Federal Circuit rules losing parties may appeal issue noticed for review by ITC

The Federal Circuit’s recent decision in General Electric Co v Int’l Trade Comm’n (2010-1223 (29th February 2012)) vindicates the right of a losing party to appeal any issue noticed for review by the International Trade Commission (ITC), regardless of whether the ITC actually decides the issue in its final determination. The General Electric (GE) investigation originated when GE filed a complaint with the ITC under Section 337, accusing Mitsubishi Heavy Industries, Ltd and Mitsubishi Power Systems Americas, Inc (collectively, "Mitsubishi") of infringing three GE patents for wind turbine technology, including US Patent 6,921,985 (the "'985 patent").

The investigation proceeded and the administrative law judge found that:

• Mitsubishi had infringed all three patents.
• None of the three patents was invalid or unenforceable.
• GE had a domestic industry with respect to two of the three patents, including the ‘985 patent.
• There was a violation of Section 337.

The parties petitioned the ITC for review of the decision and the ITC issued a notice of review, indicating that it would review all issues in the judge's decision, except importation and the “intent” prong of an inequitable conduct defence. However, upon completing its review, with regard to the ‘985 patent, the ITC addressed only the issue of whether GE met the technical prong of the domestic industry requirement (ie, whether GE practised the ‘985 patent), and determined that GE’s products did not. The ITC reversed the judge's determination and found there was no violation of Section 337. The ITC took no position on the other issues that it had previously indicated were subject to review.

Following the ITC's final determination, GE appealed to the Federal Circuit on all issues related to the ‘985 patent that the ITC had noticed for review, including the issues on which it had declined to take a position. Federal Circuit review of ITC decisions is governed by 19 USC § 1337(c), which provides that “[a]ny person adversely affected by a final determination of the Commission... may appeal such determination... to the United States Court of Appeals for the Federal Circuit”. ITC review of an administrative law judge's initial determination is governed by 19 CFR § 210.42(h)(2), which provides that “[a]n initial determination [on issues of § 337 violations] shall become the determination of the Commission... unless the Commission... shall have ordered review of the initial determination or certain issues therein”. Reading these provisions in concert, the Federal Circuit ultimately held that “issues not selected for review by the full Commission may be appealed to the Federal Circuit” (General Electric, slip op at 23).

On appeal, the ITC argued that GE had no statutory authority to appeal issues that the ITC had noticed for review, but did not address in its final determination, citing a 1984 Federal Circuit decision in Beloit Corp v Valment Oy (742 F 2d 1421 (Fed Cir 1984)) and a 2008 amendment to a federal regulation related to ITC review of initial determinations (19 CFR § 210.45(c)). More particularly, the ITC argued that Beloit held that the Federal Circuit cannot hear an appeal on any issue noticed for review, but not decided by the ITC.

The Federal Circuit rejected this argument, noting that its holding in Beloit stood only for the proposition that unreviewed issues cannot be appealed by the party prevailing on those issues. According to the Federal Circuit, nothing in Beloit allows the ITC to strip the right to appeal from a losing party. The Federal Circuit also rejected the ITC’s argument that the 2008 amendment to 19 CFR § 210.45(c) – which provides that “the Commission may take no position on specific issues or portions of the initial determination of the administrative law judge” – removed issues not decided by the ITC from appellate review, noting that “no statutory or regulatory provision contemplates excluding a fully litigated ITC decision from access to judicial review” (General Electric, slip op at 24).

Citing comments from both the ITC Trial Lawyers Association and the IP Owners Association praising the “prompt and effective resolution” of Section 337 actions by the ITC, the Federal Circuit reasoned that such promptness and effectiveness would be ill served by a rule destroying appellate rights for issues selected for review, but then not actually reviewed by the ITC. In closing, the court highlighted the inconsistencies that the rule being advanced by the ITC would create, and restated its authority to review issues noticed and reviewed by the ITC, as well as its authority to review issues not noticed by the ITC at all.

In Beloit, one reason that the Federal Circuit approved the ITC's approach of disposing of a case based on a single dispositive issue and taking no position on other issues was because such an approach could “greatly ease the burden on a Commission commonly faced with a Section 337 proceeding involving numerous complex issues and required by statute to reach its conclusion with rigid time limits” (Beloit, 742 F 2d at 1423). The decision in General Electric requires the ITC to consider every issue noticed for review in order to avoid remands, such as occurred in General Electric. If the ITC must now decide every issue noticed for review, the review process may very well take longer and result in more time for the ITC to complete Section 337 investigations. Thus, General Electric may ultimately serve to work against the “prompt and effective resolution” of Section 337 proceedings.