14 2 ~BLIC VERSIONApril 30, 2012

No. 11- ~ ......© Cou~ U.~.riLED

IN THE

~upr~m~ ~ourt of the t~nit~h2012

JOHN MEZZALINGUA ASSOCIATES, INC.(doing business as PPC),

Petitioner,

INTERNATIONAL TRADE COMMISSION,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

COURT OF APPEALS FOR THE FEDERAL CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

GABRIEL P. KRALIK

Vice President, General Counsel,Chief Patent Counsel andCorporate Secretary

JOHN MEZZALINGUA ASSOCIATES, INC.,

DOING BUSINESS AS PPC

6176 East Molloy RoadEast Syracuse, New York 13057(315) 431-7200Gkralik@ppc-online.com

241750

COUNSEL PRESS

(800) 274-3321 . (800) 359-6859

BLANK

QUESTIONS PRESENTED

(1) Whether the ITC acted cursorily and capriciouslyin finding that PPC’s substantial investment inengineering, research and development for the EXproduct was minimally attributable to its designpatent, U.S. Pat. No. D440, 539 ("the ’539 patent"),thus precluding satisfaction of the domestic industryrequirement under 19 U.S.C. Sec. 1337 (a)(3)(C) and,thereby, arbitrarily diminishing the availabilityof Section 337 relief, including for design patentsgenerally?

(2) Whether the ITC’s interpretation of "exploitation" insection 337(a)(3)(C) was unduly narrow and manifestlycontrary to the plain meaning of the language of thatstatute which compels this term to be read broadlyin accordance with its text, thereby artificiallyand arbitrarily narrowing the domestic industryrequirement to the detriment of PPC and other patentowners similarly situated?

(3) Whether it was error for the ITC, in its capacity as anadministrator of an important intellectual propertystatute, 19 U.S.C. Sec. 1337, to place an undueexpectation of trade-related or production-relatedactivity upon PPC’s ’539 patent when analyzing thedomestic industry requirement, thereby improperlylimiting section 337 relief including for patentsgenerally?

(4) Whether litigation, undertaken to enforce patentrights and enhance the value of a patent or pave theway for a stronger competitive advantage, constitutes

ii

a substantial investment in exploitation under section337(a)(3)(C), regardless of that activity’s relationshipto licensing, engineering, research or production, suchthat it was error for the ITC to exclude PPC’s litigationcosts untethered to licensing when consideringwhether PPC had established a domestic industry forthe ’539 patent?

(5) Whether litigation activities alone can support afinding of a substantial investment in exploitationunder section 337(a)(3)(C)?

iii

CORPORATE DISCLOSURE STATEMENT

The names of all parties in the Court whose judgmentis sought to be reviewed appear in the caption of thispetition for writ of certiorari.

Petitioner, John Mezzalingua Associates, Inc. dbaPPC ("PPC") has no parent company and no publicly heldcompany owns 10% or more of its stock.

iv

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ..................i

CORPORATE DISCLOSURE STATEMENT ...iii

TABLE OF CONTENTS .....................iv

TABLE OF APPENDICES ...................vii

TABLE OF CITED AUTHORITIES ...........viii

OPINIONS BELOW ..........................1

JURISDICTION ............................. 1

STATUTORY PROVISIONS INVOLVED .......1

STATEMENT OF THE CASE ................1

BACKGROUND OF THE INSTANT CASE ......6

REASONS FOR GRANTING THE PETITION..7

ARGUMENT ................................ 9

I. THE CASE SHOULD BE REMANDEDSO THAT PPC’S INVESTMENT INENGINEERING, RESEARCH ANDDEVELOPMENT FOR THE EXCONNECTOR PROJECT MAY BEAPPROPRIATELY ALLOCATED ORFOUND TO BE INEXTRICABLY TIEDBETWEEN THE FUNCTIONAL ANDORNAMENTAL FEATURES CREATEDBY INVENTOR MONTENA ............9

II.

V

Table of Contents

PPC’S INVESTMENT INEXPLOITATION OF THE ’539 PATENT,BY WAY OF LITIGATION ACTIVITIESALONE, SHOULD HAVE SATISFIEDTHE DOMESTIC INDUSTRYREQUIREMENT OF SECTION 337(A)(3)(C) AND THIS COURT SHOULDTHEREFORE REVERSE ANDREINSTATE THE TRIAL JUDGE’SRECOMMENDATION OF A GENERALEXCLUSION ORDER ..................

Ao THE ITC FAILED TO INTERPRET"EXPLOITATION" ACCORDING TOITS PLAIN MEANING ............

Bo THE ITC AND MAJORITYPANEL EVIDENCED A "TRADE-RELATED" BIAS TO THEIRVIEW OF SECTION 337 ...........

Co PPC’S LITIGATION ACTIVITIESDIRECTED TO ENHANCING THEVALUE OF THE ’539 PATENTSHOULD QUALIFY AS ASUBSTANTIAL INVESTMENTSUPPORTING A FINDINGTHAT A DOMESTIC INDUSTRYEXISTS ..........................

Page

12

14

15

18

vi

Table of Contents

Do APER SE RULE THAT LITIGATIONACTIVITIES ALONE SUFFICE TOSUPPORT A DOMESTIC INDUSTRYUNDER SECTION 337 SHOULDHAVE BEEN APPLIED TO THE’539 PATENT ......................

