Lead Opinion
Opinion for the court filed by Circuit Judge REYNA.
Dissenting opinion filed by Circuit Judge DYK.
Dissenting opinion filed by Circuit Judge O’MALLEY, with whom PROST, Chief Judge, LOURIE and DYK, Circuit Judges, join.
Section 337 of the Tariff Act of 1930, codified at 19 U.S.C. § 1337 (“Section 337”), declares certain acts unlawful. Among them is importing “articles that ... infringe a valid and enforceable United States patent.” 19 U.S.C. § 1337(a)(l)(B)(i). The International Trade Commission (“Commission”) interpreted this provision to cover importation of goods that, after importation, are used by the importer to directly infringe at the inducement of the goods’ seller. A majority panel of this court disagreed, reasoning that there are no “articles that infringe” at the time of importation when direct infringement does not occur until after importation. Suprema, Inc. v. Int’l Trade Comm’n,
We granted en banc rehearing and vacated the panel decision,
I. BackgRound
This case comes before us on appeal from a final determination by the Commission, finding a violation of Section 337 by Suprema, Inc., and Mentalix, Inc., in Certain Biometric Scanning Devices, Components Thereof, Associated Software, and Products Containing the Same, Inv. No. 337-TA-720. Section 337 authorizes the Commission to investigate allegations of unfair trade acts in the importation of articles that infringe a valid United States patent. 19 U.S.C. § 1337(b)(1). If a violation of the statute is found, the Commission issues an exclusion order that bars the importation of some or all of the infringing products and may issue a related cease and desist order unless the Commission finds that certain public interest factors militate against such remedy. Id. § 1337(d).
In May 2010, Cross Match Technologies, Inc. (“Cross Match”) filed a complaint with the Commission, alleging infringement of four patents owned by Cross Match involving certain fingerprint scanning devices. The Commission found the scanners to be manufactured by Suprema abroad, and imported into the United States by both Suprema and Mentalix. Mentalix subsequently combined the scanners with software, and used and sold the scanners in the United States.
Cross Match is the assignee of several patents covering technology used in biometric imaging scanners including U.S. Patent Nos. 7,203,344 (“the '344 patent”), the only patent relevant to this appeal. The claims of the '344 patent are drawn to fingerprint scanning systems and methods that generate a fingerprint image, process that image to identify key regions, and determine image quality. Claim 19, the sole claim remaining in this appeal, recites:
19. A method for capturing and processing a fingerprint image, the method comprising:
(a) scanning one or more fingers;
(b) capturing data representing a corresponding fingerprint image;
(c) filtering the fingerprint image;
(d) binarizing the filtered fingerprint image;
(e) detecting a fingerprint area based on a concentration of black pixels in the binarized fingerprint image;
(f) detecting a fingerprint shape based on an arrangement of the concentrated black pixels in an oval-like shape in the binarized fingerprint image; and
(g) determining whether the detected fingerprint area and shape are of an acceptable quality.
'344 patent col. 19 11. 24-37.
Suprema, Inc., is a Korean company that makes hardware for scanning fingerprints, including its RealScan line of fingerprint scanners. Suprema sells the scanners to Mentalix, Inc.
Mentalix, Inc., is an American company that purchases Suprema’s scanners and imports those scanners into the United States. It writes custom software, called FedSubmit, which uses Suprema’s SDK to control and operate the scanners. Menta-lix then bundles its software with the scanners and resells the bundle within the United States.
The Commission instituted an investigation of Suprema’s accused scanners in June 2010 pursuant to 19 U.S.C. § 1337(a)(l)(B)(i). 75 Fed.Reg. 34482-83 (June 17, 2010). Section 337(a)(l)(B)(i) declares unlawful the importation, sale for importation, or sale within the United States after importation of articles that infringe a valid and enforceable United States patent. An administrative law judge (“ALJ”) construed certain terms of claim 19 of the '344 patent and then conducted a thorough infringement analysis, expressly finding that each of the limitations of claim 19 was practiced by the accused products. See J.A. 123-32. On the basis of that finding, the ALJ determined that several Suprema scanners, the RealScan-10, RealScan-D, RealScan-10F, and RealScan-DF, directly infringe claim 19 of the '344 patent when used with the SDK kits and Mentalix’s FedSubmit software. J.A. 133.
Based on the finding that the '344 patent was infringed, the ALJ issued a Final Initial Determination that there had been “a violation of section 337 in the importation into the United States, sale for importation, and sale within the United States after importation of certain biometric scanning devices” and “associated software.” J.A. 205. The ALJ recommended, that a limited exclusion order issue that would bar Suprema’s infringing scanners from entering the United States.
In June 2011, the Commission determined to review the ALJ’s Final Initial Determination of infringement of claim 19 of the '344 patent. J.A. 209. The Commission requested briefing on the issues under review, and “requested written submissions on the issues of remedy, the public interest, and bonding from the parties and interested non-parties.” J.A. 210 (citing 76 Fed.Reg. 52970-71 (Aug. 24, 2011)). In addition to considering the issue of direct infringement, the Commission also considered whether Suprema induced infringement of claim 19. The Commission’s comprehensive analysis included a survey of the relevant law, a summary the ALJ’s decision, and an extensive discussion of the parties’ arguments.
