Otter Products, LLC v. United StatesOtter Products, LLC v. United States
CONCLUSION
After carefully considering the parties’ briefs and the administrative record, the court sustains Commerce‘s Final Results in all respects. The court will enter judgment accordingly.
Joyce R. Branda, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Amy M. Rubin, Assistant Director, Justin R. Miller, Senior Trial Counsel, Guy Eddon, Trial Attorney, Civil Division, Department of Justice, Commercial Litigation Branch, International Trade Field Office, of New York, New York, for Defendant United States. Of counsel on the briefs was Michael W. Heydrich, Office of Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection.
Christian E. Samay and Robert E. Colletti, Frommer Lawrence & Haug LLP of New York, New York, for proposed Amicus Curiae or Intervenors Speculative Product Design, LLC.
OPINION AND ORDER
BARNETT, Judge:
Plaintiff, Otter Products, LLC (“Otter“), moves pursuant to USCIT Rules 7 and 65 for a preliminary injunction enjoining U.S. Customs and Border Protection (“Customs“) from enforcing the General Exclusion Order (“GEO“) issued by the U.S. International Trade Commission (“ITC“) in Certain Cases for Portable Electronic Devices, Inv. No. 337-TA-861/867, against Otter‘s Symmetry Series (“Symmetry“) products. (See generally Pl.‘s Mot. for TRO & Prelim. Inj. (“Pl.‘s Mot.“) (ECF No. 6).) For the reasons provided below, the court denies Otter‘s motion and dissolves the previously issued temporary restraining order (“TRO“).
BACKGROUND
On September 6, 2012, and December 26, 2012, Speculative Product Design, LLC (“Speck“), owner of U.S. Patent No. 8,204,561 (“the ‘561 Patent“), filed complaints with the ITC, pursuant to section 337 of the
On June 20, 2014, the ITC issued a GEO, which covers claims 4, 5, 9, and 11 of the ‘561 Patent. (Pl.‘s Mot. Ex. 1 at 4-7(GEO).) It states, in relevant part:
Cases for portable electronic devices covered by one or more of claims 4, 5, 9, and 11 of the ‘561 patent are excluded from entry into the United States for consumption, entry for consumption from a foreign-trade zone, or withdrawal from a warehouse for consumption, for the remaining term of the patent, except under license of the patent owner or as provided by law.
(Pl.‘s Mot. Ex. 1 at 5.) The GEO became final on August 20, 2014. See
In January 2014, six months before the ITC issued the GEO, Otter announced its Symmetry Series cases, and by March 3, 2014, the products were available for purchase throughout the United States. (See Pl.‘s Mot. 4, Ex. 4.) On August 15, 2014, Customs Port of Long Beach alerted Otter that Customs was examining whether the GEO encompassed the Symmetry cases. (Pl.‘s Mot. 5.) Otter soon thereafter took the following steps:
- In late August 2014, Otter met with Customs representatives to explain why it believed that the Symmetry cases did not infringe the ‘561 Patent and, on September 2, 2014, filed a Request for Internal Advice with Customs. (Pl.‘s Mot. Ex. 6.)
- On September 3, 2014, Otter filed a Petition for Inter Partes Review of the ‘561 Patent with the U.S. Patent and Trademark Office, which is still pending. (Pl.‘s Mot. Ex. 7.)
- On September 4, 2014, Otter filed with the ITC a Request for an Advisory Opinion that Otter‘s products fall outside the scope of the GEO.2 (Pl.‘s Mot. Ex. 8.)
- On September 16, 2014, Otter filed a motion with the ITC to stay enforcement of the GEO with respect to Otter‘s Symmеtry cases. (Pl.‘s Mot. Ex. 9.) The court is not aware of any action having been taken on that motion.
- On September 17, 2014, Otter appealed the final determination of the ITC, Certain Cases for Portable Electronic Devices, 79 Fed.Reg. 20,228, which led to the issuance of the GEO, to the Federal Circuit. See generally Otter Prods., LLC v. ITC, No. 14-1840 (Fed. Cir. filed Sept. 17, 2014).
On September 19, 2014, Customs issued Notices of Redelivery, directing Otter to redeliver imported Symmetry cases covered by sixteen separate entries. (Pl.‘s Mot. Ex. 11.) On September 24, 2014, Otter moved the Federal Circuit to stay the enforcement of the GEO as to imports of Otter‘s products. (Pl.‘s Mot. Ex. 12.)