CONCLUSION ..............................

Page

19

21

vii

TABLE OF APPENDICES

APPENDIX A-- DECISION OF THE UNITEDSTATES COURT OF APPEALS FORTHE FEDERAL CIRCUIT DECIDEDOCTOBER 4, 2011 .........................

Page

la

APPENDIX B -- REMAND INITIALDETERMINATION ON VIOLATIONOF SECTION 337 OF THE UNITEDSTATES INTERNATIONAL TRADECOMMISSION WASHINGTON, D.C., DATEDMAY 27, 2010 ..............................43a

APPENDIX C -- INITIAL DETERMINATIONAND RECOMMENDED DETERMINATIONOF THE UNITED STATESINTERNATIONAL TRADE COMMISSION.......................................... 94a

APPENDIX D m ORDER DENYING THEPETITION FOR REHEARING OF THEUNITED STATES COURT OF APPEALSFOR THE FEDERAL CIRCUIT, FILEDDECEMBER 8, 2011 .......................311a

viii

TABLE OF CITED AUTHORITIES

Page

CASES

Chevron U.S.A. Inc. v.Natural Resources Defense Council, Inc.,467 U.S. 837 (1984) ......................7, 12, 14

Garcia v. United States,469 U.S. 70 (1984) ..........................14

Gotham Co. v. White,81 U.S. 511 (1871) ...........................10

Hilton Davis Chem. Co. v.Warner-Jenkinson Co., Inc.,62 F.3d 1512 (Fed. Cir. 1995) .................17

Honeywell Int’l, Inc. v. ITC,341 F.3d 1332 (Fed. Cir. 2003) ................7

John Mezzalingua Associates, Inc. (doingbusiness as PPC, Inc.) v. International TradeCommission,No. 2010-1536 (Fed. Cir. October 4, 2011) ......1,2

NSK Ltd. v. United States,390 F.3d 1352 (Fed. Cir. 2004) ................

Rybarczyk v. TRW, Inc.,235 F.3d 975 (6th Cir. Ohio 2000) .............13

ix

Cited Authorities

Page

28 U.S.C. § 1254(1) ............................1

28 U.S.C. § 1295(a)(1) .........................1

35 U.S.C. § 271(a) .............................17

Administrative Procedure Act .................7

Texas Instruments Inc. v. ITC,988 F.2d 1165 (Fed. Cir. 1993) ................16

TransCore, LP v.Elec. Transaction Consultants Corp.,563 F.3d 1271 (Fed. Cir. 2009) ................16

United States v. Carlson,900 F.2d 1346 (9th Cir. 1990) .................3, 13

STATUTES

5 U.S.C. § 706(2)(A) ...........................7

19 U.S.C. § 1337(Tariff Act of 1930 as amended) ...........passim

19 U.S.C. § 1337(a)(3) ..........................13

19 U.S.C. § 1337(a)(3)(C) ....................passim

Cited Authorities

Page

OTHER AUTHORITIES

Andrew Beckerman-Rodau, Patents are Property:A Fundamental But Important Concept,4 J. Bus. & TECH. L. 87 (2009) ................17

H.R. REP. No. 100-40 ..........................13

Joel W. Rogers & Joseph P. Whitlock, Is Section337 Consistent with the GATT and TRIPSAgreement?, 17 AM. U. INT’L L. REV. 459(2002) .................................... 16

John R. Allison et al., Valuable Patents, 92 Geo.L.J. 435 (2004) .............................18

Mark A. Lemley, The Economics of Improvementin Intellectual Property Law, 75 TEX. L.REV. 989 (1997) .............................18-19

Omnibus Trade and Competitiveness Act of1988, Pub. L. No. 100-418, Sec. 1341(b),reprinted in 1988 U.S.C.C.A.N. (102 Stat.)1107 ...................................... 16

S. REP. No. 100-71 ............................14

Thomas A. Broughan, III, Modernizing section337’s Domestic Industry Requirement forthe Global Economy, 19 FED. CIR. B.J. 41, 79(2009) .................................... 15

xi

Cited Authorities

William P. Atkins & Justin A. Pan, An UpdatedPrimer on Procedures and Rules in 337Investigations at the U.S. InternationalTrade Commission, 18 U. BhLT. INTELL. PROP.L.J. 105 (2010) .............................

Page

16

BLANK PAGE

OPINIONS BELOW

The October 4, 2011 decision of the Court of Appealsfor the Federal Circuit is reported as John MezzalinguaAssociates, Inc. (doing business as PPC) v. InternationalTrade Commission, 2010-1536 and is reproduced atAppendix A.

JURISDICTION

The judgment of the Court of Appeals for the FederalCircuit was entered on October 4, 2011. On December 8,2011, the Federal Circuit denied the petitioner’s timely filedcombined Petition for Rehearing and Rehearing en Banc(Appendix D). The International Trade Commission hadjurisdiction to hear Petitioner’s claims for relief pursuantto 19 U.S.C. Sec. 1337. The jurisdiction of the FederalCircuit was invoked pursuant to 28 U.S.C. Sec. 1295(a)(1).The jurisdiction of this Court is invoked pursuant to 28U.S.C. sec. 1254(1).

STATUTORY PROVISIONS INVOLVED

19 U.S.C. Sec. 1337, the TariffAct of 1930 as amendedgoverns Petitioner’s right to bring a patent infringementaction in the International Trade Commission.

