Trade Updates for Week of June 14, 2017

United States Court of International Trade

 

Decision Remanded Back to Commerce

 In Mitsubishi Polyester Film, Inc. v. United States, Court No. 13-62, Slip Op. 17-70 (June 8, 2017), the court considered whether the subject merchandise was within scope of the “Antidumping Duty Order on PET Film, Sheet, and Strip from Brazil: Final Scope Ruling, Terphane, Inc. and Terphane Ltda.” (Jan. 7, 2013), PD 35 (“Terphane Scope Ruling” or “Scope Ruling”).  Specifically, the court considered whether a particular set of PET products manufactured abroad by Terphane, Ltda. and imported by Terphane Inc. (collectively “Terphane”), falls within the scope of a duly issued antidumping duty order on imports of certain PET products. The basic issue was whether the Department of Commerce’s (“Commerce”) determination that Terphane’s products were not within the scope of the Terphane Scope Ruling was supported by substantial evidence and in accordance with law.  Commerce held that Terphane’s products are not within scope because they “have a performance-enhancing resinous layer that exceeds the thickness requirement listed in the scope exclusion,” which is known as COEX.  Slip Op. at pg. 9 . 

While Commerce acted reasonably in finding the scope language to be ambiguous, the court held that substantial evidence did not support its analysis under 19 CFR 351.225(k)(1).  The court held that Commerce did not discuss descriptions in the individual investigation or in the petitions. “Commerce nowhere justified its avoidance of the Petition and original investigation under its (k)(1) analysis, despite that they contain “descriptions of the merchandise” that Commerce is obligated to analyze thereunder.”  Slip Op. pg. 28. The original investigation and petition is where Mitsubishi expressed its intent for the scope.    Commerce must also clarify what “equivalent PET films” – whether they refer solely to those films excluded under the second sentence exclusion, or one that is a term of art in the industry.  For these reasons, the case was remanded back to Commerce.  Finally, the court determined that the remand moots any issue regarding the invalidation by delay.

 

Remand Decision Remanded Again to Commerce  

In Tri Union Frozen Products, Inc. et al. v. United States, Court No. 14-249, Slip Op. 17-71 (June 13, 2017), the court reviewed the U.S. Department of Commerce’s (“Commerce” or “the Department”) remand determination filed pursuant to the court’s order in Tri Union Frozen Products, Inc. v. United States, 40 CIT __, 163 F. Supp. 3d 1255 (2016) (“Tri Union I”). See Final Results of Redetermination Pursuant to Court Remand, Sept. 1, 2016, ECF No. 118-1 (“Remand Results”).

On remand, Commerce continued to use Bangladesh Bureau of Statistics (BBS) data to value the labor factor of production (“FOP”) in this review despite the Ad Hoc Shrimp Trade Action Committee’s (“Ad Hoc Shrimp”) arguments that the Bangladeshi wage rate data is aberrational and unreliable due to systemic labor abuses in the Bangladeshi shrimp industry.  The court remanded again to Commerce for further consideration of Ad Hoc Shrimp’s argument that record evidence of alleged labor abuses in the Bangladeshi shrimp industry renders the BBS data aberrational, unreliable, and not reflective of actual labor conditions in a market economy at comparable economic development to the Socialist Republic of Vietnam. While Commerce presumes the BBS data is reliable despite the evidence of systemic labor abuse, according to the court, such a presumption is not reasonable. The systemic labor abuses cited in the record by the Plaintiff at the very least, involve workers either not being paid for all of their labor.  Thus, if workers are being underpaid for their labor, as a result of forced or child labor practices, not compensated or not fully compensated for their work, then one cannot presume that the reported wage data represents either the actual labor costs in Bangladesh or the labor costs in a hypothetical market economy which is economically comparable to Vietnam. Because this information is unreliable, and does not fully reflect compensation of the shrimp industry, then it should not be applied.  Commerce on the second remand must address the use of BBS data or it must address the widespread abuses of the Bangladeshi shrimp industry.

 

Court Sustained Commerce’s Findings in Garlic Case

In Jinan Farmlady Trading Co. Ltd. v. United States v. Christopher Rand LLC, The Garlic Company, Valley Garlic, Vesey and Company Inc., and Fresh Garlic Producers Association Slip Op. 17-69, Court No. 12-00181, plaintiff challenged Commerce’s 16th administrative review of an antidumping order involving garlic. Farmlady objected to Commerce’s exclusion of non-market economy imports from the surrogate data used to calculate dumping margins. Farmlady also claimed that Commerce failed to exclude aberrational imports from the surrogate data leading to unfair margins. In addition, Farmlady challenged Commerce’s policy of issuing liquidation instructions to Customs and Border Patrol (CBP) 15 days after publication of the final result in an administrative review. For the following reasons the Court sustained Commerce’s administrative review and the surrogate data, but found the “15 day policy” unlawful.

