Protest No. 170119100004; U.S. International Trade Commission; Limited Exclusion Order; Investigation No. 337-TA-1088, Certain Road Construction Machines and Components Thereof

HQ H308232 January 21, 2020 OT:RR:BSTC:IPR H308232 JW/CBC CATEGORY: 19 U.S.C. § 1337; Unfair Competition VIA EMAIL: Juan.J.Porras@cbp.dhs.gov; Armando.Taboada@cbp.dhs.gov Mr. Juan J. Porras and Mr. Armando Taboada Directors of Machinery Center of Excellence & Expertise U.S. Customs and Border Protection 109 Shiloh Dr., Ste 300 Laredo, TX 78045 RE: Protest No. 170119100004; U.S. International Trade Commission; Limited Exclusion Order; Investigation No. 337-TA-1088, Certain Road Construction Machines and Components Thereof Dear Mr. Porras and Mr. Taboada: This letter is in response to protest number 170119100004 filed by Wirtgen America, Inc. (“Wirtgen” or “Protestant”) on December 24, 2019. Wirtgen is protesting U.S. Customs and Border Protection’s (“CBP”) exclusion of Wirtgen’s series 1810 cold milling machines, models XFi and XTi,1 by reason of the exclusion order issued by the U.S. International Trade Commission (“ITC” or “Commission”) in investigation number 337-TA-1088 under 19 U.S.C. § 1337. Wirtgen Protest at 2; see also, e.g., 1088 LEO (EDIS Doc. No. 679595); 19 U.S.C. § 1337(d). Wirtgen’s protest specifies that it is “filed in accordance with section 514(a)(4), Tariff Act of 1930, as amended (19 U.S.C. 1514(a)(4)), and 19 C.F.R. § 174.” See Wirtgen Protest at 1. However, the statute is clear on its face that the protest is not proper. See 19 U.S.C. § 1514(a)(4) and 19 C.F.R. § 174.11(b)(4). While “the exclusion of merchandise from entry” is generally addressed under subsection (4) of 19 U.S.C. § 1514(a), Congress excepted—carved out—from protest “a determination appealable under section 1337 of this title [i.e., title 19].” See 19 U.S.C. § 1514(a)(4). Wirtgen’s underlying cause of action in the protest stems from the exclusion order issued by the Commission in investigation no. 337-TA-1088, rather than CBP’s exclusion of merchandise from entry. Thus, in accordance with the language of 19 U.S.C. § 1514(a)(4), 1 Entry no. [[ ]] and entry no. [[ ]]. Wirtgen’s remedy is an appeal as provided by 19 U.S.C. § 1337; not a protest under 19 U.S.C. § 1514(a). See, e.g., 19 U.S.C. §1337(c); 19 U.S.C. §1337(k). The determination that Wirtgen is protesting is not one of the seven categories enumerated in 19 U.S.C. § 1514(a); in fact, it is explicitly carved out. 19 U.S.C. § 1514(a)(4) (“except a determination appealable under section 1337 of this title.”). Accordingly, Wirtgen’s protest is not proper under 19 U.S.C. § 1514(a) and should be DENIED AS NOT PROTESTABLE. In addition, on January 16, 2020, the Commission “determined to institute a modification proceeding pursuant to Commission authority under 19 U.S.C. § 1337(k) and Commission Rule 210.76, 19 CFR 210.76.” Certain Road Construction Machines and Components Thereof, Investigation No. 337-TA-1088, EDIS Doc. No. 699503, Notice of Commission Determination to Institute a Modification Proceeding; Request for Written Submissions at 2 (January 16, 2020). “The modification proceeding is addressed to whether Wirtgen’s redesigned Models XFi and XTi machines infringe claim 19 of the ’693 patent [i.e., U.S. Patent No. 7,140,693] and therefore fall within the scope of the LEO, or whether the LEO should be modified to include an explicit exemption for Wirtgen’s Model XFi and XTi redesigned machines.” Id. These are the same articles as the articles at issue in Wirtgen’s protest. Accordingly, this modification proceeding at the Commission will have a direct impact on, and dictate with respect to the exclusion order, CBP’s views on the admissibility of the articles at issue in Wirtgen’s protest. The determination of the Commission is binding authority on CBP and, in the case of conflict, will by operation of law modify or revoke any contrary CBP ruling or decision. Information bracketed in red [[ ]] in this letter will