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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA MICROSOFT CORPORATION, ) Plaintiff, ) ) v. ) No. 13-1063 (RWR) ) UNITED STATES, ) ) U.S. DEPARTMENT OF HOMELAND ) SECURITY, ) 245 Murray Lane, S.W. ) Washington, D.C. 20528, ) ) U.S. CUSTOMS AND BORDER PROTECTION, ) 1300 Pennsylvania Avenue, N.W. ) Washington, D.C. 20229, ) ) JANET NAPOLITANO, ) U.S. Department of Homeland Security ) 245 Murray Lane, S.W. ) Washington, D.C. 20528, ) and ) THOMAS S. WINKOWSKI, ) U.S. Customs and Border Protection ) 1300 Pennsylvania Avenue, N.W. ) Washington, D.C. 20229 ) Defendants. )
DEFENDANTS’ OPPOSITION TO MICROSOFT’S MOTION FOR PRELIMINARY INJUNCTION
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 1 of 35
STUART F. DELERY Acting Assistant Attorney General RONALD C. MACHEN JR. United States Attorney for the District of Columbia BRYANT G. SNEE Deputy Director PATRICIA M. McCARTHY Assistant Director STEPHEN C. TOSINI SEAN B. McNAMARA Senior Trial Counsels Department of Justice Civil Division Commercial Litigation Branch PO Box 480, Ben Franklin Station Washington, D.C., 20044 Tel: (202) 616-5196 Email: [email protected] August 2, 2013 Attorneys for Defendant
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 2 of 35
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA MICROSOFT CORPORATION, ) ) Plaintiff, ) ) v. ) No. 13-1063 (RWR) ) UNITED STATES, ET AL., ) ) Defendants. )
ORDER
On consideration of the motion for preliminary injunction filed by plaintiff,
Microsoft Corporation, the governmental defendants’ response, and all other pertinent
papers, it is hereby
ORDERED that the motion is denied.
______________________
CHIEF JUDGE Dated: ____________________ Washington, DC
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 3 of 35
i
TABLE OF CONTENTS BACKGROUND .............................................................................................................................1 ARGUMENT ..................................................................................................................................3 I. Standard Of Review For Preliminary Injunction .................................................................4 II. Microsoft Is Ineligible For Preliminary Injunctive Relief ...................................................4 A. Microsoft Is Unlikely To Succeed On The Merits ...................................................4 1. Introduction ..................................................................................................4 2. The Court Lacks Jurisdiction To Entertain This Case Under The APA ......5 a. Section 337 Remedies Preclude APA Jurisdiction ..........................6 b. The Patent Laws Preclude APA Jurisdiction .................................12 3. This Case Should Be Rejected Because It Falls Within The ITC’s Primary Jurisdiction .........................................................................12 4. Microsoft Will Not Succeed On The Merits ..............................................14 a. CBP’s Enforcement Decisions Are Permissible Under The Correct Standard Of Review ........................................14 b. CBP’s Decisions Are Not Arbitrary Or Capricious And Were In Accordance With Law .............................................16 i. CBP’s Ruling Was Not Foreclosed By The Law Of The Case Or Unreasonable ...................................16 ii. CBP Did Not Shift Any Burden To Microsoft ..................17 iii. CBP Did Not Fail To Provide Fair Notice To Microsoft...18 c. CBP Did Not Ignore Evidence Of Abandonment ..........................21 B. Microsoft Has Not Shown Irreparable Harm Absent Injunctive Relief ................22 C. The Balance Of Hardships Should Preclude An Injunction ..................................24 D. An Injunction Would Not Serve The Public Interest .............................................24
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TABLE OF AUTHORITIES
CASES Aliotta v. Bair,
614 F.3d 556 (D.C. Cir. 2010) .......................................................................................... 18 Allina Health Servs. v. Sebelius,
756 F. Supp. 2d 61 (D.D.C. 2010) ...................................................................................... 4 Allnet Communication Serv., Inc. v. Nat'l Exchange Carrier Ass'n,
965 F. 2d 1118 (D.C. Cir. 1992) ....................................................................................... 12 American Road & Transp. Builders Ass'n v. E.P.A.,
865 F. Supp. 2d 72 (D.D.C. 2012) .................................................................................. 5, 6 Bowen v. Massachusetts,
487 U.S. 879 (1988) .......................................................................................................... 10 Burlington Truck Lines v. United States,
371 U.S. 156 (1962) .......................................................................................................... 16 Califano v. Sanders,
430 U.S. 99 (1977) .............................................................................................................. 5 Corning Gilbert Inc. v. United States,
896 F. Supp. 2d 1281 (Ct. Int'l Trade 2013) ..................................................................... 15 Davis v. PBGC,
571 F.3d 1288 (D.C. Cir. 2009) ........................................................................................ 22 Dorfmann v. Boozer,
414 F. 2d 1168 (D.C. Cir. 1969) ......................................................................................... 4 Eaton Corp. v. United States,
395 F. Supp. 2d 1314 (Ct. Int'l Trade 2005) ..................................................................... 23 Enercon GmbH v. Int'l Trade Com'n,
151 F. 3d 1376 (Fed. Cir. 1998)........................................................................................ 12 FDIC v. Meyer,
510 U.S. 471 (1994) ............................................................................................................ 5 First Nat. Bank of Chicago v. Steinbrink,
812 F. Supp. 849 (N.D. Ill. 1993) ..................................................................................... 11
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 5 of 35
iii
Fornaro v. James, 416 F. 3d 63 (D.C. Cir. 2005) ......................................................................................... 6, 9
Fuji Photo Film Co., Ltd. v. Benun,
463 F. 3d 1252 (Fed. Cir. 2006).......................................................................................... 6 Fuji Photo Film Co., Ltd. v. Jazz Photo Corp.,
394 F. 3d 1368 (Fed. Cir. 2005)........................................................................................ 12 Funai Elec. Co., Ltd. v. United States,
645 F. Supp. 2d 1351 (Ct. Int'l Trade 2009) ................................................................. 7, 23 Harrison v. PPG Indus., Inc.,
446 U.S. 578 (1980) ............................................................................................................ 8 Heckler v. Chaney,
470 U.S. 821 (1985) .......................................................................................................... 15 Historic Eastern Pequots v. Salazar,
--- F. Supp. 2d ----, 2013 WL 1289571 (D.D.C. 2013) ..................................................... 4 Jazz Photo Corp. v. United States,
439 F. 3d 1344 (Fed. Cir. 2006).................................................................................... 7, 11 Kyocera Wireless Corp. v. Int'l Trade Comm'n,
545 F. 3d 1340 (Fed. Cir. 2008).......................................................................................... 6 Lane v. Pena,
518 U.S. 187 (1996) ............................................................................................................ 5 McNutt v. Gen. Motors Acceptance Corp. of Indiana,
298 U.S. 178 (1936) ............................................................................................................ 5 Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co.,
463 U.S. 29 (1983) ...................................................................................................... 16, 21 Munaf v. Geren,
553 U.S. 674 (2008) ...................................................................................................... 3, 23 National Treasury Employees Union v. Helfer,
53 F. 3d 1289 (D.C. Cir. 1995) ......................................................................................... 17 Nat'l Treasury Employees Union v. Whipple,
636 F. Supp. 2d 63 (D.D.C. 2009) .................................................................................... 10
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 6 of 35
iv
Nat'l Wrestling Coaches Ass'n v. Dep't of Educ., 366 F. 3d 930 (D.C. Cir. 2004) ........................................................................................... 5
Norton v. Southern Utah Wilderness Alliance,
542 U.S. 55 (2004) ............................................................................................................ 15 Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. de C.V.,
901 F. Supp. 2d 54 (D.D.C. 2012) .................................................................................. 3, 4 Pennsylvania Mun. Authorities Ass'n v. Horinko,
292 F. Supp. 2d 95 (D.D.C. 2003) ...................................................................................... 5 Reiter v. Cooper,
507 U.S. 258 (1993) .......................................................................................................... 13 Salmon Spawning Recovery Alliance v. United States,
532 F. 3d 1338 (Fed. Cir. 2008)........................................................................................ 15 Sampson v. Murray,
