Protest 2704-16-101131; U.S. International Trade Commission; General Exclusion Order; Investigation No. 337-TA-894; Certain Tires and Products Containing Same

HQ H278623 October 3, 2016 OT:RR:BSTC:IPR H279576 WMW CATEGORY: 19 U.S.C. § 1337; Unfair Competition Ms. Tinesha Cherry Director of Automotive & Aerospace Center of Excellence & Expertise Attn: APD Lisa Wallace P.V. McNamara Federal Building 477 Michigan Ave. Room 281 Detroit, MI 48226 RE: Protest 2704-16-101131; U.S. International Trade Commission; General Exclusion Order; Investigation No. 337-TA-894; Certain Tires and Products Containing Same Dear Ms. Cherry: This is in response to the application for further review of the above-referenced protest, dated September 6, 2016, and filed by Lexani Tires Worldwide, Inc. (“Protestant”) challenging the exclusion of two models of tires imported by Protestant, the LX-20 and LX-30 refused entry for consumption at the port of Los Angeles based on the above-referenced general exclusion orders issued by the U.S. International Trade Commission (“ITC” or “Commission”). As an initial matter, we note that the protest was timely filed and that the issue presented is a protestable issue. Investigation 337-TA-894 The Commission instituted Investigation No. 337-TA-894 (‘894 LEO) on September 16, 2013, based on a complaint filed by Toyo Tire & Rubber Co., Ltd. of Japan, Toyo Tire Holdings of Americas Inc. of Cypress, CA, Toyo Tire U.S.A. Corp. of Cypress, CA, Nitto Tire U.S.A. Inc. of Cypress, CA and Toyo Tire North America Manufacturing Inc. of White, GA (“Toyo”). See 78 Fed. Reg. 57882 (September 20, 2013). Toyo alleged violations against several respondents of section 337 of the Tariff Act of 1930 (19 U.S.C. §1337) by reason of patent infringement of one or more of U.S. Design Patent No. D487,424 (“the ’424 patent”); U.S. Design Patent No. D610,976 (“the ’976 patent”); U.S. Design Patent No. D610,977 (“the ’977 patent”); U.S. Design Patent No. D626,913 (“the ’913 patent”); and U.S. Design Patent No. D458,214 (“the ’214 Patent”) (collectively referred to as the “Toyo patents”). See Limited Exclusion Order (“LEO”) at 1 (July 24, 2014). On February 4, 2014, the Administrative Law Judge (“ALJ”) issued his Initial Determination Finding Respondents in Default (“IDFRD”), finding the respondents Turbo Wholesale Tiers, Inc., Lexani tires, and WTD Inc. be found in default waiving their right to appear, be served with documents, and to contest the allegations of a violation of Section 337.See IDFRD at 1-2. The Commission issued a limited exclusion order on July 24, 2014, determining that the appropriate form of relief was a limited exclusion Order (“LEO”) prohibiting the unlicensed entry of certain tires and products containing the same by WestKY Customs, LLC, Tire & Wheel Master, Inc., Vittore Wheel & Tire, RTM Wheel & Tire, Turbo Wholesale Tires, Inc., Lexani Tiers Worldwide, Inc., WTD Inc. and Simple Tire that infringe upon one or more of the ‘424, ‘976, ‘977, ‘913 and ‘214 U.S. Design Patents. See LEO at 1. FACTS: On September 6, 2016, at the direction of this office, U.S. Customs and Border Protection (“CBP”) officials at the port of Long Beach issued a notice to Protestant advising that a shipment of Lexani Tires, was excluded from entry for consumption because the articles in question were subject to the 894 LEO due to infringement of the ‘424 patent. See CBP Exclusion Notice (September 6, 1010). On September 9, 2016, at the direction of this office, CBP officials at the port of Long Beach issued a notice to Protestant iadvising that a shipment of Lexani Tires, was excluded from entry for consumption because the articles in question were subject to the 894 LEO due to infringement of the ‘424 patent. See CBP Exclusion Notice (September 9, 1016). On September 6, 2016, pursuant to 19 U.S.C. § 1514, as implemented by 19 C.F.R. Part 174, through counsel, Protestant timely filed a protest challenging the exclusion and claiming the excluded articles were not subject to the 894 LEO. Specifically, Protestant argues that the LX-20 and the LX-30 tires at issue do not infringe upon the underlying patents at issue in the 894 LEO. See Protest at 2. (September 6, 2016). This protest was given the reference number 2704-16-101131 by CBP. Neither of the two models at issue in this protest were addressed in the 894 LEO. The LX-20 tire is described by the Protestant as lacking the “center divide” but rather features a tire that has four divides across the tread of the tire which are framed by straight parallel lines. Protestant states that the ‘424 patent shows a “check mark” shape radiating from the center divide, whereas the LX-20 features straight diagonal lines in the interior partitions and zig-zag lines on the outer partitions. Protestant then claims that there is no similarity between the tread design for the LX-20 and the tire and tread design depicted in the ‘424 patent and does not violate the 894 exclusion order. The LX-30 tire is described by the Protestant as having two smooth parallel dividers in the middle of the tread as opposed to the single jagged channel in the middle of the tire tread as depicted in the ‘424 patent. On the sides of the center channels, the tire tread is composed of one set of lines, radiating out from the center of the tire, which are then met at right angles (90 degrees) by other straight lines. These straight lines flare out at about a 30 degree angle further away from the center of the tire. Protestant states that the ‘424 patent tread pattern features long “check-mark” shaped indentations, which do not come to right angles, and which do not directly intersect with other indentations, but overlap them. Protestant identifies the wavy center division of the tire tread, the check-marked designs radiating off the wavy center division and subordinate lines forming diamond-like shapes on the tire surface as key features of the tire shown in the ‘424 patent all of which are missing in the LX-30 tire. The patents at issue in the 894 LEO are all design patents and as such are limited to a single claim, an ornamental design as shown in the figures associated with the design patent. The design of the ‘424 patent is as follows:


Picture of the LX-20 model tire
Picture of the LX-30 model tire
ISSUE: The issue presented is whether the LX-20 and LX-30 model tires are covered by the underlying patents of the 894 exclusion order and are subject to exclusion from the United States. LAW AND ANALYSIS: Pursuant to the Tariff Act of 1930, the ITC has authority to conduct investigations into imported articles that allegedly infringe United States patents and impose remedies if the accused products are found to be infringing. See 19 U.S.C. § 1337(a)(1)(B), (b)(1), (d), (f). Specifically, 19 U.S.C. § 1337(d) provides the Commission authority to direct the exclusion from entry of articles found to be infringing. Moreover, when the Commission determines that there has been a violation of section 337, it may issue two types of exclusion orders: a limited exclusion order and/or a general exclusion order. See Fuji Photo Film Co., Ltd. v. U.S. Int’l Trade Comm’n, 474 F.3d 1281, 1286 (Fed. Cir. 2007); see also Certain Ink Cartridges and Components Thereof, Inv. No. 337-TA-565, Commission Opinion (October 19, 2007). Both types of orders direct CBP to bar the infringing products from entering the country. See Yingbin-Nature (Guangdong) Wood Indus. Co. v. U.S. Int’l Trade Comm’n, 535 F.3d 1322, 1330 (Fed Cir. 2008). A limited exclusion order is “limited” in that it only applies to the specific parties before the Commission in the investigation. Id. In contrast, a general exclusion order bars importation of the infringing products by everyone, regardless of whether they were respondents in the Commission’s investigation. Id. A general exclusion order is appropriate if two exceptional circumstances apply. See Kyocera Wireless Corp. v. U.S. Int’l Trade Comm’n, 545 F.3d 1340, 1356. A general exclusion order may only be issued if (1) “necessary to prevent circumvention of a limited exclusion order,” or (2) “there is a pattern of violation of this section and it is difficult to identify the source of infringing products.” 19 U.S.C. § 1337(d)(2); see also Kyocera, 545 F.3d at 1356 (“If a complainant wishes to obtain an exclusion order operative against articles of non-respondents, it must seek a GEO by satisfying the heightened burdens of §§ 1337(d)(2)(A) and (B).”). Additionally, a seizure and forfeiture order issued under 19 U.S.C. § 1337(i) directs CBP to seize and forfeit articles imported in violation of an exclusion order when the importer previously had articles denied entry and received notice that seizure and forfeiture would result from any future attempt to import covered articles. The issuance of a general exclusion order by the ITC binds named parties and non-named parties alike and shifts to would-be importers, “as a condition of entry, the burden of establishing noninfringement.” Hyundai Electronics Industries Co. v. U.S. Int’l Trade Comm’n, 899 F.2d 1204, 1210 (Fed. Cir. 1990). Accordingly, the burden is on Protestant to establish that the tires at issue are not covered by one or more of the patents at issue in the 894 GEO. Patent infringement determinations for utility patents entail two steps. The first step is to interpret the meaning and scope of the patent claims asserted to be infringed. The second step is to compare the properly construed claims to the accused device. See Markman v. Westview Instruments, Inc., 52 F.3d 967 (Fed. Cir. 1995) (en banc), aff’d, 517 U.S. 370 (1996). The first step is a question of law; the second step is a question of fact. See Freedman Seating Co. v. American Seating Company, 420 F.3d 1350, 1357 (Fed. Cir. 2005). In patent law, there are two types of infringement: direct and indirect infringement. One variety of direct infringement is literal infringement. Literal infringement is when every limitation recited in a claim is found in the accused device. See Strattec Security Corp. v. General Automotive Specialty Co., 126 F.3d 1411, 1418 (Fed. Cir. 1997); see also Digital Biometrics, Inc. v. Identix, Inc., 149 F.3d 1335, 1349 (Fed. Circ. 1998) (“An accused device cannot infringe, as a matter of law, if even a single limitation is not satisfied.”). However, a dependent claim cannot be found to infringe if the independent claim from which it depends is not found to infringe. See Becton Dickinson & Co. v. C.R. Bard Inc., 922 F.2d 792 (Fed. Cir. 1990) (“The holding of noninfringement of claim 1 applies as well to all claims dependent on claim 1.”). Under Egyptian Goddess, Inc. v. Swisa, Inc., a design patent is infringed if “in the eye of an ordinary observer, giving such attention as a purchaser usually gives, two designs are substantially the same, if the resemblance is such as to deceive such an observer, inducing him to purchase one supposing it to be the other.” 