be redacted from the public version. A public version of this letter is also enclosed for your files. Nothing in Wirtgen’s protest, which included Exhibits 1 to 8, was designated as confidential. If there is additional information not currently bracketed in red [[ ]] that Wirtgen believes should be redacted from the public version, Wirtgen is asked to email the Intellectual Property Rights Branch (“IPR Branch”) of CBP at IPRBranch.ITC337.Admin@cbp.dhs.gov by 5pm ET on January 30, 2020 identifying the additional information that should be redacted from the public version. Please note that CBP is guided in this regard by the laws relating to confidentiality and disclosure to include, for example, the Freedom of Information Act (“FOIA”), as amended (5 U.S.C. § 552), the Trade Secrets Act (“TSA”) (18 U.S.C. § 1905) and/or the Privacy Act of 1974, as amended (5 U.S.C. § 552a). BACKGROUND Investigation No. 337-TA-1088 The U.S. International Trade Commission instituted investigation no. 337-TA-1088 (“the 1088 investigation”) on November 29, 2017. 82 Fed. Reg. 56625-26 (2017). The complainants were Caterpillar Inc. and Caterpillar Paving Products, Inc. Certain Road Construction Machines and Components Thereof, Investigation No. 337-TA-1088, Final Initial Determination (Feb. 14, 2019) at 2 (“FID”). The respondents were Wirtgen GmbH, Joseph Vogele AG, Wirtgen Group Holding GmbH, and Wirtgen America, Inc. Id. The accused products were Wirtgen’s series 1810 compact milling machines, model numbers W 100 CFi, W 120 CFi, and W 130 CFi. Id. at 3; Certain Road Construction Machines and Components Thereof, Investigation No. 337-TA-1088, Commission Opinion (July 15, 2019) at 9-10 (“Comm’n Op.”). For the series 1810 machines, Wirtgen noted that it was [[ ]] FID at 24. Wirtgen stated that [[ ]] and [[ ]] Id. The Administrative Law Judge (“ALJ”) found that these alternate swing-leg designs “have not been implemented in any imported articles,” and thus “are not ripe for a determination of infringement or non-infringement in this investigation.” Id. at 24–25. Wirtgen did not petition for review of the FID’s findings on this issue, and the Commission determined not to review this issue. Comm’n Op. at 10 n.22. (The Commission noted that Wirtgen “identified [[ ]] but the FID declined to adjudicate those [[ ]] Wirtgen did not petition for review of the FID’s findings with respect to the [[ ]], and the Commission determined not to review this issue.”). The Commission found “a section 337 violation based on the infringement of claim 19 of [U.S. Patent No. 7,140,693 (“the ’693 patent”)] by Wirtgen’s series 1810 milling machines.” Comm’n Op. at 46. 2 Hence, the Commission issued a limited exclusion order in the 1088 investigation (“the 1088 LEO”) on June 27, 2019. See 1088 LEO (EDIS Doc. No. 679595). The 1088 LEO, inter alia, prohibits the unlicensed entry for consumption of road construction machines and components thereof that infringe claim 19 of the ’693 patent that are manufactured abroad by or on behalf of, or are imported by or on behalf of, the respondents Wirtgen GmbH, Wirtgen Group Holding GmbH, and Wirtgen America, Inc.3 2 Wirtgen further identified a prior generation of milling machines, that Complainants did not accuse (the 1310 series, with model numbers W 100 Fi, W 120 Fi, and W 130 Fi), for which Respondents requested that the ALJ adjudicate infringement. FID at 3; Comm’n Op. at 10 footnote Wirtgen’s 1310 series machines were found to not infringe any asserted claims of the ’693 patent. FID at 24. Accordingly, in contrast, “[t]he Commission [determined] that the LEO should include an explicit carve-out for Wirtgen’s series 1310 machines.” Comm’n Op. at 47. 