ITC Monthly Wrap-Up: March 2023

Authored by: Joshua Rosefelt

The International Trade Commission issued two final determinations in March in the 1265 and 1278 investigations. The Commission found respondents violated Section 337 in the 1265 investigation, but not in the 1278 investigation. The Commission also instituted four new investigations in March. Additionally, Administrative Law Judge Doris Hines got started this month with a short order denying a joint motion to stay filed as a result of the investigation’s reassignment. See Certain Smart Thermostat Hubs, Systems Containing the Same, and Components of the Same, Inv. No. 337-TA-1339, Order No. 18 (March 1, 2023). This month’s ITC wrap-up focuses on the public interest analysis in the 1265 investigation.

In its opinion from March 23, 2023, the Commission considered whether the public interest factors preclude the issuance of a limited exclusion order. See Certain Fitness Devices, Streaming Components Thereof, and Systems Containing Same, Inv. No. 337-TA-1265, Comm’n Op. (March 23, 2023) at 81-92.

Overview: In May 2021, the Commission instituted an investigation based on a complaint filed on behalf of Dish alleging a violation of Section 337 based on the importation of certain fitness devices with certain streaming capabilities. Id. at 1. The notice of investigation named as respondents ICON, iFIT, Inc., FreeMotion, NordicTrack, lululemon, MIRROR, and Peloton. Id. at 1-2. Following the evidentiary hearing, lululemon and MIRROR were terminated from the investigation based on settlement. Id. at 7-8. As such, iFIT, Inc., FreeMotion, NordicTrack, and Peloton remained in the investigation (hereinafter referred to as the Remaining Respondents). The technology and asserted patents at issue generally relate to streaming video and audio content over the Internet using adaptive bit rate streaming. Id. at 8-9.

In September 2022, the presiding chief ALJ issued a final initial determination finding a violation of Section 337. In the current opinion, the Commission subsequently affirmed the FID and proceeded to determine whether the public interest factors precluded the issuance of the LEO as a remedy. It determined to issue a LEO to the Remaining Respondents.

Section 337 requires the Commission, upon finding a violation of Section 337, to issue an LEO “unless, after considering the effect of such exclusion upon the public health and welfare, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, and United States consumers, it finds that such articles should not be excluded from entry.” 19 U.S.C. §§ 1337(d)(l) and (g)(1). Interestingly, the statute requires the Commission to consider and make findings on the public interest in every case in which a violation is found regardless of the quality or quantity of public interest information supplied by the parties. Id. at §§ 1337(d)(l), (f)(l), and (g)(1). Thus, the Commission publishes a notice inviting the parties, as well as interested members of the public and interested government agencies, to gather and present evidence on the public interest at multiple junctures in the proceeding. Id. Here, the Commission did not receive any comments from the public. Certain Fitness Devices, Streaming Components Thereof, and Systems Containing Same, Inv. No. 337-TA-1265, Comm’n Op. (March 23, 2023) at 82.

First, the Commission determined that an LEO would not adversely affect the public health and welfare because “the infringed claims do not generally cover all fitness devices, or even all fitness devices with streaming capabilities—they cover only infringing apparatuses using a particular method of streaming content (i.e., adaptive, multi-bitrate streaming).” Id. at 84. The Commission also noted that Dish and OUII correctly pointed out that “consumers will still have access to numerous other ways of getting exercise, both those that involve streaming content as well as options that do not.” Id. at 85. Indeed, Dish pointed to non-infringing alternatives that the Remaining Respondents currently sold. Id. at 83. Further, the Remaining Respondents asserted that they are able to modify their products to render them non-infringing within approximately five months.

Second, for similar reasons noted above, the Commission found that the United States economy would not be adversely affected by the Commission’s remedy because reasonable substitutes for the devices subject to the LEO exist. Further, the Commission noted that the remedy is an LEO, not a broad general exclusion order. Id. at 86-87. Third, the Commission found that the LEO will not affect the production of like or directly competitive articles in the United States because the record does not indicate that any competitive products are manufactured in the United States, including the accused products and the domestic industry products. Id. at 87-88. And fourth, as it relates to United States consumers, the Commission determined to “include exemptions to the remedial orders for repair or, under warranty terms, replacement of products purchased by consumers prior to the date of the remedial orders.” Id. at 89. In reaching this conclusion, the Commission acknowledged that United States consumers expect to maintain the ability to obtain service, repair, and replacement under warranty terms offered by the Remaining Respondents. Id. at 90-92.

Observation: Despite the appeal of the Remaining Respondents’ fitness-based health arguments, they faced an uphill battle given the apparent existence of competitors for the accused products. Where, as here, the LEO is limited to specific products and numerous non-infringing alternatives exist, respondents will have difficulty prevailing on the public interest factors. Also, this decision highlights the importance of soliciting and obtaining evidence related to the public interest, even in cases where the public interest has not been delegated to the ALJ. For example, as noted above, the record lacked certain evidence as it related to the production or like or directly competitive articles in the United States.