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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.

Written by Temple Law School

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