Senate Considers Reforms to Importation Rules

Kinik v. ITC: In 2004, the Federal Circuit determined that the language of 271(g) does not apply to Section 337 actions at the ITC. [Opinion]  In that decision, court noted that the 271(g) product by process statute explicitly limits itself “for the purposes of this title.”

Thus, when a defendant is accused of improper imports under Section 337, he cannot raise the defenses that the product included material change by subsequent processes or that the imported product is a trivial component of a larger product.

On May 1, 2007, the Senate held testimony regarding a legislative amendment that would apply 271(g) to ITC issues as well. Professor Chris Cotropia presented three specific problems raised by the current differential: 

• inconsistent judgments;
• noncompliance with TRIPs; and
• hindrance of the policies behind the exceptions.

AIPLA opposes amendment arguing that it "would only benefit foreign manufacturers accused of unfair trade practices."

Links:

• http://judiciary.senate.gov/hearing.cfm?id=2735
• http://www.patentlyo.com/patent/2005/10/amendment_to_27.html

Comments

[djf]

In one respect, I'm glad to see harmonization of 337 and 271(g) - I've never understood why the "materially changed" defense should be available in one forum and not another, and the only thing I liked about Kinik was that the CAFC was willing to in effect say to Congress, "you created this, you fix it".

However, given the mess that that CAFC has made of the "materially changed" provision, I'm not sure I'm happy about allowing this defense to be used in ITC proceedings. See, e.g. Judge Rader's concurrence, which is really a dissent, in Lilly v Cyanamid, 82 F.3d 1568, lamenting the fact that the panel's decision rendered 271(g) meaningless for protection of processes for chemical intermediates, and compare to BTG v Genentech, 80 F. 3d 1553, where the CAFC held that a claim to a process for transfecting a cell includes the protein products that result from the transformed cell. So as ridiculous as it is to have two rules for two different fora, I don't think the present bifurcated system is necessarily a bad thing.

(As far as I recall, there's still no CAFC case law directly on point about the meaning of "trivial and non-essential component".)

Of course, if Congress would clarify what the defenses under 271(g) encompass and don't encompass, then having a single rule for courts and the ITC would be a good thing, but I'm cynical about that happening - see Judge Rader's reasons for dismissing the legislative history as a means of statutory interpretation of 337 in Lilly.

[Malcolm Mooney]

The legislative history of 271(g) was so whacked by the attempts to please competing lobbyists that the CAFC ended up creating some bizarrely huge loopholes that they've never bothered to fix.

Rader's concurrence in Lilly: "This decision denies protection to a patented process anytime it is not the only way to make an intermediate, even if it is the most economically efficient way to produce the intermediate.”

Note that this was the basis of the holding in Lilly: the compound at issue could be made by another off-patent "commercially viable process" and, even though it wasn't made by that process, that was enough to find the product "materially changed" for purposes of the statue.