On December 13, 2013, in Suprema, Inc. v. International Trade Commission, the US Court of Appeals for the Federal Circuit partially vacated the ITC's exclusion order barring Mentalix, Inc., a co-appellant in this case, from importing Suprema's optical scanning devices, holding that the order was improperly based on a theory of inducement infringement when the facts did not support a finding of direct infringement when the devices are imported (No. 2012-1170, (Fed. Cir. Dec. 13, 2013)). The Court interpreted Section 337 as precluding the ITC from issuing exclusion orders based on inducement where the direct infringement does not occur until after the article is imported.

Cross Match owns US Patent No. 7,203,344 ('344 patent), which is a method patent relating to fingerprint image capture and processing. Suprema, Inc. manufactures and imports hardware and software for scanning fingerprints. Mentalix, Inc. is a domestic importer of Suprema scanners and integrates the scanners with its own software.

In the underlying ITC proceeding, Cross Match asserted that:

The ALJ found that a number of Suprema's scanners directly infringed claim 19 of the '344 patent when combined with Mentalix's software and recommended the ITC issue an exclusion order relating to those scanners.

At the close of the investigation, the ITC issued both:

On appeal, Suprema and Mentalix argued, among other things, that the ITC erred because a Section 337 violation could not be predicated on a theory of induced infringement on the facts of the case. The Federal Circuit agreed with Suprema, holding that a Section 337 violation cannot be predicated on a claim of induced infringement when the direct infringement of the claimed method does not occur until after the article has been imported.

In deciding this issue of first impression, the Federal Circuit focused on the authority delegated to the ITC by Section 337. According to the Federal Circuit, a close reading of Section 337 indicates that the ITC is charged with dealing with matters of patent infringement at the time of importation, rather than the intent of the parties after the goods are imported. Specifically, the Federal Circuit held that Section 337 does not apply to inducement under 35 U.S.C. § 271(b) where the underlying direct infringement occurs post-importation. Because Mentalix did not directly infringe the '344 patent until it coupled its software with Suprema's scanners, i.e., post-importation, the court reasoned, Suprema could not have induced Mentalix's infringement. Accordingly, the court partially vacated the exclusion order and remanded the matter to the ITC with instructions to amend the order to bar only the articles that infringed a patent claim at the time of importation.

In his concurring-in-part, dissenting-in-part opinion, Circuit Judge Reyna declined to join the majority's opinion in holding that the ITC did not have the statutory authority to stop induced infringement at US borders. Circuit Judge Reyna argued that the majority's opinion ignored the fact that Section 337 was designed to provide relief from specific acts of unfair trade, including acts that lead to the importation of articles which will infringe US patents. Judge Reyna also argued that although the ITC examines articles as they are imported to determine which infringement theory applies, there is no statutory language that expressly requires the articles to be in an infringing state at the time of importation. Judge Reyna also expressed concern that the majority opinion would allow importers to circumvent Section 337 liability for:

Update: On May 13, 2014, the Federal Circuit granted the ITC's and Cross Match Technologies, Inc.'s (Cross Match) petitions for rehearing en banc. The Federal Circuit vacated the December 13, 2013 opinion and judgment and reinstated the appeal (Suprema Inc. v. Int'l Trade Commn, No. 2012-1170 (Fed. Cir. May 13, 2014)).