Ninestar Technology Co. v. International Trade Commission
667 F.3d 1373
| Fed. Cir. | 2012Background
- ITC issued general and limited exclusion orders and cease and desist orders against Ninestar for infringement of Epson patents (Inv. No. 337-TA-565).
- Ninestar U.S. subsidiaries and Town Sky continued importing and selling infringing cartridges after the orders were issued.
- ENFORCEMENT proceeding led to ALJ findings of violation; Commission adopted findings and imposed a civil penalty, later reduced by the Commission.
- Ninestar sought review of infringement findings, penalty, and the inclusion of Ninestar China as jointly and severally liable.
- The Commission characterized the violations as egregious and supported joint and several liability based on control and benefit by Ninestar China.
- Ninestar challenges the constitutional basis for penalties and argues misapplication of law regarding patent exhaustion and the scope of the orders.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Ninestar violate the ITC orders by importing and selling infringing cartridges after the orders? | Ninestar contends the law they relied on negates infringement due to patent exhaustion. | Epson/Ninestar U.S. argue orders were valid, and Ninestar knew of and deliberately violated them. | Yes; violations supported by substantial evidence and law. |
| Whether the penalties under 19 U.S.C. § 1337(f) are constitutional or improperly punitive. | Ninestar asserts penalties resemble criminal punishment and violate separation of powers and Seventh Amendment protections. | ITC may impose civil penalties for violation of its orders; administrative penalties are proper public rights remedies. | Penalties are within ITC authority and constitutional under governing precedents. |
| Whether Ninestar China may be held jointly and severally liable with U.S. subsidiaries. | Ninestar claims parent liability should not extend to Ninestar China; jurisdiction over foreign entity is improper. | Ninestar China controlled and funded subsidiaries; joint liability is warranted under agency principles. | affirmed; joint and several liability proper given control and revenue flow from Ninestar China. |
| Was the cease and desist order sufficiently clear and properly invoked to support enforcement and penalties? | Ninestar argues order lacks specificity; advisory opinions could resolve, but Ninestar failed to seek clarification. | Order was clear to Ninestar; sufficient notice; advisory option existed but not pursued. | No constitutional issue; order sufficiently clear and enforcement proper. |
Key Cases Cited
- Jazz Photo Corp. v. U.S. Int'l Trade Comm'n, 264 F.3d 1094 (Fed. Cir. 2001) (patent exhaustion limited to products sold under U.S. patent; foreign provenance not exhausted)
- Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617 (S. Ct. 2008) (first-sale doctrine and exhaustion principles; not dispositive here but discussed)
- Fujifilm Corp. v. Benun, 605 F.3d 1366 (Fed. Cir. 2010) (territoriality of exhaustion; cautions against broad departures from Jazz Photo)
- Bestfoods, 524 U.S. 51 (U.S. 1998) (agency/parent-subsidiary liability principles for corporate control)
- Ward v. United States, 448 U.S. 242 (U.S. 1980) (defining civil vs. criminal penalties and due process considerations in statutory fines)
- Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (U.S. 1989) (jury trial considerations in admi nistrative proceedings involving private rights)
- Atlas Roofing Co. v. Occupational Safety & Health Review Commission, 430 U.S. 442 (U.S. 1977) (administrative adjudication of public rights may proceed without jury trial)
- Akzo N.V. v. U.S. Int'l Trade Comm'n, 808 F.2d 1471 (Fed. Cir. 1986) (public regulatory rights and agency adjudication under ITC)
- Hyde v. U.S. Int'l Trade Comm'n, — (—) (not cited as a cited case in the provided text; placeholder avoided)