[Federal Register Volume 85, Number 34 (Thursday, February 20, 2020)]
[Notices]
[Pages 9803-9806]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03346]


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INTERNATIONAL TRADE COMMISSION

[Investigation No. 337-TA-1139]


Certain Electronic Nicotine Delivery Systems and Components 
Thereof; Commission Determination to Review the Final Initial 
Determination in Part and To Affirm the Finding of a Violation of 
Section 337; Schedule for Filing Written Submissions on Remedy, the 
Public Interest and Bonding; Extension of the Target Date

AGENCY: U.S. International Trade Commission.

ACTION: Notice.

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SUMMARY: Notice is hereby given that the U.S. International Trade 
Commission has determined to review the presiding administrative law 
judge's (``ALJ'') final initial determination (``ID'') in part. On 
review, the Commission affirms the ID's finding of a violation of 
section 337 in the above-captioned investigation. The Commission 
requests written submissions from the parties, interested government 
agencies, and interested persons on the issues of remedy, the public 
interest, and bonding concerning respondent Eonsmoke, LLC 
(``Eonsmoke'') and defaulting respondent XFire, Inc. (``XFire''). The 
Commission has also determined to extend the target date for completion 
of the above-captioned investigation to Monday, April 20, 2020.

FOR FURTHER INFORMATION CONTACT: Cathy Chen, Office of the General 
Counsel, U.S. International Trade Commission, 500 E Street SW, 
Washington, DC 20436, telephone 202-205-2392. Copies of non-
confidential

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documents filed in connection with this investigation are or will be 
available for inspection during official business hours (8:45 a.m. to 
5:15 p.m.) in the Office of the Secretary, U.S. International Trade 
Commission, 500 E Street SW, Washington, DC 20436, telephone (202) 205-
2000. General information concerning the Commission may also be 
obtained by accessing its internet server at https://www.usitc.gov. The 
public record for this investigation may be viewed on the Commission's 
electronic docket (EDIS) at https://edis.usitc.gov. Hearing-impaired 
persons are advised that information on this matter can be obtained by 
contacting the Commission's TDD terminal on (202) 205-1810.