STATEMENT OF THE CASE

PPC, an East Syracuse, New York based domesticproducer of coaxial cable connectors used in thetelecommunications, satellite, and cable televisionindustries, brings this petition for certiorari and adoptsand incorporates by reference the views expressed by

2

Circuit Judge Reyna written in dissent of the majoritypanel decision in John Mezzalingua Associates, Inc.(doing business as PPC, Inc.) v. International TradeCommission, No. 2010-1536, (Fed. Cir. October 4, 2011).This case was on appeal to the Court of Appeals for theFederal Circuit from the United States InternationalTrade Commission in Investigation No. 337-TA-650.

PPC made two significant investments which support afinding that it satisfied the domestic industry requirementunder section 337, 19 U.S.C. Section 1337, for its ’539design patent. First, at its headquarters and researchfacility in East Syracuse, New York, beginning in 1997,it invested in engineering, research and developmentto bring to market its EX connector product, one of theCompany’s main sellers today. The ’539 design patentwas an off-shoot of that project. Second, it invested in theexploitation of its ’539 design patent by suing a competitor,Arris, for patent infringement. PPC won the suit anda damage award. Subsequent to Arris redesigning itsproduct to avoid the reach of the ’539 patent, PPC thenbrought a further action against Arris on a related EXutility patent, U.S. Pat. No. 6,559,194 ("the ’194 patent").Eventually, PPC forced Arris to accept a license to the’539 patent as part of a broader license to EX connectorpatents.

The ITC took a jaundiced view of PPC’s investments. Itminimized the portion of PPC’s research and developmentattributable to the ’539 design patent by assuming thatthe bulk of PPC’s investment was attributable to thefunctional aspects of its EX connector. This attribution iswhat Judge Reyna characterized in his opinion as a slightto design patents generally. Next, the ITC diminishedPPC’s litigation investment by requiring a connection

3

between enforcement expenses and licensing whichJudge Reyna felt ignored the plain language of section337(a)(3)(C) and the practical realities in the connectorindustry where PPC was faced with "copy-cat" importsand "competitors that only stopped infringing and licensedPPC’s patents at the point of a sword forged and temperedin the district court." (Reyna Dissent at p. 21).

PPC believes that this Court should take into accountthat as a company it embodies the very archetype of whatsection 337 actions were designed to protect - a domesticindustry.

In bringing this petition, PPC recognizes that JudgeReyna in his panel dissent addressed certain statutoryconstruction points that it did not raise head-on in itsappeal. Nevertheless, review here is made possiblepursuant to the points and authorities argued, for example,in footnote 3 of the dissenting opinion which concludes: "Itis therefore necessary to address the ITC’s interpretationof section 337(a)(3)(C), as the statutory constructionquestion forms the true basis of the dispute before thiscourt." The court may reach questions not properly beforeit where "the issue is purely one of law and the opposingparty will suffer no prejudice as a result of the failureto raise the issue." (Reyna Dissent at pp. 13-14, fn. 3,citing United States v. Carlson, 900 F.2d 1346, 1349 (9thCir. 1990)). No prejudice will result because on remandPPC previously presented all of its evidence of litigationactivities which the Administrative Law Judge then siftedusing an improper filter on section 337, as the ITC haddirected him, to discount what he felt were non-licensingrelated patent litigation expenditures. The Federal Circuitreviewed the full record.

4

While statutory construction questions do dominatethe arguments in this petition, PPC also addresses hereinthe arbitrary way in which the ITC unevenly attributedPPC’s research and development investment in its EXproject to favor utility patents as opposed to the ’539design patent for which the panel majority upheld the ITCin finding no domestic industry. Design patents form a keypart of PPC’s enforcement strategy and are particularlyimportant in policing the border of the widespreadinfringement which plagues the domestic coaxial cableconnector market.

PPC’s Principal Engineer Noah Montena createdthe Company’s "EX" connector line of products in about1997. Several U.S. patents now cover this product. Oneof them is the ’194 utility patent directed to a particularutility invention for a compression installed connector. Inconnection with the present case investigation below, theITC awarded PPC a General Exclusion Order ("GEO")for the ’194 patent. Customs currently enforces this order,detaining and seizing connectors which infringe the ’194patent, to protect PPC’s domestic market. Herein, PPCcontinues to pursue a General Exclusion Order relief forthe family-related ’539 design patent. Although PPC nolonger offers the specific ornamental design of the ’539patent as a product, it recognizes that CBP’s enforcementof the border could be enhanced by adding this EX designpatent. It is far easier for border agents to compare theoutside of a connector by visual examination than it is forthem to cut open connectors and examine them under amicroscope to find internal patented features of the ’194utility patent.

Unanimously, the Federal Circuit decision panelbelow agreed with PPC that it had standing to pursue

relief. Part of the panel’s consideration took into accountthat at the trial level PPC was successful in convincingthe Administrative Law Judge to recommend an awardof a GEO for the ’539 Design Patent. There the trialjudge had pointed out that the connector industry PPCparticipates in is susceptible to widespread infringementand presents opportunities to circumvent a more limitedexclusion order.

