United States Court of Appeals for the Federal Circuit
03-1426,-1489
VASTFAME CAMERA, LTD.,
Appellant,
and
ARGUS INDUSTRIES, INC.,
Appellant,
v.
INTERNATIONAL TRADE COMMISSION,
Appellee,
and
FUJI PHOTO FILM CO., LTD.,
Intervenor.
Joseph
W. Bain, Akerman Senterfitt, of West Palm Beach, Florida, argued for
VastFame Camera, Ltd.
Jean H.
Jackson, Attorney, Office of the General Counsel, U.S. International Trade
Commission, of Washington, DC, argued for appellee. With her on the brief were Lyn M. Schlitt, General
Counsel, and James M. Lyons, Deputy General Counsel.
Lawrence
Rosenthal, Stroock & Stroock & Lavan LLP, of New York, New York,
argued for intervenor. With him on the
brief were Matthew W. Siegal, Lisa A. Jakob, Angie M. Hankins
and Howard D. Shatz. Of counsel
were Will E. Leonard and Michael L. Doane, Adduci, Mastriani
& Schaumberg, L.L.P., of Washington, DC.
Appealed from: United States International Trade
Commission
United States Court of Appeals for the Federal Circuit
03-1426, -1489
VASTFAME
CAMERA, LTD.,
Appellant,
and
ARGUS
INDUSTRIES, INC.,
Appellant,
v.
INTERNATIONAL
TRADE COMMISSION,
Appellee,
and
FUJI PHOTO
FILM CO., LTD.,
Intervenor.
_____________________________
DECIDED: October 7, 2004
_____________________________
Before CLEVENGER, BRYSON, and LINN, Circuit
Judges.
LINN, Circuit Judge.
This
appeal is one of two related appeals from a decision of the International Trade
Commission (“Commission”) involving “single-use” or “disposable” 35 mm film
cameras, more formally known as “lens-fitted film packages” (“LFFP”). VastFame Camera, Ltd. (“VastFame”) appeals
from the Commission’s determination that importation of VastFame’s LFFPs violates
a pre-existing general exclusion order.
In re Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406
(Int’l Trade Comm’n May 2, 2002) (“Initial Determination”). Because the Commission’s decision refusing
to allow VastFame to present its invalidity defense was contrary to 19 U.S.C.
§ 1337(c), we vacate the Commission’s infringement determination with
respect to VastFame and remand for further proceedings consistent with this
opinion.
BACKGROUND
This proceeding arises out of the
Commission’s investigation, entitled In re Certain Lens-Fitted Film Packages,
which resulted in the issuance of a general exclusion order on June 9,
1999. Inv. No. 337-TA-406 (Int’l Trade
Comm’n June 9, 1999) (“Initial Investigation”). The Initial Investigation involved newly made and refurbished
LFFPs. The Initial Investigation also involved numerous Fuji Photo Film Co.,
Ltd. (“Fuji”) patents, including U.S. Patent No. 4,884,087 (“the ’087
patent”). At least one party in the
Initial Investigation raised an invalidity defense with respect to the ’087
patent, but the defense was abandoned before any judgment on the merits.
VastFame was not a party to the
Initial Investigation, and its VN99 and VN991 cameras were not at issue in that
investigation. Although VastFame was
not a named respondent in the Initial Investigation, it knew that the
proceedings were taking place. VastFame
was notified of the proceedings in a March 25, 1998 letter from Fuji. The letter informed VastFame that it had
been identified as a potential respondent, offered to supply VastFame with a copy
of the supplemented complaint, and advised VastFame that whether or not it
joined, it would be bound by the decision.
VastFame refused to join the proceedings.