415 U.S. 61 (1974) ............................................................................................................ 22 Sierra Club v. Jackson,
648 F.3d 848 (D.C. Cir. 2011) .......................................................................................... 14 Spansion, Inc. v. ITC,
629 F. 3d 1331 (Fed. Cir. 2010)........................................................................................ 23 Stanley v. Univ. of S. Cal.,
13 F. 3d 1313 (9th Cir. 1994) ............................................................................................. 3 Steel Co. v. Citizens for a Better Env't,
523 U.S. 83 (1998) .............................................................................................................. 5 Swan v. Clinton,
100 F. 3d 973 (D.C. Cir. 1996) ........................................................................................... 5 Town of Sanford v. United States,
140 F. 3d 20 (1st Cir. 1998) .............................................................................................. 11 United States v. L.A. Tucker Truck Lines,
344 U.S. 33 (1952) ............................................................................................................ 24 United States v. Mead Corp.,
533 U.S. 218 (2001) .......................................................................................................... 19
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 7 of 35
v
United States v. Western Pac. R. Co., 352 U.S. 59 (1956) ............................................................................................................ 12
Univ. of Tex. v. Camenisch,
451 U.S. 390 (1981) ............................................................................................................ 3 U.S. Ass’n of Importers of Textiles & Apparel v. U.S. Dep’t of Commerce, 413 F. 3d 1344 (Fed. Cir. 2005) ...……………………...…………………………………5 VastFame Camera, Ltd. v. Int'l Trade Comm'n,
386 F. 3d 1108 (Fed. Cir. 2004)................................................................................. passim Vermont Yankee Nuclear Power Corp. v. Natural Res. Def. Council, 435 U.S. 513 (1978) .......................................................................................................... 20 Washington Legal Found. v. Alexander,
984 F. 2d 483 (D.C. Cir. 1993) ........................................................................................... 5 Winter v. Natural Resources Def. Council, Inc.,
555 U.S. 7 (2008) ................................................................................................................ 3
STATUTES AND REGULATIONS 5 U.S.C. § 552 ............................................................................................................................... 21 5 U.S.C. § 701(a)(2) ............................................................................................................... passim 5 U.S.C. § 702 ........................................................................................................................ passim 5 U.S.C. § 704 ........................................................................................................................ passim 5 U.S.C. § 706 ........................................................................................................................ passim 18 U.S.C. § 1905 ........................................................................................................................... 20 19 U.S.C. § 1337 .................................................................................................................... passim 19 U.S.C. § 1337(a)(1)(B) .............................................................................................................. 6 19 U.S.C. § 1337(b) ...................................................................................................................... 13 19 U.S.C. § 1337(c) ........................................................................................................................ 7 19 U.S.C. § 1337(d)-(f) ................................................................................................................. 13 19 U.S.C. § 1337(d)(1) ............................................................................................................... 2, 7
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 8 of 35
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19 U.S.C. § 1337(d)(2) ................................................................................................................... 6 19 U.S.C. § 1337(f)(1) .................................................................................................................... 8 19 U.S.C. § 1337(f)(2) .................................................................................................................... 8 19 U.S.C. § 1514(a) ........................................................................................................................ 7 19 U.S.C. § 1516 ........................................................................................................................... 21 28 U.S.C. § 1295(a)(6) .................................................................................................................... 7 28 U.S.C. § 1331 ............................................................................................................................. 5 28 U.S.C. § 1581(a) ........................................................................................................................ 7 35 U.S.C. § 281 et seq................................................................................................................... 12 35 U.S.C. § 284 ............................................................................................................................. 12 19 C.F.R. § 103.2(b) ..................................................................................................................... 21 19 C.F.R. § 103.23(b)(6) ............................................................................................................... 21 19 C.F.R. § 177 et seq.. ................................................................................................................. 19 19 C.F.R. § 210.75 ................................................................................................................. passim 19 C.F.R. § 210.75(a)...................................................................................................................... 8 19 C.F.R. § 210.75(b)(1) ................................................................................................................. 8 19 C.F.R. § 210.75(c)...................................................................................................................... 8 19 C.F.R. § 210.76 .................................................................................................................... 8, 24 19 C.F.R. § 210.77 ........................................................................................................................ 24 19 C.F.R. § 210.77(a)...................................................................................................................... 8 19 C.F.R. § 210.79 .................................................................................................................... 8, 24
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 9 of 35
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FEDERAL RULES Fed. R. Civ. P. 12(b)(6)................................................................................................................. 14
MISCELLANEOUS Attorney General’s Manual on the Administrative Procedure Act 108 (1947) ........................... 15
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 10 of 35
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA MICROSOFT CORPORATION, ) ) Plaintiff, ) ) v. ) No. 13-1063 (RWR) ) UNITED STATES, ET AL., ) ) Defendants. )
DEFENDANTS’ OPPOSITION TO MICROSOFT’S MOTION FOR PRELIMINARY INJUNCTION
The governmental defendants (collectively United States) respectfully respond to the
motion for preliminary injunction filed by plaintiff, Microsoft Corporation (Microsoft). As we
demonstrate below, this Court should deny Microsoft’s motion. The Court lacks jurisdiction to
entertain this case, and Microsoft entirely fails to establish entitlement to the extraordinary
remedy of compelling Government to action.
BACKGROUND
This case arises from a patent dispute before the United States International Trade
Commission (ITC). Microsoft filed a complaint at the ITC alleging that Motorola Mobility, Inc.
(Motorola) Android smartphones had infringed U.S. Patent No. 6,370,566 (the ‘566 patent),
owned by Microsoft. As a result, the ITC issued a limited exclusion order pursuant to 19 U.S.C.
§ 1337 (section 337), ordering that unlicensed mobile devices, associated software, and
components covered by claims 1, 2, 5, or 6 of the ‘566 patent and manufactured abroad or
imported by or on behalf of Motorola were, with limited exception, excluded from entry for
consumption into the United States. Certain Mobile Devices, Associated Software, and
Components Thereof, Inv. No. 337-TA-944, Limited Exclusion Order, ¶ 1 (May 18, 2012) (Pl.
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 11 of 35
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Mem. Ex. H). Pursuant to 19 U.S.C. § 1337(d)(1), United States Customs and Border Protection
(CBP) administers ITC exclusion orders at the border.
On May 25, 2012, Motorola requested that CBP allow it to import certain redesigned
mobile devices that Motorola asserted were not covered by the ITC’s exclusion order.
