Articles Posted in U.S. Court of Appeals for the Federal Circuit

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Organik and Dow both manufacture opaque polymers, hollow spheres used as additives to increase paint’s opacity. Dow has maintained its worldwide market-leader position through a combination of patent and trade-secret protections. Dow filed a complaint with the International Trade Commission requesting an investigation into whether Organik’s opaque polymer products infringed four Dow patents. The Commission granted Dow’s request, and the parties began discovery. During the proceedings, Dow amended its complaint to add allegations of trade secret misappropriation when it discovered that Organik may have coordinated the production of its opaque polymers with the assistance of former Dow employees. As Dow attempted to obtain discovery relating to the activities of those employees, Dow discovered spoliation of evidence “on a staggering scale.” The Federal Circuit affirmed the Commission’s imposition of default judgment and entry of a limited exclusion order against Organik as sanctions for the spoliation of evidence. Organik’s “willful, bad faith misconduct” deprived Dow of its ability to pursue its trade secret misappropriation claim effectively. The record supports the limited exclusion order of 25 years with the opportunity for Organik to bypass that order at any time if it can show that it has developed its opaque polymers without using Dow’s misappropriated trade secrets. View "Organik Kimya v. International Trade Commission" on Justia Law

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Lexmark makes and sells printer toner cartridges, for which it holds patents. Lexmark buyers may purchase a “Regular Cartridge” at full price, not subject to any terms restricting reuse or resale of the cartridge, or may purchase a “Return Program Cartridge” at a discount, subject to a single-use/no-resale restriction. Impression acquired restricted cartridges for resale in the U.S. after a third party physically modified them to enable re-use. Impression’s actions infringe under 35 U.S.C. 271, unless Lexmark’s initial sale of the cartridges constitutes the grant of authority that makes later resale and importation non-infringing under the doctrine of exhaustion. The Federal Circuit, en banc, held that a patentee, when selling a patented article subject to a single-use/no-resale restriction that is lawful and clearly communicated to the purchaser, does not thereby give the buyer, or downstream buyers, the resale/reuse authority that has been expressly denied. Such resale or reuse, when contrary to known, lawful limits on the authority conferred at the original sale, remains unauthorized, infringing conduct under section 271. Under Supreme Court precedent, a patentee may preserve its 271 rights through such restrictions when licensing others to make and sell patented articles; there is no basis for denying the same ability to the patentee that sells the articles itself. View "Lexmark Int'l, Inc. v. Impression Prods., Inc." on Justia Law

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3M and TransWeb manufacture respirator filters, consisting of “nonwoven fibrous webs.” 3M sued Transweb for infringement of several patents. TransWeb sought a declaratory judgment of invalidity and non-infringement. A jury found the patents to be invalid based on TransWeb’s prior public use of the patented method. In accordance with an advisory verdict from the jury, the district court found the patents unenforceable due to inequitable conduct. An inventor for the patents and a 3M in-house attorney acted with specific intent to deceive the patent office as to the TransWeb materials. The district court awarded approximately $26 million to TransWeb, including trebled attorney fees as antitrust damages. The Federal Circuit affirmed, finding sufficient corroborating evidence to support the finding of prior public use by TransWeb, and that attorney fees are an appropriate basis for damages under the antitrust laws in this context. TransWeb’s attorney fees appropriately flow from the unlawful aspect of 3M’s antitrust violation and are an antitrust injury that can properly serve as the basis for antitrust damages. View "Transweb, LLC v. 3M Innovative Props. Co." on Justia Law

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Between 2001 and 2004, Nitek Electronics, Inc. entered thirty-six shipments of pipe fitting components used for gas meters into the United States from China. U.S. Customs and Border Protection (“Customs”) claimed that the merchandise was misclassified and issued Nitek a final penalty claim stating that the tentative culpability was gross negligence. Customs then referred the matter to the United States Department of Justice (“Government”) to bring a claim against Nitek in the Court of International Trade to enforce the penalty. The Government brought suit against Nitek to recover lost duties, antidumping duties, and a penalty based on negligence under 19 U.S.C. 1592. Nitek moved to dismiss the case for failure to state a claim. The court denied dismissal of the claims to recover lost duties and antidumping duties but did dismiss the Government’s claim for a penalty based on negligence, concluding that the Government had failed to exhaust all administrative remedies under 19 U.S.C. 1592 by not having Customs demand a penalty based on negligence, instead of gross negligence. The Federal Circuit affirmed, holding that the statutory framework of section 1592 does not allow the Government to bring a penalty claim based on negligence in court because such a claim did not exist at the administrative level. View "United States v. Nitek Elecs., Inc." on Justia Law

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The Department of Commerce determined that utility scale wind towers from the People’s Republic of China and utility scale wind towers from the Socialist Republic of Vietnam (together, the subject merchandise) were sold in the United States at less than fair value and that it received countervailable subsidies. The International Trade Commission made a final affirmative determination of material injury to the domestic industry. The determination was by divided vote of the six-member Commission. The Court of International Trade upheld the Commission’s affirmative injury determination. Siemens Energy, Inc., an importer of utility scale wind towers, challenged the determination. The issues on appeal concerned the interpretation and effect of the divided vote. The Federal Circuit affirmed, holding that the Court of International Trade properly upheld the Commission’s affirmative injury determination. View "Simens Energy, Inc. v. United States, Wind Tower Trade Coalition" on Justia Law