3 It should further be noted that in the 1088 investigation Wirtgen sought to limit the limited exclusion order to accused road milling machines, and asserted that the LEO should not encompass other road construction machines and components. FID at 79. However, the ALJ differentiated this argument citing that “[l]ong-standing Commission precedent supports issuance of broad remedial orders extending to ‘all products covered by the patent claims as to which a violation has been found, rather than limiting its orders to only those specific models selected for the infringement analysis.’” FID at 80 (citation omitted). The ALJ recognized that Wirtgen has presented “no evidence or arguments that would justify setting aside the Commission’s established policy with respect to a LEO.” Id.; see also Comm’n Op. at 50 (“[T]he Commission finds no reason to limit the scope of the remedial orders.”).  Wirtgen’s Communications with CBP On August 13, 2019, and again, on August 15, 2019, the IPR Branch offered Wirtgen an opportunity to submit a request for an administrative ruling under 19 C.F.R. part 177 to obtain guidance as to whether its redesigned series 1810 milling machines fall within the scope of the limited exclusion order issued in the 1088 investigation.4 The IPR Branch further noted that there were also administrative procedures available at the Commission. 5 Wirtgen neither used the procedures available under Commission Rules 210.76 and 210.79 to obtain a determination from the Commission regarding whether its redesign falls within the scope of the limited exclusion order issued in the 1088 investigation.6 Nor did Wirtgen request guidance from CBP under 19 C.F.R. part 177 on that issue. Instead, Wirtgen opted to submit a memorandum,7 with unilateral attorney argument and devoid of expert analysis, to the IPR Branch on September 5, 2019, stating that they “will be importing a road milling machine that has been modified to be outside the scope of the limited exclusion order . . . issued by the U.S. International Trade Commission . . . in Investigation No. 337-TA-1088.” See Exhibit 6 of Wirtgen Protest at 1. In the email accompanying this memorandum, Wirtgen noted that the “first modified milling machine” was scheduled to arrive on September 9, 2019 (i.e., four days after submission of the memorandum). 4 The IPR Branch offered again in an email dated January 6, 2020 noting that “we remain open to a request for an administrative ruling submitted pursuant to 19 C.F.R. part 177.” 5 We further note that on August 19, 2019 Wirtgen filed a motion to stay the Commission’s remedial orders pending appeal; however this motion was denied by the Commission. In the Commission’s Order issued September 12, 2019, denying Wirtgen’s motion, the Commission also noted the procedures available to Wirtgen at the Commission “through which Wirtgen may obtain a timely ruling regarding whether its redesign falls within the scope of the remedial order.” Commission Order at 6, n.8, Doc. ID 688119 (Sep. 2019) (Public Version) (“Wirtgen states that it ‘is attempting to bring to market a redesign that would not be subject to the Commission’s exclusion order.’ Wirtgen’s Mot. at 19 n.1. The Commission notes that there are procedures available under Commission Rules 210.76 and 210.79 through which Wirtgen may obtain a timely ruling regarding whether its redesign falls within the scope of the remedial order. See 19 C.F.R. §§ 210.76, 210.79.”). 6 However, as noted infra, on January 16, 2020, the Commission “determined to institute a modification proceeding pursuant to Commission authority under 19 U.S.C. § 1337(k) and Commission Rule 210.76, 19 CFR 210.76.” Certain Road Construction Machines and Components Thereof, Investigation No. 337-TA-1088, EDIS Doc. No. 699503, Notice of Commission Determination to Institute a Modification Proceeding; Request for Written Submissions at 2 (January 16, 2020). 