SUPPLEMENTARY INFORMATION: On December 13, 2018, the Commission 
instituted this investigation under section 337 of the Tariff Act of 
1930, as amended, 19 U.S.C. 1337, based on a complaint filed on behalf 
of Juul Labs, Inc. (``JLI'') of San Francisco, California. 83 FR 64156 
(Dec. 13, 2018). The complaint, as amended and supplemented, alleges 
violations of section 337 based upon the importation into the United 
States, the sale for importation, and the sale within the United States 
after importation of certain electronic nicotine delivery systems and 
components thereof by reason of infringement of certain claims of U.S. 
Patent Nos.: 10,070,669 (``the '669 patent''); 10,076,139 (``the '139 
patent''); 10,045,568 (``the '568 patent''); 10,058,130 (``the '130 
patent''); and 10,104,915 (``the '915 patent'') (collectively, ``the 
Asserted Patents''). Id. The Commission's notice of investigation named 
twenty-one respondents, including Eonsmoke of Clifton, New Jersey and 
XFire of Stafford, Texas. Id. at 64157. The Office of Unfair Import 
Investigations (``OUII'') is also a party to the investigation.
    On February 25, 2019, the ALJ granted JLI's motion to amend the 
complaint and notice of investigation to change the name of respondent 
Bo Vaping of Garden City, New York to ECVD/MMS Wholesale LLC of Garden 
City, New York and the name of respondent MMS Distribution LLC of Rock 
Hill, New York to MMS/ECVD LLC of Garden City, New York. See Order No. 
8 (Feb. 25, 2019), not rev'd by Comm'n Notice (Mar. 25, 2019).
    On February 28, 2019, the ALJ granted a motion to amend the 
complaint and notice of investigation to change the name of respondent 
Limitless Mod Co. of Simi Valley, California to Limitless MOD, LLC of 
Simi Valley, California. See Order No. 10 (Feb. 28, 2019), not rev'd by 
Comm'n Notice (Mar. 27, 2019).
    Before the evidentiary hearing, JLI settled with the following 
eight respondents: J Well France S.A.S. of Paris, France; ECVD/MMS 
Wholesale LLC; MMS/ECVD LLC; The Electric Tobacconist, LLC of Boulder, 
Colorado; ALD Group Limited of Guangdong Province, China; Flair Vapor 
LLC of South Plainfield, New Jersey; Shenzhen Joecig Techonology Co., 
Ltd. of Guangdong Province, China; and Myle Vape Inc. of Jamaica, New 
York. See Order No. 31 (July 30, 2019), not rev'd by Comm'n Notice 
(Aug. 23, 2019); Order No. 16 (Mar. 21, 2019), not rev'd by Comm'n 
Notice (Apr. 4, 2019); Order No. 33 (July 30, 2019), not rev'd by 
Comm'n Notice (Aug. 23, 2019); Order No. 13 (Mar. 12, 2019), not rev'd 
by Comm'n Notice (Apr. 5, 2019); Order No. 34 (July 30, 2019), not 
rev'd by Comm'n Notice (Aug. 23, 2019); Order No. 32 (July 30, 2019), 
not rev'd by Comm'n Notice (Aug. 23, 2019).
    In addition, the investigation terminated as to the following six 
respondents based on a consent order stipulation and the issuance of a 
consent order: Vapor Hub International, Inc. of Simi Valley, 
California; Limitless MOD, LLC; Asher Dynamics, Inc. of Chino, 
California; Ply Rock of Chino, California; Infinite-N Technology 
Limited of Guangdong Province, China; and King Distribution LLC of 
Elmwood Park, New Jersey. See Order No. 9 (Feb. 27, 2019), not rev'd by 
Comm'n Notice (Mar. 27, 2019); Order No. 11 (Feb. 28, 2019), not rev'd 
by Comm'n Notice (Mar. 26, 2019); Order No. 18 (Mar. 28, 2019), not 
rev'd by Comm'n Notice (Apr. 11, 2019); Order No. 20 (Apr. 2, 2019), 
not rev'd by Comm'n Notice (Apr. 15, 2019).
    On April 23, 2019, the ALJ found respondent XFire in default 
pursuant to Commission Rule 210.16(b), 19 CFR 210.16(b). See Order No. 
22 (Apr. 23, 2019), not rev'd by Comm'n Notice (May 16, 2019).
    Also, prior to the evidentiary hearing, the ALJ granted JLI's 
motion for partial termination of the investigation with respect to 
allegations of infringement as to all asserted claims of the '139 
patent and certain asserted claims of the other asserted patents. See 
Order No. 36 (Aug. 8, 2019), not rev'd by Comm'n Notice (Sep. 5, 2019). 
As a result, the following claims remain at issue in the investigation: 
Claims 1, 2, and 13 of the '669 patent; claims 12, 17, and 20 of the 
'568 patent; claims 1, 2, and 4 of the '130 patent; and claims 1, 6, 
and 21 of the '915 patent (collectively, ``the Asserted Claims'').
    JLI and the Commission were unable to serve respondent Keep Vapor 
Electronic Tech. Co., Ltd. of Shenzhen, China despite multiple attempts 
at service. The final ID states that JLI does not request any relief 
against this respondent. See ID at 2 n.1.
    On May 21, 2019, the ALJ granted a motion to amend the complaint 
and notice of investigation to change the name of respondent Ziip Lab 
Co., Ltd. of Guangdong Province, China to SS Group Holdings of 
Guangdong Province, China. See Order No. 26 (May 21, 2019), not rev'd 
by Comm'n Notice (June 14, 2019).
    Only five respondents participated in the evidentiary hearing: SS 
Group Holdings; ZLab S.A. of Punta del Este--Maldonado, Uruguay; 
Shenzhen Yibo Technology Co. Ltd. of Guangdong Province, China 
(collectively, ``the Ziip Respondents''); Vapor 4 Life Holdings, Inc. 
of Northbrook, Illinois (``V4L''); and Eonsmoke.
    On August 5, 2019, one day before the prehearing conference, the 
ALJ issued an ID (Order No. 35), granting JLI's motion for summary 
determination of importation, infringement, and domestic industry. The 
ALJ found that JLI was entitled to summary determination of importation 
with respect to the Ziip Respondents and their accused products; 
Eonsmoke and its accused products; and V4L and certain V4L accused 
products. See Order No. 35 at 4-11 (Aug. 5, 2019). Citing to a 
stipulation between JLI and the Ziip Respondents, the ALJ stated in his 
infringement analysis with respect to the Ziip Respondents' accused 
products that ``the question of whether Ziip accused products contain 
or perform each limitation of asserted claims is moot.'' Id. at 11. The 
ALJ did not specifically state whether summary determination of 
infringement as to the Ziip Respondents was denied or granted nor the 
reasoning supporting grant or denial of the motion as to this issue. 
Id.
    An evidentiary hearing was held from August 6-7, 2019.
    On September 4, 2019 the Commission reviewed Order No. 35 in part. 
Specifically, the Commission reviewed the ALJ's analysis as to 
infringement and a statement regarding mootness on page 11 of the ID. 
The Commission remanded to the ALJ for clarification on this issue and 
as to whether the ID grants or denies summary determination that the 
Ziip Respondents infringe the Asserted Patents. See Comm'n Notice (Sep. 
4, 2019).
    In response to the Commission's September 4, 2019 Notice, the ALJ 
clarified that Order No. 35 denied

