DBN Holding, Inc. v. ITC

DBN Holding, Inc. v. ITC

Opinion

 [*994]  Reyna, Circuit Judge.

DBN Holding, Inc. and BDN LLC appeal from a decision of the U.S. International Trade Commission, which denied their petition to rescind or modify a civil penalty order. The Commission denied the petition on the basis of "res judicata" in light of our decision in DeLorme Publishing Co. v. Int'l Trade Comm'n, 805 F.3d 1328 (Fed. Cir. 2015). We conclude that the Commission erred by relying on res judicata because neither the Commission nor this court has considered whether to rescind or modify the civil penalty in light of the invalidity of the relevant patent claims. We reverse and remand.

Background

1. The Past Appeals

In September 2012, the U.S. International Trade Commission ("Commission") instituted a Section 337 investigation (Inv. No. 337-TA-854) to determine [**2]  whether imports by DeLorme Publishing Company, Inc. and DeLorme InReach LLC (collectively, "DeLorme")¹ of certain satellite communication devices infringed U.S. Patent No. 7,991,380 ("the '380 patent"). DeLorme executed a Consent Order Stipulation, proposing to terminate the investigation. J.A. 123-25. In April 2013, the Commission terminated the investigation.

In May 2013, the Commission instituted an enforcement proceeding based on allegations that DeLorme had violated the Consent Order. The Commission ultimately determined that DeLorme had violated the Consent Order and assessed a civil penalty of $6.2 million.

Shortly after institution of the May enforcement proceeding, DeLorme filed a declaratory judgment action in the Eastern District of Virginia, seeking judgment of noninfringement and invalidity of certain claims of the '380 patent. The claims challenged were the same claims asserted in the Section 337 investigation. The district court subsequently granted summary judgment of invalidity in favor of DeLorme, finding that the claims asserted in the enforcement proceeding and subject to  [*995]  the Consent Order were invalid. The district court's invalidity judgment was issued after the Commission had assessed the civil penalty in the enforcement proceeding. [**3] 

The respective losing parties appealed the decisions of both the Commission and the district court. This court received the appeals for consideration as companion cases. Prior to oral arguments, we asked for supplemental briefing on "[w]hat effect, if any, would an affirmance of the district court's summary judgment of invalidity in [the district court case] have on the [Commission's] enforcement of the Consent Order at issue in this appeal?" J.A. 469. The Commission argued that if we affirmed the invalidity judgment, further proceedings before it would be necessary because the effect of the invalidity of the patent had not been considered by the Commission. DeLorme Publ'g Co. v. Int'l Trade Comm'n, No. 2014-1572, Dkt. No. 64 at 3-4 ("ITC Suppl. Br."). The Commission pointed to 19 C.F.R. § 210.76, which "has been used by the Commission to vacate civil penalties which have been assessed for violation of a consent order," as the procedural mechanism for the further proceedings it argued were necessary. Id.; see also J.A. 471-72; Certain Neodymium-Iron-Boron Magnets, Magnet Alloys, and Articles Containing Same, Inv. No. 337-TA-372, 64 Fed. Reg. 56,515-16 (Oct. 20, 1999) ("Magnets") (relying on Section 337 and 19 C.F.R. § 210.76 as authority for vacating a civil penalty order). According to the Commission, to seek modification "DeLorme [**4]  [could] file a petition under [19 C.F.R. §] 210.76 based on affirmance of the invalidity judgment." ITC Suppl. Br. at 4.

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