Headquarters Ruling (HQ) H226615 (April 25, 2013) (Pl. Mem. Ex. M). In particular, Motorola
requested that CBP issue an administrative ruling pursuant to 19 C.F.R. Part 177. Motorola’s
request informed CBP that it had redesigned certain devices to remove the ability to generate
meeting requests when using Microsoft Exchange ActiveSync protocols and described the
features that were removed in the modified devices. Id. at 6-10. According to Motorola, the
devices did not infringe. Id. at 1. CBP issued HQ H226615 in response to Motorola’s request.
Microsoft requested revocation of HQ H226615 on two grounds. First, Microsoft
contended that the ITC had found the Google functionality present on the legacy devices to
infringe. Pl. Mem. Ex. A at 1. Second, even absent consideration of Google functionality,
Microsoft contended that the redesigned devices do not successfully avoid infringement. Id.
Motorola opposed. CBP subsequently issued HQ H242025 (Jun. 24, 2013) and HQ H242026
(Jun. 24, 2013) in which it found that the record did not support Microsoft’s allegations
regarding Google functionality and the redesigned Motorola devices.
In its suit, Microsoft contends that CBP’s decision not to exclude Motorola’s phones
pursuant to the ITC’s order was arbitrary and capricious. Complaint (Cmpl.) ¶ 2. Microsoft
asserts that CBP erred by concluding that Microsoft abandoned its claim before the ITC that
Motorola’s Google functionality infringed its patent. Cmpl. ¶ 8. Microsoft further alleges that
CBP failed to provide Microsoft with proper notice before issuing its decision, and that CBP
inappropriately shifted the burden to Microsoft to prove that Motorola’s phones should be
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 12 of 35
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excluded. Cmpl. ¶¶ 9-10. Microsoft seeks injunctive and declaratory relief compelling CBP to
exclude certain redesigned smartphones from the United States and to order redelivery of certain
merchandise already imported. Cmpl. ¶¶ 15-16.
ARGUMENT
I. Standard Of Review For Preliminary Injunction
A plaintiff seeking a preliminary injunction must establish (1) that it is likely to succeed
on the merits; (2) that it will suffer irreparable harm in the absence of preliminary relief; (3) that
the balance of equities tips in plaintiff’s favor; and (4) that an injunction is in the public interest.
Winter v. Natural Resources Def. Council, Inc., 555 U.S. 7, 20 (2008) (citing Munaf v. Geren,
553 U.S. 674, 689-690 (2008)). “A preliminary injunction is an extraordinary and drastic
remedy; it is never awarded as of right.” Munaf, 553 U.S. at 689-90 (citations omitted) (reversing
grant of preliminary injunction in which courts below did not assess whether there was a
likelihood of success on the merits). Microsoft cannot meet any prong here.
When, as in this case, a plaintiff seeks a preliminary injunction compelling an agency to
act, plaintiffs face an additional hurdle. The purpose of a preliminary injunction “is merely to
preserve the relative positions of the parties until a trial on the merits can be held.” Univ. of Tex.
v. Camenisch, 451 U.S. 390, 395 (1981). If the “requested relief would alter, not preserve, the
status quo, the court must subject the plaintiff’s claim to a somewhat higher standard.” Paleteria
La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. de C.V., 901 F. Supp. 2d 54, 56
(D.D.C. 2012) (internal quotations omitted); see Stanley v. Univ. of S. Cal., 13 F.3d 1313, 1319
(9th Cir. 1994) (holding that, “where a party seeks mandatory preliminary relief that goes well
beyond maintaining the status quo pendente lite, courts should be extremely cautious about
issuing a preliminary injunction.”). Although this Circuit has “neither adopted nor rejected a
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 13 of 35
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heightened burden as a doctrinal matter . . . it is common practice . . . to proceed with extreme
caution when the injunction would alter the status quo.” Paleteria, 901 F. Supp. 2d 54, 57 n.1
(citing Allina Health Servs. v. Sebelius, 756 F. Supp. 2d 61, 70 n.5 (D.D.C. 2010)); see also
Dorfmann v. Boozer, 414 F.2d 1168, 1173 (D.C. Cir. 1969) (“The power to issue a preliminary
injunction, especially a mandatory one [that would alter the status quo], should be sparingly
exercised.”) (internal quotation marks omitted).
II. Microsoft Is Ineligible For Preliminary Injunctive Relief
Microsoft’s request for a preliminary injunction should be denied. As demonstrated
below, Microsoft is unlikely to succeed on the merits and suffers no irreparable harm. Moreover,
the balance of equities tips in the Government’s favor and an injunction is not in the public
interest.
A. Microsoft Is Unlikely To Succeed On The Merits
1. Introduction
Microsoft is unlikely to succeed on the merits. As an initial matter, this Court lacks
jurisdiction to entertain Microsoft’s challenge to CBP’s decision not to enforce the limited
exclusion order against redesigned devices. Microsoft cites no precedent for what it asks the
Court to do, and we are aware of none. That no district court has ever considered a challenge of
this kind highlights the jurisdictional flaw at the heart of Microsoft’s case – other, well-
established avenues of redress deprive this Court of jurisdiction under the Administrative
Procedure Act (APA). Indeed, Microsoft seeks to short-circuit the detailed statutory and
regulatory procedures that empower the ITC – and, ultimately, the United States Court of
Appeals for the Federal Circuit – to consider and decide patent infringement claims in the
importing context. Microsoft also ignores the right to remedies under domestic patent law, rights
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 14 of 35
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that Microsoft is already pursuing. No district court has ever found jurisdiction to entertain this
type of shoe-horned trade complaint. This Court should not be the first. In the same vein, this
Court should dismiss this case because the ITC retains primary jurisdiction to consider
interpretations of its own orders.
Moreover even assuming that jurisdiction exists, Microsoft still could be unlikely to
succeed on the merits of its claim, because CBP’s actions in this matter have been reasonable.
2. The Court Lacks Jurisdiction To Entertain This Case Under The APA __
This Court must consider jurisdiction as a threshold matter. Steel Co. v. Citizens for a
Better Env’t, 523 U.S. 83, 94 (1998). Absent jurisdiction, this Court cannot rule on a motion for
a preliminary injunction. U.S. Ass’n of Importers of Textiles & Apparel v. U.S. Dep’t of
Commerce, 413 F.3d 1344, 1348 (Fed. Cir. 2005); Pennsylvania Mun. Authorities Ass’n v.
Horinko, 292 F. Supp. 2d 95, 101 (D.D.C. 2003).
Microsoft bears the burden of demonstrating subject-matter jurisdiction. McNutt v. Gen.
Motors Acceptance Corp. of Indiana, 298 U.S. 178, 188-89 (1936). If Microsoft cannot meet its
burden, the Court must dismiss. Steel Co., 523 U.S. at 94. Sovereign immunity is “jurisdictional
in nature,” FDIC v. Meyer, 510 U.S. 471, 475 (1994), and any waiver must be “express[ed] in
statutory text.” Lane v. Pena, 518 U.S. 187, 192 (1996).
Microsoft attempts to invoke the Court’s jurisdiction pursuant to 28 U.S.C. § 1331 and 19
U.S.C. § 1337. Alone, neither statute waives sovereign immunity. Swan v. Clinton, 100 F.3d
973, 981 (D.C. Cir. 1996); Historic Eastern Pequots v. Salazar, --- F. Supp. 2d ----, 2013 WL
1289571 (D.D.C. 2013). The APA, however, when it provides a cause of action, can both waive
sovereign immunity and form a basis for jurisdiction in tandem with section 1331. Califano v.