Regarding direct infringement, the Commission found that record evidence demonstrated that Mentalix had already
Turning to the issue of indirect infringement, the Commission examined the elements required to support an inducement finding, in addition to underlying direct infringement. In particular, the Commission considered the inducer’s knowledge regarding patent infringement. The Commission explained that the knowledge prong is met by a showing of willful blindness. J.A. 221 (citing Global-Tech Appliances, Inc. v. SEB S.A.,
The Commission found that Suprema “ ‘willfully blinded’ itself to the infringing nature of Mentalix’s activities,” which Suprema “had actively encouraged.” J.A. 221. Though much of the relevant evidence is confidential and cannot be repeated here, the Commission found that Suprema believed in high probability that its scanners would infringe the '344 patent. For instance, the Commission found that Suprema was successful in its attempts to develop various functions covered by the '344 patent into its products. J.A. 222. Based on these factual findings, the Commission found that Suprema subjectively believed in the high probability that Cross Match’s scanner technology was patented and, therefore, that it was likely that Suprema’s scanner products would be covered by Cross Match’s patents. J.A. 224.
The Commission also found that Supre-ma deliberately avoided acquiring knowledge of the '344 patent.
As to the active encouragement and facilitation requirement, the Commission listed numerous confidential examples of the collaborative efforts of Suprema and Mentalix, noting the list was not exhaustive. J.A. 225. Based on this extensive evidence, the Commission found that Suprema aided and abetted Mentalix’s infringement by collaborating “with Mentalix to import the scanners and to help adapt Mentalix’s FedSubmit software to work with Suprema’s imported scanners and SDK to practice claim 19 of the '344 patent.” J.A. 225. Thus, the Commission found that all the elements of induced infringement had been met. The Commission modified the ALJ’s initial determination such that Mentalix was found to directly infringe claim 19 of the '344 patent, establishing the underlying direct infringement, and Suprema was found to induce infringement of claim 19. J.A. 233.
Upon determining Section 337 was violated, the Commission considered the ap
Suprema and Mentalix appealed several of the Commission’s findings to this court, including the findings of direct and indirect infringement of claim 19 of the '344 patent. They further requested that the Commission’s limited exclusion order be vacated.
A divided panel of this court vacated the Commission’s findings that Mentalix directly infringed the '344 patent and that Suprema induced infringement of the '344 patent. Suprema, Inc. v. Int’l Trade Comm’n,
Cross Match and the Commission petitioned for rehearing en banc. We granted the petition to consider whether the Commission correctly concluded that unfair trade acts covered by Section 337 include the importation of articles used to infringe by'the importer at the inducement of the articles’ seller. The United States Department of Justice and numerous Amici filed briefs. Oral arguments were heard on February 5, 2015.
II. Discussion
United States trade laws have long afforded trade relief to domestic industries from a range of unfair trade practices. The commercial effect of international trade acts and practices has been a major congressional concern since the founding of our nation. In the second Act passed by the first United States Congress, the Tariff Act of 1789, Congress found that the imposition of duties on imports was “necessary for ... the encouragement and protection of manufactures.” Act of July 4, 1789, ch. 2, § 1,1 Stat. 24, 24. Since 1789, Congress has been vigilant both to encourage and protect U.S. domestic interests in connection with unfair commercial activity involving foreign imports, a vigilance that in 1922 led to the passage of Section 316, the predecessor of Section 337. See Tariff Act of 1922, ch. 356, § 316(a), Pub.L. No. 67-318, 42 Stat. 858 (1922). Section 316 declared unlawful “unfair methods of competition and unfair acts in the importation of articles into the United States.” Id. at 943.
Section 337, the modern statutory section, is codified at 19 U.S.C. § 1337. As a trade statute, the purpose of Section 337 is to regulate international commerce. Id. at 858 (explaining purpose of Act enacting precursor to Section 337 was “to regulate commerce with foreign countries”); Pub.L. No. 71-361, 46 Stat. 590, 590 (1930) (same). Section 337 necessarily focuses on commercial activity related to cross-border movement of goods. See, e.g., 19 U.S.C. §§ 1337(a)(1)(B) (imported goods infring
Section 337 declares certain activities related to importation to be unlawful trade acts and directs the Commission generally to grant prospective relief if it has found an unlawful trade act to have occurred. Subsection (a) identifies several types of acts as unlawful, one of which relates to infringement of a U.S. patent. Specifically, the statute provides:
(a)(1) ... [T]he following are unlawful, and when found by the Commission to exist shall be dealt with ... as provided in this section:
(B) The importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer, or consignee, of articles that — ■
(i) infringe a valid and enforceable United States patent or a valid and enforceable United States copyright registered under title 17
§ 1337(a)(1)(B)© (emphases added). Section 337 directs the Commission to “investigate any alleged violation of this section on complaint,” including allegations of importing articles that infringe. • Id. § 1337(b)(1). After concluding the investigation, the Commission is required to “determine ... whether or not there is a violation of this section.” Id. § 1337(c). If it finds a violation under subsection (a), subsection (d) obligates the Commission to fashion prospective relief, typically involving the Commission directing that certain articles be excluded from entry into the U.S., “unless, after considering the effect of such exclusion upon the public health and welfare, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, and United States consumers, it finds that such articles should not be excluded from entry.” Id. § 1337(d)(1). Under the statutory provisions at issue, proof of quantifiable harm is not an element of liability, and monetary damages are not available as relief.
We are asked to decide whether goods qualify as “articles that infringe” when the Commission has found that such goods were used, after importation, to directly infringe by the importer at the inducement of the goods’ seller. In other words, does the importation of such goods qualify as an unfair trade act under Section 337? If the answer is yes, the Commission has authority under § 1337(d)(1) to issue an exclusion order to prevent this act from occurring in the future.