After the general exclusion order
issued, VastFame obtained a ruling from the U.S. Customs Service[1]
(“Customs”) that the VN99 and VN991 cameras did not violate the general
exclusion order. Lens-Fitted Film
Packages, Pub. No. 468780, ITC Inv. No. 337-TA-406 (Customs Serv. Mar. 27,
2000). Customs only considered one of
the fifteen patents upon which the general exclusion order was based. Nevertheless, having concluded that
VastFame’s LFFPs did not violate the general exclusion order, Customs allowed
the importation of VastFame’s VN99 and VN991 cameras beginning in early
2000.
In June 2001, Fuji filed a complaint
with the Commission requesting enforcement and advisory proceedings to
determine whether VastFame and others had violated the general exclusion
order. In those proceedings, VastFame
pled as a defense that claim 15 of the ’087 patent was invalid under 35 U.S.C.
§§ 102 and 103(a) in view of certain prior art references. Vastfame fully briefed the invalidity
defense and was prepared to put on its case at the trial, but the
Administrative Law Judge (“ALJ”) refused to consider invalidity, ruling that
the defense could not be raised in the enforcement proceeding. Initial Determination, slip op. at 64
n.33. The ALJ explained his position at
a pretrial conference. At that
conference, he advised the parties that the Commission’s order directing the
ALJ to conduct the proceedings did not permit him to entertain a validity
challenge to the patents underlying the general exclusion order. The ALJ expressed the view that the
Commission’s order limited him to determining only whether the importation of
the enforcement respondents’ cameras violated the general exclusion order.
In February 2002, the ALJ conducted
an evidentiary hearing on the issues raised in Fuji’s complaint. On May 2, 2002, the ALJ concluded that the
VN99 and VN991 cameras infringed only one claim asserted by Fuji, namely, claim
15 of the ’087 patent. Initial
Determination. Based on the finding
of infringement, the ALJ held that the VN99 and VN991 cameras were in violation
of the general exclusion order and could no longer be imported. Because
Fuji’s complaint sought both enforcement and advisory proceedings, the ALJ
simultaneously issued separate opinions in the form of an initial determination
on enforcement and an advisory opinion regarding violation of the general
exclusion order. See In re
Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406 (Int’l Trade
Comm’n May 2, 2002) (advisory opinion).
Upon entry of the ALJ’s enforcement
initial determination, VastFame petitioned the Commission to remand the case to
the ALJ for consideration of the previously excluded invalidity defense. The Commission declined to review the ALJ’s
decision on this issue leaving the decision as the final determination of the
Commission. In re Certain
Lens-Fitted Film Packages, Inv. No. 337-TA-406 (Int’l Trade Comm’n Aug. 7,
2002). On May 15, 2003, the Commission
finalized its proceedings. In re
Certain Lens-Fitted Film Packages, Inv. No. 337-TA-406 (Int’l Trade Comm’n
May 15, 2003).
VastFame timely appealed to this
court. We have jurisdiction under 28
U.S.C. § 1295(a)(6).
DISCUSSION
A. Standard
of Review
As
the agency charged with the administration of § 1337, the Commission is
entitled to appropriate deference to its interpretation of the statute. See United States v. Mead Corp.,
533 U.S. 218, 227 (2001); Chevron U.S.A. Inc. v. Natural Res. Def. Council,
Inc., 467 U.S. 837, 844 (1984); Enercon GmbH v. Int’l Trade Comm’n, 151 F.3d 1376, 1381 (Fed. Cir.
1998). Under Chevron,
we must first look to “whether Congress has directly spoken to the precise
question at issue.” 467 U.S. at
842. As the Supreme Court explained,
“If a court, employing traditional tools of statutory construction, ascertains
that Congress had an intention on the precise question at issue, that intention
is the law and must be given effect.” Id.
at 843 n.9. However, “if the statute is
silent or ambiguous with respect to the specific issue, the question for the
court is whether the agency’s answer is based on a permissible construction of
the statute.” Id. at 843. In the latter case, this court will
“uphold the [Commission’s] interpretation of [19 U.S.C. § 1337] if it is
reasonable in light of the language, policies and legislative history of the
statute.” Enercon, 151 F.3d at
1381; see also San Huan New Materials High Tech, Inc. v. Int’l Trade
Comm’n, 161 F.3d 1347, 1351 (Fed. Cir. 1998) (quoting Enercon, 151
F.3d at 1381).
