Ot:Rr:Bstc:Ipr H286719 Jw

HQ H286719

July 24, 2017

OT:RR:BSTC:IPR H286719 JW

CATEGORY: 19 U.S.C. §1337; Unfair Competition

Mr. Michael J. McKeon

Fish & Richardson P.C.

901 15 Street, N.W.

Washington, DC 20005

RE: Ruling Request; U.S. International Trade Commission; Limited Exclusion Order; Investigation No. 337-TA-972; Certain Automated Teller Machines, ATM Modules, Components Thereof, and Products Containing Same.

Dear Mr. McKeon:

This ruling letter, issued under 19 C.F.R. § 177, is the result of an inter partes proceeding that the Intellectual Property Rights Branch, Regulations and Rulings, U.S. Customs and Border Protection (“CBP”), administered pursuant to section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337, that involved your client, Nautilus Hyosung Inc., Nautilus Hyosung America Inc., and HS Global, Inc. (collectively, “Nautilus Hyosung”), and Diebold-Nixdorf Incorporated and Diebold Self-Service Systems, Inc. (collectively, “Diebold”) as the two parties with a direct and demonstrable interest in the question presented by their respective ruling requests.

In your letter, dated May 26, 2017, which included Exhibits 1 to 14 (“Ruling Request”), submitted on behalf of your client Nautilus Hyosung you requested an administrative ruling, pursuant to 19 C.F.R. § 177, whether certain automated teller machines, ATM modules, components thereof, and products containing same to be imported by Nautilus Hyosung are subject to the limited exclusion order (“972 LEO”) issued by the U.S. International Trade Commission (“ITC” or “Commission”) in Investigation No. 337-TA-972. On June 16, 2017, Diebold submitted a response letter to the Ruling Request, which included Exhibit A (“Diebold’s Opposition”). Both parties presented arguments before CBP during the proceeding held on June 30, 2017. At the proceeding, Nautilus Hyosung also provided CBP with a sample of the upper half of a redesigned Halo II ATM machine, which included the metal tray and plastic covering. Post proceeding briefs were subsequently submitted by both parties to CBP on July 10, 2017. Nautilus Hyosung’s post proceeding submission included Exhibits 15 to 17 (collectively, “Nautilus Hyosung’s Post Proceeding Submission”) and Diebold’s post proceeding submission included Exhibits 1 to 3 and Exhibit B (collectively, “Diebold’s Post Proceeding Submission”). Replies to the post proceeding briefs were submitted by both parties to CBP on July 17, 2017. Nautilus Hyosung’s reply included Exhibit 18, (collectively, “Nautilus Hyosung’s Reply), and Diebold’s reply included Exhibit A (collectively, “Diebold’s Reply”).

FACTS:

A. Investigation No. 337-TA-972

The Commission instituted Investigation No. 337-TA-972 on November 20, 2015, based on a complaint filed by Diebold, Incorporated and Diebold Self-Service Systems (collectively, “Diebold”). See 80 Fed. Reg. 72735-36 (November 20, 2015). The complaint alleged violations of section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337, in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain automated teller machines, ATM modules, components thereof, and products containing the same by reason of infringement of U.S Patent No. 7,121,461 (“the ‘461 patent”); U.S. Patent No. 7,249,761 (“the ‘761 patent”); U.S. Patent No. 7,314,163 (“the ‘163 patent”); U.S. Patent No. 6,082,616 (“the ‘616 patent”); U.S. Patent No. 7,229,010 (“the ‘010 patent”); and U.S. Patent No. 7,832,631 (“the ‘631 patent”). Commission Opinion (May 19, 2017) at 1. The notice of investigation names Nautilus Hyosung as respondents. Id. The Office of Unfair Import Investigations was not named as a party. Id.

The ‘461 patent, the ‘761 patent, and the ‘163 patent were previously terminated from the investigation. Id. On November 30, 2016, the presiding administrative law judge (“ALJ”) issued the final initial determination (“ID”), which found a violation of section 337 with respect to the ‘616 patent and the ‘631 patent. Id. at 2. The ALJ found no violation with respect to the ‘010 patent. Id. The ALJ recommended the issuance of a limited exclusion order and cease and desist orders against Nautilus Hyosung. Id.

Petitions for review were filed by the parties with respect to certain findings related to the ‘616 patent and the ‘631 patent. Id. The Commission determined to review and modify two claim constructions for the ‘616 patent. Id. The Commission Claim Construction Opinion issued on January 30, 2017, and as a result the Commission determined to review certain issues with respect to infringement, domestic industry, and invalidity. Id. The Commission decided not to review the ID’s finding of violation with respect to the ‘631 patent. Id.

