Ruling Request; U.S. International Trade Commission; Limited Exclusion Order; Investigation No. 337-TA-1067; Certain Road Milling Machines and Components Thereof

HQ H324012 April 2, 2022 OT:RR:BSTC:EOE H324012 CATEGORY: 19 U.S.C. § 1337; Unfair Competition Mr. James R. Barney Finnegan, Henderson, Farabow, Garrett & Dunner, LLP 901 New York Avenue, NW Washington, D.C. 20001-4413 VIA EMAIL: james.barney@finnegan.com; cat-wirtgen-177-customs@finnegan.com RE: Ruling Request; U.S. International Trade Commission; Limited Exclusion Order; Investigation No. 337-TA-1067; Certain Road Milling Machines and Components Thereof Dear Mr. Barney: Pursuant to 19 C.F.R. Part 177, the Exclusion Order Enforcement Branch (“EOE Branch”), Regulations and Rulings, U.S. Customs and Border Protection (“CBP”) issues this ruling letter. We find that Caterpillar Prodotti Stradali S.r.l., Caterpillar Americas CV, Caterpillar Paving Products Inc. and Caterpillar Inc. (collectively, “Caterpillar”) has met its burden to show that Caterpillar’s updated PM600 and PM800 cold planar machines (“Updated Machines” or “articles at issue”) do not infringe claims 11 and 17 of U.S. Patent No. 7,530,641 (“the ‘641 patent”). Thus, CBP’s position is that the Updated Machines are not subject to the modified limited exclusion order (“LEO”), dated November 4, 2021, that the U.S. International Trade Commission (“Commission” or “ITC”) issued in Investigation No. 337-TA-1067 (“the underlying investigation” or “the 1067 investigation”) pursuant to section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337 (“section 337”). We further note that determinations of the Commission resulting from the underlying investigation and a related proceeding under 19 C.F.R. Part 210 are binding authority on CBP and, in the case of conflict, will by operation of law modify or revoke any contrary CBP ruling or decision pertaining to section 337 exclusion orders. This ruling letter is the result of a request for an administrative ruling from CBP under 19 C.F.R. Part 177, which was conducted on an inter partes basis. The process involved the two parties with a direct and demonstrable interest in the question presented by the ruling request: (1) your client, Caterpillar, the ruling requester and respondent in the 1067 investigation; and (2) Wirtgen America, Inc. (“Wirtgen”), complainant in the 1067 investigation. See, e.g., 19 C.F.R. § 177.1(c). The parties were asked to clearly identify confidential information, including information subject to the administrative protective order in the underlying investigation in all of their submissions to the CBP. See 19 C.F.R. §§ 177.2 and 177.8. If there is additional information in this ruling letter not currently bracketed in red [[ ]] that either party believes constitutes confidential information, and should be redacted from the published ruling, then the parties are asked to contact CBP within ten (10) working days of the date of this ruling letter. See, e.g., 19 C.F.R. § 177.8(a)(3). Please note that disclosure of information related to administrative rulings under 19 C.F.R. Part 177 is governed by, for example, 6 C.F.R. Part 5, 31 C.F.R. Part 1, 19 C.F.R. Part 103, and 19 C.F.R. § 177.8(a)(3). See, e.g., 19 C.F.R. § 177.10(a). In addition, CBP is guided by the laws relating to confidentiality and disclosure, such as the Freedom of Information Act (“FOIA”), as amended (5 U.S.C. § 552), the Trade Secrets Act (18 U.S.C. § 1905), and the Privacy Act of 1974, as amended (5 U.S.C. § 552a). A request for confidential treatment of information submitted in connection with a ruling requested under 19 C.F.R. Part 177 faces a strong presumption in favor of disclosure. See, e.g., 19 C.F.R. § 177.8(a)(3). The person seeking this treatment must overcome that presumption with a request that is appropriately tailored and supported by evidence establishing that: the information in question is customarily kept private or closely-held and either that the government provided an express or implied assurance of confidentiality when the information was shared with the government or there were no express or implied indications at the time the information was submitted that the government would publicly disclose the information. See Food Marketing Institute v. Argus Leader Media, 588 U. S. , , 139 S. Ct. 2356, 2366 (2019) (concluding that “[a]t least where commercial or financial information is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy, the information is ‘confidential’ within the meaning of exemption 4.”); see also U.S. Department of Justice, Office of Information Policy (OIP): Step-by-Step Guide for Determining if Commercial or Financial Information Obtained from a Person is Confidential Under Exemption 4 of the FOIA (updated 10/7/2019) and OIP Guidance: Exemption 4 after the Supreme Court’s Ruling in Food Marketing Institute v. Argus Leader Media (updated 10/4/2019). BACKGROUND ITC Investigation No. 337-TA-1067 Procedural