7 Nothing in the email or memorandum was designated as confidential. In addition to the memorandum dated September 5, 2019, Wirtgen provided photographs and videos of an XFi8 machine with a particular serial number, and noted that a technician could be arranged to demonstrate the operation of this machine at the port if needed. In a later email that same day, Wirtgen further stated that this memorandum was not a request for an administrative ruling under 19 C.F.R. part 177, but rather only a “courtesy” to let CBP know that an XFi machine “is already on the way.” Wirtgen further noted that “[s]hould Customs determine to exclude that machine [described in the memorandum], Wirtgen intends to file an administrative protest under 19 C.F.R. [part] 174.” Since the submission of the memorandum to the IPR Branch on September 5, 2019, Wirtgen did not provide any additional information to the IPR Branch regarding its purportedly modified machines until December 2, 2019 following detention of one of its shipments. On December 2, 2019, Wirtgen’s broker submitted what appeared to be a self-certification from Wirtgen signed and dated September 9, 2019. This self-certification, which was not specific to any particular entry number, stated that the articles being imported are not subject to the exclusion order issued in the 1088 investigation.9 In addition, we note that on December 13, 2019, counsel for Wirtgen sent the IPR Branch a copy of a final written decision from the Patent Trial and Appeal Board (“PTAB”) of the U.S. Patent and Trademark Office (“USPTO”) finding certain claims, including claim 19, of the ’693 patent unpatentable. Wirtgen America, Inc. and Joseph Vogele AG v. Caterpillar Paving Products Inc., IPR2018-01201, Final Written Decision (Dec. 13, 2019) at 35.10 8 In the memorandum, Wirtgen noted that “[a]ll future modified machines can be identified by the ‘XFi’, e.g., W 100 XFi, W120 XFi, and W130 XFi.” 9 We note generally that “[c]ertification provisions aid U.S. Customs and Border Protection (“CBP”) in enforcing Commission Orders but ‘do not mandate that CBP accept certification as proof that the articles in question are not covered’ by the limited exclusion order.” Certain Robotic Vacuum Cleaning Devices and Components Thereof Such As Spare Parts, Comm’n Op. at 55 (Feb. 1, 2019) (USITC Pub. 4979 (Sept. 2019)) (quoting Certain Access Control Systems and Components Thereof, Inv. No. 337-TA-1016, Comm’n Op. at 35 (Aug. 21, 2018) (USITC Pub. 4957 (Sept. 2019)); see also Certain Network Devices, Related Software and Components Thereof (I), lnv. No. 337-TA-944, Comm’n Op. at 54 n.19 (June 23, 2016) (USITC Pub. 4909 (June 2019)) (“[t]he standard provision does not allow an importer to simply certify that it is not violating the exclusion order as Arista suggests. CBP only accepts a certification that the goods have been previously determined by CBP or the Commission not to violate the exclusion order.”). 10 We further note that the Commission has previously stated “that patent claims are valid until the [USPTO] issues certificates [for] cancelling [ ] those claims, which it cannot do until the exhaustion of any appeals [the patent owner] may take from the PTAB’s final written decisions.” See e.g., Certain Network Devices, Related Software and Components Thereof (II), Inv. No. 337-TA-945, Comm’n Op. at 12 (Aug. 16, 2017) (Public Version) (EDIS Doc. No. 620120) (“. . . the Commission finds that the PTAB final written decisions finding the relevant claims of the ‘577 and ‘668 patents unpatentable do not constitute a changed circumstance warranting temporarily rescinding the remedial orders issued in Inv. No. 337-TA-945, Certain Network Devices (II).”). To date, the  The Excluded Articles On December 17, 2019, pursuant to 19 U.S.C. § 1337(d), CBP denied entry of the following articles by reason of the limited exclusion order issued by the Commission in the 1088 investigation: From Bill of Lading No. KKLU-HAM505320 (S) (i.e., entry no. [[ ]]): Wirtgen Cold Milling Machine, W 120 XTi, Serial No. 18101088; Wirtgen Cold Milling Machine, W 120 XTi, Serial No. 18101089; and Wirtgen Cold Milling Machine, W 120 XFi, Serial No. 18101092 From Bill of Lading No. WLWH-DE2007062 (S) (i.e., entry no. [[ ]]): Wirtgen Cold Milling Machine, W 120 XFi, Serial No. 18101084; and Wirtgen Cold Milling Machine, W 120 