What the Federal Circuit decision panel was notunanimous on was how to look at this case - did it presentfact based questions or legal questions. Two judges ofthe panel decided the matter factually under restrictedstandards of review, denying PPC its requested relief.Judge Reyna looked at the matter as raising questionsof law with broader standards of review. His dissentingopinion in this matter is studied and forceful and isrecognized by the patent bar to invite a request for furtherconsideration by the full Federal Circuit Court.

PPC as a domestic manufacturer of coaxial cableconnectors is interested in this appeal because if JudgeReyna’s views with respect to design patents areupheld, design patents that surround its utility patentson products it sells, such as the ’539 patent here, wouldbecome powerful additional weapons in the fight tosecure its market from a sea of unfair infringing foreigncompetition and imports. In addition, other patents, bothutility and design, that PPC does not commercialize butwhich nevertheless protect its domestic market in coaxialcable connectors could be enforced in the InternationalTrade Commission forum. PPC pursued these additionalutility and design patents because it recognized thatforeign competitors impacting the U.S. market withtheir low-priced connectors offer design variations whichcompete with PPC, for example with the EX connector.

6

The first argument presented in this petition givesthe Court the opportunity to weigh in on the innate valueof design patents either combined with or separate andapart from utility patents. The second argument affordsthe Court an opportunity to decide whether litigationinvestment permits a patent owner to utilize the ITC as aforum because litigation expense qualifies as a significantinvestment in exploitation for the purpose of satisfyingsection 337’s domestic industry requirement.

In sum, it is fair to say that Judge Reyna felt theITC and panel majority below gave PPC’s design patentthe short shrift. He also felt that the ITC and panelshould have credited the litigation expenses PPC made,suing infringers on both the ’539 design patent and itscounterpart ’194 utility patent, to find a domestic industry.

BACKGROUND OF THE INSTANT CASE

PPC hereby incorporates and adopts the Backgroundstatement found at pp. 2-8 of Judge Reyna’s dissentingopinion in this matter. (Appendix). The case herewith respect to PPC’s ’539 patent arose from an ITCinvestigation to combat widespread infringement of PPC’sintellectual property related to its coaxial cable connectorbusiness. The ’539 patent emerged from engineering,research and development work performed by PPC’sprincipal engineer Noah Montena and others at PPC’sheadquarters in East Syracuse, New York. Anotherpatent, the ’194 utility patent, regarding substantiallysimilar subject matter to the ’539 design patent is alreadythe subject of an ITC General Exclusion Order. PPCprotects its product lines using both utility and designpatents. This appeal relates to the latter.

7

PPC hereby incorporates and adopts the reviewstandards set forth at pp. 8-9 of Judge Reyna’s dissentingopinion in this matter which state as follows:

The ITC’s Final Determination is reviewed inaccordance with the Administrative Procedure Act. SeeHoneywell Int’l, Inc. v. ITC, 341 F.3d 1332, 1338 (Fed. Cir.2003). This court must set aside any findings or conclusionsof the ITC that are "arbitrary, capricious, or otherwisenot in accordance with law." 5 U.S.C. Sec. 706(2)(A). TheITC’s legal conclusions are reviewed de novo.

Statutory interpretation by the ITC is a legal issuereviewed de novo, except to the extent deference to theITC’s construction of a statute it administers is requiredunder the two-step analysis set forth in Chevron U.S.A.Inc. v. Natural Resources Defense Council, Inc., 467 U.S.837 (1984). NSKLtd. v. United States, 390 F.3d 1352, 1354(Fed. Cir. 2004). The ITC’s interpretation must be setaside if it is "arbitrary, capricious, or manifestly contraryto the statute." Chevron, 467 U.S. at 844.

REASONS FOR GRANTING THE PETITION

This Court has a keen interest in insuring the properand uniform application of laws as administered by theITC and as reviewed by the Court of Appeals for theFederal Circuit. In this regard, the Court has an interestin upholding the plain language and legislative intent ofthe Tariff Act of 1930 as amended, such that decisionsrendered below are consistent with established principlesof statutory interpretation and the policy reasons forpassage of that statute. Here, review and correction isrequired to uphold these interests.

8

Below, the ITC acted cursorily and capriciously infinding that PPC’s substantial investment in engineering,research and development for the EX product wasminimally attributable to its design patent, U.S. Pat. No.D440, 539 ("the ’539 patent"), thus precluding satisfactionof the domestic industry requirement under 19 U.S.C.Sec. 1337 (a)(3)(C) and, thereby, arbitrarily diminishingthe availability of Section 337 relief.

Further, the ITC’s interpretation of "exploitation" insection 337(a)(3)(C) was unduly narrow and manifestlycontrary to the plain meaning of the language of thatstatute which compels this term to be read broadlyin accordance with its text, thereby artificially andarbitrarily narrowing the domestic industry requirementto the detriment of PPC.

Also, it was error for the ITC, in its capacity as anadministrator of an important intellectual propertystatute, 19 U.S.C. Sec. 1337, to place an undue expectationof trade-related or production-related activity uponPPC’s ’539 patent when analyzing the domestic industryrequirement, thereby improperly limiting section 337relief.

Adopting the views of Federal Circuit Judge Reyna indissent, PPC’s litigation activities, undertaken to enforceand enhance the value of the ’539 patent paved the wayfor a stronger competitive advantage in the domesticmarketplace. These efforts, then, should have constituteda substantial investment in exploitation under section337(a)(3)(C), regardless of that activity’s relationshipto licensing, engineering, research or production.Instead, the ITC unfairly excluded PPC’s litigation costs

9

untethered to licensing when considering whether PPChad established a domestic industry for the ’539 patent.

