Senator Toomey changes tune on exclusion orders and patents, supports Comcast against TiVo at ITC

Senator Pat Toomey (R-PA)

As we’ve written about before, there’s an important case weaving its way through the ITC.  TiVo brought an action against Comcast for infringing the patents of Rovi (with which TiVo merged) covering inventions that allow consumers to control set top boxes from a remote device, such as a mobile phone.

The dispute, which also includes a patent infringement lawsuit, arose as the result of Comcast refusing to renew a license to the Rovi patent portfolio. Comcast had long paid a licensing fee to use this patented technology, popular with its customers, as have all of Comcast’s cable competitors.  When the contract between Comcast and TiVo expired on March 31, 2016, rather than renew the agreement to pay licensing fees, as all of the other major cable providers did, Comcast decided to stop paying. Rather than removing the infringing products and services from its lineup, Comcast continued to use Tivo’s intellectual property.

TiVo then took its case to the ITC seeking an exclusion order on Comcast’s imports of its now-infringing set top boxes.

An administrative judge at the ITC ruled in TiVo’s favor, finding that Comcast is indeed infringing TiVo’s patents and granted the exclusion order.  During the current public interest determination phase, as you can imagine, various parties have submitted comments on whether the exclusion order is in the public interest. One of those submitting comments is Senator Pat Toomey (R-PA).

Senator Toomey, a respected member of the Senate who is generally regarded as an intellectual and above the sniping that is so common in Washington, is the home state Senator for Comcast, whose corporate headquarters is located in Philadelphia, Pennsylvania. Toomey’s recent comments to the ITC appear to argue against an exclusion order for TiVo, which at first glance probably is hardly surprising to anyone.  Senator Toomey is supporting a large constituent, which is to be expected. However, by doing so in this case Senator Toomey but seems to be directly at odds with a letter he sent just three years ago expressing “strong support of the protections afforded by 19 U.S.C. § 1337 (Section 337)” for a different constituent.

Back in 2014, Senator Toomey wrote to the ITC to support a proposed exclusion order because the patent holder in that case “had made considerable financial investments into developing these technologies and without adequate remedies for imported goods that use their patents without paying for them, our de facto policy will be one that encourages this type of activity.”  He argued that “[t]his will only deter companies . . . from taking bets on future research and development. That cannot be good for American innovation and job creation.”

In his submission supporting Comcast, however, Senator Toomey argues that Section 337 is not the appropriate remedy for TiVo.  Instead, he argues that the proper remedy is to “enjoin infringing uses of the set-top boxes, not to block all importation of the set-top boxes.”  In particular, Toomey argues that because the set top boxes Comcast imports have “substantial, non-infringing uses,” and the patent infringement occurs only in the United States “when Comcast informs customers that they can use smart phones or other mobile devices to schedule a recording on their set-top boxes,” an exclusion order against set-top boxes is an inappropriate remedy.

There are several problems with this logic. First, it’s not clear to me what’s the difference between what Senator Toomey argues is the appropriate remedy – enjoining infringing uses in the United States – and requiring Comcast to remove the infringing functionality before importation. He seems to be splitting a rather nuanced hair here, and one that Section 337 is ill equipped to split. The argument also seems to practically admit that the boxes will at some point infringe even if they do not literally infringe at the moment. But isn’t it the job of the ITC to use Section 337 to keep out those products and services that infringe?

Second, and more importantly perhaps, Senator Toomey’s argument seems to ignore entirely the Federal Circuit’s 2015 en banc decision in Suprema v. ITC.  In that case, fingerprint scanners manufactured abroad and imported into the United States were combined with software running on an external computer and that combination was then used in an infringing manner inside the United States.  The Federal Circuit decided that a violation of Section 337 may be found where a respondent is adjudicated to be an induced infringer even when the direct infringement occurs after importation.  The court recognized that not allowing relief in these circumstances would gut Section 337 because foreign entities could “circumvent Section 337 by importing articles in a state requiring post-importation combination or modification before direct infringement could be shown.”

On one hand it is surprising Senator Toomey would miss such an obvious rebuttal to his argument and seemingly go out of his way to undermine the Section 337 remedy he previously so strongly supported. On the other hand, it is all too predictable that a politician would in one case support strong patent rights and the issuance of an exclusion order, but then when a constituent is involved change tune and decry the overreach of the very same exclusion order previously supported as necessary to protect American innovation and job creation.

Even more fundamental is the point that Comcast could entirely avoid the exclusion order by removing the remote recording functionality found to be infringing.  Then Comcast’s set-top boxes would not infringe and therefore not be subject to exclusion.  A simple solution to a clear problem created by the choice to infringe. Alternatively, if Comcast does not want to remove this functionality, and I certainly understand why they would not want to remove such a desirable functionality, they can take a license like the rest of the industry has done.

Whatever Comcast chooses, they should not be allowed to continue to import the infringing set-top boxes without a license, as Senator Toomey suggests.  That would allow Comcast to have its cake and eat it too. Such a result runs counter to the Senator’s previous views strongly supporting Section 337 when a constituent was the complainant rather than the respondent, as here. It would also reward Comcast’s choice to knowingly pursue a path of infringement.

 

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4 comments so far.

  • [Avatar for Anon]
    Anon
    August 23, 2017 06:16 pm

    Two words:

    Citizens United

    Two other words:

    Legislative capture.

  • [Avatar for xtian]
    xtian
    August 23, 2017 09:24 am

    Gene,

    Thank you for posting this. I have emailed my esteemed senator to point out his lack of respect for the rule of law.

  • [Avatar for Eric Berend]
    Eric Berend
    August 23, 2017 06:10 am

    It is difficult to sustain the essential components of the durable economic structure established by the Founders, when such feckless hypocrisy underpins lawmakers’ actions bearing the appearance of window shutters flapping in the political wind.

  • [Avatar for angry dude]
    angry dude
    August 22, 2017 04:02 pm

    Newsflash

    All animals are equal, but some animals are more equal than others

    and

    America has best justice in the world money can buy