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summary determination of infringement as to the Ziip Respondents 
because that issue was moot in light of the stipulation between JLI and 
the Ziip Respondents. See Remand of Order No. 35 (Oct. 10, 2019).
    On November 19, 2019, the ALJ granted motions to terminate the 
investigation as to the Ziip Respondents and V4L based on settlement 
agreements. See Order Nos. 38 and 39 (Nov. 19, 2019), not rev'd by 
Comm'n Notice (Dec. 16, 2019). Accordingly, only respondent Eonsmoke 
remains active in this investigation.
    On December 12, 2019, the ALJ granted JLI's motion to strike 
portions of the Ziip Respondents' and Eonsmoke's posthearing briefs. 
See Order No. 40 (Dec. 12, 2019). Specifically, these portions relate 
to the issue of invalidity of asserted claim 4 of the '915 patent, 
which was not addressed by Respondents' expert or in their prehearing 
briefings. Id. at 3-5.
    On December 13, 2019, the ALJ issued a combined final ID and 
recommended determination (``RD''), finding a violation of section 337 
by respondent Eonsmoke. Specifically, the final ID finds, inter alia, 
that JLI satisfied the importation requirement as to Eonsmoke's accused 
products; that JLI has shown Eonsmoke's accused products infringe the 
Asserted Claims; that JLI has satisfied the domestic industry 
requirement with respect to the Asserted Patents; and that the Asserted 
Claims have not been shown to be invalid. In addition, in the event the 
Commission finds a violation of section 337, the RD recommends that the 
Commission issue a limited exclusion order (``LEO'') and cease and 
desist orders (``CDO'') directed at Eonsmoke and defaulting respondent 
XFire, and impose a 100 percent bond during the period of Presidential 
review.
    No petitions for review were filed, which means each party has 
abandoned all issues decided adversely to that party. See 19 CFR 
210.43(b)(4).
    Having reviewed the record of this investigation, including the 
final ID, the Commission has determined to sua sponte review the final 
ID in part. 19 CFR 210.44. Specifically, the Commission has determined 
to review and, on review, decline to adopt the discussion of the 
validity of element [c] of claim 12 of the '669 patent on pages 50 and 
55 of the final ID. The Commission has also determined to review the 
discussion of Warranty and Customer Support and Regulatory Compliance 
on pages 265-266 of the final ID and the discussion of the quantitative 
significance of JLI's contract manufacturers' investments in the last 
paragraph on page 272 of the final ID. The Commission has determined 
not to review the remainder of the final ID, including the other 
portions of the ID's domestic industry analysis, which are sufficient 
to support the ID's finding that JLI has satisfied the domestic 
industry requirement under subparagraphs 337(a)(3)(A) and (B) with 
respect to the Asserted Patents. Accordingly, the Commission finds a 
violation of section 337 by reason of Eonsmoke's importation of 
electronic nicotine delivery systems and components thereof that 
infringe one or more of claims 1, 2, and 13 of the '669 patent; claims 
12, 17, and 20 of the '568 patent; claims 1, 2, and 4 of the '130 
patent; and claims 1, 6, and 21 of the '915 patent. The Commission also 
finds that JLI is entitled to relief against defaulting respondent 
XFire pursuant to 19 U.S.C. 1337(g)(1).
    The Commission has determined to extend the target date for 
completion of the investigation to Monday, April 20, 2020.
    In connection with the final disposition of this investigation, the 
statute authorizes issuance of (1) an order that could result in the 
exclusion of the subject articles from entry into the United States, 
and/or (2) cease and desist order(s) that could result in the 
respondent(s) being required to cease and desist from engaging in 
unfair acts in the importation and sale of such articles. Accordingly, 
the Commission is interested in receiving written submissions that 
address the form of remedy, if any, that should be ordered. If a party 
seeks exclusion of an article from entry into the United States for 
purposes other than entry for consumption, the party should so indicate 
and provide information establishing that activities involving other 
types of entry either are adversely affecting it or likely to do so. 
For background, see Certain Devices for Connecting Computers via 
Telephone Lines, Inv. No. 337-TA-360, USITC Pub. No. 2843, Comm'n Op. 
at 7-10 (Dec. 1994). In addition, if a party seeks issuance of any 
cease and desist orders, the written submissions should address that 
request in the context of recent Commission opinions, including those 
in Certain Arrowheads with Deploying Blades and Components Thereof and 
Packaging Therefor, lnv. No. 337-TA-977, Comm'n Op. (Apr. 28, 2017) and 
Certain Electric Skin Care Devices, Brushes and Chargers Therefor, and 
Kits Containing the Same, lnv. No. 337-TA-959, Comm'n Op. (Feb. 13, 
2017). Specifically, if Complainant seeks a cease and desist order 
against a respondent, the written submissions should respond to the 
following requests:
    1. Please identify with citations to the record any information 
regarding commercially significant inventory in the United States as to 
each respondent against whom a cease and desist order is sought. If 
Complainant also relies on other significant domestic operations that 
could undercut the remedy provided by an exclusion order, please 
identify with citations to the record such information as to each 
respondent against whom a cease and desist order is sought.
    2. ln relation to the infringing products, please identify any 
information in the record, including allegations in the pleadings, that 
addresses the existence of any domestic inventory, any domestic 
operations, or any sales-related activity directed at the United States 
for each respondent against whom a cease and desist order is sought.
    3. Please discuss any other basis upon which the Commission could 
enter a cease and desist order.
    The statute requires the Commission to consider the effects of any 
remedy upon the public interest. The public interest factors the 
Commission will consider include the effect that an exclusion order 
would have on (1) the public health and welfare, (2) competitive 
conditions in the U.S. economy, (3) U.S. production of articles that 
are like or directly competitive with those that are subject to 
investigation, and (4) U.S. consumers. The Commission is therefore 
interested in receiving written submissions that address the 
aforementioned public interest factors in the context of this 
investigation.
    If the Commission orders some form of remedy, the U.S. Trade 
Representative, as delegated by the President, has 60 days to approve, 
disapprove, or take no action on the Commission's determination. See 
Presidential Memorandum of July 21, 2005, 70 FR 43251 (July 26, 2005). 
During this period, the subject articles would be entitled to enter the 
United States under bond, in an amount determined by the Commission and 
prescribed by the Secretary of the Treasury. The Commission is 
therefore interested in receiving submissions concerning the amount of 
the bond that should be imposed if a remedy is ordered.
    Written Submissions: Parties to the investigation, interested 
government agencies, and any other interested parties are encouraged to 
file written submissions on the issues of remedy, the public interest, 
and bonding. Such

