The Technology & Information Law Blog

Analysis by Charles Gideon Korrell

Month: February 2025

  • Federal Circuit Upholds Antidumping Enforcement in Xanthan Gum Transshipment Case

    On February 27, 2025, the United States Court of Appeals for the Federal Circuit issued a significant opinion in All One God Faith, Inc. v. United States, affirming the U.S. Court of International Trade’s decision that upheld Customs and Border Protection’s (CBP) enforcement actions under the Enforce and Protect Act (EAPA). The case revolved around allegations that several companies, including GLōB Energy Corp. and Ascension Chemicals LLC, engaged in transshipment to evade antidumping (AD) duties on xanthan gum originating from China.

    This case highlights two critical areas of law—international trade enforcement and intellectual property protection—as it relates to regulatory compliance, customs evasion, and the implications of foreign manufacturing claims.

    Key Legal Issues in the Case

    1. Transshipment and Antidumping Evasion

    The central issue before the Federal Circuit was whether the appellants had engaged in transshipment, a practice in which goods subject to antidumping or countervailing duties are routed through a third country to obscure their true origin. The U.S. Department of Commerce had previously imposed antidumping duties on xanthan gum from China under AD Order No. A-570-985, requiring importers to pay tariffs to offset unfair pricing advantages.

    Customs determined that the appellants imported xanthan gum produced in China but falsely declared India as the country of origin. This resulted in an unlawful avoidance of duties, which Customs deemed an act of evasion under 19 U.S.C. § 1517. The court upheld this determination, emphasizing that companies cannot circumvent trade laws by misrepresenting the origins of their goods.

    2. Customs’ Use of Adverse Inferences

    A pivotal issue in the case was CBP’s use of adverse inferences against the appellants and their foreign suppliers for failing to provide requested manufacturing documentation. The EAPA allows Customs to apply adverse inferences under 19 U.S.C. § 1517(c)(3)(A) when parties do not cooperate fully with investigations.

    The court upheld CBP’s approach, noting that the appellants’ suppliers did not adequately respond to inquiries, and therefore, Customs was justified in inferring that the xanthan gum was manufactured in China, not India. This ruling reinforces the importance of compliance with regulatory investigations, as failure to provide supporting documentation can lead to negative legal presumptions.

    3. Jurisdiction Over Finally Liquidated Entries

    A notable procedural question was whether the trial court had jurisdiction to review CBP’s evasion determinations regarding entries that had already been finally liquidated. Initially, the U.S. Court of International Trade ruled that it lacked jurisdiction over these entries, but the Federal Circuit clarified that judicial review remains available under 28 U.S.C. § 1581(c), which allows challenges to evasion determinations irrespective of liquidation status.

    While the appellate court found that the lower court erred in dismissing these claims on jurisdictional grounds, it nonetheless affirmed the trial court’s decision because CBP’s evasion determinations were supported by substantial evidence.

    4. Intersection with Intellectual Property and Trade Laws

    Beyond trade enforcement, this case underscores broader implications for intellectual property (IP) protection. Many antidumping and countervailing duty cases involve industries where intellectual property plays a key role in market competitiveness. The production of xanthan gum, a specialty polysaccharide used in food and industrial applications, involves proprietary manufacturing processes that companies seek to protect through patent and trade regulations.

    When companies engage in transshipment to evade duties, it can undermine domestic producers who invest in IP and R&D. The enforcement of antidumping duties thus serves a dual purpose—preventing unfair trade practices and ensuring that companies adhering to U.S. intellectual property and trade laws are not undercut by competitors evading tariffs.

    Implications of the Ruling

    The Federal Circuit’s decision reinforces the U.S. government’s commitment to strict enforcement of antidumping and countervailing duty laws. Key takeaways from the ruling include:

    • Companies must accurately report the origin of their imports or face significant penalties, including back duties and additional enforcement actions.
    • Failure to cooperate with trade investigations can lead to adverse inferences, increasing financial and legal risks for importers.
    • Judicial review of trade enforcement actions remains available even for liquidated entries, providing clarity on the scope of federal court oversight in trade disputes.
    • This case highlights the ongoing tension between international trade laws and intellectual property protections, particularly where proprietary manufacturing processes and trade secrets are implicated.