Finally, following the reason of Judge Reyna, thisCourt can reverse the decision below by adopting aper se rule that PPC’s ’539 patent litigation activities,alone, supported a finding of a substantial investment inexploitation under section 337(a)(3)(C).

ARGUMENT

THE CASE SHOULD BE REMANDED SO THATPPC’S INVESTMENT IN ENGINEERING,RESEARCH AND DEVELOPMENT FORTHE EX CONNECTOR PROJECT MAY BEAPPROPRIATELY ALLOCATED OR FOUNDTO BE INEXTRICABLY TIED BETWEEN THEFUNCTIONAL AND ORNAMENTAL FEATURESCREATED BY INVENTOR MONTENA.

Under section 337, 19 U.S.C. Sec. 1337(a)(3)(C), adomestic industry in a patent can be found through"substantial investment in its exploitation, includingengineering, research and development, and licensing."As a first matter, Judge Reyna’s dissent took issuewith the ITC and the panel majority on whether PPC’sinvestment in engineering, research and developmentfor the EX product overall could be associated with itsdesign patent in a manner that establishes a substantialinvestment. Judge Reyna argued that the ITC and panelmajority were conclusory in their views because theyassigned the primary value of the EX investment to thefunctional aspects of the EX product (see Reyna Dissentat pp. 9-10) and not to its ornamental industrial design. He

10

also criticized the ITC and panel majority for discountingPPC’s engineering, research and development investmentsimply because PPC eventually chose not to use the ’539in its commercial product (see Reyna Dissent at p. 10). Asa third matter, Judge Reyna identified the difficulty ofseparating out the functional and ornamental features ofa research effort where both result from the same work.He stated: "The result may be greater than the sum ofits parts, and the parts may not be easily separable."(Reyna Dissent at p. 11). Recognizing that PPC musthave made some investment in the ornamental design thatbecame the ’539 patent, Judge Reyna chastised the ITCand panel majority as engaging in "mere conjecture" todeny PPC relief because they concluded that the designinvestment was not substantial without any fair basis. Heargued that a remand was required to determine whetherPPC’s research and development efforts, recognized bythe trial judge as substantial in total, may be allocated tothe ornamental features set out in the ’539 patent. (ReynaDissent at p. 12).

Judge Reyna argued that the ITC and panel majority’sdecision undermined the value of design patents generallyby diminishing the availability of section 337 relief fordesign patents. Citing Gorham Co. v. White, 81 U.S. 511,524-25 (1871), he observed that "[d]esign patents protectfundamentally different subject matter than that whichis encompassed by a utility patent, and can be used toeffectively and efficiently combat knock-off products thatcan be easily identified by visual inspection alone." (ReynaDissent at p. 10).

Judge Reyna found unreasonable the fact that theITC and panel majority had discounted PPC’s investment

11

simply because the design was not used in a commercialproduct. He went on to argue that it was significant thatthe inventors efforts in the EX project had yielded "bothfunctional and ornamental features applicable to thesame underlying article." Judge Reyna concluded that"the utility of the article itself cannot be presumed tocompletely overshadow the investment in research anddevelopment of the article’s design." (Reyna Dissent atpp. 10-11).

In debating the panel majority, Judge Reyna’s offeredthe solution of a remand to verify "the possibility andextent to which" PPC’s overall substantial investment inthe EX project "may be allocated between the functionaland ornamental features created by Mr. Montena." (ReynaDissent at p. 12).

PPC adopts Judge Reyna’s views and recognizesthat this Court may want to weigh in on the matter ofthe ITC arbitrarily prioritizing utility patents directedto functional features over design patents coveringornamental features of a product, when allocating a party’sinvestment in engineering, research and developmentfor the purposes of satisfying the domestic industryrequirement under section 337 (a)(3)(C). While it is notalways easy to apportion research and developmentexpenses between utility and design features that emanatefrom the same engineering project, PPC believes thatthe Court could fashion a remand order that would givethe ITC the latitude to either determine whether suchan allocation could be had or permitting judgment onthe record already presented that PPC’s substantialinvestment in its EX project inures to the benefit of the’539 patent.

12

II. PPC’S INVESTMENT IN EXPLOITATION OFTHE ’539 PATENT, BY WAY OF LITIGATIONACTIVITIES ALONE, SHOULD HAVESATISFIED THE DOMESTIC INDUSTRYREQUIREMENT OF SECTION 337(A)(3)(C)AND THIS COURT SHOULD THEREFOREREVERSE AND REINSTATE THE TRIALJUDGE’S RECOMMENDATION OF A GENERALEXCLUSION ORDER.

Judge Reyna set up the question of satisfaction ofthe domestic industry requirement of section 337(a)(3)(C) by litigation activities by first noting in his dissent the"licensing-nexus" holding by the ITC below:

"We conclude that patent infringement alone,i.e., patent infringement litigation activitiesthat are not related to engineering, researchand development, or licensing, do not satisfythe requirements of section 337(a)(3)(C).However, litigation activities (including patentinfringement lawsuits) may satisfy theserequirements if a complainant can prove thatthese activities are related to licensing andpertain to the patent at issue, and can documentthe associated costs." Comm’n Op. at 44.