History at the ITC The Commission instituted Investigation No. 337-TA-1067 on August 25, 2017, based on a complaint filed by Wirtgen America, Inc. of Antioch, Tennessee. Certain Road Milling Machines and Components Thereof, Inv. No. 337-TA-1067, EDIS Doc. ID 684600, Public Commission Opinion (Aug. 7, 2019) (“Comm’n Op.”) at 1 (citing 82 Fed. Reg. 40595-96 (Aug. 25, 2017)). The complaint alleged a violation of section 337 by reason of infringement of certain claims of U.S. Patent Nos. 7,530,641 (“the ‘641 patent”); 7,828,309 (“the ‘309 patent”); 9,624,628 (“the ‘628 patent”); 9,644,340 (“the ‘340 patent”); and 9,656,530 (“the ‘530 patent”). Comm’n Op. at 1. The notice of investigation named Caterpillar Bitelli SpA of Minerbio BO, Italy; Caterpillar Prodotti Stradali S.r.L. of Minerbio BO, Italy; Caterpillar Americas CV of Geneva, Switzerland; Caterpillar Paving Products, Inc. of Minneapolis, Minnesota; and Caterpillar Inc., of Peoria, Illinois. Id. at 1-2. The Commission’s Office of Unfair Import Investigations (“OUII”) was named as a party, but later withdrew from the investigation. Id. at 2 (citation omitted). On October 1, 2018, the presiding Administrative Law Judge (“ALJ”) issued his final initial determination (“FID”) finding a violation of section 337. Id. Specifically, the ALJ determined that a violation of section 337 occurred in the importation into the United States, the sale for importation, or the sale within the United States after importation, of certain road milling machines and components thereof with respect to the ‘309 and ‘530 patents, but that such violation did not occur with respect to the ‘641 and ‘340 patents. Id. On April 17, 2019, the Commission issued a notice in which it determined to review in part the FID. Comm’n Op. at 3. In the notice, the Commission determined not to review any issues relating to the ‘340, ‘641, and ‘530 patents and reversed the finding of no invalidity as to only claim 36 of the ‘309 patent. Id. Thus, the Commission found a violation of section 337 as to claim 29 of the ‘309 patent and claims 2, 5, 16, and 23 of the ‘530 patent, and requested written submissions on remedy, the public interest, and bonding. Id. On March 15, 2021, the Court of Appeals for the Federal Circuit (“Federal Circuit”) issued a decision in an appeal and cross-appeal Wirtgen and Caterpillar filed, respectively, challenging the Commission’s final determination in the 1067 investigation. The Federal Circuit affirmed the Commission’s determination as to the ‘530 patent and the ‘309 patent, but reversed in part, vacated in part, and remanded as to the ‘641 patent. Caterpillar Prodotti Stradali S.R.L. v. ITC, 847 Fed. Appx. 893, 2021 U.S. App. LEXIS 7457 (Fed. Cir. 2021). Specifically, the Federal Circuit reversed and vacated the Commission’s finding, adopted from the FID, that Wirtgen failed to prove the knowledge required for inducement and, as such, remanded as to the ‘641 patent for further proceedings. Id. at 899-900; see also Commission Order (Remand) at 3 (dated June 7, 2021). On June 17, 2021, Caterpillar submitted comments in response to the Commission’s Notice requesting written submissions following the Federal Circuit’s remand. Certain Road Milling Machines and Components Thereof, Inv. No. 337-TA-1067 (Remand), EDIS Doc. 745051, Caterpillar's Response to the Notice of Commission Request for Written Submissions Pursuant to a Court Remand (June 17, 2021). In the submission, Caterpillar argued that it had “updated its machines to remove the previously accused reverse-travel feature” and a remand to the ALJ was necessary to “assess this updated design and issue a no violation finding if he finds it to be noninfringing.” Id. at 3. On June 22, 2021, Wirtgen submitted a reply to Caterpillar’s comments in response to the Commission’s Notice. Certain Road Milling Machines and Components Thereof, Inv. No. 337-TA-1067 (Remand), EDIS Doc. 745305, Wirtgen's Reply Comments Concerning Proceedings on Remand (June 22, 2021). In November 2021, after receiving comments from the parties, the Commission issued a modified LEO, dated November 4, 2021, and two modified cease and desist orders in the 1067 investigation that added claims 11 and 17 of the ‘641 patent. Certain Road Milling Machines and Components Thereof, Inv. No. 337-TA-1067 (Remand), EDIS Doc. 755957, Modified Limited Exclusion Order (Nov. 4, 2021) (“Modified 1067 LEO”); Certain Road Milling Machines and Components Thereof, Inv. No. 337-TA-1067 (Remand), EDIS Doc. 755956, Modified Cease and Desist Order for Caterpillar Paving Products, Inc. (Nov. 4, 2021); Certain Road Milling Machines and Components Thereof, Inv. No. 337-TA-1067 (Remand), EDIS Doc. 755955, Modified Cease and Desist Order for Caterpillar Inc. (Nov. 4, 2021). The Legacy Products in the Underlying Investigation The legacy products in the underlying investigation were cold planers (also referred to as road milling machines). Certain Road Milling