The Commission issued a notice finding a violation of section 337 as to the ‘616 patent. Id. Accordingly, on May 19, 2017, the Commission issued a limited exclusion order and cease and desist orders, prohibiting, inter alia, the importation of articles that infringe claims 1, 6, 10, 16, 26, and 27 of the ‘616 patent and claims 1-7 and 18-20 of the ‘631 patent. Id.; see also 972 LEO (May 19, 2017).

B. The ‘616 Patent

While the Commission found a violation of section 337 with respect to both the ‘616 patent and the ‘631 patent, the Ruling Request relates to just one patent: the ‘616 patent. See Ruling Request at 1. The ‘616 patent “relates to an enclosure for an ATM that includes a rollout tray.” ALJ ID at 3. The rollout tray includes a service opening “used to access service points on the serviceable components when the rollout tray is extended from the housing.” ‘616 patent, Abstract. Figure 2 in the ‘616 patent depicts an embodiment of the service opening 54 in the tray’s lower wall 52:

‘616 patent, Fig. 2.

In the Commission’s Claim Construction Opinion dated January 30, 2017, the Commission construed the term “service opening” to have its plain and ordinary meaning, namely, “an opening through which a component may be serviced.” Commission Claim Construction Opinion at 11. As noted above, the 972 LEO prohibits the importation of articles that infringe claims 1, 6, 10, 16, 26, and 27 of the ‘616 patent. Of these claims, claims 1, 26, and 27 of the ‘616 patent are independent claims. The independent claims, with the limitations relevant to this ruling in bold, read as follows:

Claim 1

1. An automated banking machine apparatus comprising:

a housing bounding an interior area, the housing having a first opening to the interior area;

a rollout tray movably supported on the housing, the rollout tray including a wall portion, a service opening extending through the wall portion, wherein the rollout tray is movable between a first position wherein the tray extends outward from the first opening and the service opening is accessible from outside the housing, and a second position wherein the tray is within the interior area and the service opening is not accessible from outside the housing;

a first serviceable component mounted in supporting connection with the tray and overlying the service opening, the serviceable component having a service point, and wherein the service point is accessible from outside the housing by extending a tool upwardly through the service opening when the tray is in the first position.

Claim 26

26. An automated banking machine apparatus comprising:

a housing bounding an interior area, the housing having a first opening to the interior area;

a rollout tray movably mounted in supporting connection with the housing, the rollout tray including a service opening, wherein the rollout tray is movable between a first position wherein the tray extends outward from the first opening and the service opening is accessible from outside the housing, and a second position wherein the tray is within the interior area and the service opening is not accessible from outside the housing;

a serviceable component mounted in supporting connection with the tray, the serviceable component having a service point, and wherein the service point is accessible from outside the housing through the service opening when the tray is in the first position;

an upper wall in supporting connection with the tray, the wall disposed above the service opening, wherein the service point is disposed between the wall and the service opening.

Claim 27

27. An automated banking machine apparatus comprising:

a housing bounding an interior area, the housing having a first opening to the interior area;

a rollout tray movably mounted in supporting connection with the housing, wherein the rollout tray is movable between a first position wherein the tray extends outward from the first opening and wherein a service opening is accessible from outside the housing, and a second position wherein the tray is generally within the interior area and the service opening is not accessible from outside the housing;

a fascia in supporting connection with the tray, and wherein the fascia generally covers the first opening when the tray is in the second position.

C. The Accused Products

The products accused of infringing in the underlying investigation were ATMs, which could generally be divided into two groups: full service bank ATMs and lower cost retail ATMs. See ID at 11. The ATMs accused of infringing the ‘616 patent were generally the retail ATMs. Id. The specific Nautilus Hyosung ATMs accused of infringing the ‘616 patent were the Halo, Halo S, NH2600, and MX2600, which are part of the Halo series; the Halo II and MX2600SE, which are part of the Halo II series; the MX5000CE and MX5000SE, which are part of the MX5000 series; the MX5200XP, MX5200W7, and MX5200SE, which are part of the MX5200 series; the MX5300, MX5300CE, and MX5300XP, which are part of the MX5300 series; and the MX5600 model. Id.; Commission Opinion at 5-6.

Ultimately, the Commission found the Halo II, MX5200, and MX5600 series ATMs to infringe the ‘616 patent. Commission Opinion at 20. In so finding, the Commission found that, inter alia, these ATMs had a “service opening” and noted that the “service opening” does not have to be only “for service a real technician would do,” rather “it should be for service that a real technician could do.” Id. at 7 (emphasis in the original). The pictures below depict the service openings in the rollout trays of the Halo II, MX5200, and MX5600 series.