Sanders, 430 U.S. 99, 107 (1977); American Road & Transp. Builders Ass’n v. E.P.A., 865 F.
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 15 of 35
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Supp. 2d 72, 81 (D.D.C. 2012). Nevertheless, if “another statute provides an ‘adequate remedy
in a court,’ 5 U.S.C. § 704, then the APA neither provides a cause of action nor waives sovereign
immunity.” Id. (citing Washington Legal Found. v. Alexander, 984 F.2d 483, 486 (D.C. Cir.
1993); Fornaro v. James, 416 F.3d 63, 66 (D.C. Cir. 2005); Nat’l Wrestling Coaches Ass’n v.
Dep’t of Educ., 366 F. 3d 930, 947 (D.C. Cir. 2004)). And “if the statute providing the adequate
remedy channels review to the courts of appeals, it eliminates the federal question jurisdiction
that the district courts would otherwise enjoy.” Id. (citing Harrison v. PPG Indus., Inc., 446
U.S. 578, 584 (1980)).
Two statutory schemes provide adequate remedies sufficient to bar any claim by
Microsoft that the APA provides a waiver of sovereign immunity in this case. The first is section
337 itself. The second is the patent laws.
a. Section 337 Remedies Preclude APA Jurisdiction
Microsoft possesses a host of remedies under section 337 and the ITC’s implementing
regulations, which precludes APA jurisdiction.
Among its duties related to international trade, the ITC investigates and adjudicates
claims that a party is importing or has imported items that infringe a valid United States patent.
19 U.S.C. § 1337(a)(1)(B). If the ITC determines that an importer is infringing a patent, the ITC
will issue a “limited exclusion order,” which governs the parties before the ITC, or it may issue a
“general exclusion order,” covering a broader range of circumstances. Kyocera Wireless Corp.
v. Int’l Trade Comm’n, 545 F.3d 1340, 1356 (Fed. Cir. 2008). The purpose of both types of
orders is to exclude infringing goods from entering the United States. 19 U.S.C. § 1337(d)(2).
The ITC does not, however, directly implement its orders at the border. Rather, the statute
entrusts the Treasury Department (currently through CBP) with that responsibility. 19 U.S.C.
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 16 of 35
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§ 1337(d)(1). Accordingly, after the ITC issues an exclusion order, the ITC notifies CBP of the
order, and CPB “shall, through the proper officers, refuse” entry to subject goods. Id.
Judicial review of the ITC’s and CBP’s actions in section 337 cases may be pursued in
two ways. Most directly, after the ITC makes a determination under section 337, an adversely
affected party may appeal within 60 days to the Federal Circuit. 19 U.S.C. § 1337(c); 28 U.S.C.
§ 1295(a)(6). This direct review is happening in this case – both Microsoft and Motorola have
appealed the ITC’s order to the Federal Circuit, which is scheduled to hear argument on
August 6, 2013. Fed. Cir. Docket Nos. 12-1445 and 12-1535.
The other avenue of judicial review, though more limited, is through the United States
Court of International Trade. Pursuant to 19 U.S.C. § 1514(a), an importer may protest a
decision by CBP to exclude entry pursuant to an ITC exclusion order. See, e.g., Jazz Photo
Corp. v. United States, 439 F.3d 1344, 1347-48 (Fed. Cir. 2006). If CBP denies an importer’s
protest, the importer may challenge that denial in the Court of International Trade. 28 U.S.C.
§ 1581(a); Jazz Photo Corp., 439 F.3d at 1347. As Microsoft correctly points out, however, only
importers may challenge CBP’s exclusion decisions in the Court of International Trade because
of that court’s jurisdictional limitations; other parties at the ITC, such as Microsoft, have no
cause of action in the Court of International Trade. Funai Elec. Co., Ltd. v. United States, 645 F.
Supp. 2d 1351 (Ct. Int’l Trade 2009).
Despite these statutory limitations, patent holders still possess further administrative and
judicial remedies. The Federal Circuit has held that the ITC possesses the statutory authority to
enforce its own orders. VastFame Camera, Ltd. v. Int’l Trade Comm’n, 386 F.3d 1108, 1113
(Fed. Cir. 2004). Indeed, the ITC’s regulations provide a road map for complainants like
Microsoft to pursue their rights before the ITC, and, if necessary, the Federal Circuit. The ITC’s
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 17 of 35
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enforcement regulations offer both informal and formal proceedings. 19 C.F.R. § 210.75.
Informal enforcement proceedings “may be conducted by the [ITC] with respect to any act or
omission by any person in possible violation of any provision of an exclusion order . . . .”
19 C.F.R. § 210.75(a). The ITC then “may issue such orders as it deems appropriate to
implement and insure compliance with the terms of an exclusion order.” Id. The regulation
governing formal proceedings allows a “complainant in the original investigation,” such as
Microsoft, to file “a complaint setting forth alleged violations of any exclusion order . . . .”
19 C.F.R. § 210.75(b)(1).
The ITC’s enforcement proceeding could also result in the issuance of a cease and desist
order, which is enforceable through substantial civil penalties. Id.; see also 19 U.S.C.
§ 1337(f)(1) (entitled “[c]ease and desist orders; civil penalty for violation of orders”). The ITC
may also bring suit in district court to enforce cease and desist orders against importers. 19
U.S.C. § 1337(f)(2); 19 C.F.R. § 210.75(c). If Microsoft believed that Motorola’s imports were
as flagrant and obvious a violation of the exclusion order as it purports, Microsoft could also
seek temporary emergency relief before the ITC. This relief would function almost exactly like a
preliminary injunction pending formal proceedings. See 19 C.F.R. § 210.77(a). Microsoft could
also seek modification of the exclusion order expressly to include the redesigned products it
claims are infringing. See 19 C.F.R. § 210.76. Moreover, as it did with respect to the ITC’s
initial exclusion order in this case, Microsoft could appeal to the Federal Circuit a decision by
the ITC concerning enforcement. See, e.g., Vastfame, 386 F.3d at 1110 (noting that “Fuji filed a
complaint with the [ITC] requesting enforcement and advisory proceedings to determine whether
VastFame and others had violated the general exclusion order”). Lastly, Microsoft may seek an
advisory opinion from the ITC concerning the exclusion order’s scope. 19 C.F.R. § 210.79.
