation to those claims were “inadequate” and failed to show violations.
In relation to trade dress—which was the only issue on appeal—the ITC said that Laerdal had failed to prove the specific elements that constitute its trade dresses, that its trade dresses were not functional, and that it suffered the requisite harm.
At the Federal Circuit, Laerdal claimed that the ITC acted outside of its statutory authority by terminating the trade dress investigation at the final determination stage and not issuing relief for its trade dress claims against the defaulting respondents.
According to 19 US Code section 1337(g), “the commission shall presume the facts alleged in the complaint to be true and shall, upon request, issue an exclusion from entry or a cease and desist order, or both, limited to that person”.
Once the commission found all respondents in default, it was required to accept the facts pleaded in the complaint and issue a remedy, Laerdal said.
In response, the ITC said that even where the facts in the complaint are presumed to be true, it must still identify unlawful activity before issuing relief.
No relief is warranted—even if the allegations are unopposed—where a complaint did not adequately plead a violation, the commission added.
However, the Federal Circuit said that if the violation had not been pleaded adequately, the ITC could have declined institution and dismissed the complaint, but “the time for that assessment was pre-institution”.
The court went on to confirm that the finding of a violation in the context of a defaulting respondent occurs upon default.
The Federal Circuit also found that the statute “unambiguously requires the commission to grant relief against defaulting respondents, subject only to public interest concerns”, where all the prerequisites are satisfied.
It added that granting the ITC discretion in issuing relief under this statute runs contrary to the surrounding statutory language, and Congress had limited this discretion by using the word “shall” in section 1337.
The ITC was required to presume all facts alleged in the complaint were true and issue an exclusion order and/or cease-and-desist orders, the court concluded.
It reversed the commission’s determination that Laerdal had failed to plead its trade dress claims; vacated the decision that no relief was warranted for them; and remanded for the ITC to determine the appropriate remedy.
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