B. Statutory
Basis of the Enforcement Proceeding
As a threshold matter, the parties
disagree as to the statutory basis of the enforcement proceeding before the
Commission. This is an issue we must
decide before we can determine if the Commission erred in not providing
VastFame an opportunity to present its invalidity defense. VastFame argues that the enforcement
proceeding, which was expressly conducted under 19 C.F.R. § 210.75(b),
constituted an investigation under § 1337(b) because that is the only
provision that authorizes the type of inquiry engaged in by the Commission in
this case. The Commission argues that
§ 1337 provides the Commission with general authority to enforce its own
exclusion orders. It argues that
multiple provisions in § 1337 indicate that Congress intended for the
Commission to have a role in enforcing its own orders.
Neither party cites express
statutory authority for enforcement proceedings, and we have found none. Because the statute is silent with respect
to the Commission’s authority specifically to conduct enforcement proceedings,
the Commission’s interpretation of § 1337 may be entitled to deference “if
it is reasonable in light of the language, policies and legislative history of
the statute.” Enercon, 151 F.3d
at 1381.
The Commission is a creature of
statute. Sealed Air Corp. v. U.S.
Int’l Trade Comm’n, 645 F.2d 976, 987 (CCPA 1981). Thus, it must find authority for its actions
in its enabling statute. See Young
Eng’rs, Inc. v. U.S. Int’l Trade Comm’n, 721 F.2d 1305, 1311-12 (Fed. Cir.
1983) (“5 C.F.R. § 211.57 cannot, and does not, provide greater authority than
the statute.”). The Commission cites 19
U.S.C. § 1335, which gives the Commission authority to “adopt such
reasonable procedures and rules and regulations as it deems necessary to carry
out its functions and duties.” However,
this provision does nothing more than provide the Commission with authority to
promulgate rules. It does not give the
Commission the substantive right to go beyond the express powers provided in
§ 1337. Similarly, the Commission
cites Rule 210.75(b), under which the enforcement proceeding was
conducted. However, the Rule itself cannot
provide the needed statutory authority.
See Young Eng’rs, 721 F.2d at 1312. The Commission also cites § 1337(f);
however, that section concerns only cease and desist orders and cannot provide
the authority for Rule 210.75(b), at least to the extent that the rule relates
to the enforcement of a general exclusion order. As VastFame points out, a cease and desist order was not issued
against it in this case.
The Commission also cites
§ 1337(k)(1), which provides that exclusion orders shall remain in effect
until the Commission determines otherwise; and § 1337(k)(2), which
provides that a party previously found in violation of § 1337 may petition
for a change of an exclusion order.
Section 1337(k)(1) says nothing about the Commission’s authority to conduct
enforcement proceedings. Moreover, it
was Fuji, not the Commission, that initiated the present proceedings when it
filed its complaint. Section 1337(k)(2)
is inapplicable because VastFame had not “previously been found by the
Commission to be in violation of” § 1337.
19 U.S.C. § 1337(k)(2) (2000).
And that would be true even if VastFame had requested the
proceedings. Finally, the Commission
cites § 1337(i), which provides that the Commission may order the seizure
of goods previously adjudged to be in violation of § 1337 and previously
denied entry. But the Commission does
not argue that any of these statutory provisions, including § 1337(i),
expressly authorizes the enforcement proceeding conducted in this case. The Commission uses § 1337(i) to
buttress its argument made with respect to each of these statutory provisions
that the authority to promulgate Rule 210.75(b) emanates from the penumbra of
§ 1337. We cannot agree with the
Commission that, if no specific statutory authority exists, the Commission has
the inherent authority to conduct enforcement proceedings. Such a view is not reasonable in light of
the express powers provided in § 1337 and the fact that the Commission is
a creature of statute. Sealed Air
Corp., 645 F.2d at 987. Because the
Commission’s proffered interpretation of the statute is unreasonable, we reject
it.