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 18 of 35
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The above remedies under section 337 and the ITC’s implementing regulations provide
Microsoft with more than adequate redress for all claims raised in its complaint. These
alternative remedies deprive this Court of jurisdiction to entertain this case. Indeed, this case is
strikingly similar to Fornaro, in which the District of Columbia Circuit held that the APA did
not waive sovereign immunity to allow a district court challenge to an Office of Personnel
Management (OPM) decision when review was available at the Federal Circuit. Fornaro, 416
F.3d at 64-66. In that case, law enforcement officers challenged OPM’s decision not to notify
members of a prospective class of claimants and provide enhanced retirement benefits resulting
from earlier Federal Circuit case law. Id. at 65. OPM’s ruling was appealable to the Merit
Systems Protection Board (MSPB) and ultimately to the Federal Circuit. Id. at 66. The Court
held that allowing plaintiffs to challenge OPM’s action in district court “would plainly
undermine the whole point of channeling review of benefits determinations to the MSPB and
from there to the Federal Circuit.” Id. at 68. This approach, the Court explained, would also: (a)
“reintroduce the haphazard arrangements for administrative and judicial review of personnel
action, involving resort to the district courts through various forms of action, including suits for
mandamus, injunction, and declaratory judgment, that Congress sought to replace in the CSRA
[Civil Service Retirement Act]”; (b) “erode the primacy of the MSPB for administrative
resolution of disputes and the primacy of the Federal Circuit for judicial review”; and (c)
“impermissibly create a right of access to the courts more immediate and direct than the CSRA
provides, thus fracturing the unifying authority of the MSPB, and undermining the consistency
of interpretation by the Federal Circuit envisioned by the Act.” Id. at 68-69 (internal quotations,
brackets, ellipses, and citations omitted). Not all APA district court actions involving the CSRA
are prohibited, but those that are allowed involve limited challenges, for example, to system-
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wide rulemaking. See, e.g., Nat’l Treasury Employees Union v. Whipple, 636 F. Supp. 2d 63, 69
(D.D.C. 2009).
Like the challenge to OPM’s actions under the CSRA in Fornaro, allowing Microsoft’s
challenge here to proceed would upset a carefully crafted statutory mechanism that provides an
adequate remedy for parties like Microsoft. Such a result is impermissible. As demonstrated
above, CBP’s implementation of ITC exclusion orders is reviewed by the Federal Circuit. If the
Court considers Microsoft’s challenge, the Court would be forced to review CBP’s interpretation
of the ITC’s exclusion order and to construe what that order means, even though the ITC already
has a process in place for such determinations. Review of this Court would be in the District of
Columbia Circuit, when it would otherwise occur in the Federal Circuit, which is certainly an
adequate forum. Such a splitting of review between the regional circuits and the Federal Circuit
similarly ignores the Supreme Court’s teaching regarding the APA. See Bowen v.
Massachusetts, 487 U.S. 879, 908 (1988) (declining to split the review of 5 U.S.C. § 704 final
agency actions regarding Medicaid between the courts).
Microsoft cannot involve this Court and suddenly create a right of access to judicial
review where none before existed. Allowing Microsoft to do so would circumvent the
longstanding process by which parties return to the ITC and seek clarification, modification, and
enforcement of exclusion orders. This right of access would mean a right to injunctive relief and
declaratory judgments that before were the sole province of the ITC and CBP. The ITC can
clarify and enforce its own rulings, and that power, coupled with available review in the Federal
Circuit, deprives this Court of jurisdiction. Moreover, that Microsoft’s remedy before the ITC
might inconvenience it because it might obtain injunctive relief more quickly here (which is
questionable given the ITC’s ability to grant emergency relief) is of no moment. See Town of
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Sanford v. United States, 140 F.3d 20, 23 (1st Cir. 1998) (explaining that “[a] legal remedy is not
inadequate for purposes of the APA because it is procedurally inconvenient for a given plaintiff,
or because plaintiffs have inadvertently deprived themselves of the opportunity to pursue that
remedy.”); First Nat. Bank of Chicago v. Steinbrink, 812 F. Supp. 849, 854 (N.D. Ill. 1993)
(“Not only is an administrative proceeding pending which addresses the very same issues . . . ,
but a viable opportunity for review exists in the appellate courts once a final enforcement order is
issued. The only inadequacy with this remedy is that the Bank must endure the added expense
and inconvenience of final adjudication in the administrative proceedings and subsequent review
in the Seventh Circuit.”).
Indeed, Microsoft’s correct judicial remedy was pursued by Fuji in the disposable camera
cases. Fuji, like Microsoft, filed a complaint at the ITC against an importer (including Jazz
Photo) that Fuji claimed was infringing its patents. Jazz Photo, 439 F.3d at 1346-47. Just as the
ITC did here for Microsoft, the ITC agreed with Fuji, and issued an exclusion order. Id. at 1347.
Two years later, Fuji returned to the ITC “seeking institution of a formal enforcement proceeding
to enforce the Exclusion Order” against Jazz Photos and others. Id. The ITC agreed with Fuji
that Jazz Photo had violated the exclusion order. Id.; see also VastFame, 386 F.3d at 1110
(discussing ITC post-exclusion order proceedings). Had it been adversely affected by the ITC’s
ruling, Fuji could have appealed, but instead, Jazz Photo sued in the Court of International Trade,
challenging CBP’s exclusion of certain disposable cameras stemming from the ITC’s
enforcement decision. Id.
In sum, Microsoft’s remedies before the ITC and the Court of Appeals for the Federal
Circuit are adequate and have been pursued before. This Court accordingly lacks jurisdiction to
entertain this case pursuant to the APA.
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b. The Patent Laws Preclude APA Jurisdiction
The patent laws also provide Microsoft with an adequate remedy – one that Microsoft is
already pursuing. 35 U.S.C. § 281 et seq. Patent holders may initiate infringement actions for
which they are entitled to seek damages. 35 U.S.C. § 284; Fuji Photo Film Co., Ltd. v. Jazz
Photo Corp., 394 F.3d 1368 (Fed. Cir. 2005) (patent remedies sought while section 337 case
before ITC). Microsoft already sued Motorola in the United States District Court for the
Western District of Washington, alleging that Motorola was “infringing the ’566 patent by,
among other things, making, using, offering to sell or selling in the United States, or importing
into the United States, products and/or services that are covered by one or more claims of the
’566 patent . . .” W.D. Wash. Cmpl. at ¶ 36 (emphasis added). Attachment A. Like Microsoft’s
available remedies before the ITC and the Federal Circuit, Microsoft’s pursuit in district court of
a case for patent infringement concerning the devices at issue in this very case demonstrates that
Microsoft possesses adequate remedies sufficient to deprive this Court of jurisdiction.
3. Alternatively, This Case Should Be Rejected Because It Falls Within The ITC’s Primary Jurisdiction___________________________
The Court should also decline to exercise jurisdiction because the case’s subject matter
falls within the ITC’s primary jurisdiction. The primary jurisdiction doctrine promotes “proper
relationships between the courts and administrative agencies charged with particular regulatory
duties.” United States v. Western Pac. R. Co., 352 U.S. 59, 63-64 (1956). No fixed formula
exists for applying the doctrine. Id. at 64. Instead, the doctrine “rests both on a concern for
uniform outcomes (which may be defeated if disparate courts resolve regulatory issues
inconsistently) . . . and on the advantages of allowing an agency to apply its expert judgment.”
Allnet Communication Serv., Inc. v. Nat’l Exchange Carrier Ass’n, 965 F.2d 1118, 1120 (D.C.
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 22 of 35
13
Cir. 1992). Although the doctrine of primary jurisdiction need not deprive the Court of
jurisdiction, this Court may, if the parties would not be unfairly disadvantaged, dismiss a case
without prejudice pursuant to the doctrine. Reiter v. Cooper, 507 U.S. 258, 268-69 (1993).
As explained above, the ITC is charged in section 337 with excluding from import items
that infringe valid patents. The ITC has exclusive jurisdiction to determine whether a violation
of section 337 has occurred, including infringement of asserted patents, and to issue exclusion
orders upon finding a violation of section 337. Pursuant to both section 337 and its
implementing regulations, the ITC also has jurisdiction to enforce compliance with its orders.
