This morning, the Federal Circuit issued a precedential opinion in an international trade case and a nonprecedential opinion in a patent case. Here are the introductions to the opinions.
Diamond Sawblades Manufacturers’ Coalition v. United States (Precedential)
Since 2006, importation of diamond sawblades from the People’s Republic of China (PRC) has been governed by an antidumping duty order issued by the United States Department of Commerce under 19 U.S.C. § 1673. In 2016, Commerce launched an administrative review, under 19 U.S.C. § 1675, of duties owed on subject merchandise sold to unaffiliated U.S. purchasers from November 1, 2014, through October 31, 2015. In that review, Commerce investigated the dumping margin of Bosun Tools Co., Ltd. (Bosun), an exporter and producer of diamond sawblades from the PRC, that it sends directly to one of its two U.S. importer-affiliates for sale to unaffiliated U.S. purchasers. The second importer-affiliate imports diamond sawblades from a Bosun entity in Thailand (which are not covered by the antidumping duty order). The two importer-affiliates trade between themselves, so both end up selling PRC-originating and Thailand-originating sawblades.
To determine the domestic-price component of the dumping margin calculation, Commerce had to identify which diamond sawblades sold by the Bosun importer-affiliates to unaffiliated U.S. purchasers were from the PRC (not Thailand). Because Bosun’s affiliates (and Bosun’s overall database) did not record the country of origin on each sale to those purchasers, Bosun supplied country-of-origin information from three sources: (1) the particular product code (which was country-specific for some products); (2) the unit price (which allowed origin identification for some products); and (3), for remaining products, an inference as to origin based on the premise that the importer-affiliates generally sold products in the order they received them (the first-in, first-out, or FIFO, inference).
To calculate Bosun’s margin, Commerce used the information Bosun provided, finding it sufficiently verified. The domestic-industry Diamond Sawblades Manufacturers’ Coalition challenged Commerce’s determination in the Court of International Trade, which remanded the matter to Commerce for further explanation. Diamond Sawblades Mfrs.’ Coalition v. United States, No. 17-00167, 2018 WL 5281941 (Ct. Int’l Trade Oct. 23, 2018) (DSMC I). On remand, Commerce noted problems with some of Bosun’s information—perhaps only with the small subset of products for which the FIFO-inference step was used for origin identification—and concluded that it would use “the facts otherwise available” under 19 U.S.C. § 1677e(a), and indeed draw adverse inferences under § 1677e(b), as to the totality of the Bosun-sawblade sales during the period of review. The Trade Court affirmed Commerce’s determination. Diamond Sawblade Mfrs.’ Coalition v. United States, 415 F. Supp. 3d 1365, 1369 (Ct. Int’l Trade 2019) (DSMC II).
We now conclude that some of the bases on which Commerce invoked § 1677e(a) are unsupported by substantial evidence, while some—which involve only a gap in reliable information—are adequately supported. We also conclude, however, that, in light of the limited bases for applying § 1677e(a), Commerce may have applied that subsection— and hence § 1677e(b), which applies only where subsection (a) applies—too broadly by disregarding all of Bosun’s country-of-origin information. It appears that the errors Commerce identified in Bosun’s information are limited in their reliability-undermining effect to a defined subset of sold sawblades (the subset of sawblades whose origin Bosun identified only through the FIFO-inference step). If the unreliable information is confined to some or all sawblades within such a defined subset, then there is no substantial evidence to support Commerce’s determination that all of the Bosun-supplied origin information was unreliable, and Commerce articulated no supported basis for disregarding the reliable portion of the origin information Bosun supplied. We remand for further proceedings to determine the extent to which unreliability is so confined, and the consequence for Bosun’s dumping margin. We leave to the Trade Court the decision whether a further remand to Commerce is needed.
KEYnetik, Inc. v. Samsung Electronics Co. (Nonprecedential)
KEYnetik, Inc. (“KEYnetik”) appeals from a final decision of the Patent Trial and Appeal Board (“Board”) holding that claims 1–20 of U.S. Patent No. 8,370,106 (“the ’106 patent”) are unpatentable as obvious. We affirm the Board’s claim construction and obviousness determination as to claims 1–3, 5–6, 8–14, 16–17, and 19–20. We also affirm the Board’s finding of a motivation to combine as to dependent claims 4, 7, 15, and 18. However, we vacate the Board’s obviousness determination as to claims 4, 7, 15, and 18 and remand for the Board to make a determination of reasonable expectation of success.
O’Malley, Circuit Judge, concurring in part and dissenting in part.
The Board found all claims of the ’106 patent unpatentable as obvious in view of the prior art. Samsung Elecs. Co. v. KEYnetik, Inc., No. IPR2018-00986, 2019 Pat. App. LEXIS 13034 (P.T.A.B. Dec. 18, 2019) (“Board Decision”). I agree with the majority that the Board’s analysis of claims 4, 7, 15, and 18 was fundamentally flawed because it applied an incorrect legal standard. As to those claims, the Board stated that Samsung had no burden to establish a reasonable expectation of success from combining the prior art references at issue. We have held the exact opposite. Intelligent Bio-Sys., Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359,1367–68 (Fed. Cir. 2016) (It is the petitioner’s “burden to demonstrate both ‘that a skilled artisan would have been motivated to combine the teachings of the prior art references to achieve the claimed invention, and that the skilled artisan would have had a reasonable expectation of success in doing so.’”). The Board’s error on this point could not be clearer.
Although I agree with the majority’s decision to remand to correct that error, there are other errors which the majority lets stand. In particular, I believe the Board erred in construing the “orientation detector” limitation and the “sequence” limitation—terms that appear in both claim 1 and claim 12, the only independent claims at issue—and that those errors infected the obviousness analysis across all claims. In my view, the claim construction should be reversed and the Board’s obviousness analysis, which relies on that construction, should be vacated and remanded to correct those errors as well.