While no statutory provision of
§ 1337 expressly refers to enforcement proceedings, § 1337(b) gives
the Commission general authority to investigate violations of the statute. Section 1337(b)(1) provides, “The Commission
shall investigate any alleged violation of this section on complaint under oath
or upon its initiative.” Section 1337(b),
by its language, is not limited to initial complaints and authorizes the Commission
to conduct proceedings, including proceedings for the enforcement of general
exclusion orders, to “investigate any alleged violation of this section on
complaint under oath.” In this case,
the Commission began its investigation as a result of Fuji’s complaint. Initial Determination, slip op. at
1. The statute further provides that
“the Commission shall publish notice thereof in the Federal Register.” 19 U.S.C. § 1337(b)(1) (2000). Consistent with this requirement, the
Commission, in this case, published notice of its investigation in the Federal
Register. In re Certain Lens-Fitted
Film Packages, 66 Fed. Reg. 40,721 (Int’l Trade Comm’n Aug. 3, 2001)
(notice of investigation).
Although the Commission seeks to
avoid basing its enforcement proceeding on § 1337(b), we hold that the
Commission has authority to conduct proceedings to enforce general exclusion
orders, and that its authority to conduct such proceedings arises under and is
subject to the provisions of § 1337(b).
C. “All
Cases”
Having determined that the
Commission’s authority to conduct an enforcement proceeding is found generally
in § 1337(b), we next consider whether the Commission violated § 1337
in not allowing VastFame to present its invalidity defense. The language of § 1337(b)(1)
states: “The Commission shall investigate
any alleged violation of this section on complaint under oath or upon its
initiative.” 19 U.S.C.
§ 1337(b)(1) (2000) (emphasis added).
Investigations are governed by § 1337(c), which states:
The Commission shall determine, with respect
to each investigation conducted by it under this section, whether or not there
is a violation of this section . . . . Each
determination under subsection (d) or (e) of this section shall be made on the
record after notice and opportunity for a hearing in conformity with the
provisions of subchapter II of chapter 5 of title 5. All legal and equitable defenses may be presented in all
cases.
Id. § 1337(c) (emphases added).
On its face, the statute appears to
require the Commission to allow the presentation of all defenses in its
investigations. The Commission
contends, however, that the nature of a general exclusion order and the
considerable burden in establishing the need for such an order support the
Commission’s view that general exclusion orders may not be collaterally
attacked. The Commission argues that
§ 1337(d)(2) is a codification of the Commission’s balancing of the burden
on domestic patentees of repeated litigation and the effects on legitimate
foreign trade of erroneous determinations as laid down in Certain Airless
Paint Spray Pumps and Components Thereof, USITC Pub. No. 1199, Inv. No.
337-TA-90 (Nov. 1981). Section
1337(d)(2), however, only addresses the criteria for issuance of general
exclusion orders. It does not address
whether general exclusion orders may be subject to collateral attack. Section 1337(d)(2), then, provides no
support for the Commission’s position.
Moreover, Congress’s intent in adding § 1337(d)(2) was to comply
with its obligations under the General Agreement on Tariffs and Trade, not to
adopt the Commission’s policy objectives as announced in Certain Airless
Paint Spray Pumps. See S.
Rep. No. 103-412, at 120 (1994); H.R. Rep. No. 103-826, at 140-42 (1994) (“The
amendments are necessary to ensure that U.S. procedures for dealing with
alleged infringements by imported products comport with GATT 1994 ‘national
treatment’ rules, while providing for the effective enforcement of intellectual
property rights at the border.”).
