Lithium Metal Oxide Cathode Materials: Commission Grants Relief after First Oral Hearing in a 337 Investigation in 10 Years

BatteriesOn January 26, 2017, after taking the unusual step of ordering a full International Trade Commission oral hearing to consider issues including laches, remedy, and public interest, the Commission issued a limited exclusion order (LEO) in Lithium Metal Oxide Cathode Materials, Inv. No. 337-TA-951. The oral hearing was the first held before the Commission since the 2007 hearing in Baseband Processor Chips, Inv. No. 337-TA-543.  It remains to be seen whether this is the start of a new trend of more frequent Commission oral hearings in section 337 investigations.


Complainants BASF Corporation (BASF) and UChicago national laboratory Argonne LLC (ANL)[1] asserted U.S. Patent Nos. 6,677,082 (“the ’082 patent”) and 6,680,143 (“the ’143 patent”) against materials manufactured and imported by Umicore N.V. (Belgium) and Umicore USA Inc. (collectively, “Umicore” or “Respondents”). Argonne owns the patents-in-suit, while BASF held exclusive licenses to the patents. Comm’n Op. at 2. Both patents claim lithium metal oxide electrodes used in battery cells. Since ANL developed the technology, the DOE and U.S. government retain nonexclusive licenses under both patents. Id. at 3, fn. 1.

On February 29, 2016, Judge Pender issued a final initial determination (ID) finding that Umicore had violated Section 337 by importing materials that directly infringed both the ’143 and ’082 patents. ID at 65-71, 83-85. The judge also found contributory infringement, inferring intent from the absence of a non-infringing use of the accused material. Id. at 84 (citing Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005)). With respect to induced infringement, the judge determined that Umicore had a sufficient good-faith belief in non-infringement to negate the intent requirement for inducement. ID at 81-82. Umicore argued that its belief as to non-infringement had been based on chemical and crystallographic studies showing differences between its products and the asserted claims. Id.

Umicore’s laches defense – that Complainants had waited too long to file their complaint after learning of the potentially infringing products – failed as a matter of law. Umicore argued that SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 807 F.3d 1311, 1331 (Fed. Cir. 2015) (en banc), made laches available as a defense in Section 337 investigations because it expressly overruled an earlier case, A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992), which the Commission had relied upon to reach the opposite conclusion. See Comm’n Op. at 15-16 citing SCA Hygiene, 807 F.3d at 1132. The judge, however, agreed with Complainants that SCA Hygiene “does not alter the principle that ‘laches does not provide . . . any meaningful defense in a Section 337 investigation.’” ID at 122 (citations omitted). The judge also ruled that Umicore’s laches defense failed on the merits because there was no evidence BASF knew Umicore sold accused products in the United States before filing its complaint. ID at 122.

Accordingly, the judge recommended issuing an LEO prohibiting importation of Umicore’s infringing products. Recommended Determination (RD) at 2-3.  The judge found that none of the public interest factors weighed against the LEO. RD at 10.

Commission Review

Umicore petitioned for review of the ID’s infringement, domestic industry, and laches findings on March 14, 2016, and requested a Commission hearing. On the same day, Complainants filed a petition challenging the finding of no induced infringement. The Commission investigative attorney petitioned for review of the ID’s laches finding.

The Commission determined to review the final ID on May 11, 2016, and scheduled a hearing for November 17, 2016. At the hearing, Umicore presented witnesses, including an industry representative (e.g., a product development manager at 3M), professors, and market analysts who argued that Umicore’s lithium oxide materials were essential for the research and development of batteries for electric vehicles, energy systems, and medical device applications. Comm’n Op. at 45-47. Witnesses for Complainants included the DOE (represented by its general counsel, among others). Id. at 47. The DOE testified about its interest in the patented technology and its “innovation pipeline” bringing advances from public sector research to commercial applications. Id. Failure to enforce the DOE’s patents, it argued, undermines support for the pipeline. Id.

Commission Opinion

The Commission upheld the ID’s finding that Umicore had failed to prove laches on the merits. Comm’n Op. at 15. For future investigations, however, the Commission took no position as to whether a laches defense is available at the ITC, since SCA Hygiene’s overruling of Auckerman’s bar on laches is now before the U.S. Supreme Court. Id.

With respect to induced infringement, the Commission overruled the ID’s finding that Umicore had possessed a good-faith belief of non-infringement. No evidence showed that Umicore had actually relied on its chemical and crystallographic studies to conclude that its products did not infringe. Id. at 22-23. Moreover, data cited by Umicore was insufficient to show non-infringement and its expert’s testimony, commissioned specifically for the ITC investigation, could not establish any pre-investigation belief by Umicore. Id. at 23-24. The Commission found specific intent to infringe in Umicore’s failure to seriously pursue licenses during negotiations with the Complainants, and in Umicore’s failure to investigate its customers’ suggestions that its product compositions fell within the scope of the patents-at-issue. Id. at 25-26.

With regard to public interest, the Commission rejected Umicore’s arguments that an exclusion order would negatively impact R&D in energy technology. Id. at 48. Despite substantial expert testimony, no “person appearing before the Commission could identify any particular ongoing research effort that would be impacted by an exclusion order.” Id. The Commission concluded that sources other than Umicore might still provide the materials (id. at 50-51), and the government would still be able to develop the technology because of its licenses to the patented technology (id. at 49). The Commission reasoned that these circumstances distinguished the case from Inclined-Field Acceleration Tubes, Inv. No. 337-TA-67, where an exclusion order’s impeding of research and development was determined to be contrary to the public interest and warranted denial of any remedy order. Here, unlike in Inclined-Field Acceleration Tubes, the ITC concluded there was no evidence that Umicore’s materials were indispensable to ongoing R&D efforts. Id. at 50.

Finally, the Commission rejected Complainants’ suggestion that the LEO include a provision requiring the Commission to adjudicate any redesigns before importation. Id. at 29. Instead, the Commission ruled that Customs and Border Protection, not the ITC, initially enforces exclusion orders with respect to redesigns. Id. It advised that the parties may seek enforcement, advisory, or modifications proceedings before the Commission (presumably a nod to the ITC’s new pilot program for redesigns and new products). Id. at 29.

[1] Argonne National Laboratory, represented by ANL, is a scientific laboratory run by the U.S. Department of Energy (DOE).