In opposition to Otter‘s motion to stay before the Federal Circuit, the ITC cited the 012 Ruling and argued that Otter faced no imminent harm or, in the alternative, that the motion was moot. (Pl.‘s Mot. Ex. 18.) On October 20, 2014, the Federal Circuit denied Otter‘s motion to stay, simply stating that Otter “failed to carry its burden in seeking a stay.” Otter Prods., LLC, No. 14-1840 (Fed. Cir. Oct. 20, 2014).
That same day, Speck requested a ruling from Customs as to whether Otter‘s Symmetry cases are subject to exclusion from entry pursuant to the GEO. Notwithstanding its decision in the 012 Ruling, this time Customs found that it was “not precluded by
Otter filed a protest against the Notices of Redelivery on November 7, 2014. (Pl.‘s Mot. Ex. 24.) In its protest, Otter presented three arguments: (1) Otter‘s Symmetry cases are not covered by the GEO because they do not infringe the relevant claims of the ‘561 Patent; (2) the claims of the ‘561 Patent listed in the GEO are invalid; and (3) Customs’ ruling is inappropriate because infringement and the validity of the ‘561 Patent are currently at issue in Otter‘s appeal before the Federal Circuit. (Pl.‘s Mot. Ex. 24 at 7-9.) That same day, Otter filed another motion to stay before the Federal Circuit, which the court construed as a motion for reconsideration and denied on November 11, 2014. Otter Prods., LLC, No. 14-1840 (Fed. Cir. Nov. 11, 2014).
Otter‘s protest was deemed denied, pursuant to
On December 15, 2014, Otter filed a First Amended Complaint, in which it invoked the court‘s subject matter jurisdiction under
SUBJECT MATTER JURISDICTION
Before addressing the merits of Otter‘s motion for a preliminary injunction, the court must determine the extent of its subject matter jurisdiction over the case. See Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006). A court has “an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party,” id.; see also Ford Motor Co. v. United States, 38 CIT ___, ___, 992 F.Supp.2d 1346, 1354 (2014), and “the plaintiff bears the burden of demonstrating that jurisdiction exists,” Ford, 38 CIT at ___, 992 F.Supp.2d at 1354 (citing E & S Express, Inc. v. United States, 37 CIT ___, ___, 938 F.Supp.2d 1316, 1320 (2013)).
Subject matter jurisdiction under § 1581(i), the court‘s residual jurisdiction provision, “may only be invoked when another subsection of § 1581 is unavailable or the remedy provided by another subsection is ‘manifestly inadequate.‘” Am. Frozen Food Inst., Inc. v. United States, 18 CIT 565, 569 n. 9, 855 F.Supp. 388, 392 n. 9 (1994) (citing Nat‘l Corn Growers Ass‘n v. Baker, 840 F.2d 1547, 1557 (Fed. Cir. 1988); Miller & Co. v. United States, 824 F.2d 961, 963 (Fed.Cir.1987)). “Such residual jurisdiction is available if Congress has not defined another avenue for judicial review or if Congress has not precluded it entirely.” Techsnabexport, Ltd. v. United States, 16 CIT 420, 423, 795 F.Supp. 428, 434 (1992) (citing Macmillan Bloedel Ltd. v. United States, 16 CIT 331, 332, 1992 WL 107336 (1992)). Although neither Congress nor the courts have precisely defined manifest inadequacy, “mere allegations of financial harm, or assertions that an agency failed to follow a statute, do not make the remedy established by Congress manifestly inadequate.” Gov‘t of the PRC v. United States, 31 CIT 451, 459, 483 F.Supp.2d 1274, 1281 (2007) (quotation marks omitted) (quoting Int‘l Custom Prods., Inc. v. United States, 467 F.3d 1324, 1327 (Fed.Cir.2006)).7
Otter asserts that the remedies available under other subsections of § 1581 are manifestly inadеquate because, with jurisdiction restricted to § 1581(a), Otter will have to repeatedly enter Symmetry cases “in contradiction of Ruling 071, wait for [Customs] to exclude those cases, protest the exclusion, wait for the protest to be denied or ‘deemed denied’ 30 days later, and then file a Summons on each such protest as it must do to meet the jurisdictional requirements of
Otter has not demonstrated that the court has subject matter jurisdiction under subsection (i). That the legal regime established by Congress may require Otter to attempt to enter its goods, suffer an exclusion, protest that exclusion, and then appeal Customs’ denial of the protest, pursuant to § 1581(a), does not make the remedies available under subsection (a) manifestly inadequate. Case law has long held that “section 1581(i) cannot be used to circumvent the procedures set forth by section 1581(a).” Manufacture de Machines du Haut-Rhin, 6 CIT at 65, 569 F.Supp. at 882 (citing United States v. Uniroyal, Inc., 69 CCPA 179, 687 F.2d 467 (1982)); accord Connor v. United States, 24 CIT 195, 200, 2000 WL 341097 (2000); see also Inner Secrets/Secretly Yours, Inc. v. United States, 18 CIT 1028, 1035, 869 F.Supp. 959, 965-66 (1994) (“Congress did not intеnd the Court of International Trade to have jurisdiction over appeals concerning completed transactions when the appellant had failed to utilize an avenue for effective protest before the Customs Service.“) (citation and quotation marks omitted). That Otter may suffer “delays inherent in the protest procedures do[es] not render these procedures manifestly inadequate.” Inner Secrets/Secretly Yours, 18 CIT at 1036, 869 F.Supp. at 966.
