Viscofan, S.A. v. U.S. International Trade Commission, Union Carbide Corporation, and Teepak, Inc.

787 F.2d 544, 229 U.S.P.Q. (BNA) 118, 1986 U.S. App. LEXIS 20032, 7 I.T.R.D. (BNA) 2105
CourtCourt of Appeals for the Federal Circuit
DecidedMarch 18, 1986
DocketAppeal 85-2282
StatusPublished
Cited by17 cases

This text of 787 F.2d 544 (Viscofan, S.A. v. U.S. International Trade Commission, Union Carbide Corporation, and Teepak, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Viscofan, S.A. v. U.S. International Trade Commission, Union Carbide Corporation, and Teepak, Inc., 787 F.2d 544, 229 U.S.P.Q. (BNA) 118, 1986 U.S. App. LEXIS 20032, 7 I.T.R.D. (BNA) 2105 (Fed. Cir. 1986).

Opinion

FRIEDMAN, Circuit Judge.

This petition to review challenges (1) aspects of a remedial order the United States International Trade Commission (Commission) entered in a proceeding under section 337 of the Tariff Act of 1930, 19 U.S.C. § 1337 (1982), and 19 U.S.C. § 1337a (1982), and (2) the Commission’s refusal to declassify confidential information that had been submitted during the Commission proceedings pursuant to a protective order. We affirm the challenged portions of the remedial order and dismiss the challenge to the refusal to declassify as an issue over which we have no jurisdiction.

I

A. In response to a complaint filed by respondent, Union Carbide Corporation (Carbide), the Commission in October 1983 initiated an investigation to determine whether the petitioner, Viscofan, S.A. (Viscofan), had committed unfair methods of competition and unfair acts in violation of section 337. The alleged unfair practices consisted of the importation and selling by Viscofan, a Spanish corporation, of certain skinless sausage casings. Carbide’s complaint to the Commission alleged that Viscofan had manufactured the casings by processes that (1) violated two of Carbide’s patents, and (2) involved trade secrets of Carbide that Viscofan had misappropriated. Carbide is one of the two major American manufacturers and sellers of skinless sausage casings.

The Commission consolidated this investigation with another investigation it previously had instituted, involving similar claims of patent infringement (but no claim of misappropriation of trade secrets) made by the other major American manufacturer and seller of skinless sausage casings, Teepak, Inc. (Teepak). No issues relating to the Teepak investigation are involved in the case before us.

In its opinion, the Commission stated that the

general manufacturing process for skinless sausage casings as practiced by each of the parties to these investigations involves three distinct manufacturing operations: (1) chemical preparation, which involves the manufacture of viscose from natural cellulose fibers; (2) simultaneous regeneration of the cellulose and continuous formation of accurately-sized cellulose tubes in extrusion machines, including drying the extruded casing under carefully controlled conditions and winding it onto reels of semi-finished material called “flat stock;” and (3) shirring, which is a finishing operation during which lengths of flat stock are finely pleated and compressed into short, self-supporting, tubular sticks. [Footnote omitted.]

The Commission further stated:

Meatpackers use skinless sausage casings to make sausage products by sliding a stick of shirred casing over the stuffing tube or horn of a sausage stuffing machine and pumping a meat emulsion into the stick as it de-shirrs, or extends. The meat-filled casing is twisted at intervals to define individual sausages or links. The long chain of links produced is cooked, after which the casing is normally removed, and the resulting product is sold as “skinless” sausages or frankfurters. [Footnote omitted.]

Following a hearing, the administrative law judge in July 1984 rendered a 363-page initial decision holding that Viscofan had violated section 337 and 19 U.S.C. § 1337a by (1) infringing a valid patent owned by Teepak, and (2) misappropriating Carbide’s trade secrets. He determined that Viscofan had misappropriated six of those trade secrets.

The Commission stated:

*547 The AU found all the other elements of a violation of section 337 to exist in each investigation. The ALJ also determined that respondent Viscofan had failed to prove its affirmative defenses of patent misuse and unclean hands, wherein it alleged that complainants Teepak and Union Carbide had conspired to monopolize the manufacture of skinless sausage casings in the United States by means of illegal patent pooling, cross-licensing, price-fixing, and predatory behavior.

The Commission declined to review the initial decision, which thereby became the agency’s final decision. The Commission then considered the relief stage of the proceedings and received submissions on the relief and public interest aspects of the case from the parties and others.

The Commission’s final order, which became effective in January 1985, excluded “from entry into the United States for the remaining term of the patent” “[s]mall caliber sausage casings manufactured abroad in accordance with the process disclosed” in the Teepak patent. It provided that persons desiring to import such casings “may petition the Commission to institute” further proceedings to determine whether the casings sought to be imported fell within the bar of the preceding paragraph.

Paragraph 3 of the Commission’s order, the validity of which is a major issue before us, “excluded from entry into the United States for ... ten (10) years from the date of this order” “[sjmall caliber cellulose sausage casings manufactured by Viscofan” or any affiliated company or related business entity.

The Commission explained at considerable length the reasons that led it to adopt paragraph 3, which we discuss in some detail in part II, infra. Here we merely summarize the Commission’s reasoning.

The Commission rejected Viscofan’s contention that “a cease and desist order is the only appropriate remedy in a trade secrets investigation____” It stated that because there was no way in which it could determine from the finished casings whether they had been manufactured by processes using the misappropriated trade secrets, and because it could not police Viscofan’s manufacturing operations in Spain to determine whether the misappropriated secrets were being used, an exclusion order was “the only remedy that promises to be reasonably effective.”

In setting the period of exclusion at 10 years, the Commission stated that the normal period of relief in a trade secrets misappropriation case is the time it would take the misappropriator “independently to develop the technology using lawful means.” It rejected Viscofan’s contention that the proper basis for ascertaining that period was the time it would have taken Viscofan to discover each trade secret separately, because “this approach ignores the interrelationships between and among the trade secrets and technology involved” and the fact that Viscofan had misappropriated six such interrelated trade secrets. The Commission concluded that it should “consider a single independent development time” for the six misappropriated trade secrets together. On the basis of the evidence Carbide submitted and Carbide’s arguments regarding the time necessary independently to develop an integrated manufacturing process without the benefit of the six misappropriated trade secrets, the Commission concluded that. its “remedial order should apply for a period of ten years.”

Finally, the Commission concluded that the 10-year period of exclusion should run from the date of its order rather than, as Viscofan argued, from the date of the misappropriation of the trade secrets.

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787 F.2d 544, 229 U.S.P.Q. (BNA) 118, 1986 U.S. App. LEXIS 20032, 7 I.T.R.D. (BNA) 2105, Counsel Stack Legal Research, https://law.counselstack.com/opinion/viscofan-sa-v-us-international-trade-commission-union-carbide-cafc-1986.