Next, Judge Reyna turned to question of theappropriate standard of review for this holding indicatingunder Chevron that no deference was owed to the ITCdetermination because as a statutory interpretationquestion, the review above was de novo. (Reyna Dissent atp. 13). In footnote 3 of his opinion, Judge Reyna tackled thequestion of whether review of this issue could be foreclosedowing to PPC’s declining to affirmatively raise head-on

13

the statutory construction point again on appeal after thequestion had been well-briefed at the ITC level and was acritical and dispositive element of the ITC’s decision. Hisconclusion was that review was not foreclosed as the issuewas a "pure question of law that cries out for resolution."Citing Rybarczyk v. TRW, Inc., 235 F.3d 975, 984 (6thCir. Ohio 2000); United States v. Carlson, 900 F.2d 1346,1349 (9th Cir. 1990).

Judge Reyna noted the legislative history of the TariffAct of 1930. He identified a shift in 1988 when Congressamended the statute and "considerably lowered thedomestic industry requirement threshold by permittingnon-manufacturing activity such as licensing and researchto show the existence of a domestic industry." (See ReynaDissent at p. 14, citing H.R. REP. NO. 100-40, at 157). Theamendment reads as follows:

"an industry in the United States shall beconsidered to exist if there is in the UnitedStates, with respect to the articles protected bythe patent, copyright, trademark, mask work,or design concerned -

(A) significant investment in plant andequipment;

(B) significant investment in labor or capital;or

(c) Substantial investment in its exploitation,including engineering, research anddevelopment, or licensing."

19 U.S.C. Sec. 1337(a)(3).

14

In concluding his set up of the statutory interpretationissue, Judge Reyna noted his view that "[n]either partycontends that Congress has directly addressed the preciseissue" of whether litigation activities can alone support afinding of a substantial investment in exploitation undersection 337(a)(3)(C), and further that "the plain languageof section 337 is silent as to how litigation or patentenforcement expenses should be treated." (Reyna Dissentat p. 15).

THE ITC FAILED TO INTERPRET"EXPLOITATION" ACCORDING TO ITSPLAIN MEANING.

PPC hereby adopts the views and analysis of JudgeReyna in his dissenting opinion at pp. 14-17 where heconcluded: 1) that the ITC’s interpretation of section337(a)(3)(C) was "unduly narrow and manifestly contraryto the statute," citing Chevron, 467 U.S. at 842-44; 2)that the ITC failed to articulate a reasonable basis in thelegislative history or a showing of contrary intention tojustify its departure from the plain meaning of section337, citing Garcia v. United States, 469 U.S. 70, 75 (1984);and 3) that the legislative history of section 337 compelsthat "exploitation" be read broadly in accordance withthe statutory text, citing S. REP. NO. 100-71, at 130. Theultimate sum of these points, according to Judge Reyna’sdissent, is that the ITC’s construction of section 337(a)(3)(C) "artificially and arbitrarily narrowed the domesticindustry requirement" requiring reversal.

In application, the ITC’s interpretation of the statuteexcluded a substantial amount of PPC’s litigation expensesassociated with its ’539 design patent because they were

15

not directly tied to licensing. Such a formula was arbitrary,capricious and manifestly contrary to the statute whichdid not require such a licensing connection at all.

Bo THE ITC AND MAJORITY PANELEVIDENCED A "TRADE-RELATED" BIASTO THEIR VIEW OF SECTION 337.

PPC hereby adopts the views and analysis of JudgeReyna in his dissenting opinion at pp. 17-20 where heconcluded that "when Congress amended section 337 itrevised the standing requirement to eliminate the needto show material injury, a factor that is plainly trade-related, and thereby charged the ITC with administeringa statute having a primary purpose of enforcing validintellectual property rights." Citing Thomas A. Broughan,III, Modernizing section 337’s Domestic IndustryRequirement for the Global Economy, 19 FED. CIR. B.J.41, 79 (2009).

Judge Reyna took issue with the panel majority’sposition that the ITC is "fundamentally a trade forum,not an intellectual property forum." (Reyna Dissent at p.17). He noted the similar treatment of the statute at theITC level where the ITC suggested that "exploitation"under section 337 could only be shown by taking steps to"foster propagation or use of the underlying intellectualproperty" or by engaging in "activities that serve toencourage practical applications of the invention or bringthe patented technology to market." (Reyna Dissent at p.17 citing Comm’n Op. at 49).

Judge Reyna contrasted prior Federal Circuitprecedent on this point which sets out a clear issue for

16

this court to maintain consistency in its administrationof the patent laws.

"As this court has observed however, "[w]henCongress amended section 337 of the Tariff Act of 1930in 1988 to provide the definition of domestic industrynow found in subsection (a)(3), it stated that its purposewas ’to make [section 337] a more effective remedy forthe protection of United States intellectual propertyrights.’" Texas Instruments Inc. v. ITC, 988 F.2d 1165,1181 (Fed. Cir. 1993) (quoting Omnibus Trade andCompetitiveness Act of 1988, Pub. L. No. 100-418, Sec.1341(b), reprinted in 1988 U.S.C.C.A.N. (102 Stat.) 1107,1212 (codified at 19 U.S.C. Sec. 1337))(emphasis added).Indeed, subsequent to the 1988 amendment, "actions forthe enforcement of intellectual property rights againstinfringing imports have increased and become the mostprominent of complaints brought before the ITC." (ReynaDissent at pp. 17-18, citing William P. Atkins & JustinA. Pan, An Updated Primer on Procedures and Rulesin 337 Investigations at the U.S. International TradeCommission, 18 U. BALT. INTELL. PROP. L.J. 105, 107(2010) and Joel W. Rogers & Joseph P. Whitlock, Is Section337 Consistent with the GATT and TRIPS Agreement?,17 AM. U. INT’L L. REV. 459, 470-71 (2002)).

