In a first of its kind decision with important ramifications for patentees, the U.S. International Trade Commission ("ITC") denied a petition to suspend or temporarily rescind remedial orders issued in Investigation No. 337-TA-945 pending appeal of the Patent Trial and Appeal Board's ("PTAB") separate finding that the patent claims at issue are invalid. The ITC has therefore decided to continue to exclude products it found to be infringing certain patents, regardless of the PTAB invalidating the very patents the exclusion order is based upon in separate IPR proceedings. While this decision aiding patentees may surprise some, it is consistent with the ITC's practices regarding stays and of giving little deference to IPR proceedings.
In December 2014, Cisco accused Arista network devices and software of infringing U.S. Patent Nos. 6,377,577 (the "'577 Patent"), 7,023,853 (the "'853 Patent"), and 7,224,668 (the "'668 Patent") in variety of venues, including before the ITC. Arista responded by filing separate Inter Partes Review ("IPR") petitions against each patent, which the PTAB later instituted. As previously discussed on this blog, the ITC found the '577 and '668 Patents to be valid and infringed, but that Arista did not infringe the '853 Patent. Following this finding, the ITC issued orders barring any Arista products that infringed the '577 and '668 Patents from entering the United States and barring Arista from marketing or selling such products in the United States. The PTAB, however, found the '577 and '668 Patents invalid just a few weeks after the ITC issued its opinion and orders. After the PTAB issued its final written decisions in IPR2016-00303 (regarding the '577 Patent) and IPR2016-00309 (regarding the '668 Patent), Arista filed two separate motions before the ITC, one for each final written decision, requesting that, given the PTAB's invalidation of the asserted claims, the remedial orders be suspended or temporarily rescinded pending appeal of the PTAB final written decisions and Arista be allowed to resume sales in the United States.
The ITC denied Arista's motions, specifically finding that even though the PTAB had issued a final written decision invalidating the asserted claims, the PTAB's decisions "do not constitute a changed circumstance such that the remedial orders should be rescinded" because the "legal status of the claims at issue will not change unless and until the United States Patent and Trademark Office issues a certificate cancelling the claims following exhaustion of all appeals." Therefore, it appears that the ITC will not consider suspension or rescission of the issued remedial orders until the parties have exhausted all appellate options and the USPTO has issued a certificate cancelling the relevant claims of the patents.
Arista, shortly after its motions to suspend or rescind were denied, filed a motion to stay enforcement of the remedial orders, presumably on the same grounds as its motions for suspension. The Commission has not yet ruled on this motion. Both Cisco and Arista have appealed the final written decision of the PTAB in IPR2016-00303 related to the '577 Patent (Arista appeals a finding that a claim of the '577 Patent not asserted in the ITC Investigation was not shown to be unpatentable, and Cisco appeals the findings that its patent claims are unpatentable), but oral argument, should there be any, is many months away. Neither party has yet filed an appeal of IPR2016-00309 related to the '668 Patent, but must do so by July 31st. As it can take over a year from a notice of appeal to a final written decision from the Federal Circuit, the final decision on the validity of these patents may be a year away.
Though this decision surprised many, it is consistent with ITC trends and practices. Unlike the district courts, which generally stay patent infringement cases once an IPR is filed, the ITC has steadfastly refused to delay or stay its investigations due to IPRs. Similarly, the ITC judges have not considered themselves bound to follow PTAB decisions to institute IPRs or preliminary PTAB rulings. In this way, the ITC's decision to decline to rescind its orders until all appeals are exhausted is consistent. The ITC has also historically allowed stays of its exclusion orders pending Federal Circuit appeals only rarely. Arista's attempt to resume importation was novel in that it was the first time an IPR finding was used as the basis for such a request, but that the ITC denied a request to resume importation while an appeal was pending is not surprising.
The effects of the ITC's order have yet to be fully seen, however, at a minimum the decision serves as a reminder of the ITC's continued difference from the district courts with respect to the deference accorded IPRs and its commitment to the finality of its decisions. It is also provides patentees with an important benefit—as of the current date Cisco has enjoyed a period of exclusion of more than two months after the PTAB found its patents invalid, and may enjoy an even longer exclusion if the ITC does not grant Arista's motion to stay. In other words, should Cisco fail on appeal to the Federal Circuit, it may still successfully block importation of Arista's products for an additional year based on ultimately invalid patent claims.
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