543 F.3d 665, 670 (Fed. Cir. 2008) (quoting Gorham Co. v. White, 81 U.S. 511, 528 (1871)). PROTESTANT’S ARGUMENT The LX-20 tire is described by the Protestant as lacking the “center divide” but rather features a tire that has four divides across the tread of the tire which are framed by straight parallel lines. Protestant states that the ‘424 patent shows a “check mark” shape radiating from the center divide, whereas the LX-20 features straight diagonal lines in the interior partitions and zig-zag lines on the outer partitions. Protestant then claims that there is no similarity between the tread design for the LX-20 and the tire and tread design depicted in the ‘424 patent and does not violate the 894 exclusion order. The scalloped center rib is a defining feature of the tire shown in the ‘424 patent. This scalloped center rib has adjacent to it scalloped grooves. This rib and its adjacent grooves are abutted by staggered intermediate lugs with a convex sweep of the leading edge which tapers in to form a stylized “check-mark”. Each “check mark” shaped intermediate lug is matched with a double set of shoulder lugs, the line dividing the set of shoulder lugs protruding into the intermediate lug shaped like a check mark. There is also a line separating each set of shoulder lugs from each other, said separating line continuing inward to the center of the tread and serves to outline each “check mark” shaped intermediate lug. The LX-20 does not possess any feature that could be described as a scalloped center rib, or even a center divide. The LX-20 possess three vertical columns of intermediate lugs, these lugs are separated from each other by vertical straight lines. The intermediate lugs are of a uniform shape and are slanted in straight lines. The shoulder lugs are all connected to each other and do not form pairs that are associated with the intermediate lugs closer to the center of the tire tread. Seeing that the ordinary observer of these tire would not confuse the two, it cannot be said that the LX-20 tires practice the ‘424 patent and as such do not fall under the 894 LEO and can be allowed to enter the United States. The LX-30 tire is described by the Protestant as having two smooth parallel dividers in the middle of the tread as opposed to the single jagged channel in the middle of the tire tread as depicted in the ‘424 patent. On the sides of the center channels, the tire tread is composed of one set of lines, radiating out from the center of the tire, which are then met at right angles (90 degrees) by other straight lines. These straight lines flare out at about a 30 degree angle further away from the center of the tire. Protestant states that the ‘424 patent tread pattern features long “check-mark” shaped indentations, which do not come to right angles, and which do not directly intersect with other indentations, but overlap them. Protestant identifies the wavy center division of the tire tread, the check-marked designs radiating off the wavy center division and subordinate lines forming diamond-like shapes on the tire surface as key features of the tire shown in the ‘424 patent all of which are missing in the LX-30 tire. The LX-30 tire possesses a center rib running down the midline of the tire tread. However, the center rib is straight as opposed to possessing scalloped edges as shown in the images of the ‘424 patent. The adjacent groove alongside the center rib is likewise straight, as opposed to the scalloped groove in the ‘424 patent. The next feature moving outward from the center rib is an intermediate lug shaped somewhat like a trapezoid. This trapezoidally shaped intermediate lug is separated to a second lug which leads away from the trapezoidal lug at an acute angle and connects to a singular set of shoulder lugs. The second lug does not taper as it moves towards the set of shoulder lugs. The LX-30 model tire possesses a single set of shoulder lugs while the ‘424 patent shows a tire with a double set of shoulder lugs. Stylistically the design of the LX-30 model and the ‘424 patent model tire are very similar; however, the differences between the LX-30 model tire and the tire shown in the ‘424 patent are such that the ordinary observer would not consider them to be substantially the same. Under Hyundai Electronics Industries Co., the importer of record, having previously found by default to have infringed upon the patents at issue, bears the burden of showing that its products do not now practice the patents associated with the 894 LEO. See Hyundai at 1210. The record does not show that at the time of importation any attempt by the importer to establish that either model of tire did not practice the patents at issue in the 894 LEO. This burden was not met at the time of importation based upon the record and as such it was appropriate for the tires to be detained and excluded by CBP. However, seeing that the ordinary observer of these tire would not confuse the two, it cannot be said that the LX-30 tires practice the ‘424 patent and as such do not fall under the 894 LEO and can be allowed to enter the United States. HOLDING: Based on the record before this office, it is our position that that the LX-20 and the LX-30 tires do not practice the patents underlying the 894 GEO. Therefore, the protest challenging exclusion from entry is allowed. In accordance with the Protest/Petition Processing Handbook (CIS HB, December 2007), you are to mail this decision, together with the Customs Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision, Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Charles R. Steuart Chief, Intellectual Property Branch