Judge Reyna explained that a proper use of section337 should account for the fact that "patentees have noaffirmative right to practice their inventions, but only theright to exclude others from doing so." (Reyna Dissentat pp. 17-18, citing TransCore, LP v. Elec. TransactionConsultants Corp., 563 F.3d 1271, 1275 (Fed. Cir. 2009)).He continued, "A patent right is therefore empty withoutthe ability to meaningfully enforce it against infringers."

17

Judge Reyna observed that Congress, in amending section337 recognized that it was giving patent owners a moreeffective means of enforcing their patent rights at theborder. He argued that Congress had "advanced the axiomthat enforceable patent rights are good for innovation andthe economy." (See Reyna Dissent at p. 19, citing HiltonDavis Chem. Co. v. Warner-Jenkinson Co., Inc., 62 F.3d1512, 1529 n.1 (Fed. Cir. 1995)); Andrew Beckerman-Rodau, Patents are Property: A Fundamental ButImportant Concept, 4 J. BUS. & TECH. L. 87, 93 (2009);and 35 U.S.C. Sec. 271(a).

In application, the ITC’s bias required PPC to exploitits ’539 patent in trade-related activities, either bringingthe patented design to market or licensing others. Thisprejudice, which took the form of a licensing nexusrequirement for qualifying PPC’s litigation activities,neglected the true import of section 337 actions. Properlyadministered, the amended section 337 would have broadlyfound that PPC’s investment in litigation activities relatedto the ’539 patent, of their own accord, were substantialbecause they were "intellectual property" enforcementrelated. The ITC’s approach undermined PPC’s incentiveas a domestic producer to innovate, thus permittingforeign companies to utilize PPC’s intellectual propertywithout the benefit of Congress’ enhanced recourse atthe border under section 337. As Judge Reyna observed,foreign infringing companies "vanish at the first sign oflegal opposition to their importation or domestic sales,only to later resurface under a new name with moreinfringing products" and "[f]or such situations, Congressmade meaningful relief available to patentees by enablingthe ITC to issue exclusion orders to stop infringement atthe border." (Reyna Dissent at p. 19).

18

Judge Reyna concluded his "intellectual property-related" purpose argument by noting that theAdministrative Law Judge had recognized PPC’spredicament with foreign infringers, determining thata General Exclusion Order was a proper." As shown inPPC’s case, there exists strong motivation for infringersto circumvent U.S. patent enforcement efforts, acircumstance that can only be effectively addressedthrough the issuance of a general exclusion order." (ReynaDissent at pp. 19-20, citing Initial Determination at 143.).

PPC’S LITIGATION ACTIVITIESDIRECTED TO ENHANCING THE VALUEOF THE ’539 PATENT SHOULD QUALIFYAS A SUBSTANTIAL INVESTMENTSUPPORTING A FINDING THAT ADOMESTIC INDUSTRY EXISTS.

PPC hereby adopts the views and analysis of JudgeReyna in his dissenting opinion at pp. 20-21 where heconcluded that PPC’s litigation activities associatedwith the ’539 patent increased its value. Judge Reynabelieved that PPC had thereby fortified its position in themarketplace and that, absent the infringement actionsassociated with EX product-related patents, PPC wouldnever have obtained the ’539 license agreement.

In addition to noting that successfully litigatinga patent to a favorable judgment of validity andinfringement strengthens its value (citing John R. Allisonet al., Valuable Patents, 92 Geo. L.J. 435, 439-440 (2004)),Judge Reyna explained that stronger patents attract andprovide higher returns on investment (citing Mark A.Lemley, The Economics of Improvement in Intellectual

19

Property Law, 75 TEX. L. REV. 989, 994 (1997). (ReynaDissent at pp. 201-21).

Applying these observations to PPC’s situation, JudgeReyna found it "unreasonable that entities like PPC bediscouraged from first enforcing a patent in litigation inlieu of producing the patented article to compete in themarketplace while at a clear economic disadvantage."Applying the thought more broadly, Judge Reyna opinedthat "when an industry is highly reluctant to licensepatents in the relevant technological field, a patenteeshould be able to pursue litigation as an alternative orprecursor to licensing negotiations without diluting itspatents rights" as "[1]itigation in these contexts constitutesan investment in exploitation." (Reyna Dissent at p. 21).

Dt A PER SE RULE THAT LITIGATIONACTIVITIES ALONE SUFFICE TO SUPPORTA DOMESTIC INDUSTRY UNDER SECTION337 SHOULD HAVE BEEN APPLIED TOTHE ’539 PATENT.