    As global supply chains grow more complex, businesses engaged in international trade must remain vigilant in compliance efforts, particularly when sourcing materials from countries subject to trade restrictions. The ruling in All One God Faith, Inc. v. United States serves as a cautionary tale for importers seeking to circumvent trade laws and a reminder of the legal tools available to combat customs evasion.

    By Charles Gideon Korrell

  • Federal Circuit Overturns ITC’s Patent Ineligibility Ruling in US Synthetic v. ITC

    On February 13, 2025, the United States Court of Appeals for the Federal Circuit issued its opinion in US Synthetic Corp. v. International Trade Commission, a case involving key issues in intellectual property law, particularly the eligibility of patent claims under 35 U.S.C. § 101 and the requirements for enablement under § 112. The Federal Circuit reversed the ITC’s conclusion that certain patent claims were directed to an abstract idea and, therefore, ineligible for patent protection, marking a significant decision for patent law concerning material compositions.

    Case Background

    US Synthetic Corp. (USS) filed a complaint with the International Trade Commission (ITC) alleging that several companies had violated Section 337 of the Tariff Act (19 U.S.C. § 1337) by importing and selling products that infringed its U.S. Patent No. 10,508,502 (the ’502 patent). The patent in question covers a polycrystalline diamond compact (PDC), a material used in drilling and machining applications.

    After an investigation, the ITC determined that the asserted claims of the ’502 patent were directed to an abstract idea and were thus patent-ineligible under § 101. The ITC’s ruling was based on its conclusion that the patent claims were primarily focused on certain magnetic properties of the PDCs, which it considered to be merely the result of the manufacturing process rather than structural limitations of the claimed composition.

    USS appealed this determination, arguing that the ITC had misapplied the Supreme Court’s Alice test and that the patent claims were not abstract but instead directed to a specific, novel composition of matter.

    Federal Circuit’s Analysis and Ruling

    The Federal Circuit reversed the ITC’s finding of patent ineligibility and ruled in favor of USS. The court applied the Alice two-step test for determining patent eligibility:

    1. Step One: Are the Claims Directed to an Abstract Idea? The Federal Circuit found that the claims were not directed to an abstract idea but rather to a specific composition of matter. The court emphasized that the patent defines the PDC by its material composition, including diamond grains, catalyst properties, grain size, and certain magnetic properties. Because these characteristics inform a skilled artisan about the structure and physical properties of the PDC, the claims were not abstract.
    2. Step Two: Do the Claims Contain an Inventive Concept? Since the claims were not abstract under step one, the court did not need to proceed to step two. However, it noted that even if step two had been necessary, the claimed composition involved specific manufacturing parameters that resulted in improved material properties, which could qualify as an inventive concept.

    Enablement Under § 112

    In addition to patent eligibility, the intervenors argued that the claims were not enabled under § 112 because the patent did not adequately describe how to achieve the claimed properties without undue experimentation. However, the Federal Circuit upheld the ITC’s conclusion that the claims were enabled. The court found that the patent specification contained sufficient details on the manufacturing process and provided working examples that a skilled artisan could follow without undue experimentation.

    Key Takeaways for Intellectual Property Law

    1. Clarification on Patent Eligibility for Material Compositions
      • The ruling reinforces that claims defining specific material compositions—especially when tied to measurable properties—are not abstract ideas under § 101.
      • The decision pushes back against an overly restrictive view of patent eligibility that might otherwise exclude innovations in material science.
    2. Reaffirmation of the Enablement Standard
      • The Federal Circuit reiterated that the burden of proving non-enablement is on the party challenging the patent.
      • The court emphasized that some level of experimentation is permissible as long as it is not unduly extensive.

    Conclusion

    The US Synthetic v. ITC decision is a significant win for patent holders in the field of material science. It demonstrates that courts are willing to take a nuanced approach when assessing whether a patent is directed to an abstract idea, particularly in cases involving compositions of matter. Moreover, the ruling affirms that patents must provide enough information to enable a skilled artisan to practice the invention without undue experimentation, but they do not need to be exhaustive in their disclosures. This decision is likely to influence future litigation involving patent eligibility and enablement in the chemical and material sciences industries.