The Commission argues that general
exclusion orders are like district court injunctions in that they must be
obeyed until they are modified, reversed, or vacated. Thus, in the Commission’s view, a general exclusion order, like a
district court injunction, should not be subject to collateral attack. However, a general exclusion order is not
like a district court injunction with respect to the parties affected. A general exclusion order broadly prohibits
entry of articles that infringe the relevant claims of a listed patent without
regard to whether the persons importing such articles were parties to, or were
related to parties to, the investigation that led to issuance of the general
exclusion order. See 19 U.S.C.
§ 1337(d)(2) (2000) (“The authority of the Commission to order an exclusion
from entry of articles shall be limited to persons determined by the Commission
to be violating this section unless the Commission determines
that . . . .”); Hyundai Elecs. Indus. Co. v. U.S. Int’l
Trade Comm’n, 899 F.2d 1204, 1210 (Fed. Cir. 1990) (stating that “in an
appropriate case the Commission can impose a general exclusion order that binds
parties and nonparties alike and effectively shifts to would-be importers of
potentially infringing articles, as a condition of entry, the burden of establishing
noninfringement”). By contrast,
district court injunctions are generally limited to the parties entering
appearances before the court or those aiding and abetting or acting in concert
or participation with a party before the court. Additive Controls & Measurement Sys., Inc. v. Flowdata,
Inc., 96 F.3d 1390, 1394 (Fed. Cir. 1996) (“Courts do not write legislation for members of the public at
large; they frame decrees and judgments binding on the parties before them.”). Because of the differing nature of general
exclusion orders and district court injunctions, the justification for the
prohibition against collateral challenges to injunctions is not directly
applicable to general exclusion orders.
Thus, the Commission’s analogy to district court injunctions is
inapposite and unhelpful.
Additionally, the Commission cites Multi-Level
Touch Control Lighting Switches, Inv. No. 337-TA-225 (Int’l Trade Comm’n
July 16, 1987), as evidence of its long standing policy of not hearing
challenges to the validity of a patent underlying a general exclusion order in
enforcement or advisory proceedings. It
sets forth three public policy arguments to support this position: (1) the difficulty in administering the
statute if general exclusion orders are subject to repeated challenges; (2) the
necessity of preserving the original complainant’s remedy once it has been
issued; and (3) the public interest in avoiding uncertainty in the market
place. One can argue that all of these policies
would be similarly served by preventing subsequent accused infringers in
district courts from challenging the validity of a patent that had been
previously adjudicated to be not invalid.
However, that is not the law.
These policies do not justify the Commission’s interpretation in the absence
of a showing that the statute may be fairly read the way the Commission
interprets it. To the contrary, the
intent of Congress with respect to this issue is quite clear.
Nevertheless, the Commission argues
that the “all cases” language of § 1337(c) only applies to original
investigations, not advisory and enforcement proceedings. The Commission argues that the following
language of § 1337(c) indicates that the statute only provides for
presentation of all defenses in proceedings that lead to determinations under
§ 1337(d) or (e):
The Commission shall determine, with respect to each investigation
conducted by it under this section, whether or not there is a violation of this
section . . . . Each determination under
subsection (d) or (e) of this section shall be made on the record after notice
and opportunity for a hearing in conformity with the provisions of subchapter
II of chapter 5 of title 5. All legal
and equitable defenses may be presented in all cases.
19 U.S.C. § 1337(c)
(2000). Because subsections (d) and (e)
both relate to the issuance of exclusion orders, the Commission’s
interpretation would require the Commission to first determine whether a
complainant was likely to prevail before deciding whether all defenses may be
presented. Moreover, the second
sentence quoted above specifically refers to determinations “under subsection
(d) or (e),” whereas the “all defenses” rule applies to “all cases.” If Congress had intended the “all defenses”
provision to only apply to proceedings that lead to determinations under
subsections (d) and (e), or even to original proceedings, it could have easily
said so. The Commission’s proffered
interpretation contravenes the clear language of the statute.