We begin with our standard of review, and what deference, if any, is owed to the Commission’s interpretation of Section 337. There is no dispute that Congress has delegated authority to the Commission to resolve ambiguity in Section 337 if the Commission does so through formal adjudicative procedures. See United States v.
The Chevron framework is well-established. City of Arlington, Tex. v. FCC, — U.S. -,
A. Chevron Step One
Chevron’s framework begins with the language of the statute. DIRECTV Grp., Inc. v. United States,
By using the word “infringe,” Section 337 refers to 35 U.S.C. § 271, the statutory provision defining patent infringement. The word “infringe” does not narrow Section 337’s scope to any particular subsections of § 271. As reflected in § 271 and the case law from before and after 1952, “infringement” is a term that encompasses both direct and indirect infringement, including infringement by importation that induces direct infringement of a method claim'. See 35 U.S.C. § 281 (remedy for infringement); Crystal Semiconductor Corp. v. TriTech Microelectronics Int’l, Inc.,
Section 337 refers not just to infringement, but to “articles that infringe.” That phrase does not narrow the provision to exclude inducement of post-importation infringement. Rather, the phrase introduces textual uncertainty. Simply put, the phrase “articles that infringe” does not map onto the Patent Act’s definition of infringement. In its amicus brief to us, the United States describes the disparity as one arising from the in rem language of Section 337 and the in personam language of § 271. See U.S. Amicus Br. 10-14.
Suprema argues that, because Section 337 refers to articles, the only bases for infringement under Section 337 come from 35 U.S.C. §§ 271(a) and (c), which refer to “any patented invention” and “a component” of a patented machine, respectively. Appellant’s Br. at 30-31. Suprema’s argument fails to recognize that inducement, like contributory infringement, is commonly based on the provision of articles. See Commit USA, LLC v. Cisco Sys., Inc., — U.S.-,
Moreover, Suprema has not shown that the phrase “articles that infringe” has a clearly established usage limited to product claims or to direct or contributory infringement, much less a usage that excludes induced infringement of a method claim. To the contrary, various forms of shorthand references to devices that infringe have often been used without such narrowed meaning.
Citing the present-tense use of the verb “infringe” in the phrase “articles that infringe,” the panel suggested that Section 337 must exclude inducement of post-importation infringement because the acts that complete infringement have not all taken place at the time of importation. Suprema,
For contributory infringement, as for • inducement, direct infringement is necessary and will typically take place later than the accused indirect infringer’s act. See Aro Mfg. Co. v. Convertible Top Replacement Co.,
Reading the statute unambiguously to require that infringement occur at the time of importation would have produced absurd results under the pre-1994 version of § 271(a). Such a reading would mean that Congress, when it enacted the language at issue in 1988, excluded even the ordinary case of direct infringement. At that time (before 1994), § 271(a) did not define importing a patented invention (or the offer to sell a patented invention) an infringing act. Section 271(a) only covered making, using, and selling, and those actions had to occur in the United States. 35 U.S.C. § 271(a) (1988). At least for ordinary importations involving goods that enter the United States for a later use or sale, none of the activities encompassed by the former § 271(a) would have occurred in the United States at the time of importation. If Congress meant to forbid the Commission from looking past the time of importation in defining Section 337’s reach, Section 337 would not have reached even garden-variety direct infringement. Even if Section 337(a)(l)(B)’s clause covering post-importation sales allowed assessment of infringement after importation, Section 337 would not have covered the ordinary case of post-importation use without post-importation sales. We cannot attribute that result to Congress.
The panel also reasoned that Section 337’s remedial provision allowing for an exclusion order demonstrates that Section 337’s “focus is on the' infringing nature of the articles at the time of importation.” Suprema,
The panel’s reasoning evidences a misunderstanding of enforcement statutes like Section 337. The “articles” of subsections (a) and (d)(1) are not the same. Subsection (a) defines unfair trade acts. When the Commission determines that one of these unfair trade acts has occurred, it
Accordingly, we hold that Congress has not directly answered whether goods qualify as “articles that infringe” when the Commission has found that an importer used such goods, after importation, to directly infringe at the inducement of the goods’ seller.
B. Chevron Step Two
Because Section 337 does not answer the precise question before us, we consider whether the Commission’s interpretation of Section 337 is reasonable. The Commission’s interpretation “prevails if it is a reasonable construction of the statute, whether or not it is the only possible interpretation or even the one a court might think best.” Holder v. Martinez Gutierrez, - U.S. -,
1. Statutory Text
The Commission’s interpretation is consistent with the statutory text, for reasons we have already suggested. Induced infringement is one kind of infringement, and when it is accomplished by supplying an article, the article supplied can be an “article that infringes” if the other requirements of inducement are met. Liability for inducement must be predicated on a finding of direct infringement. Limelight,
The Commission’s interpretation is also consistent with the text of Section 337 as a whole. See Holder,
Nothing in nearly a century of U.S. trade law enactments is inconsistent with the Commission’s interpretation. The legislative history consistently evidences Congressional intent to vest the Commission with broad enforcement authority to remedy unfair trade acts. The United States Tariff Commission (“Tariff Commission”), the predecessor to the Commission, was established in 1916. Pub.L. No. 64-271, 39 Stat. 795 (1916). From its creation, a fundamental purpose of the Tariff Commission was to prevent a diverse array of unfair methods of competition in the importation of goods.