    By Charles Gideon Korrell

  • Patent Litigation and Expert Testimony: Lessons from Trudell v. D R Burton

    The recent decision in Trudell Medical International Inc. v. D R Burton Healthcare, LLC by the United States Court of Appeals for the Federal Circuit highlights significant issues in intellectual property law, particularly in the realm of patent litigation. This case, which revolves around the infringement of U.S. Patent No. 9,808,588, serves as a critical reminder of the procedural and evidentiary requirements in patent disputes.

    Background of the Case

    Trudell Medical International Inc. (“Trudell”) sued D R Burton Healthcare, LLC (“D R Burton”) for infringement of its patent covering oscillatory positive expiratory pressure (OPEP) therapy devices. Trudell alleged that D R Burton’s vPEP®, iPEP®, PocketPEP®, and related products infringed claims 1–7, 9, and 18 of its patent. After a three-day trial, the jury found the asserted claims valid but not infringed.

    Trudell appealed on multiple grounds, including the improper admission of expert testimony by Dr. John Collins, an expert retained by D R Burton. The Federal Circuit ultimately reversed the district court’s decision allowing Dr. Collins’ testimony, granted a new trial on infringement, and ordered the case to be reassigned to a different judge.

    Key Legal Issues in the Case

    1. Expert Testimony and Compliance with Federal Rules

    One of the most significant issues in the case was the admission of expert testimony. Under Federal Rule of Civil Procedure 26(a)(2), expert reports must include a complete statement of opinions, the basis and reasons for those opinions, supporting data, and a list of prior cases where the expert has testified. Additionally, under Rule 37(c)(1), failure to disclose expert information as required by Rule 26 results in automatic exclusion unless the failure is substantially justified or harmless.

    The court found that D R Burton failed to comply with these disclosure requirements, as Dr. Collins did not submit a timely expert report on noninfringement. His testimony was introduced at trial despite not being disclosed during discovery, depriving Trudell of an opportunity to challenge or cross-examine his findings adequately. The court held that this failure was neither substantially justified nor harmless, leading to the exclusion of his testimony and the ordering of a new trial.

    2. Claim Construction and Expert Reliability

    The Federal Circuit also addressed issues with the methodology of Dr. Collins’ testimony. The district court had construed specific claim terms, including the definition of “a vane” and “rotate relative to the opening.” Despite this, Dr. Collins provided testimony that contradicted the court’s construction, effectively redefining key claim terms. His approach was deemed unreliable under Federal Rule of Evidence 702, which requires that expert opinions be based on reliable principles and methodologies.

    This aspect of the decision underscores the importance of ensuring that expert witnesses adhere to judicial claim constructions rather than reinterpreting patent terms in a manner inconsistent with the court’s ruling.

    3. The Impact of Procedural Missteps on Patent Trials

    Another crucial takeaway from this case is the procedural mismanagement at the district court level. The judge overseeing the case made multiple contradictory rulings regarding Dr. Collins’ testimony, initially excluding it, then allowing it, then reversing again. Additionally, comments made by the judge suggested a predisposition toward resolving the case quickly, rather than ensuring a fair trial. These concerns led the Federal Circuit to order a reassignment of the case to a different judge on remand—a rare but important corrective measure to preserve judicial impartiality.

    Implications for Patent Law and Litigation Strategy

    This decision has several important takeaways for patent litigants:

    • Strict Compliance with Expert Disclosure Rules: Failure to provide timely and complete expert reports can lead to exclusion of testimony, which can be case-dispositive in patent disputes.
    • Adherence to Claim Construction: Experts must base their testimony on the court’s claim construction and avoid introducing conflicting interpretations.
    • The Role of Judicial Conduct in Patent Trials: The reassignment of this case underscores the importance of judicial impartiality and procedural fairness in complex intellectual property disputes.

    Conclusion

    The Trudell v. D R Burton case highlights the complexities of patent litigation, particularly in the areas of expert testimony and claim construction. For attorneys and companies engaged in intellectual property disputes, this ruling reinforces the necessity of procedural diligence, expert reliability, and fair trial practices. As the case moves forward on remand, it will be interesting to see how the new trial unfolds without the tainted expert testimony that influenced the first jury’s verdict.

    By Charles Gideon Korrell