Farmlady argued that Commerce was required to use all import data from a surrogate country, and cannot exclude import data from a non-market economy in using a surrogate to calculate dumping margins. Farmlady also argued that the surrogate data Commerce did use was aberrational, which led to an unfair distortion in the surrogate values.   19 U.S.C. § 1677 requires Commerce to use the “best available information regarding the values of such factors from an appropriate surrogate market.” Id. at 5-6.  The court stated that Commerce has “broad discretion to determine what constitutes such information.” Id. at 5. The courts stated “it is reasonable for Commerce to infer that data on imports from an NME country are inferior to import data for goods from a market economy.” Id. at 6.  In regards to plaintiff’s claims Commerce used aberrational data in making its surrogate calculations, the court said no evidence was provided. The court stated “because an average is calculated from higher and lower values within a range, it cannot be the case that a value it aberrant because it is lower than average.” Id. at 7. The court sustained all aspects of Commerce’s 16th annual review.

Farmlady also challenged Commerce’s “15 day policy” for notifying CBP of assessment instructions based on the review. 19 U.S.C § 1516 provides interested parties a 30-day period to commence civil action regarding the results of an administrative review. The Court says that “the 15 day policy causes recurring injury in fact by repeatedly forcing plaintiffs to file summons, complaint, and motion for preliminary injunctions within fifteen days of the publication of the final results.”  Id. at 10. The court ruled that the 15 day policy was not reasonable in light of the 30 days that parties are allowed to prepare litigation in statute.  

 

United States Court of Appeals for the Federal Circuit

Reversed ITC Decision Regarding Infringement of Sonar Patents

In Garmin International, Inc., Garmin USA, Inc., and Garmin Corporation, v. United States, Court No. 2016-1572 (June 13, 2017), appellants Garmin International, Inc., Garmin USA, Inc., and Garmin Corporation, collectively “Garmin”,  appealed from a Final Determination of the United States International Trade Commission that resulted in an exclusionary order.  The order prohibited the importation of certain solar imaging devices, which infringed U.S. Patent Nos. 8,305,840 and 8,605,550.  The Final Determination also found Patent No. 8,300,499 to be invalid, and thus, the Federal Circuit made a finding of noninfringement. However, because the Commission’s findings of validity and infringement of ‘840 and ‘550 patents were not supported by substantial evidence, the Federal Circuit reversed the Final Determination in part.

The ‘840 patent is a “Downscan imaging sonar” which discloses a sonar imaging device for generating images of objects beneath a water craft.  A linear transducer (“downscan tranducer”) directed downward prvides images of the water column and bottom features directly below the vessel, while transducers pointed toward the sides (“sidescan transducers”) are used to map the sea floor on the sides of the vessel.  Conventional circular transducer with conical beams are als o used under this patent, but provide poor quality images for sonar data.  The ‘550 patent which is also entitled a “Downscan imaging sonar” contains the same specification as the ’840 patent, however it has three transducers two of which are linear sidescan transducers and one of which is a linear transducer.  The two linear sidescan transducers are angled 30 degrees from the horizontal axis, and the downward transducer is directed 90 degrees south of the horizontal axis. 

The Commission had found some of the claims of the ‘550 patent to be invalid based on two references.  The first is a 1960 article by Tucker which is a “Narrow-beam echo ranger for fishery and geological investigations,” and the second is U.S. Patent No. 7,652,942 established by Betts entitled, “Sonar Imaging system for mounting to watercraft.” On appeal, appellants argue that the prior art invalidates patents ‘840 and ‘550 by disclosing a “sonar signal processor” limitation of certain independent claims on both patents.  Garmin argued that Tucker prior art describes a sonar signal processor which has a “receiver” for receiving bounce-back sonar echo and “the recorder” for processing the data received and displaying the information on a chart or cathode ray tube.  While the Commission argued on appeal that Tucker does not disclose receiving input from a transducer, the Federal Circuit found that Tucker shows how the receiver is connected to the transducer. Likewise, the Betts art also discloses a sonar signal processor. Thus, the Federal Circuit reversed the Commission’s findings that all asserted claims of ’550 and ‘840 are valid.

 

Federal Circuit Affirms Commission’s Findings

In Navico, Inc. and Navico Holdings AS v. United States, Court No. 2016-5033 (June 13, 2017),  a similar case to the above Garmin decision, appellants appeal from the Final Determination of the Commission where the Commission did not find infringement of certain claims  because of obviousness.  The Commission found claims 1, 7, 12, 13, and 57 of the ’550 patent obvious. These claims were directed to three linear transducer elements, two of which scan to the sides and one of which scans downwards. The Commission, reversing the Initial Determination, found these claims obvious based on a combination of the Betts and Tucker references.  The Federal Circuit agreed with the Commission’s findings and affirmed.