19 U.S.C. § 1337(b), (d)-(f); 19 C.F.R. § 210.75 et seq. The Federal Circuit has recognized the
ITC’s technical expertise. See, e.g., Enercon GmbH v. Int’l Trade Com’n, 151 F.3d 1376, 1382
(Fed. Cir. 1998).
Given the clear route of review before the ITC that Microsoft resisted by filing suit here,
the Court should decline to entertain this suit and instead allow the ITC to interpret and enforce
its own order. If the Court creates an avenue for review of CBP rulings on ITC matters, a split of
authority – with no uniform mechanism for review in a single court of appeals – will become
possible, depending on where a party elects to seek relief.
Further, and as in Allnet, the posture of Microsoft’s suit as “a declaratory judgment action
strengthens the case for primary jurisdiction” because “Federal declaratory judgments are
available as a matter of judicial discretion, not as of right . . . and are not to be used to pre-empt
and prejudge issues that are committed for initial decision to an administrative body or special
tribunal.” 965 F. 2d at 1121 (internal citations omitted).
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4. Microsoft Will Not Succeed On The Merits
Even assuming that the Court possesses jurisdiction to entertain Microsoft’s complaint,
Microsoft’s claim still would be likely to fail because CBP acted lawfully and reasonably.
a. CBP’s Enforcement Decisions Are Permissible Under The Correct Standard Of Review_________________________ Microsoft misstates the governing standard in its motion and complaint by attempting to
apply the standard of review for review of final agency actions to what is in fact an attempt to
“compel agency action [allegedly] unlawfully withheld.” 5 U.S.C. § 706(1). Microsoft thus fails
to state a claim pursuant to Fed. R. Civ. P. 12(b)(6), because CBP’s decision not to exclude
redesigned smartphones was discretionary and cannot be compelled pursuant to section 706(1).
Sierra Club v. Jackson, 648 F.3d 848, 853-55 (D.C. Cir. 2011) (citing 5 U.S.C. § 701(a)(2)
“committed to agency discretion” exemption from APA review).
Microsoft contends that “[t]he case arises from Defendants’ unlawful and arbitrary
refusal to enforce an order of the United States International Trade Commission,” Pl. Mem. at 1,
and that it “seeks injunctive and declaratory relief requiring [CBP] to comply with a mandatory
Limited Exclusion Order.” Cmpl. at ¶ 2. Microsoft then treats CBP’s purported non-
enforcement of the ITC’s exclusion order as a final agency action under the APA, 5 U.S.C.
§ 702. Pl. Mem. at 16. Microsoft asserts that it may seek to compel enforcement by way of a
Court decision holding CBP’s alleged non-enforcement “arbitrary and capricious” under
5 U.S.C. § 706(2)(A), see Pl. Mem. at 16-28 (argument pursuant to section 706(a)(A)), instead of
the correct provision, under which Courts may “compel agency action unlawfully withheld” only
under very limited circumstances. 5 U.S.C. § 706(1).
As the unanimous Supreme Court recognized, and contrary to the premise of Microsoft’s
suit, “the only agency action that can be compelled under the APA is action legally required.
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This limitation appears in § 706(1)’s authorization for courts to ‘compel agency action
unlawfully withheld.’” Norton v. Southern Utah Wilderness Alliance, 542 U.S. 55, 63 (2004)
(SUWA) (quoting 5 U.S.C. § 706(1)) (emphasis by Court). “A claim under § 706(1) can proceed
only where a plaintiff asserts that an agency failed to take a discrete agency action that it is
required to take.” Id. (emphasis by Court). Indeed, section “706(1) empowers a court only to
compel an agency ‘to perform a ministerial or non-discretionary act,’ or ‘to take action upon a
matter, without directing how it shall act.’” Id. (quoting Attorney General’s Manual on the
Administrative Procedure Act 108 (1947) (emphasis by Court); see also Heckler v. Chaney, 470
U.S. 821, 831 (1985) (decisions not to enforce are unreviewable under APA because they are
“committed to agency discretion by law” under 5 U.S.C. § 701(a)(2)); Salmon Spawning
Recovery Alliance v. United States, 532 F. 3d 1338, 1345 (Fed. Cir. 2008) (rejecting attempt to
compel CBP to enforce Endangered Species Act (ESA) against alleged importers of ESA-listed
salmon); Corning Gilbert Inc. v. United States, 896 F. Supp. 2d 1281, 1289 (Ct. Int’l Trade
2013) (unlike ministerial actions that courts may compel under section 706(1), CBP “may have
to go beyond the mechanical application of [an exclusion order].”).
To be sure, we do not contend that CBP possesses unbounded discretion to ignore ITC
exclusion orders. Rather, when faced with containers of redesigned merchandise at the border,
some level of discretion necessarily inures to CBP to deny or allow entry by determining
whether those imports fall within or outside the scope of the ITC’s exclusion. Indeed, Microsoft
implicitly recognized this practical reality by not contending that exclusion of redesigned
products is a “ministerial” or “discrete agency action that [CBP] is required to take,” SUWA, 542
U.S. at 63 (emphasis by Court), whenever CBP implements an exclusion order. Microsoft’s
claim thus fails to state a claim for which relief may be granted for that reason alone.
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b. CBP’s Decisions Are Not Arbitrary Or Capricious And Were In Accordance With Law_______________________________
Even if this Court reviews CBP’s actions under the (incorrect) arbitrary and capricious
standard that Microsoft advances, Pl. Mem. 16-17, Microsoft’s claims still must fail. “The scope
of review under the ‘arbitrary and capricious’ standard is narrow and a court is not to substitute
its judgment for that of the agency.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 43 (1983). “[T]he agency must examine the relevant data and
articulate a satisfactory explanation for its action including a ‘rational connection between the
facts found and the choice made.’” Id. (quoting Burlington Truck Lines v. United States,
371 U.S. 156, 168 (1962)). Courts thus “consider whether the decision was based on a
consideration of the relevant factors and whether there has been a clear error of judgment.” Id.
(citations omitted). CBP was reasonable and thus it more than met this deferential standard.
i. CBP’s Ruling Was Not Foreclosed By The Law Of The Case Or Unreasonable
Microsoft first contends that it will succeed because CBP’s ruling was foreclosed by the
ITC’s order. Pl. Mem. 18-20. Microsoft is mistaken. CBP’s ruling that Motorola’s redesigned
devices were not covered by the ITC’s exclusion order is entirely reasonable.
Microsoft’s contentions hinge on a misreading of a two-sentence footnote in the ITC’s
opinion. Pl. Mem. Ex. G. As Microsoft notes, Motorola asserted “that any exclusion order
should not extend to the accused products’ use of Google’s servers and Google’s synchronization
protocol to synchronize calendar objects.” ITC Op. 24, n.12. The ITC declined “to consider this
issue because it was raised by Motorola for the first time in a responsive brief.” Id.
This footnote does not say what Microsoft claims it says. The footnote does not say that
the ITC’s exclusion order covers products that use Google’s servers and protocol. All the
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footnote says is that Motorola raised the issue only at the conclusion of ITC proceedings, in a
manner that prevented the administrative law judge, Microsoft, and the Commission from
addressing it. So when Motorola and Microsoft brought this issue to CBP’s attention, CBP
needed to look beyond the footnote. CBP needed to determine whether, in fact, Motorola’s
Google synchronization was at issue before the ITC. The ITC’s opinion is silent on the question,
so to make its determination, CBP analyzed the record. Pl. Mem. Ex. A (HQ H242025) at 2-7.