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initial submissions should include views on the recommended 
determination by the ALJ on remedy and bonding.
    Complainant and the Commission Investigative Attorney are also 
requested to identify the form of remedy sought and to submit proposed 
remedial orders for the Commission's consideration in their initial 
written submissions. Complainant is further requested to state the 
dates that the Asserted Patents expire, the HTSUS numbers under which 
the accused products are imported, and to supply the identification 
information for all known importers of the products at issue in this 
investigation. The written submissions and proposed remedial orders 
must be filed no later than close of business on February 27, 2020. 
Reply submissions must be filed no later than the close of business on 
March 5, 2020. No further submissions on these issues will be permitted 
unless otherwise ordered by the Commission.
    Persons filing written submissions must file the original document 
electronically on or before the deadlines stated above and submit 8 
true paper copies to the Office of the Secretary by noon the next day 
pursuant to Commission Rule 210.4(f), 19 CFR 210.4(f). Submissions 
should refer to the investigation number (Inv. No. 337-TA-1139) in a 
prominent place on the cover page and/or the first page. (See Handbook 
for Electronic Filing Procedures, https://www.usitc.gov/documents/handbook_on_filing_procedures.pdf). Persons with questions regarding 
filing should contact the Secretary, (202) 205-2000.
    Any person desiring to submit a document to the Commission in 
confidence must request confidential treatment. All such requests 
should be directed to the Secretary to the Commission and must include 
a full statement of the reasons why the Commission should grant such 
treatment. See 19 CFR 201.6. Documents for which confidential treatment 
by the Commission is properly sought will be treated accordingly. A 
redacted non-confidential version of the document must also be filed 
simultaneously with any confidential filing. All information, including 
confidential business information and documents for which confidential 
treatment is properly sought, submitted to the Commission for purposes 
of this investigation may be disclosed to and used: (i) By the 
Commission, its employees and Offices, and contract personnel (a) for 
developing or maintaining the records of this or a related proceeding, 
or (b) in internal investigations, audits, reviews, and evaluations 
relating to the programs, personnel, and operations of the Commission 
including under 5 U.S.C. Appendix 3; or (ii) by U.S. government 
employees and contract personnel, solely for cybersecurity purposes. 
All contract personnel will sign appropriate nondisclosure agreements. 
All nonconfidential written submissions will be available for public 
inspection at the Office of the Secretary and on EDIS.
    The authority for the Commission's determination is contained in 
section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. 1337, and 
in Part 210 of the Commission's Rules of Practice and Procedure, 19 CFR 
part 210.

    By order of the Commission.

    Issued: February 13, 2020.
Lisa Barton,
Secretary to the Commission.
[FR Doc. 2020-03346 Filed 2-19-20; 8:45 am]
 BILLING CODE 7020-02-P