Thursday, June 11, 2015

Rapid Creation of New Business Entities Justifies General Exclusion Order

The ALJ recommended that a general exclusion order be issued following a violation of section 337 by defaulting/non-participating respondents' toner cartridges. "Not only would a GEO prevent circumvention of an exclusion order limited to the infringing products of specifically named entities, but the evidence also demonstrates that there is a pattern of violation of section 337 such that it is difficult to identify the source of infringing products. . . . [F]oreign aftermarket toner cartridge manufacturers have the capacity to replicate their operations in the form of a new business in a matter of months. . . . [I]n approximately two months' time, [personnel from a respondent who was terminated through a consent order] (a) left [the terminated respondent], (b) created a toner cartridge manufacturing facility in Jiangxi, China, which could reportedly produce about 300,000 toner cartridges per month, (c) created a global sales and marketing center in Sanxiang, Zhongshan (China), and (d) created a U.S. importer and distributor for [a new group of respondents'] toner-cartridges. . . . The rapid creation of [a new group of respondents] demonstrates how quickly a new business can spring to life and carry on the same infringing activities as a company named in a limited exclusion order, and is an example of how key management personnel of a named company could circumvent an exclusion order limited to the products of that company by leaving to start a new company."

Toner Cartridges and Components Thereof, 337-TA-918 (ITC June 8, 2015, Order) (Shaw, ALJ)

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