Procedural History The Commission rulings before us arise from proceed- ings in which Cross Match Technologies, Inc. ("Cross Match") asserts that Suprema, Inc. and Mentalix, Inc. violated 19 U.S.C. § 1337(a)(1)(B)(i) by importing articles that infringe or are used to infringe U.S. Patent Nos. 7,203,344 ("the '344 patent"), […] and 5,900,993 ("the '993 patent"). The Commission found that Mentalix directly infringed method claim 19 of the '344 patent by using its own software with imported Suprema scanners and found that Suprema induced that infringement. The Commission also found that certain of Suprema's imported optical scanners directly infringe claims 10, 12, and 15 of the '993 patent. […] The Commission then held that Suprema and Mentalix failed to prove that the '993 patent was invalid as obvious over two prior art patents: U.S. Patent No. 3,619,060 ("the '060 patent") and U.S. Patent No. 5,615,051 ("the '051 patent"). Based on these findings, on October 24, 2011, the Commission issued a limited exclusion order directed to certain scanning devices imported "by or on behalf of Suprema or Mentalix" and issued a cease and desist order directed to Mentalix only.
Cross Match Tech., Inc. at *5.
Factual Backdrop Mentalix imports Suprema's scanners and integrates them with its own software in the United States. The specific Mentalix software involved in this case is called FedSubmit. Mentalix's accused software can be used with fingerprint scanners sold by other companies, including Cross Match. In the Commission investigation, Cross Match contended that its system claims [in the '993 Patent] are infringed by Suprema optical systems and that the method claims [in the '344 Patent] are infringed when Suprema's scanners are used in combination with both respondents' software (i.e., Suprema's SDKs and FedSubmit).
Cross Match Tech., Inc. at *9-10 (text added).
 '344 Patent: The statutory grant of authority in § 337 cannot extend to the conduct proscribed in § 271(b) where the acts of underlying direct infringement occur post-importation.
The Commission's mandate to deal with matters of patent infringement under § 337(a)(1)(B)(i) is thus premised on the "importation," "sale for importation," or "sale within the United States after importation" of "articles that . . . infringe." Id. Thus, the Commission's authority extends to "articles that . . . infringe a valid and enforceable United States patent." The focus is on the infringing nature of the articles at the time of importation, not on the intent of the parties with respect to the imported goods.
Cross Match Tech., Inc. at *16.
Exclusion orders based on violations of § 337(a)(1)(B)(i) thus pertain only to the imported goods and are necessarily based on the infringing nature of those goods when imported.
[T]he focus of the inducement analysis is not on the conduct of the alleged inducer alone. "To prevail on inducement, 'the patentee must show, first that there has been direct infringement . . . .'" [...] Under that longstanding law, while the inducing act must of course precede the infringement it induces, it is not a completed inducement under § 271(b) until there has been a direct infringement.
Id. at *20 (citations omitted).
Prior to the commission of any direct infringement, for purposes of inducement of infringement, there are no "articles that . . . infringe"—a prerequisite to the Commission's exercise of authority based on §337(a)(1)(B)(i). Consequently, we hold that the Commission lacked the authority to enter an exclusion order directed to Suprema's scanners premised on Suprema's purported induced infringement of the method claimed in the '344 patent.
Claim Construction Written Description Disclaims "stortion correcting prisms, holographic optical elements, or off-axis optics" The stated purpose of the invention, which forms the strongest basis for Suprema's arguments, says "it is an object of the invention to provide lens systems which employ only lens elements and do not employ distortion correcting prisms, holographic optical elements, or off-axis optics." [...] If anything is disclaimed by this statement, it is prisms, holographic optical elements, and off-axis optics, when either is used as the means to correct distortion.
Cross Match Tech., Inc. at *30-31 (citations omitted).
Id. at *32-32 (text added).
Insufficient Motivations to Combine the '060 Patent with the '051 Patent [T]he ALJ found that the '051 patent discloses a lens system that is well suited for "photographic cameras," not fingerprint scanners. That finding, we hold, was supported by substantial evidence. The '051 patent itself indicates that the lens it discloses "is well suited for use on photographic cameras." '051 patent col. 1. ll. 7–8. Thus, Suprema adduced insufficient evidence of motivation to substitute the photograph- ic camera triplet lens of the '051 patent for the fingerprint scanner achromatic lens of the '060 patent. Moreover, since it gives no description of the achromatic lens' structure, there is no indication that the achromatic lens of the '060 patent is a triplet lens or that a triplet lens would be suitable in its place.
For the reasons explained, we vacate the Commission's judgment regarding infringement of the '344 patent and vacate the limited exclusion order to the extent it was predicated on that finding. We affirm the Commission's holding that Suprema directly infringes the '993 patent, however, and leave intact the exclusion order regarding the RealScan-10 and RealScan-10F optical systems. The scope of the exclusion order must thus be adjusted accordingly—it appears that only two of the previously identified products may be subject to the order.7 Accordingly, we vacate the limited exclusion order and remand for proceedings in accordance with this decision.
Cross Match Tech., Inc. at *36.
The majority opninion also discussed infringement of patent 7,277,562 ("the '562 patent"). For further reading on this, click here.
REYNA, Circuit Judge, concurring-in-part, dissenting-in- part. Cross Mach Tech., Inv., Reyna Op., at 2.
General Grounds for Concurrance and Dissent According to the majority, the phrase "articles that – infringe" in Section 337 re- quires infringement at the time of importation, and because inducement is not "completed" until there has been direct infringement, the Commission may not invoke inducement to ban the importation of articles that are not already in an infringing state at the time of importation. See id. at 20, 25. My problem with the majority's opinion is that it ignores that Section 337 is a trade statute designed to provide relief from specific acts of unfair trade, including acts that lead to the importation of articles that will result in harm to a domestic industry by virtue of infringement of a valid and enforceable patent. To negate both a statutory trade remedy and its intended relief, the majority overlooks the Congressional purpose of Section 337, the long established agency practice by the Commission of conducting unfair trade investigations based on induced patent infringement, and related precedent by this Court confirming this practice.
Cross Match Tech., Inc. at *4.
Congressional Intent in the Realm of International Trade Section 337 not only supplements the patent infringement remedies available in federal courts, it also provides a unique form of relief in patent law: preventing unfairly traded articles from entering the U.S. customs territory. Congress provided this broad remedy because it recognized that "[t]he importation of any in- fringing merchandise derogates from the statutory right, diminishes the value of the intellectual property, and thus indirectly harms the public interest." H.R. Rep. No. 100- 40, at 154, 156. In other words, imported articles involved in unfair acts of infringement inflict injury on the U.S. industry and patent holders simply by virtue of importation, apart from any acts occurring after importation. Under Section 337, once the unfairly traded article is imported, the harm is done.
Article does Not have to be Completed at the Time of Inducement [W]hile the Commission examines articles as they are imported to determine which infringement theory applies, it is not constrained by a requirement that the articles be in an infringing state when imported. Section 337 expressly applies not only to the moment of importation, but also, in the alternative, to sales occurring before and after importation that can give rise to infringement liability. An article that is not in an infringing state at the moment of importation can still form the basis of a Section 337 violation if its importation is tied to conduct giving rise to infringement liability.
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