Temple Law Hosts Court of Appeals for the Federal Circuit

Temple Law hosted the Court of Appeals for the Federal Circuit
on Tuesday, October 8, providing students and area lawyers a unique
opportunity to see the court in action and to meet the judges at a
reception following the arguments.
On the bench were Judges Timothy B. Dyk, Judge Alan D. Lourie ’70,
and Judge Kathleen M. O’Malley.  The panel heard arguments in
three matters: AMS Assoc.  v. United States, University of
Pittsburgh v. Varian Medical Systems, and Massachusetts Institute
of Technology v. Affymetrix, Inc. Professors David Post, Greg
Mandel, and Don Harris provided the following summaries of the
cases before the Court.

AMS Assoc. v United States
On Aug 7, 2008, the Commerce Department determined that laminated
woven sacks (“LWS”)from the People’s Republic of China were being
“dumped” in  the United States – that is, sold at a price
below the actual cost of making and transporting the goods – and
that they were therefore subject to a “countervailing duty” – i.e.,
a special import tax designed to counteract the effects of the
dumping.  Commerce issued (as is standard in these
circumstances) a “suspension of liquidation” order to the US
Customs and Border Protection (CPB) Service – basically, an order
stating that the Customs account for goods subject to the order
entering the US are not “liquidated” (i.e., deemed to be complete
and paid) until completion of all reviews of the anti-dumping
proceeding.
Aifudi Plastic Packaging Co., Ltd. (Aifudi) manufactures LWS in the
PRC and exports them to the United States.  Much of Aifudi’s
production was not listed, in the information it provided to the
Commerce Department and to the CPB, as having been produced in the
PRC.  Aifudi had obtained a so-called “country of origin
ruling” from the CPB declaring that sacks manufactured in the PRC
from fabric originating outside the PRC was not deemed to have been
“manufactured in the PRC,” and therefore did not have to be
declared as such (and were therefore not subject to the
countervailing duty) when imported into the US.  As a result,
Aifudi  paid no antidumping deposits upon the entry of the
goods into the US.

On July 10, 2010, during the first Administrative Review (AR1)
of the anti-dumping order, Commerce determined that LWS produced in
the PRC from imported fabric is of “PRC Origin,” and that therefore
it such goods are within the scope of the original anti-dumping
order and countervailing duty. 
We recommend preliminarily finding the country-of-origin of LWS
produced in the PRC from imported fabric is of PRC origin. As a
result, we also recommend preliminarily finding that the LWS
imported by Aifudi into the U.S. are within the scope of the order.
Based on these findings, we recommend that Aifudi be required to
provide its U.S. sales of LWS produced from third countries[‘]
woven fabric. 

Based upon this finding, Commerce issued a ‘clarification’ of
its instructions to CBP, instructing CBP to ²continue to suspend
liquidation of all LWS from the PRC, regardless of the origin of
the woven fabric, that is entered, or withdrawn from warehouse, for
consumption, on or after January 31, 2008.” In the district court’s
words, “the effect of the Clarification was to retroactively
suspend liquidation of and collect cash deposits of antidumping
duties on all entries of Aifudi sacks made with non-PRC origin
fabric after January 31, 2008.”
Plaintiff argues that its due process rights have been violated by
this retroactive suspension of liquidation.  First, it argues
Commerce’s regulations do not permit it to rule (as it did here) on
the scope of an anti-dumping order during an Administrative Review,
but only through a formal “Scope Proceeding” under 19 CFR
§351.225.  

The district court rejected this contention. 

Although argued extensively by the parties, it is clear that
Commerce has the right to conduct a scope inquiry during an
administrative review. Indeed, 19 C.F.R. § 351.225(f)(6) expressly
permits Commerce to “conduct [a] scope inquiry in conjunction with
[an administrative] review.”
It found for plaintiff nonetheless, holding that (a) Commerce was
bound by the regulations regarding suspension of liquidations
during Scope Proceedings even though it had technically not chosen
to initiate one, and further that (b) those regulations only permit
Commerce to order suspension of liquidation orders prospectively
from the date of the initiation of the scope review.
Therefore, the “clarification” order issued here (which was
retroactive to the date of the initial anti-dumping order, Jan
2008) was ultra vires and based on an erroneous interpretation of
the law.

University of Pittsburgh v. Varian Medical
Systems

 The University of Pittsburgh owns a patent on an improved
radiation therapy device for treating cancer.  The device
works by identifying marks on a patient’s skin and turning the
radiation treatment on-and-off with patient movements (such as when
the patient breathes) to reduce damage to healthy tissue during
treatment.  Pitt prevailed with a judgment of infringement and
an award of damages at trial.  Varian appealed several issues,
two of which were the primary focus during oral argument.
First, how to interpret the breadth of the patent’s claim coverage
with respect to precisely what the claimed software covered.
The District Court adopted an interpretation of the patent claims
that read on (covered) Varian’s device; Varian argued for an
alternative interpretation that would render their products
non-infringing.  Second, one item of damages that the District
Court awarded to Pitt was based on Varian’s sales of products that
were part of the Pitt patent claims, but were not the innovative
part of the claims.  Varian challenged this award.

Massachusetts Institute of Technology v.
Affymetrix

The Federal Circuit also heard a patent case involving cutting edge
technology that is, arguably, the future of health care –
personalized health.  Plaintiff Massachusetts Institute of
Technology holds a patent entitled “Methods and Products Related to
Genotyping and DNA Analysis.”  According to the claims of the
patent, the method allows one to identify genetic markers for
particular diseases.   More particularly, variations in
the chain of nucleotides that make up the human DNA genome may
indicate a predisposition to specific diseases.  One such
variation, single nucleotide polymorphism (SNP), is detected by a
method called SNP genotyping.  The patent claims a method of
SNP genotyping that purports to be “groundbreaking method.”
Because the human genome is complex, making it technically
infeasible to detect SNPS by analyzing the full genome, scientists
create a reduced complexity genome (RCG), a subset of the DNA
genome, which is then used to detect the variations or SNPs.
MIT alleged that a company, Affymetrix, infringed the patent by
using a SNP genotyping process that fell within the claims of the
patent.

The heart of the appeal and litigation in the district court is
how a particular term in the patent claim, “randomly primed
PCR-derived RCG” should be interpreted.   This is a
matter of what is called in the patent world as “claim
interpretation.”  Claim interpretation involves interpreting
particular claims contained in the patent, in order to determine
the scope of the patented invention and also to determine whether
someone’s product or conduct falls within those claims.  Each
party to the litigation advances competing claim interpretations
and the court, usually with the help of expert witnesses, will
construe the claims.   Here, Affymetrix claimed that
“randomly primed” should be construed to mean “primed with PCR
primers that contain one or more arbitrarily selected nucleotides,”
while MIT argued that the term “randomly primed” referred to the
structure of the RCG, not to the particular selection of
nucleotides.   If the court adopted Affymetrix’s claim
construction, Affymetrix would not infringe the patent.  If
the court adopted MIT’s construction, infringement was likely.

The district court adopted Affymetrix’s
construction.   MIT appealed, arguing that it
specifically defined “randomly primed PCR-derived RCG” in the
patent itself and during prosecution of the patent before the
Patent and Trademark Office and, as such, the district court erred
by not adopting its definition.