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The International Trade Commission Has Broad Jurisdictional Authority, Including Indirect Sellers

On April 26, 2019, Administrative Law Judge (“ALJ”) Lord clearly stated in Certain Intraoral Scanner and Related Hardware and Software that the International Trade Commission’s (“ITC”) jurisdictional authority extends to accused infringers whose activities have “some nexus” to an element of section 337.  ALJ Lord found that involvement in training and supporting resellers, distributors and end users in the infringing goods in the United States was sufficient to put that respondent under the broad reach of section 337, even if they did not import or directly sell the products. 

In November 2017, Align Technology, Inc. (“Align”) sued 3Shape A/S, 3Shape Inc., and 3Shape Trios A/S at the ITC alleging patent infringement of patents related to methods of scanning, modeling, treating, and correcting dental abnormalities.  Respondents admitted that 3Shape Trios A/S satisfied the importation requirement, but argued that the sister companies, 3Shape A/S and 3Shape Inc. did not because they did not import or directly sell the allegedly infringing goods in the United States.  Respondents argued that the participation of 3Shape A/S and 3Shape Inc. in providing mere sales support to U.S. resellers and accompanying resellers on visits to potential customers was not sufficient to put them within the jurisdiction of the ITC.

ALJ Lord disagreed and stated that “the Commission’s authority thus may be extended to parties that do not themselves engage in prohibited acts, but whose activities are so closely entwined with prohibited acts as to bring them within the broad reach of section 337.”  Certain Intraoral Scanner and Related Hardware and Software, Inv. No. 337-TA-1090, Init. Det. at 19 (April 26, 2019).  Therefore, the Commission has authority over “any case in which ‘some nexus’ is found between the activities of the respondent and a jurisdictional element of section 337(a)(1).” Id. (citations omitted).  Here, 3Shape is generally involved in training and supporting resellers, attending trade shows and other industry events, and assisting resellers in training end users on the products.  ALJ Lord believed these activities “clearly” had the purpose and effect of promoting the sale of 3Shape products in the United States.  As a result, “both 3Shape A/S and 3Shape Inc. themselves participate in the sale to reseller customers or the promotion for the sale of accused products to the ultimate consumers and users.”  Id.

Ultimately, ALJ Lord did not find a violation of section 337, for no asserted claims were infringed.  Moreover, one—out of three—patents was found invalid.  And, while Align satisfied the domestic industry with just one patent, ALJ Lord clarified that technical sales people may not count for domestic industry purposes. 

This initial determination is a great reminder that the ITC has a broad jurisdictional reach, and that its jurisdiction is not limited to just the parties that directly sell or import the relevant products.  Only “some nexus” between a potential respondent’s activities and a jurisdictional element of section 337 is required.  

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Authors

Aarti Shah

Member

Aarti Shah is a Mintz Member who focuses her practice on patent litigation, leveraging her experience as trial counsel. Aarti helps clients develop and implement effective ITC strategies. She frequently writes and comments on matters involving the International Trade Commission.

Kara E. Grogan

Associate

Kara E. Grogan is a Mintz intellectual property attorney who focuses her practice on Section 337 cases in the ITC, patent litigation, and assisting clients with licensing agreements.