In the Tariff Act of 1930, Congress superseded Section 316 with Section 337, but did not alter the Tariff Commission’s broad authority to address every type and form of unfair trade practice. See Pub.L. No. 71-361, 46 Stat. 590 (1930). Section 337 “provides broadly for action by the Tariff Commission in cases involving ‘unfair methods of competition and unfair acts in the importation of articles’ but does not define those terms nor set up a definite standard.” In re Von Clemm,
For nearly 35 years, the Commission has embraced its Congressional grant as bestowing authority to investigate and take action under Section 337 based on induced infringement. At least as early as 1980, the Commission was making determinations that inducement to infringe a valid U.S. patent under 35 U.S.C. § 271(b) constituted an unfair trade act under Section 337 that could be remedied by an exclusion order. E.g., Certain Surveying Devices, Inv. No. 337-TA-68, USITC Pub. 1085 (July 1980) (Commission Determination). The Commission has persisted in its interpretation of Section 337 to the present day.
Congress has not upset the Commission’s consistent interpretation of Section 337. Indeed, Congress introduced the current statutory language in 1988, after the Commission had adopted this interpretation. See note 6, supra. Congress acted against a backdrop of consistent agency and judicial interpretation emphasizing the breadth of the Commission’s authority. See, e.g., Von Clemm,
Congress amended Section 337 in 1988, removing the requirement that a complainant must show injury to domestic industry before a violation is found. Omnibus Trade and Competitiveness Act of 1988, Pub.L. No. 100-418, 102 Stat. 1107 (1988) (codified at Section 337(a)(2)-(3)). As a part of this effort, the 1988 Act inserted the phrase “articles that infringe.” Id. Congress declared its purpose to enhance Commission authority.
This court has consistently affirmed the Commission’s determination that a violation of Section 337 may arise from an act of induced infringement. See, e.g., Young Eng’rs Inc. v. Int’l Trade Comm’n,
The technical interpretation adopted by the panel weakens the Commission’s overall ability to prevent unfair trade acts involving infringement of a U.S. patent. The panel’s interpretation of Section 337 would eliminate relief for a distinct unfair trade act and induced infringement. There is no basis for curtailing the Commission’s gap-filling authority in that way. Indeed, the practical consequence would be an open invitation to foreign entities (which might for various reasons not be subject to a district court injunction) to circumvent Section 337 by importing articles in a state requiring post-importation combination or modification before direct infringement could be shown.
The Commission reasonably determined that its interpretation would further the purpose of the statute. See Mayo Found. for Med. Educ. & Research v. United States,
We note that our deference to the Commission’s statutory interpretation in this case is hardly momentous. The court has consistently deferred to the Commission, recognizing the Commission’s technical expertise in deciding issues arising under Section 337, a statute Congress has entrusted the agency to administer. E.g., Farrel Corp. v. Int’l Trade Comm’n,
Conclusion
We hold that the Commission’s interpretation that the phrase “articles that infringe” covers goods that were used by an
Notes
. Suprema separately imports scanners into the United States. Suprema displays these scanners at trade shows and uses them to obtain a certification under the United States
. A limited exclusion order is directed solely to Suprema imports and does not affect importations of scanning products manufactured by other foreign entities.
. The finding was based on confidential evidence that we do not publicly discuss.
. See, e.g., Brain Life, LLC v. Elekta Inc.,
. Unfair methods of competition have included dumping, subsidies, safeguards, anticém-petitive practices, and violations of intellectual property rights, all involving the cross-border movement of goods, i.e., articles. See, e.g., 42 Stat. 935-36, 943 (1922).
. See, e.g., Certain Inkjet Ink Cartridges with Print-heads and Components Thereof, Inv. No. 337-TA-723, USITC Pub. 4373 (Feb.2013),.
. "(a) FINDINGS. — The Congress finds that— (1) United States persons that rely on protection of intellectual property rights are among the most advanced and competitive in the world; and (2) the existing protection under section 337 of the Tariff Act of 1930 against unfair trade practices is cumbersome and costly and has not provided United States owners of intellectual property rights with adequate protection against foreign companies violating such rights.
(b) PURPOSE.- — The purpose of this part is to amend section 337 of the Tariff Act of 1930 to make it a more effective remedy for the protection of United States intellectual property rights.” § 1341, 102 Stat. 1211-1212.
Dissenting Opinion
dissenting.
While I fully join Judge O’Malley’s dissent, I write separately to emphasize the difference between this case and prior Section 337 cases at the International Trade Commission (“Commission”), and how starkly the Corn-mission’s theory of induced infringement differs from its own past practice.
Suprema, Inc. (“Suprema”) imports fingerprint scanners to several customers in the United States, including Mentalix, Inc. (“Mentalix”). Cross Match Technologies, Inc. does not dispute the Commission’s finding that Suprema’s “scanners and [software development kit, or “SDK”] are capable of substantial non-infringing use.” J.A. 229. At the time of importation, the scanners neither directly infringe nor induce infringement of method claim 19 of U.S. Patent No. 7,203,344, the sole remaining claim in this appeal. Instead, these staple articles may or may not ultimately be used to infringe claim 19, depending upon whether and how they are combined with domestically developed software after importation into the United States.