PPC hereby adopts the views and analysis regardingstatutory interpretation of Judge Reyna in his dissentat pp. 14-22 which, in sum, present a per se rule thatinfringement litigation qualifies as substantial exploitationof a patent within the meaning of section 337(a)(3)(C). Evenif in its original Federal Circuit briefing PPC declined toraise a specific dispute regarding the ITC’s statutory readof "exploitation," which required a nexus with licensingfor litigation expenses to qualify for consideration undersection 337(a)(3)(C), such a proof requisite, as Judge Reynaasserts, "cries out" for reversal. It is incumbent upon theITC, the Federal Circuit and this Court to do consistent

2O

justice and appropriately weigh evidence using the correctlegal standard.

Statutory construction is purely an issue of lawand the opposing party here, the ITC, will suffer noprejudice. Below, on remand, PPC presented all of itslitigation expenses associated with the ’589 patent,this after the Administrative Law Judge had come to adifferent conclusion about PPC satisfying its burden toprove a domestic industry. Also, in the Federal Circuit,PPC addressed the question of why those same expensesqualified as a substantial investment in exploitation. Itwas only by an improper sifting of these expenses, asdirected by the ITC, that the Administrative Law Judgeeventually declined to find a domestic industry -- anissue he characterized as "a close one." Unchecked, thepromulgation of this incorrect standard would work aninjustice to PPC and to other patent holders similarlysituated.

In context, PPC was successful in establishing adomestic industry for its ’194 patent and received aGeneral Exclusion Order. The ’539 patent emanated fromthe same parent patent as the ’194 and arose from thesame research and development project that launchedPPC’s EX product. There is little dispute that PPC’soverall litigation expenses associated with the ’539 patent,as presented, were significant -- without sifting them forlicensing nexus. Judge Reyna’s per se rule is set forthbroadly at page 20 of the dissent where he concludes:"Under the broad language of section 337(a)(3)(C), patentinfringement litigation is an investment in the exploitationof a patent." Per se, PPC made a significant investmentin litigating the ’539 patent in the district court. PPC

21

leaves to this Court the further question of whether anITC action alone could satisfy the statutory threshold.

For Judge Reyna, when an entity acts upon itspatent rights through litigation, it has satisfied Congress’prerequisite for a section 337 enforcement action. "Entitiesthat are or can become market participants in the fieldof the patented technology should not be deemed to lackstanding for a section 337 action if those entities havesubstantially staked out their claim to the technologyvia infringement litigation." (Reyna Dissent at p. 21).PPC, of course, did much better that satisfying this soleprerequisite. It created the ’539 patent as part of anengineering project that became its domestic market inEX coaxial cable connectors. It also sued and licenseda competitor, upholding the validity of its ’539 patent.Today, PPC holds numerous utility and design patents inthe U.S. These patents protect its coaxial cable connectorindustry. PPC is actively engaged in several district courtenforcement actions for that purpose.

CONCLUSION

PPC’s sincere intention in bringing this petitionto protect the jobs of its domestic employees in EastSyracuse, New York, consistent with the legislativepurpose of the Tariff Act of 1930, 19 U.S.C. Sec. 1337as amended. Respectfully, PPC requests that the Courtreach a decision that is consistent with Judge Reyna’sviews in dissent.

After developing the EX product beginning in 1997,and successfully launching this product in the marketplace,PPC faced with a flood of "me-too" infringing imports.

22

Foreign infringers significantly undercut EX pricingand adversely affected PPC’s EX sales. To remedy thisproblem, in 2003 and 2004, PPC brought district courtactions against several defendants. It won those suits.Later, in 2008, PPC brought an ITC action. In the previousdistrict court litigation, PPC sued on its ’539 designpatent and won a judgment of infringement. Later, itreached a license agreement with this same competitor.Despite these circumstances, the ITC did not grant PPCits requested relief.

First, in a slight to design patents generally, the ITCtook the position that PPC’s engineering, research anddevelopment investment in the ’539 design patent couldn’thave been significant simply because the patent protectedornamental features of the EX product developmentand because PPC’s commercial product used a differentdesign. As argued herein, neither excuse gave the ITClicense to be arbitrary and capricious in its findings whichseverely prejudiced PPC. Adopting Judge Reyna’s views indissent, PPC believes it should be afforded an opportunityon remand to show the significant investment in itsdesign work associated with the ’539 patent or to pointout to the trial court why such work should be consideredinseparable from the significant engineering research anddevelopment expense that qualified its related EX ’194utility patent for a General Exclusion Order.

Second, in its statutory interpretation of "exploitation",the ITC ignored the plain meaning of section 337 (a)(3)(C)and its legislative history. Instead, the ITC (and FederalCircuit panel majority) exhibited a "trade-related" bias tothe enforcement of section 337 and ignored the significanceof PPC’s litigation expense directed to enhancing the valueof its ’539 design patent.

23

The ITC should have followed a per se rule todetermine that PPC’s litigation activities with respectto the ’539 patent constituted a significant investment inexploitation to qualify as a domestic industry. On the basisof its litigation investment alone, PPC requests reversaland entrance of a finding that it proved the existenceof a domestic industry through significant investmentin the exploitation of its ’539 patent and the entranceof a General Exclusion Order that had originally beenrecommended by the Administrative Law Judge in theInitial Determination.

Respectfully submitted,

GABRIEL Po KRALIK

Vice President, General Counsel,Chief Patent Counsel andCorporate Secretary

JOHN MEZZALINGUA ASSOCIATES, INC.,

DOING BUSINESS AS PPC6176 East Molloy RoadEast Syracuse, New York 13057(315) 431-7200Gkra]ik@ppc-online.com

E LANK