Machines and Components Thereof, Inv. No. 337-TA-1067, EDIS Doc. ID 684600, FID at 7, 12. In particular, Wirtgen accused Caterpillar’s PM600 Series (e.g., the PM620 and PM622 models) and PM800 Series (e.g., the PM820, PM822, and PM825 models) cold planer machines of infringing the asserted claims of the patents at issue. Id. at 8 (citation omitted). Wirtgen further accused Caterpillar’s PM300 Series (e.g., the PM310, PM312, and PM313 models) cold planer machines of infringing the asserted claims of the ‘641 patent. Id. The ALJ determined that the PM620 model was representative of the PM600 Series and PM800 Series products, and that the PM312 model was representative of the PM300 Series products. Id. The Patents and Claims in the Modified 1067 LEO The Modified 1067 LEO prohibits the entry for consumption of road-milling machines and components thereof that infringe claim 29 of the ‘309 patent, claims 2, 5, 16, or 23 of the ‘530 patent, or claims 11 or 17 of the ‘641 patent manufactured for or on behalf of, or imported by or on behalf of, Caterpillar, or any of their affiliated companies, parents, subsidiaries, contractors, joint venture, agents, distributors, or other related business entities, or their successor or assigns. See ¶ 1 of Modified 1067 LEO. Claims 11 and 17 of the ‘641 Patent The ’641 patent is titled “Automotive construction machine, as well as method for working ground surfaces” and in general concerns “operating a road-milling machine in reverse without uncoupling the milling drum.” FID at 137 (citation omitted); see also ‘641 Patent Abstract; Ex. 1 (copy of U.S. Patent No. 7,530,641). The invention relates to a method for use when the machine is traveling in the same direction that the machine’s milling drum is rotating. Id. This method includes a monitoring device to monitor the distance between the milling drum and the ground surface and triggers an event when the monitoring device detects a deviation that falls below a pre-determined distance. Id. In the ’641 patent, independent claim 11 is a method claim. Other method claims, such as claims 15 and 17, depend from claim 11. The text of Claim 11 is reproduced below: 11. Method for working ground surfaces (2) with a construction machine (1) that is automotive by means of traveling devices (8) and in which a milling drum (12) supported in a machine frame (4) is driven by a drive engine (6), where the milling drum (12) is moved into a raised position when it is not in milling mode, characterized in that, the milling drum (12) remains coupled with the drive engine (6) when in raised position and with a direction of travel in which the rotating direction of the milling drum (12) corresponds to the rotating direction of the traveling devices (8), in that a distance is monitored between the rotating, raised milling drum (12) and the ground surface (2) or an obstacle located in front of the milling (12) when seen in the direction of travel, and in that the milling drum (12) is uncoupled from the drive engine (6), and/or the traveling devices (8) are uncoupled from the drive engine (6) and/or the machine frame (4) is raised and/or an alarm signal is generated when detecting that the deviation falls below a pre-determined distance between the milling drum (12) and the ground surface (2). See ‘641 patent, col. 8:4-27 see also FID at 138-9 (citing JX-0004). During the 1067 investigation, the parties disputed the construction of one term in claim 11. FID at 140. Specifically, the parties disputed the construction of the term “deviation,” which appears in independent claims 1 and 11 of the ‘641 patent. Id. at 140. The ALJ construed the term “deviation” as used in the ‘641 patent to mean “a change, difference, or departure.” Id. at 150-53. 19 C.F.R. Part 177 Ruling Request Procedural History On October 14, 2020, prior to the issuance of the Modified 1067 LEO, such that the LEO as initially issued in the 1067 investigation was in effect and, therefore, did not include the ‘641 patent, Caterpillar requested an administrative ruling under 19 C.F.R. Part 177 that the Updated Machines did not infringe claims 2 ,5, 16, and 23 of ‘530 patent or claim 29 of the ‘309 patent. See HQ H314355 at 1. As noted in that ruling, “it was the EOE Branch’s position that unless, and until, the Commission includes the claims of the ’641 patent in an exclusion order issued under 19 U.S.C. § 1337, CBP would not have authority to exclude articles from entry on this basis or address whether any articles infringe the claims of the ’641 patent in response to a request for an administrative ruling submitted under 19 C.F.R. Part 177.” Id. at 8-9. Thus, HQ H314355 found that the Updated Machines were not subject to the (initial) LEO issued in the 1067 investigation because they do not infringe claims 2, 5, 16, and 23 of the ’530 patent or claim 29 of the ’309 patent. Id. Additionally, HQ H314355 remains binding on CBP under 19 C.F.R. 177 and continues to establish