The Commission’s Limited Exclusion Order here excluded all fingerprint scanners imported by Suprema or Mentalix “that infringe ... claim 19,” interpreted to mean all scanners imported by Suprema or Mentalix, regardless of how those scanners were later used. Supp.App. 400502. The Commission’s theory was that Suprema induced Mentalix’s post-importation direct infringement of claim 19. The Commission concedes that “Customs might not be able to determine whether future shipments of Supreme scanners presented for entry infringe claim 19 under § 271(b),” but relies on a finding that some of the imported scanners will ultimately be used by Mentalix to directly infringe to enter an order excluding all scanners imported by Suprema or Mentalix. ITC Br. 59.
The government contends that in prior commission decisions it has relied on an inducement theory, and that this case plows no new ground. But as the government conceded at oral argument, in prior cases, the Commission banned staple articles for importation on an inducement theory only in circumstances where inducing instructions were imported alongside an article that was ultimately used to directly infringe in the United States. The Commission’s theory was that all of the imported articles infringed because inducing instructions were included in the importation. Judge O’Malley’s dissent correctly points out that the vast majority of these prior Commission cases are distinguishable. But even taking the government’s description of those prior cases at face value, there was no such finding of instructions imported alongside the scanners here.
It is a far different matter where, as here, any inducement is separate from the importation, and the articles as imported may or may not ultimately be used to directly infringe a method claim when combined with software post-importation.
The Commission’s notion that it can nevertheless exclude all of the scanners imported by Suprema because the Exclusion Order allows the importer to certify that certain of the staple articles will not ultimately be used to infringe reads the statute exactly backwards. The statute covers only “articles that — infringe,” 19 U.S.C. § 1337(a)(1)(B), and does not allow the Commission to enter an exclusion order directed to all of the subject articles, even those that ultimately may never be used to infringe, on the theory that some of the articles may be used in an infringing manner after importation.
. The majority notes that the scanners ship “with an instruction manual that explains how programs can be written to take advantage of scanner functionality.” Maj. Op. at 1342. But that is not the same as instructions directed to infringement of method claim 19, and neither the administrative law judge nor the Commission found that these manuals contained instructions that induced infringement of claim 19, nor even mentioned the instructions in the inducement analysis. See J.A. 212 ("The SDKs include manuals as well as dynamic link libraries ('dlls’) that include functions that operate various features of the accused fingerprint scanners.”).
Dissenting Opinion
dissenting, with whom PROST, Chief Judge, LOURIE and DYK, Circuit Judges, join.
The majority today authorizes the International Trade Commission (“Commission”) to bar the importation of articles of commerce that may or may not be later used by third parties to infringe a method patent, based only on the putative intent of the importer. And, it does so in circumstances in which it is undisputed that the patented method cannot be practiced unless the imported article is used in combination with software neither embedded in the imported article nor sold by the importer. Because 19 U.S.C. § 1337 unambiguously fails to provide the Commission with the authority the majority endows on it, I respectfully dissent.
The majority justifies its decision on two grounds: (1) policy concerns regarding the desire to protect United States patent holders from unfair competition; and (2) deference to the Executive agency’s view of how best to fulfill its role in regulating “international commerce”. But we are not the appropriate audience for policy concerns except to the extent we are charged with enforcing the policy articulated in the statutory scheme Congress actually adopted. When Congress provides us with clear instructions, we are to follow those instructions regardless of our own policy preferences. Deference under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
Like us, the Executive may not expand the limited powers afforded to it by Congress under the guise of “deference”. At the Executive’s invitation, the majority strains to find an ambiguity in the statute where there is none, just so it may resort to the protective umbrella of Chevron. Although the majority says it is concerned about importers taking advantage of an apparent gap in the statute, any gaps should be filled by Congress, not by us or the Commission. The patent holder here is well protected under the patent laws— having the ability to stop the only entity practicing its patented method from doing so in an action in district court under 35 U.S.C. § 271(a), and the ability to seek
I. The LANGUAGE OF THE STATUTE
Our analysis of the scope of § 1337 must begin with the language of the statute. Hughes Aircraft Co. v. Jacobson,
Section 1337(a), in relevant part, states that:
(1) Subject to paragraph (2), the following are unlawful, and when found by the Commission to exist shall be dealt with, in addition to any other provision of law, as provided in this section:
(A) Unfair methods of competition and unfair acts in the importation of articles ... into the United States ...
(B) The importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer, or consignee, of articles that—
(i) infringe a valid and enforceable United States patent ...
(ii) are made, produced, processed, or mined under, or by means of, a process covered by the claims of a valid and enforceable United States patent.
The key language is “articles that — infringe.” Because the majority finds this language to be ambiguous, it concludes that we must defer to the Commission’s interpretation. Maj. Op. at 1346-48. The majority fails, however, to identify an actual ambiguity in the statute. The word “articles” is not ambiguous — it has a well-defined legal definition. See Black’s Law Dictionary 160 (7th ed.1990) (defining “article” as “[generally, a particular item or thing”); see, e.g., also Freeman v. Quicken Loans, Inc., — U.S.-,
We thus turn to the surrounding statutory text to determine what forms of infringement outlined in § 271 support liabil
The exceptions to this importation-centric rule are specified in § 1337(a)(l)(B)(i) and § 1337(a)(l)(B)(ii). “[T]he sale within the United States after importation” in § 1337(a)(l)(B)(i) raises considerations of post-importation conduct, but Congress specifically limited this to “sale”, which does not apply to methods. We have long held that “use” in § 271(a) covers infringement of method claims. NTP, Inc. v. Research in Motion, Ltd.,
This makes practical sense; there is no actual harm to a patentee until an infringing use, and that harm only occurs after importation for method claims such as the ones at issue in this appeal. This is especially true for staple goods like Suprema’s scanners, where a broad assertion of the Commission’s power could prevent non-infringing goods from entering the country on the basis of what a customer may do with that item once it enters U.S. territory. Such considerations are the purview of the district courts, and fall outside the limited statutory jurisdiction of the Commission.