Otter has failed to demonstrate that the remedies available to it under
LEGAL STANDARD FOR PRELIMINARY INJUNCTION
“A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). To obtain a preliminary injunction, a party must demonstrate “(1) that it will be immediately and irreparably injured; (2) that there is a likelihood of success on the merits; (3) that the public interest would be better served by the relief requested; and (4) that the balance of hardship on all the parties favors the [movant].” Qingdao Taifa Grp. Co. v. United States, 581 F.3d 1375, 1378 (Fed. Cir. 2009) (citations omitted); accord Kwo Lee, Inc. v. United States, 38 CIT ___, ___, 24 F.Supp.3d 1322, 1326 (2014). Although “[n]o one factor is dispositive,” the likelihood of success and irreparable harm factors are “[c]entral to the movant‘s bur-
DISCUSSION
I. Irreparable Harm
To satisfy the standard to obtain a preliminary injunction, Otter must show that it faces an “immediate and viable” threat of irreparable harm. Kwo Lee, 38 CIT at ___, 24 F.Supp.3d at 1326 (citing Zenith Radio Corp. v. United States, 710 F.2d 806, 809 (Fed.Cir.1983)). Harm is irreparable when “‘no damages payment, however great,’ can address it.” Id. (citations omitted) (quoting Celsis In Vitro, Inc. v. CellzDirect, Inc., 664 F.3d 922, 930 (Fed.Cir. 2012)). Generally, financial loss alone is not irreparable. Id. at *3 (citing Sampson v. Murray, 415 U.S. 61, 90 (1974)). However, the ability to calculate a financial loss may not preclude a finding of irreparable harm, because accompanying harm from “‘[p]rice erosion, loss of goodwill, damage to reputation, and loss of business opportunities’ ” may be irreparable. Id. (citations omitted).
Critically, irreparable harm may not be speculative. See Am. Inst. for Imported Steel, Inc. v. United States, 8 CIT 314, 318, 600 F.Supp. 204, 209 (1984). “It is not enough to establish ‘a mere possibility of injury, even where prospective injury is great. A presently existing, actual threat must be shown.‘” Shree Rama Enters. v. United States, 21 CIT 1165, 1167, 983 F.Supp. 192, 194-95 (1997) (quoting Zenith Radio, 710 F.2d at 809). The threat of irreparable harm must be “demonstrated by probative evidence,” Am. Inst. for Imported Steel, 8 CIT at 318, 600 F.Supp. at 209, and “cannot be determined by surmise,” Elkem Metals Co. v. United States, 25 CIT 186, 192, 135 F.Supp.2d 1324, 1331 (2001); see also Techsnabexport, 16 CIT at 428, 795 F.Supp. at 437 (“The court may not grant preliminary relief based upon unsupported allegations.... Allegations of harm to potential future business relations are too speculative to constitute irreparable harm.“). The court must deny a preliminary injunction where the plaintiff fails to present evidence that the alleged injuries are likely to occur. See Nat‘l Hand Tool Corp. v. United States, 14 CIT 61, 66, 1990 WL 13550 (1990).
