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ITC Blocks Import of Apple Watches Based on Alleged Infringement… But Patents Have Already Been Declared Invalid

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from escape-life… department

It has been many, many years since we regularly covered what we call the ITC loophole in patent enforcement. The problem was that patent holders could get two totally separate bats to try to force a company that was actually innovating to pay for dodgy patents. They could go to court, of course, by filing a patent lawsuit. But they could Also go to the International Trade Commission, claiming infringement, and if the ITC agreed, it could ban the importation of the products it believed were covered by that patent. While the ITC couldn’t force a company to pay a violation fee like a federal court would, it was actually just as bad, because once an import ban was in place (since most products are made outside of the United States), companies would be forced to negotiate a huge settlement just to continue their business.

Fortunately, the worst parts of this “loophole” were at least somewhat limited a decade ago with the American Inventions Act patent reform, which introduced the concept of inter-party review (IPR), in which anyone could apply to the Patent Trial and Appeal Board (PTAB) to review a patent to determine if an error was made in the initial issuance. While this did not stop the use of the ITC, it did create a faster path to invalidating a patent, which in theory was supposed to stop proceedings under the ITC. Of the law:

The applicant in an adversarial examination of a claim in a patent under this chapter which results in a final written decision under Section 318(a), or the real party having an interest in or having knowledge of the applicant, shall not may assert either in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 that the claim is invalid for any reason that the applicant has raised or could reasonably have raised during this inter review of exhibits.

Patent owners (mostly trolls, but also practicing entities) tried to kill the IPR process, but their efforts to get the Supreme Court tossed it out lack. Twice.

Either way, the ITC flaw still exists, but it’s (thankfully) less powerful.

However, it seems to have bitten Apple, and in the process demonstrated serious issues with the system. A company named AliveCor has claimed Apple infringes three of its patents with certain Apple Watch features related to heart rate tracking. AliveCor filed its complaint with the ITC directly, seeking an injunction blocking the import of Apple Watch into the United States. The patents in question are US patents 10,638,941, 10,595,731and 9,572,499.

In response, Apple launched an IPR process, claiming all three patents were invalid and should never have been granted. At the beginning of December, the PTAB decided in favor of Apple, estimating all three patents are invalid. For the three patents, Apple referred to two earlier patents, referred to in the proceedings as Shmueli’s invention and Osorio’s invention. And with the three patents, the PTAB found that combining the ideas of Shmueli and Osorio would be an obvious thing to do for someone skilled in the art, making AliveCor’s invalid patents so obvious. Here is part of one of the invalidations (although they are all quite similar):

For the reasons set forth above, we find that the combination of Shmueli and Osorio discloses or makes obvious the detection and confirmation of the arrhythmia cited in the contested claims. We also find that a person skilled in the art would have been motivated to combine the cited references with a reasonable expectation of success in arriving at the contested claims. The Patentee does not specifically challenge any other aspect of the Petitioner’s demonstration with respect to ground 1. After reviewing the argument and the evidence on the record, we find that the Petitioner has shown by a preponderance of the evidence that the claims 1, 5, 7-9, 11, 12, 16, 18–20, 22 and 23 are not patentable as is obvious in view of Shmueli and Osorio.

So… patents are not valid. In theory this should kill the ITC process, but no. As AliveCor noted in a press release after the USPTO invalidated those patents, it apparently didn’t matter, because the ITC could still issue an injunction:

AliveCor is deeply disappointed and strongly disagrees with PTAB’s decision and will appeal. The PTAB and the ITC are two separate independent bodies and will make their own independent decisions. We look forward to the separate final decision from the ITC expected on December 12 and are cautiously optimistic based on the initial decision for AliveCor in June this year.

And, indeed, last week (a few weeks later than expected) the ITC issued a final decision in favor of AliveCor, and issued an injunction that would prevent Apple from importing Apple Watches, although he stayed enforcement of the injunction while President Biden reviews the decision and pending a “final decision” of the PTAB on the validity of patents.

Notice is hereby given that the United States International Trade Commission (“Commission”) has determined that there has been a violation of Section 337 in the above investigation. The Board has further decided to issue a limited exclusion order and a cease and desist order and to set a bond in the amount of $2 per unit of covered items imported or sold during the period of presidential exam. Enforcement of these orders, including the bond clause, is stayed pending final resolution of the final written decisions of the United States Patent and Trademark Office, the United States Trial and patents (“PTAB”) finding that the claimed patent claims are not patentable.

Presidential review is important here, because when the ITC issues one of these injunctions, the President is actually empowered to step in and reverse the decision. In fact, President Obama did just that In a similar scenario ten years ago, after the ITC issued an injunction on iPhones and iPads regarding certain Samsung patents.

It is hoped that Biden will do the right thing and eliminate this attempt to hamper grassroots innovation. Especially since the USPTO has already declared the patents invalid, even if AliveCor is appealing.

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Companies: livingcor, Apple

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