The Commission and the majority instead rely on an inducement theory under § 271(b). But as the Supreme Court recently reminded us, “our case law leaves no doubt that inducement liability may arise ‘if, but only if, [there is] ... direct infringement/” Limelight Networks, Inc. v. Akamai Techs., Inc., — U.S.-,
Congress did not, in either § 1337(a)(1)(B)© or § 271, grant the Commission the power to issue an exclusion order on the basis of the importer’s intent to induce possible infringement after importation. If Congress had sought to grant the Commission the power to issue an exclusion order based on an importer’s intent to cause direct infringement at a later time, it would have said so. Congress could have used language similar to the “unfair methods of competition and unfair acts” language of § 1337(a)(1)(A), broadly sweeping in such an intent to induce infringement. Instead, in 1988, Congress defined prohibited acts related to patent infringement in § 1337(a)(1)(B)®
By permitting indirect infringement liability at the point of importation when there has been no direct infringement, the majority crafts patent policy where it believes there is a loophole ripe for abuse. See Maj. Op. at 1351-52. As the Supreme Court recently reminded us, however, “[t]he courts should not create liability for inducement of non-infringing conduct where Congress has elected not to extend that concept.” Limelight,
The language of the statute is unambiguous — the Commission lacks the power under § 1337(a)(l)(B)(i) to enter an exclusion order on the basis of infringement of a method claim when the underlying direct infringement occurs post-importation.
II. The MajoRity’s Constkuction
The majority, the appellees, and the government read § 1337(a)(l)(B)(i) differently. They argue that the in rem nature of the Tariff Act and the in personam nature of the Patent Act are inherently incompatible. Maj. Op. at 1346-48. Because, they say, only a person, and not an article, can infringe, the majority reasons that the combination of § 1337(a)(l)(B)(i) and § 271 is necessarily ambiguous, and we must therefore defer to the Commission’s reasoned interpretation of the Tariff Act under Chevron.
A. The Lack of Ambiguity
The majority’s presumed ambiguity in the combination of § 1337(a)(1)(B)© and
Section 1337(a)(l)(B)(i) speaks in terms of “articles that — infringe.” The majority says that this is not how we naturally refer to infringement under § 271 — that we normally think in terms of a person or entity doing the infringing. The majority claims that this “disparity” requires that the Commission, and not our court, resolve the “uncertainty.” Maj. Op. at 1346^47. This argument — newly asserted by the government in this en banc proceeding— lacks logical grounding. Although it is people who are liable for infringement under the law, it is the underlying article or methods that are the focus of an infringement analysis. It is to the aspects of articles that are manufactured, sold, or offered for sale or methods that are “used” that an element-by-element comparison with the patent claims is made. Multiple subsections of § 271 tie conduct directly to an article. For example, § 271(a) defines infringement as conduct involving the “makfing], us[ing], offering] to sell, or selling] any patented invention.” The “patented invention” of § 271(a) is the equivalent to the “article” in § 1337(a)(1)(B)®. In the one situation where this analogy breaks down — method claims — the Commission has not said that the statute is inexorably ambiguous, it has instead concluded that § 1337(a)(1)(B)® does not apply to post-importation conduct that infringes method claims. Certain Electronic Devices,
Section 271(b) has no similar analogue. Induced infringement focuses on conduct tied to another infringer, not to an “article,” “patented invention,” or “component.” See 35 U.S.C. § 271(b) (“Whoever actively induces infringement of a patent shall be liable as an infringer.”). We have clarified that, in an induced infringement analysis, we focus on the conduct of the inducer and not the article itself. See DSU Med. Corp. v. JMS Co.,
The fact that Congress spoke in terms of “articles” instead of “infringers” in § 1337(a)(l)(B)(i) is not evidence that Congress was confused or sought to implicitly delegate the decision of what an “article— that infringes” is to the Commission. King v. Burwell, — U.S.-,
The majority counters that an unambiguous construction of the statute “to require that infringement occur at the time of importation” would produce “absurd results under the pre-1994 version of § 271(a),” because, pre-1994, § 271(a) did not define importing a patented invention as an infringing act. Maj. Op. at 1348. The majority, however, ignores that § 1337(a)(1)(B)® explicitly considers the “sale within the United States after importation,” which means that Section 337 would “have reached even garden-variety direct infringement” that occurs through infringing sales within the United States. Maj. Op. at 1348. Congress also amended § 271 in 1988 by adding § 271(g) to cover the importation of an article made by a patented process as an act of infringement. Omnibus Foreign Trade & Competitiveness Act of 1988, Pub.L. No. 100-418, § 9003, 102 Stat. 1107. And, the domestic industry was not without recourse, as it could still seek to invoke § 1337(a)(1)(A) as it had done before the 1988 Amendments because, under the majority’s interpretation, those articles would not have been “articles that — infringe” under § 1337(a)(1)(B)®. The 1994 Amendments to § 271, as part of the legislation necessary to effectuate the Uruguay Round Agreements, Uruguay Round Agreements Act, P.L. No. 103-466, 108 Stat 4809 (1994), demonstrate that Congress recognized the importance of clearly tying infringement to the point of importation, strengthening both the power of the district courts and the Commission explicitly. Even if the majority’s “absurd result” theory were true, moreover, we would still be required to give effect to the language Congress chose in 1988 to describe the Commission’s current power to control imports at the point of importation. See, e.g., Stone v. INS,
B. Legislative History
Failing to find a clear statement in the language of the statute that would support their interpretation of § 1337(a)(1)(B)®, the majority relies on its own reading of the legislative history. Maj. Op. at 1349-52. Putting aside the extent to which rebanee on statements in legislative history have limited value when engaging in statutory interpretation, the history of the Tariff Act does not support the majority’s expansive interpretation of § 1337(a)(1)(B)®.