XTi, Serial No. 18101086. See e.g., CBP Letters to Wirtgen dated December 18, 2019 (Exhibits 2 and 3 of Wirtgen Protest).11 D. Protest No. 170119100004 On December 24, 2019, Wirtgen America, Inc. filed a protest challenging CBP’s denial of entry of the five Wirtgen Cold Milling Machines referenced above (collectively, the “articles at issue”). See Wirtgen Protest at 1–2. The statutory and regulatory authority cited by Wirtgen for the filing of this protest is “section 514(a)(4), Tariff Act of 1930, as amended (19 U.S.C. 1514(a)(4)), and 19 C.F.R. [part] 174.” Id. at 1. Seizure and Forfeiture Order On January 14, 2020, pursuant to 19 U.S.C. § 1337(i), the Commission issued a seizure and forfeiture order against road construction machines and components thereof that are imported in violation of the limited exclusion order issued in the 1088 investigation if imported by Wirtgen America Inc., or any affiliated companies, parents, subsidiaries, or other related business entities, or any of their successors or assigns. Certain Road Construction Machines and Components Thereof, Investigation No. 337-TA-1088, EDIS Doc. No. 699209, Seizure and Forfeiture Order (January 14, 2020) (the “1088 SFO”). USPTO has not issued certificates cancelling claim 19 of the ’693 patent and the Commission has not modified or set aside the limited exclusion order issued in the 1088 investigation. Hence, the limited exclusion order issued in the 1088 investigation remains in effect. 11 We note that on December 6, 2019, CBP sent a letter to the Commission requesting clarification as to the 1088 investigation, particularly whether the Commission adjudicated any redesigned versions of Wirtgen’s series 1810 milling machines. See EDIS Doc. No. 699429. On December 12, 2019, the Commission responded to CBP in a letter, confirming that it did not adjudicate Wirtgen’s redesigned series 1810 machines. See EDIS Doc. No. 699436.  Notice of Commission Determination to Institute a Modification Proceeding On January 16, 2020, the Commission “determined to institute a modification proceeding pursuant to Commission authority under 19 U.S.C. § 1337(k) and Commission Rule 210.76, 19 CFR 210.76.” Certain Road Construction Machines and Components Thereof, Investigation No. 337-TA-1088, EDIS Doc. No. 699503, Notice of Commission Determination to Institute a Modification Proceeding; Request for Written Submissions at 2 (January 16, 2020) (“Commission Notice to Institute Modification”). “The modification proceeding is addressed to whether Wirtgen’s redesigned Models XFi and XTi machines infringe claim 19 of the ’693 patent and therefore fall within the scope of the LEO, or whether the LEO should be modified to include an explicit exemption for Wirtgen’s Model XFi and XTi redesigned machines.” Id. The Commission found that an institution of a modification is warranted in view of the following facts: Wirtgen’s Renewed Motion for Stay12 requests the Commission to clarify the scope of the Commission’s remedial orders; In the underlying violation investigation, the Commission did not adjudicate whether any redesigned products infringe the asserted patent claims; When CBP offered Wirtgen an opportunity to submit a request for an administrative ruling under 19 C.F.R. part 177 to address whether the redesigned products infringe, “Wirtgen declined to consent to an inter partes proceeding in which Caterpillar would be able to be heard, and thus declined CBP’s invitation for CBP to issue a ruling under 19 CFR part 177.” Id. at 2–3. ISSUE Whether an exclusion from entry made by CBP based on an order issued by the U.S. International Trade Commission pursuant to 19 U.S.C. § 1337 is a Customs decision subject to protest enumerated in 19 U.S.C. § 1514(a) and 19 C.F.R. § 174.11. LEGAL STANDARDS Section 337 Exclusion Orders Congress charged the Commission with investigating and making a determination whether or not there is a violation of Section 337, and on that basis, absent a finding that the pu