Tariff Act and Imports of Products Manufactured by Patented Processes

Background

Section 271(g) of the Patent Act provides in relevant part:

"Whoever without authority imports into the United States or offers to sell, sells or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer, if the importation, offer to sell, sale, or use of the product occurs during the term of such process patent."(1)

This section, which was added to the patent laws in 1988, offers an infringement remedy to patentees concerned about the importation of products manufactured abroad by processes that would be infringing if performed within the United States. This remedy, however, is limited to the extent that:

"A product which is made by a patented process will, for purposes of this title, not be considered to be so made after (1) it is materially changed by subsequent processes; or (2) it becomes a trivial and nonessential component of another product."(2)

Prior to the enactment of Section 271(g), the only remedy available to patentees was an action for exclusion of products made by patented processes, pursuant to the Tariff Act. Specifically, Section 1337(a)(1)(B)(ii) of the Tariff Act renders unlawful:

"The importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer or consignee, of articles that...are made, produced, processed or mined under, or by means of, a process covered by the claims of a valid and enforceable [US] patent."(3)

Until recently, however, it remained unclear whether the limits to infringement identified in Sections 271(g)(1) and (2) of the Patent Act apply to actions under this section of the Tariff Act.

Decision

On March 25 2004 the Federal Circuit considered this issue in Kinik Company v International Trade Commission.(4) Affirming the underlying decision of the International Trade Commission (ITC), the Federal Circuit held that the defences to infringement under Section 271(g) do not apply to the broader import restrictions imposed by Section 1337(a)(1)(B)(ii) of the Tariff Act.

The Kinik litigation concerned the importation of abrasive articles(5) from Taiwan that were allegedly manufactured by the process claimed in US Patent 5,620,489. 3M, the assignee of the patent, initiated an exclusion action in the ITC under Section 1337(a)(1)(B)(ii) of the Tariff Act. The ITC found that (i) the defences available under Section 271(g) of the Patent Act do not apply to actions pursuant to Section 1337(a)(1)(B)(ii), and (ii) Kinik infringed the patent.

On appeal, the Federal Circuit reversed the ITC's finding of infringement under Section 271(g) but nonetheless affirmed the ITC's decision to exclude the products in question under the Tariff Act. With respect to this latter determination, the Federal Circuit relied extensively on the language and legislative history of Section 271(g), with minimal discussion. Specifically, the court cited the Senate Report accompanying the Process Patent Amendments Act:

"There is no intention to impose any of these limitations on owners of products or on owners of process patents in suits they are able to bring under existing law. Neither is there any intention for these provisions to limit in any way the ability of process patent owners to obtain relief from the US International Trade Commission."(6)

Additionally, the court noted that the Process Patent Amendments Act of 1988 further states that:

"The amendments made by this subtitle shall not deprive a patent owner of any remedies available...under Section 337 [recodified at Section 1337] of the Tariff Act of 1930, or under any other provision of law."(7)
Based on these statements, the Federal Circuit concluded that the limitations of Sections 271(g)(1) and (2) do not, and were not intended to, apply to Section 1337(a)(1)(B)(ii) of the Tariff Act.

Comment

It is not entirely clear why the limitations on infringement codified in Section 271(g) were not drafted to apply to the Tariff Act's import restrictions. One explanation for this difference, however, may be rooted in the variance between societal and individual interests in fostering innovation through grants of exclusive right. It is nonetheless important that practitioners and their clients realize the broader scope of exclusion offered by the Tariff Act with respect to products manufactured by patented processes.

Endnotes

(1) 35 USC Section 271(g) (2000).

(2) Id.

(3) 19 USC Section 1337(a)(1)(B)(ii) (2000).

(4) 362 F 3d 1359 (Fed Cir 2004).

(5) 'Abrasive articles' include grinding wheels, sanding discs, and traditional cutting and drilling tools.

(6) 362 F 3d at 1362-3 (quoting S Rep 100-83, at 60-61 (1987)).

(7) 362 F 3d at 1362 (quoting Pub L 100-418, Section 9006(c) (1988)).