From its inception in 1916, the Commission administered a predecessor to modern § 1337. Section 316 of the 1922 Tariff Act declared that “unfair methods of competition and unfair acts in the importation of articles into the United States ... the effect or tendency of which is to destroy or substantially injure an industry ...” were unlawful. Ch. 386, 42 Stat. 858, 943 (1922). This presumably included patent infringement as an “unfair method of competition” or an “unfair act.” See, e.g., Frischer & Co. v. Bakelite Corp.,
Section 337 remained largely unchanged until 1988, when Congress substantively amended the Tariff Act to its present form. Omnibus Foreign Trade & Competitiveness Act of 1988, Pub.L. No. 100-418, 102 Stat. 1107. In § 1342 of the Act, Congress amended § 337 to split the analysis of “unfair methods of competition and unfair acts.” Under § 1337(a)(1)(A), an exclusion order based on general unfair methods of competition and unfair acts required a finding of substantial injury to the industry, as in the 1922 and 1930 Acts, but under § 1337(a)(1)(B), an exclusion order predicated on the importation of “articles that — infringe” no longer required a showing of substantial injury to the industry. Id. § 1342,
The majority and the government point to a portion of the 1988 Amendments discussing congressional fact-findings in support of their argument that Congress intended that § 1337(a)(1)(B) maintain a broad scope. Maj. Op. at 1351-52 & n. 7 (referring to this language as “consistent with Congress’ longstanding broad policy, with its broadening purpose”). Section 1341 of the 1988 Act, titled “Findings”, states that “the existing protection under section 337 of the Tariff Act of 1930 ... is cumbersome and costly and has not provided United States owners of intellectual property rights with adequate protection. ...”
Rather, by removing the domestic injury requirement for exclusion orders based on patent infringement, Congress eliminated one of the most “cumbersome and costly” aspects of seeking an exclusion order— proof of substantial injury to the domestic industry.
C. Historical Commission Practice
The majority and the government also assert that the statutory and legislative
The majority cites a single pre-1988 case in support of its “consistency theory”: Young Engineers, Inc. v. U.S. International Trade Commission,
Standard Oil Co. v. Nippon Shokubai Kagaku Kogyo Co.,
There is simply no evidence of any pre-1988 Commission practice equivalent to the Commission’s actions here. Even if reliance on congressional silence were ever a strong reed upon which to premise statutory interpretation,
D. Modern Commission Practice
Our post-1988 case law provides no better support for the majority’s interpretation. Although it is unclear which cases the majority believes supports its view, as it cites only two in passing, the government points to two cases that they argue demonstrate the Commission’s reliance on § 271(b) in an exclusion order: Alloc, Inc. v. International Trade Commission,
In Alloc, the Commission found no infringement, either direct or indirect, in imported flooring products, and we af
Kyocera also fails to provide any support for an interpretation of § 1337(a)(1)(B)® that would include induced infringement of method claims for potential post-importation direct infringement. Similar to Alloc, there was no challenge to the Commission’s authority regarding induced infringement allegations; we assumed without deciding that an exclusion order could be predicated on a finding of induced infringement under § 1337(a)(1)(B)®. Kyocera,
To the contrary, Kyocera involved the importation of wireless devices that were programmed to operate in an infringing manner prior to being imported. Id. at
Judge Reyna, in his dissent to the panel opinion, highlighted a series of Commission decisions allegedly involving exclusion orders based on an intent to induce direct infringement after importation. Suprema, Inc. v. Int’l Trade Comm.,
Congress did not intend for Customs agents to need to decipher an importer’s intent to induce infringement at some later date. It, instead, avoided such an unworkable construct by requiring the Commission to issue exclusion orders based on the infringing nature of the article itself. Pri- or Commission practice, either pre- or post-1988, lends no support to a contrary view. Though we need not reach the legislative history or past Commission practice to perform our duty of saying what the law is for unambiguous statutory language, I am unconvinced that any of the “evidence” upon which the majority relies alters a fair reading of the language that a majority of both houses of Congress agreed to: “articles that — infringe.” Indeed, I believe it supports the unambiguous reading that the panel majority found in that statutory language.