[ ]

See Diebold’s Opposition at 3.

D. The Redesign

The Commission found that the Halo, MX5000, and MX5300 series ATMs did not infringe the ‘616 patent; hence, Nautilus Hyosung has not redesigned those ATMs and they are not included in the Ruling Request. See Ruling Request at 1. Nautilus Hyosung’s Ruling Request relates only to the three lines of ATMs found to infringe in Investigation No. 337-TA-972: the Halo II, MX5200, and MX5600 series ATMs. Id. Nautilus Hyosung purports to have “eliminated the cutouts and gaps that were accused of being openings in the accused ATMs.” Ruling Request at 9. Nautilus Hyosung states that for the three product series (i.e., the Halo II, MX5200, and MX5600) a non-removable hard cover has been added to the tray to completely cover the accused cutouts and gaps. Id. at 9-10; see also Nautilus Hyosung Post Proceeding Submission at 4 (“. . . the hard plastic covering is connected to the ATM trays with rivets.”). Nautilus Hyosung further notes that the covering is riveted onto the ATMs and cannot be removed without substantial damage. Ruling Request at 10. Nautilus Hyosung believes that this substantial damage would be harm to the plastic of the covering and harm to the structural integrity of the machine such as destroying the metal of the tray or the breaking of other components. See Hearing Transcript at 36:12-38:8.

The following images provided by Nautilus Hyosung compares the products found to infringe at the ITC (left column) with the redesigned ATMs (right column).

[ ]

Ruling Request at 10. Accordingly, Nautilus Hyosung contends that as the redesigned ATMs no longer have “service openings,” they do not infringe the asserted claims of the ‘616 patent and fall outside the scope of the exclusion order. Id. at 12.

Diebold disagrees. Diebold asserts that Nautilus Hyosung’s redesigned ATMs still have a service opening as shown in the pictures below taken by Diebold during its June 12, 2017 inspection of the redesigned ATMs.

[ ]

Diebold Opposition at 5. Diebold contends that “[e]ven though [Nautilus] Hyosung has placed a temporary plastic cover over the opening, the redesigned machines nonetheless have ‘an opening through which a component may be serviced’” that “would provide the exact same access to components that the Commission determined to infringe the 616 Patent.” Id. at 6.

In addition, Diebold argues that the manner by which Nautilus Hyosung chose to cover the opening shows that Nautilus Hyosung does not intend for the cover to be a permanent fixture on the redesigned ATMs. Id. Diebold points out that the plastic cover secured by rivets can be easily removed with no harm done to the machine. Exhibit 1 (Kurfess Declaration) of Diebold’s Post Proceeding Submission at ¶¶ 18-23. Diebold further states that the cover can be easily undone in the field, and in fact, must be removed to perform services on the machines. Diebold Opposition at 6. As an example, Diebold cites to the MX5600 Service Manual, which Diebold asserts that Nautilus Hyosung has no intent of modifying. Id. The MX5600 Service Manual directs users to service the ATM’s pin pad through the service opening. Id. Diebold also states that “the temporary plastic cover in at least the ‘redesigned’ MX5600 is positioned such that the pin pad cannot actually be serviced when the cover is in place.” Id.

II. ISSUE

Whether Nautilus Hyosung’s redesigned ATMs are covered by the asserted claims of the `616 patent and therefore fall within the scope of the Commission’s limited exclusion order from Investigation No. 337-TA-972, such that they would be excluded from entry for consumption into the United States.

III. LAW AND ANALYSIS

A. Treatment of Confidential Business Information Submitted Under 19 C.F.R. § 177

As a preliminary matter, Nautilus Hyosung has requested confidential treatment in connection with this ruling request for certain information from its submissions, claiming that the disclosure of such information would likely cause substantial harm to its competitive position and, on this basis, seeks to have the information in question redacted from any ruling that is published in accordance with 19 U.S.C. § 1625(a). Disclosure of information related to administrative rulings under 19 C.F.R. § 177 is governed by 31 C.F.R. § 1, 19 C.F.R. § 103, and 19 C.F.R. § 177.8(a)(3). See 19 C.F.R. § 177.10(a). Moreover, the determination whether to include or redact information within a published ruling is guided by various federal laws—and the relevant standards for their application—that involve confidentiality and disclosure, to include the Freedom of Information Act (“FOIA”) (5 U.S.C. § 552), the Trade Secrets Act (18 U.S.C. § 1905), and the Privacy Act of 1974 (5 U.S.C. § 552a). See CBP HQ Ruling H121519 at 1 (dated February 8, 2011).