Indeed, CBP carefully considered the record developed by the parties before the ITC
given that Motorola’s failure to raise the issue on a timely basis before the administrative law
judge precluded the ITC’s adjudication of the issue. CBP examined the deposition testimony of
both Motorola’s and Microsoft’s expert witnesses. Id. at 10. CBP considered Microsoft’s
updated claim chart, which did not refer to Google’s technology. Id. CBP also considered
Microsoft’s pre- and post-hearing briefs, which also did not address the issue. Id.
CBP’s consideration of the ITC’s opinion and the record before the ITC to determine
whether Motorola’s smartphones were covered by the ITC’s order was reasonable. CBP
considered all relevant factors and its conclusion was logically drawn from the record and
reasonably articulated. In these circumstances, this Court should not substitute its judgment for
that of CBP. National Treasury Employees Union v. Helfer, 53 F.3d 1289, 1292-93 (D.C. Cir.
1995).
ii. CBP Did Not Shift Any Burden To Microsoft
Microsoft next claims that CBP wrongly allocated the burden of proof to Microsoft to
prove that Motorola’s smartphones were covered by the ITC’s exclusion order. Pl. Mem. 20-22.
This is wrong because CBP expressly ruled that Motorola bore the burden to demonstrate non-
infringement and held Motorola to that standard.
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As Microsoft concedes, CBP’s rulings explain that an exclusion order shifts the burden of
proof to would-be importers to prove that their products are not covered by an exclusion order.
Pl. Mem. Ex. M. (HQ H226615) at 6; Pl. Mem. Ex. A (HQ H242025) at 9. Despite CBP’s clear
statement, Microsoft maintains that CBP’s use of the phrase “Microsoft points to” at page 10 of
HQ H242025 somehow demonstrates that CBP impermissibly shifted the burden of proof to
Microsoft. This is absurd. CBP first ruled on Motorola’s request without consulting Microsoft.
Pl. Mem. Ex. M (HQ H226615). There, CBP considered the evidence provided by Motorola and
found that Motorola had proven that its redesigned smartphones were not covered by the
exclusion order. Id. Microsoft then asked CBP to revoke that ruling. In doing so, Microsoft
made arguments and, in making its arguments, Microsoft “pointed to” evidence. As a result,
CBP merely noted that Microsoft had “pointed to” evidence that the agency found unpersuasive.
CBP did not shift any burden; it merely considered Microsoft’s contentions and found that they
did not overcome Motorola’s demonstration that its redesigned smartphones were not covered by
the exclusion order.
Nor did CBP impose an improper standard for claim abandonment. Pl. Mem. at 22.
Microsoft appears to maintain that, because it raised its infringement claim regarding the use of
Google technology in an exhibit to its complaint before the ITC, Microsoft did not abandon that
claim in later filings when it submitted a revised chart that did not address Google technology.
Id. A party may abandon a claim after raising it in a complaint by not pressing for it in a later
motion. Aliotta v. Bair, 614 F.3d 556, 562-63 (D.C. Cir. 2010). CBP’s conclusion that
Microsoft abandoned its claim with respect to Google technology was thus entirely reasonable.
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iii. CBP Did Not Fail To Provide Fair Notice To Microsoft
Microsoft erroneously claims that CBP failed to notify Microsoft that CBP was shifting
the burden to Microsoft to prove that Motorola devices should be excluded. Pl. Mem. 23-25.
As an initial matter, Microsoft identifies no authority requiring CBP to provide notice in
the manner that Microsoft claims. Pl. Mem. at 23-25. Microsoft asserts only that notice must be
given for “formal proceedings.” Id. at 24. The proceedings here were governed by 19 C.F.R.
§ 177 et seq., and were not formal proceedings. Rather, rulings made under Section 177 are “far
removed . . . from notice-and-comment process . . . .” United States v. Mead Corp., 533 U.S.
218, 231 (2001). CBP had no obligation to provide Microsoft notice before issuing its rulings.
Aside from the issue of required notice, Microsoft also contends that it was harmed
because CBP transformed its revocation request into a request for a new ruling. Microsoft is
wrong. Nothing about how CBP treated Microsoft’s request was improper.
Motorola initially asked CBP to allow importation of smartphones that it had redesigned
purportedly to avoid the infringement covered by the ITC’s order. Pl. Mem. Ex. M (HQ
H226615). In particular, Motorola contended to CBP that it had redesigned its smartphones to
avoid generating emails when scheduling calendar events using Microsoft’s ActiveSync
Exchange Protocol. Id. at 3, 9. CBP considered Motorola’s arguments and agreed. Id. at 9.
After obtaining a copy of the ruling, Microsoft sought revocation on two grounds. Pl. Mem. Ex.
A (HQ H242025). First, Microsoft asserted that Motorola’s devices still infringed because they
sent emails using Google technology. Id. at 1-2. Second, Microsoft contended that the
redesigned smartphones continued to infringe by using Microsoft technology. Id. at 2. CBP
addressed these two contentions in separate rulings, both issued on June 24. Id.
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Microsoft does not make clear exactly what wrong CBP allegedly committed. Motorola
did not request that it be allowed to import smartphones that used only Google technology,
presumably because Motorola interpreted the ITC’s order not to cover those devices because
Motorola believed that they were not at issue before the ITC. Instead, Motorola requested a
ruling about smartphones using Microsoft technology. CBP ruled that Motorola’s redesigned
devices were not covered. Microsoft challenged that ruling by arguing that CBP had missed an
important issue – that Motorola’s smartphones were still generating email requests using Google
technology. As demonstrated above, CBP examined Microsoft’s argument carefully,
considering both the ITC’s opinion and the record before the ITC. CBP found that the record did
not support a finding that using Google technology was specifically accused and found to
infringe at the ITC. Microsoft disagrees with that conclusion, but it does not successfully
demonstrate that CBP’s process in reaching its decision was in any way unlawful.
Microsoft’s other procedural complaints are equally meritless. There is simply no bar
preventing CBP from communicating with importers and domestic interested parties on an ex
parte basis. Similarly, Microsoft identifies no authority that compels CBP to hold adversarial
proceedings every time an importer or domestic interested party contacts the agency regarding
imports. Rather, it is well established that interested parties are entitled only to those
administrative proceedings that are mandated by statute or regulation. Vermont Yankee Nuclear
Power Corp. v. Natural Res. Def. Council, 435 U.S. 513, 543-44 (1978).
In addition, adversarial proceedings of the sort that Microsoft envisions may very well
require CBP to divulge trade secrets absent authority. In particular, the proceedings sought by
Microsoft would require disclosure of Motorola’s proprietary designs to Microsoft, despite the
criminal prohibition upon such disclosure under the Trade Secrets Act. 18 U.S.C. § 1905. Other
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customs information, such as the identity of importers, the ports of entry used, and the content of
entries, are also considered proprietary information belonging to the importer. See, e.g., 19
C.F.R. § 103.23(b)(6) (barring disclosure if “[d]isclosure would improperly reveal confidential
commercial information without the owner’s consent (e.g., entry information)”); 19 C.F.R.