VastFame is correct that the “all
defenses” provision at least applies to investigations under
§ 1337(b). The opening sentence of
§ 1337(c) plainly indicates that investigations under § 1337(b) are
governed by § 1337(c). No other
language in § 1337(c) modifies the broad reference to “all cases.” Thus, we hold that the phrase “all cases”
clearly encompasses investigations under § 1337(b). The necessary result, then, is that
participants in a proceeding under § 1337(b) must be permitted to raise
all defenses.[2]
The Commission argues that an
interpretation of § 1337(c) that makes every Commission proceeding subject
to the “all defenses” rule is inconsistent with § 1337(i). Section 1337(i) provides authority for the
Commission to issue an order requiring articles imported in violation of
§ 1337 to be seized and forfeited to the United States if the article was
previously the subject of an attempted importation that was denied by reason of
an order issued under subsection (d) and upon such denial the party seeking to
import was informed of the exclusion order and that any further attempts to
import such articles would result in seizure and forfeiture. The Commission’s argument misses the mark,
however, because VastFame has not asked us to hold that the “all defenses”
provision applies to all proceedings in the Commission. VastFame argues that the “all defenses”
provision applies to § 1337(b) at a minimum. Thus, whether the “all defenses” provision applies to
§ 1337(i) is not before us. We
hold only that the phrase “all cases” encompasses investigations under
§ 1337(b). We need not and do not
decide what other proceedings may fall within the scope of “all cases.”
D. Due
Process
Because we hold that the Commission
erred by not allowing VastFame to present its invalidity defense based on the
clear language of § 1337(c), we do not reach the issue of whether
VastFame’s due process rights were violated in this case.
E. VastFame’s
Invalidity Defense
As an alternative argument, VastFame
asks this court not merely to vacate but to reverse the Commission’s final
determination if we find, without further need of evidence, that claim 15 of
the ’087 patent is invalid. The
Commission declined to entertain VastFame’s invalidity defense; it has not
ruled on the merits of this defense. In
Beloit Corp. v. Valmet Oy, 742 F.2d 1421, 1423 (Fed. Cir. 1984), this
court held that it “does not sit to review what the Commission has not
decided.” Accordingly, the court will
not consider the merits of the validity defense that was neither heard nor
decided by the Commission. Instead,
having determined that the Commission erred in excluding the validity
challenge, we remand the case to the Commission for consideration of VastFame’s
invalidity defense in the first instance.
CONCLUSION
Because the
Commission’s decision precluding VastFame from raising its invalidity defense
was not reasonable or supported by the language, policies, and legislative
history of § 1337, we vacate the Commission’s enforcement decision and
remand for further proceedings consistent with this opinion.
VACATED AND REMANDED
COSTS
No costs.
[1] As of March 1, 2003, the U.S. Customs Service became the Bureau of Customs and Border Protection in the Department of Homeland Security. The Department of the Treasury still retains authority over Customs’ revenue functions including enforcement of 19 U.S.C. § 1337. Homeland Security Act of 2002, P.L. 107-296, §§ 412, 415, 116 Stat. 2135, 2179-81.
[2] Our
interpretation of the statutory language should not be read to preclude
application of traditional principles of res judicata or
collateral estoppel. See, e.g., San
Huan New Materials High Tech, Inc. v. Int’l Trade Comm’n, 161 F.3d 1347,
1357-58 (Fed. Cir. 1998) (“There is no denial of due process in applying to San
Huan the claim construction that it declined to challenge by offering consent
and seeking termination of the investigation.”); Aktiebolaget Karlstads
Mekaniska Werkstad v. U.S. Int’l Trade Comm’n, 705 F.2d 1565, 1578 (Fed.
Cir. 1983) (“Section 337(c) was not violated; KMW had adequate opportunity to
present its legal and equitable defenses, albeit during the first
investigation.”). However, this is not
a case where any form of preclusion is appropriate. Vastfame was not a party to the Initial Investigation before the
Commission and, thus, did not have a prior opportunity to raise the invalidity
issue it now seeks to present.