E. Equitable Considerations
The crux of the majority’s holding is equity, and the industry’s concern that the plain language of the statute might leave a porous border hospitable to infringers. See, e.g. Maj. Op. at 1344, 1351-52. But that concern is best addressed to Congress, who chose the words we are interpreting today. The majority minimizes— or ignores — both the power already avail
Behind the majority’s strained statutory interpretation is a belief that any construction of § 1337(a)(l)(B)(i) that reduces the Commission’s authority to institute exclusion orders would negate the flexibility built into the Tariff Act for remediating harms against the domestic industry. See Maj. Op. at 1352 (“There is no basis for curtailing the Commission’s gap-filling authority in that way.”). The majority claims that, under the broad language of the Tariff Act, the Commission must have the necessary authority to halt importation of all even potentially infringing goods'in order to effectuate Congress’s intent in enacting § 1337(a)(l)(B)(i). Id. The amici also highlight that, in combination with the Commission’s decision not to entertain complaints of direct infringement of method claims under § 271(a), Certain Electronic Devices,
These concerns are overstated. There is little evidence' that the Commission would be impotent to stop such importers. The plain language of the statute would not prevent the Commission from predicating an exclusion order on, for example, a non-staple item. This construction also would not prevent the Commission from excluding goods that directly infringe at the point of importation. The Commission has a rich historical practice of excluding such goods, and the “articles that — -infringe” language does not diminish the Commission’s power. The language of the statute only denies the Commission the power to issue an exclusion order solely on the very limited factual scenario envisioned here — allegations of induced infringement of a method claim based on potential post-importation direct infringement. This interpretation would not open a porous border for all kinds of nefarious actors. At worst, it would limit the Commission’s ability to address a situation that has never arisen prior to the present appeal. Our recency bias should not force us to depart from our traditional role in statutory interpretation due to concerns that may or may not ever present themselves again. It certainly should not serve as a justification to abdicate to the Executive all authority over interpretation of § 1337(a)(l)(B)(i).
This desire to give the Commission free rein to prevent potential abuses highlights a more fundamental Poncern with the majority’s approach. The Commission is a creature of statute, with its powers narrowly defined by Congress. Kyocera,
The majority nominally defers to the Commission because it finds that the statute is ambiguous due to the interplay of § 1337 and § 271(b), even though the language of § 1337 is clear on its face. Maj. Op. at 1345-48. But the majority agrees with the Commission in part because it believes the Commission’s interpretation will prevent the narrow set of abuses described above. Maj. Op. at 1351-52. The industry should address its concerns with potential holes in the statute to Congress, not the Commission or the courts. By choosing to fix the purported mistake made by Congress in using “articles that— infringe”, the majority oversteps its role, and at the same time weakens that of Congress.
Finally, we must not forget that there is a forum that can provide an appropriate remedy for allegations of induced infringement of method claims based, on post-importation direct infringement: district courts. District courts can enter injunctions preventing downstream customers from using the article in an infringing manner. 35 U.S.C. § 283 (“The several courts having jurisdiction of cases under this title may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent ....”). And, unlike the Commission, a district court could award damages for such acts of inducement. Id. § 284.
The Commission is an alternative to district courts that acts to supplement the powers of district courts, not a substitute for district courts when the district court is not as convenient a forum or the remedy sought is more difficult to obtain. Indeed, as noted previously, the Commission itself has determined that it does not have power over allegations of direct infringement of method claims at the point of importation. Certain Electronic Devices,
Finally, the majority’s interpretation of § 1337(a)(1)(B)® is not the catholicon it purports to be. Although it will permit the Commission to premise exclusion orders on claims of induced infringement based on threats of post-importation direct infringement, it will also grant the Commission the power to hold up staple goods. By premising Customs’s power to exclude goods on the importer’s alleged intent for
III. CONCLUSION
The plain language of § 1337(a)(1)(B)® reveals that Congress did not grant the Commission the power to issue an exclusion order based solely on a finding of induced infringement of a method claim and potential post-importation direct infringement. Neither ambiguous statements from the legislative history nor vague and non-determinative prior Commission statements detract from this analysis. The majority’s attempt to shoehorn the language of § 1337(a)(1)(B)® into a strained interpretation of the statute under the guise of deferring to the Commission’s interpretation may prevent some rare potential abuses of our patent system, but the majority also opens Pandora’s Box. The majority refers to the original panel interpretation as a “technical interpretation,” Maj. Op. at 1352, but it should more appropriately be coined “the interpretation mandated by Congress.” Our system of separation of powers guarantees that Congress enacts the laws and we interpret those laws. The majority here harms both of these aims: it diminishes Congress’s power to define the scope of the Commission’s authority, and it permits the Executive Branch to say what the law is. For these reasons, I respectfully dissent from the majority’s interpretation of § 1337(a)(1)(B)®.
. The majority asserts that Suprema failed to demonstrate a “clearly established usage" of "articles that — infringe” “limited to product claims or to direct or contributory infringement." Maj. Op. at 1347-48. The plain language of the statute is all that is necessary to determine its meaning. Indeed, the Commission itself has limited the scope of “articles that' — infringe” with regard to direct infringement of method claims, relying on die statute and common parlance, without reference to "clearly established usage” of "articles that— infringe.” See Certain Electronic Devices with Image Processing Systems, Components Thereof, and Associated Software, USITC Inv. No. 337-TA-724,
. Thus, even though this court has used the term "infringement” to generically describe any acts under § 271, Maj. Op. at 1346 (citing Crystal Semiconductor Corp. v. TriTech Microelectronics Int'l, Inc.,
. The majority does not argue that the use of "articles” in § 1337(a)(l)(B)(i) is so fundamentally incorrect or creates such unanticipated results as to trigger the absurdity doctrine. See, e.g., United States v. Kirby,
. The government relies heavily on Frischer & Co. v. Bakelite Corp.,
. The Supreme Court has recognized that, absent circumstances not present here, congressional silence is, at best, a tenuous ground upon which to justify a particular statutory construction. See Cmty. for Creative Non-Violence v. Reid,
. See, e.g., Certain Semiconductor Chips Having Synchronous Dynamic Random Access Memory Controllers and Prods. Containing Same, Inv. No. 337-TA-661, USITC Pub. 4266,