§ 103.2(b) (applying disclosure provisions of Freedom of Information Act, 5 U.S.C. § 552,
subsection (b)(4) of which excludes from disclosure “trade secrets and commercial or financial
information obtained from a person and privileged or confidential.”). In sum, there is no basis
for CBP to share commercial information with an importer’s competitors. In that vein, the only
statute that provides for CBP investigations at the behest of domestic interested parties does not
focus on any entries of merchandise. Rather, the investigation focuses solely on how CBP
should classify for tariff purposes imported merchandise identical to that produced or sold by the
domestic petitioner. The particulars of any importation are wholly absent from that provision.
See 19 U.S.C. § 1516 (setting forth procedures and standards).
d. CBP Did Not Ignore Evidence Of Abandonment
Lastly, Microsoft contends that CBP ignored evidence submitted by Microsoft. Pl. Mem.
26-27. The authority cited by Microsoft concerns an agency’s obligation to consider all
important aspects of a problem. See, e.g., Motor Vehicle Mfrs., 463 U.S. at 43. Microsoft first
concedes that CBP’s ruling demonstrates that CBP did consider Microsoft’s evidence; CBP just
did not find it persuasive. Pl. Mem. 26. Microsoft’s next contends that CBP failed to consider
that Motorola did not raise an argument when requesting more time to respond to an expert
report. Id. Microsoft does not explain how Motorola’s failure proves anything, let alone how
this failure was somehow an important aspect of the issue before CBP.
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B. Microsoft Has Not Shown Irreparable Harm Absent Injunctive Relief
In addition to no likelihood of success on the merits, Microsoft does not even attempt to
proffer evidence that it would be irreparably harmed absent injunctive relief. Rather, Microsoft
hinges its claim on the fact that sovereign immunity bars APA money judgments against the
United States, allegedly preventing redress of its complaint. Pl. Mem. at 30. Yet Microsoft
currently seeks damages from Motorola in its infringement action in the Western District of
Washington.
Moreover, Microsoft concedes at page 6 of its motion that, “[r]ather than exclude others
from using its patented technology, Microsoft has licensed use of the ‘566 patent under defined
circumstances to most of the industry’s leading smartphone manufacturers, including Nokia,
Apple, Samsung, Research In Motion, HTC, AsusTek, Kyocera, Pantech, and Sony.” In sum,
the harm that Microsoft alleges does not stem from Motorola’s imports. Rather, it stems from
Motorola not licensing the ‘566 patent in the same manner as most of the industry. That can
easily be redressed should Microsoft prevail in its patent suit. Rather than being irreparably
harmed by a possible delay in recovery of licensing fees from Motorola, “the temporary loss of
income, ultimately to be recovered, does not usually constitute irreparable injury.” Sampson v.
Murray, 415 U.S. 61, 90 (1974); see also Davis v. PBGC, 571 F.3d 1288, 1294-95 (D.C. Cir.
2009) (explaining that plaintiffs “cannot establish irreparable harm. The only alleged injuries in
this case are economic. The pilots complain that they are not getting enough money from the
PBGC. If they succeed in their suit on the merits, the PBGC will have to give them the money
they request.”). In fact, Microsoft’s allegation of harm leads to the perverse result that, even if it
cannot demonstrate harm sufficient to enjoin an alleged infringer, it nevertheless can establish
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23
irreparable harm in a case against the Government seeking to compel enforcement against the
same alleged infringer.
Similarly, Microsoft’s reliance on Spansion, Inc. v. ITC, 629 F.3d 1331 (Fed. Cir. 2010)
to reduce its burden to show harm is misplaced. Pl. Mem. at 27-29. In that case, the court held
that a petitioner need not demonstrate irreparable harm to obtain an ITC exclusion order. But
that is not the case here, where Microsoft seeks a preliminary injunction to compel CBP to act.
Spansion did not limit binding Supreme Court precedent requiring courts to apply the four-prong
test before awarding injunctive relief. Munaf, 553 U.S. 674.
Lastly, Microsoft’s attempt to advance a lightened standard for injunctive relief based on
the Court of International Trade’s decision in Eaton Corp. v. United States, 395 F. Supp. 2d 1314
(Ct. Int’l Trade 2005), is misplaced. There, the court issued a preliminary injunction to prevent
an importer from importing redesigned merchandise pending an ITC proceeding on whether the
redesigned merchandise infringed the patent subject to a limited exclusion order. At the time,
the court expressly refused to assess its own jurisdiction. Id. at 1162. Eaton is unavailing
because, first, the Federal Circuit immediately rejected the court’s decision and allowed
continued importation of allegedly infringing merchandise. That court held “that it was likely
legal error for the trial court to issue an injunction without considering the important
jurisdictional issues” in that case. Eaton Corp. v. United States, Fed. Cir. Dkt. No. 05-1565
(October 28, 2005) Order at 5. Attachment B. Second, the Court of International Trade later
concluded that it lacked jurisdiction to entertain the very type of claim asserted in Eaton. Funai,
645 F. Supp. 2d at 1357.
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C. The Balance Of Hardships Should Preclude An Injunction
In contrast to the lack of immediate irreparable harm that Microsoft would suffer absent
injunctive relief, the Government’s administration of the customs laws would be significantly
harmed by short-circuiting the regulatory process for administration and enforcement of
exclusion orders before the ITC. 19 C.F.R. §§ 210.75, 210.76, 210.77, 210.79. Indeed,
Congress entrusted the ITC with the authority to determine the need for and the scope of
exclusion orders in the first instance and, under the regulations above, the ITC is a correct forum
for determining whether Motorola’s redesigned smartphones infringe on Microsoft’s patent.
D. An Injunction Would Not Serve The Public Interest
As previously discussed, Microsoft’s attempt to bypass available avenues for relief harm
the administration of the customs laws. Rather than following the process set forth in the ITC’s
regulations, Microsoft seeks an extraordinary remedy of a preliminary injunction under the
assumption that Motorola’s redesigned products infringe the ‘566 patent, without even asking the
agency entrusted by Congress to determine in the first instance whether Microsoft’s contentions
are meritorious. Although the ITC regulations do not set forth mandatory administrative
prerequisites for filing suit, they do provide explicit administrative remedies, and may result in
decisions appealable as of right to the Federal Circuit. In light of the administrative remedies
that Microsoft elected to eschew, “[s]imple fairness to those who are engaged in the tasks of
administration, and to litigants, requires as a general rule that courts should not topple over
administrative decisions unless the administrative body not only has erred but has erred against
objection made at the time appropriate under its practice.” United States v. L.A. Tucker Truck
Lines, 344 U.S. 33, 37 (1952). That is the case here because the ITC could have issued decisions
upon redesigned merchandise, resolving Microsoft’s complaints without burdening this Court.
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For these reasons, we respectfully request that the Court deny Microsoft’s motion for
preliminary injunction.
Respectfully submitted, STUART F. DELERY Acting Assistant Attorney General RONALD C. MACHEN JR. United States Attorney for the District of Columbia
BRYANT G. SNEE Deputy Director /s/ PATRICIA M. McCARTHY Assistant Director /s/ STEPHEN C. TOSINI (DC Bar No. 470415) /s/ SEAN B. McNAMARA Senior Trial Counsels Department of Justice Civil Division Commercial Litigation Branch PO Box 480, Ben Franklin Station Washington, D.C., 20044 Tel: (202) 616-5196 Email: [email protected] August 2, 2013 Attorneys for Defendant
Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 35 of 35