admissibility with respect to the ’530 and ’309 patent for devices that implement the redesigns. On November 24, 2021, following the issuance of the Modified 1067 LEO, which included the additional patent claims from the ‘641 patent, Caterpillar submitted to the EOE Branch another request for an administrative ruling pursuant to 19 C.F.R. Part 177 that included Exhibits 1-27 (collectively, “Ruling Request”). Exhibit 22, the [[ ]], was not provided to CBP as part of the Ruling Request due to the “highly confidential nature” of the exhibit, but Caterpillar was willing to provide the exhibit to CBP through other means. See Ruling Request at 13. Caterpillar specifically “request[ed] that Customs issue a ruling finding (1) that the updated PM600 and PM800 Machines do not infringe claims 11 and 17 of the ’641 patent, and (2) that future imports of these machines would not violate the modified LEO that issued on November 5, 2021.” Id. at 2. As part of the Ruling Request, Caterpillar included a copy of the finalized and executed non-disclosure agreement with Wirtgen and provided a copy of the Ruling Request to Wirtgen. See Caterpillar Email to EOE Branch (dated November 24, 2021). On December 3, 2021, the EOE Branch had an initial conference call with Caterpillar and Wirtgen and discussed their views with respect to a schedule for the inter partes proceeding. See EOE Branch email to Parties (dated December 1, 2021). On December 7, 2021, after the parties were not able to reach an agreement, the EOE Branch established the schedule for this inter partes proceeding. See EOE Branch email to Parties (dated December 7, 2021). On January 13, 2022, the parties requested modification of the schedule such that the “deadline for Wirtgen America’s response to Caterpillar’s ruling request [would be changed] from January 18 to January 21[.]” See Caterpillar email to EOE Branch (dated January 13, 2022). On January 14, 2022, the EOE Branch agreed to this modification. See EOE Branch email to Parties (dated January 14, 2022). On January 20, 2022, the parties again requested a modification of the schedule such that: (1) the deadline for Wirtgen America’s response to Caterpillar’s ruling request would be changed from January 21 to January 24; (2) Caterpillar’s reply to Wirtgen’s response would be changed from January 28 to February 3; and (3) all subsequent dates would be extended by six days. See Caterpillar email to EOE Branch (dated January 20, 2022). On the same day as the request from the parties, the EOE Branch agreed to this modification. See EOE Branch email to Parties (dated January 20, 2022). On February 7, 2022, the parties requested an additional modification to the schedule such that the deadline for all subsequent dates would be extended by six days. See Wirtgen email to EOE Branch (dated February 7, 2022). On February 9, 2022, the EOE Branch agreed to this modification. See EOE Branch email to Parties (dated February 9, 2022). On January 24, 2022, Wirtgen provided its response to the Ruling Request, which included Exhibits 28-39 (collectively, “Wirtgen Response”). On February 3, 2022, Caterpillar provided its reply to Wirtgen’s Response, which included Exhibits 40-47 (collectively, “Caterpillar Reply”). On February 18, 2022, Wirtgen provided its sur-reply (“Wirtgen Sur-Reply”) to Caterpillar’s Reply, which included Exhibits 48-49. On February 25, 2022, in line with the schedule, the EOE Branch held an oral discussion with the parties. Due to the national emergency over the coronavirus pandemic, the oral discussion was held remotely by video conference, and the parties provided their respective presentation materials to the EOE Branch on the day of the oral discussion (hereinafter, “Caterpillar Presentation” and “Wirtgen Presentation”). On March 4, 2022, both Caterpillar and Wirtgen filed their post-oral discussion submissions (respectively, “Caterpillar Post-Oral Discussion Submission” and “Wirtgen Post-Oral Discussion Submission”). Caterpillar’s Post-Oral Discussion Submission included Exhibit 50 (Transcript of the Oral Discussion held on February 25, 2022). The Articles at Issue The articles at issue in the Ruling Request are Caterpillar’s PM600 and PM800 Updated Machines. Ruling Request at 2. The articles at issue are road-milling machines, specifically “updated” PM600 series and PM800 series machines that include a new drum shutoff design. Ruling Request at 18. As noted supra, CBP previously issued a ruling (HQ H314355) regarding other redesigns to the Updated Machines before the Commission issued the Modified 1067 LEO. Thus, in addition to the features noted here, we incorporate by reference, the description of the Updated Machines as outlined in HQ H314355. The Updated Machines have continued since 2020 to implement the earlier redesigns relevant to claims 2, 5, 16, and 23 of the ’530 patent and claim 29 of ’309 patent at issue in H314355, as well as the new drum shutoff design relevant to claim