Otter has proffered the following evidence to support its claim that it faces irreparable harm absent a preliminary injunction. Otter has asserted that, since the market debut of the Symmetry cases, they have continuously grown to become a significant portion of its sales, producing millions of dollars in revenue in a highly competitive, cyclical market. (Kreutzfeldt Decl. ¶¶ 4-8, Nov. 25, 2014.) Without a preliminary injunction, Otter claims it would lose out on sales during the increased demand of the holiday season, which it will not be able to recover once the holiday season is over. Moreover, Otter has stated that it would not be able to recover monetary damages in this suit if the exclusion of its products is ultimately determined to be unlawful. In addition, Otter has expended great efforts to estab-
Otter‘s evidence, however, fails to account for the breadth of injunctive relief available under § 1581(a). The scope of the court‘s subject matter jurisdiction in (a) cases is limited to those entries subject to the challenged protest, Corning Gilbert, 37 CIT at ___, 896 F.Supp.2d at 1297 n. 4; see also Int‘l Custom Prods., 467 F.3d at 1327 (noting that § 1581(a) does not offer prospective relief). In this case, Otter challenges Customs’ deemed denial of a protest against Notices of Redelivery covering twenty specific entries. (Am. Compl. ¶¶ 1-2, 5-7.) The court therefore may provide injunctive relief only with respect to those twenty entries. After the court issued the TRO, Otter provided additional information in its motion for clarification of the TRO. In particular, Otter indicated that it had not redelivered the entries in question and, in fact, had already informed Customs that it had no intention of redelivering the entries in question because they had already been distributed to Otter‘s customers. (Pl.‘s Mot. Clarify at 3-4.) Otter has further acknowledged that it is Customs’ policy “not to assess liquidated damages for failure to redeliver goods that are subject to a protest or civil action until after a final decision on that protest or in that civil actiоn.” (Pl.‘s Mot. Clarify at 2, 5.) Therefore, Otter has effectively conceded that it will not suffer irreparable harm in the absence of a preliminary injunction enjoining the enforcement of the twenty Notices of Redelivery.
Otter has failed to demonstrate that it will suffer irreparable harm absent a preliminary injunction and, therefore, the court need not address the three remaining factors prior to denying Otter‘s motion. See Qingdao Taifa Grp., 581 F.3d at 1378. Moreover, based on this additional information demonstrating an absence of irreparable harm, the court hereby dissolves the TRO of December 12, 2014.
SUBJECT MATTER JURISDICTION UNDER 28 U.S.C. § 1581(h)
Otter‘s failure to demonstrate irreparable harm in its motiоn for a preliminary injunction raises questions about its invocation of subject matter jurisdiction under
The Court of International Trade shall have exclusive jurisdiction of any civil action commenced to review, prior to the importation of the goods involved, a ruling issued by the Secretary of the Treasury, or a refusal to issue or change
such a ruling, relating to ... restricted merchandise, entry requirements, ... or similar matters, but only if the party commencing the civil action demonstrates to the court that he would be irreparably harmed unless givеn an opportunity to obtain judicial review prior to such importation.
Although the standard for proving irreparable harm is the same as in the case of the preliminary injunction, in this case, the entries at issue arguably differ between the court‘s analysis pursuant to its jurisdiction under § 1581(a) and Plaintiff‘s allegation of jurisdiction under § 1581(h). As discussed above, the irreparable harm considered under the court‘s (a) jurisdiction related to the twenty entries covered by the Notices of Redelivery. Fоr purposes of the court‘s § 1581(h) jurisdiction, the court must concern itself with any irreparable harm, demonstrated by clear and convincing evidence, resulting from the Customs rulings that would exclude future entries of Otter‘s Symmetry cases.
Notwithstanding these differences, Otter‘s counsel stated that the evidence it provided to demonstrate irreparable harm in its preliminary injunction motion was the same evidence it proffered to support its claim for § 1581(h) jurisdiction. During the hearing on Otter‘s motion for a preliminary injunction, the court reminded all parties of the court‘s need to resolve jurisdictional matters as a threshold issue and, among other things, inquired as to Otter‘s intent to provide clear and convincing evidence of irreparable harm specifically for purposes of establishing jurisdiction pursuant to § 1581(h). Otter declined to provide any additional evidence or witness testimony to support its jurisdictional claim under § 1581(h), instead choosing to rest on its submitted papers, and, at no time, did Otter request that the court defer resolving the jurisdictional issue pending receipt of additional evidence. (Mot. Hr‘g 10:32-35, Dec. 17, 2014.)
Restated briefly, by means of the declarations, Otter asserts that it will lose out on sales during the increased demand of the holiday season, which it will not be able to recover once the holiday season is over; it will not be able to recover monetary damages if the exclusion of its products is ultimately determined to be unlawful; its relationships with its customers will erode, as will its reputation of durability and dependability; and it may lose market share, as customers purchase its competitors’ products in conjunction with their purchase of the recent release of the latest phone models. (Lecy Decl. ¶¶ 18-25, 30, 33.)
Otter also has not presented clear and convincing evidence that it will suffer immediate irreparable harm during the holiday season due to the application of the GEO to its products. The instant action covers twenty entries of Symmetry series cases which Otter entered throughout October 2014. Otter has informed Customs that it will not redeliver the merchandise covered by these еntries. In its motion asking the court to clarify its TRO, Otter also indicated that there are, in fact, some ninety-one entries of Symmetry cases (presumably inclusive of the twenty entries at issue in this case) for which Customs has issued Notices of Redelivery and for which Otter has informed Customs that it will not redeliver the merchandise. (Pl.‘s Mot. Clarify 5.) Moreover, the record makes it clear that Otter was importing Symmetry cases throughout the period between their introduction and early October 2014. At no point, however, has Otter indicated the extent of its U.S. inventory of the Symmetry cases, the extent to which its customers have established an inventory of these pаrticular cases, or at what point the application of the GEO to Otter‘s imports of Symmetry cases will begin to impact Otter‘s ability to meet any customer obligations.
Absent information on these issues, the court cannot discern to what degree the eight months of imports may cover the number of units that Otter predicts it will sell during the last quarter of 2014. (See Kreutzfeldt Decl. 18). The court also cannot discern to what degree the ninety-one entries that Otter subsequently brought into the United States, now subject to Notices of Redelivery with which Otter will not comply, (see Pl.‘s Mot. Clarify 5; Pl.‘s Mot. Ex. 23), will enable it to meet its predicted sales. Otter also has not shown that it facеs immediate damage to its relationships with its customers, including damage to its reputation and loss of floor space, and to its market share. Otter has not produced any of the contracts that it has with its customers nor even described their contents; rather, it has made conclusory allegations, based mostly on conjecture, that Customs’ actions will cause it harm. (See, e.g., Lecy Decl. ¶¶ 11-14, 16-25, 33-35.) Moreover, Otter sells other cell phone cases, designed for the latest cell phone models, which could be expected to buffer any financial or market share losses that Otter might face. (Def.‘s Opp‘n (ECF No. 28) 29; see Lecy Decl. 14.) Bеcause Otter has not shown, by clear and convincing evidence, that it faces immediate and irreparable harm, the court cannot exercise subject matter jurisdiction over this matter pursuant to § 1581(h). See Am. Frozen Food Inst., 18 CIT at 571, 855 F.Supp. at 394. The court therefore dis-
DEFENDANT‘S PARTIAL MOTION TO DISMISS PLAINTIFF‘S FIRST AMENDED COMPLAINT
On December 16, 2014, Defendant filed a partial motion to dismiss Plaintiff‘s First Amended Complaint for lack of subject matter jurisdiction under §§ 1581(h) and (i). (ECF No. 29.) As discussed above, in keeping with the need to resolve its jurisdictional authority as a threshold matter, the court has determined that it lacks jurisdiction to consider Otter‘s claims pursuant to §§ 1581(h) and (i). Consequently, Defendant‘s partial motion to dismiss is moot.
SPECK‘S MOTION TO APPEAR AS AMICUS CURIAE
On December 16, 2014, Speck, owner of the ‘561 Patent underlying the ITC‘s GEO in this case, filed a motion, pursuant to USCIT Rules 7 and 76, to appear as amicus curiae. (ECF No. 26.) Based upon the court‘s reading of Speck‘s motion, it is clear to the court that Speck desires a role greater than that of an amicus curiae. To that end, Speck effectively seeks to become a defendant-intervenor in the case and advocate for its own benefit. (ECF No. 26 at 2-3.) The court is statutorily prohibited from permitting parties to intervene in § 1581(a) cases.
CONCLUSION
For the reasons provided above, the court
DENIES Plaintiff‘s motion for a preliminary injunction;
ORDERS the TRO of December 12, 2014, dissolved;
DISMISSES in part the Amended Complaint to the extent that it invokes subject matter jurisdiction pursuant to
DENIES Speculative Product Design, LLC‘s motion to appear as amicus curiae.
Parties are hereby advised that, in early January 2015, the court will set a time for a telephonic conference with the parties, during which it will establish an expedited briefing schedule on the merits.
MARK A. BARNETT
JUDGE