[Federal Register Volume 88, Number 198 (Monday, October 16, 2023)]
[Notices]
[Pages 71377-71378]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22754]


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INTERNATIONAL TRADE COMMISSION

[Investigation No. 337-TA-1363]


Certain Lidar (Light Detection and Ranging) Systems and 
Components Thereof; Notice of Commission Determination To Review and, 
on Review, To Affirm With Modification an Initial Determination 
Terminating the Investigation in Its Entirety Based on an Arbitration 
Agreement; Termination of Investigation

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 and, on review, to affirm with 
modification an initial determination (``ID'') (Order No. 10) of the 
presiding administrative law judge (``ALJ'') granting a motion to 
terminate the investigation in its entirety based upon an arbitration 
agreement. The investigation is terminated.

FOR FURTHER INFORMATION CONTACT: Namo Kim, Esq., Office of the General 
Counsel, U.S. International Trade Commission, 500 E Street SW, 
Washington, DC 20436, telephone (202) 205-3459. Copies of non-
confidential documents filed in connection with this investigation may 
be viewed on the Commission's electronic docket (EDIS) at https://edis.usitc.gov. For help accessing EDIS, please email 
[email protected]. General information concerning the Commission may 
also be obtained by accessing its internet server at https://www.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 May 17, 2023, the Commission instituted 
this investigation under section 337 of the Tariff Act of 1930, as 
amended, 19 U.S.C. 1337 (``section 337''), based on a complaint filed 
by Ouster, Inc. of San Francisco, CA (``Ouster''). See 88 FR 31519-20 
(May 17, 2023). The complaint 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 
LiDAR (Light Detection and Ranging) systems and components thereof by 
reason of the infringement of certain claims of U.S. Patent Nos. 
11,175,405; 11,178,381; 11,190,750; 11,287,515; and 11,422,236. Id. The 
notice of investigation names as respondents Hesai Group of Shanghai, 
China; Hesai Technology Co., Ltd. of Shanghai, China; and Hesai Inc. of 
Palo Alto, CA (collectively, ``Hesai''). Id. The Office of Unfair 
Import Investigations (``OUII'') is also participating in this 
investigation. Id.
    On June 22, 2023, Hesai filed a motion to terminate or 
alternatively stay the investigation in its entirety based upon an 
arbitration provision in a 2020 Litigation Settlement and Patent Cross-
License Agreement (``Settlement Agreement'') between Hesai Photonics 
Technology Co. Ltd. (``Hesai Photonics,'' a subsidiary of respondent 
Hesai Group) and Velodyne Lidar, Inc. (``Velodyne,'' now merged with 
Ouster). On July 7, 2023, Ouster filed an opposition to the motion and 
OUII filed a response in support of the motion. On July 12, 2023, a 
case management conference was held to give each of the parties an 
opportunity to discuss the motion to terminate or stay.
    On July 17, 2023, Ouster filed a supplemental brief. On July 18, 
2023, OUII filed a sur-reply to Ouster's opposition. On July 20, 2023, 
Hesai filed a sur-reply to Ouster's opposition.
    On August 24, 2023, the ALJ issued the subject ID (Order No. 10) 
pursuant to Commission Rule 210.21(d), 19 CFR 210.21(d), granting the 
motion to terminate the investigation in its entirety under 19 U.S.C. 
1337(c) because of an arbitration agreement. In particular, the ID 
finds that (1) ``a valid arbitration agreement at ] 9.5 exists as part 
of the Settlement Agreement that binds Ouster and Hesai,'' (2) ``the 
arbitrability of the dispute between Ouster and Hesai . . . rests with 
[Judicial Arbitration and Mediation Services, Inc.], London,'' and (3) 
``Hesai did not waive its right to arbitrate as Ouster argues.'' See ID 
at 4.
    On August 31, 2023, Ouster filed a petition for review of the ID 
with the Commission. On September 8, 2023, Hesai and OUII filed their 
responses to Ouster's petition.
    On September 12, 2023, Ouster filed a notice of recent developments 
explaining that, on September 5, 2023,

[[Page 71378]]

Hesai filed petitions for inter partes review before the Patent Trial 
and Appeal Board with respect to two of the patents at issue in this 
investigation. On September 14, 2023, Hesai and OUII filed their 
responses to Ouster's notice of recent developments.
    The Commission has determined to review and, on review, to affirm 
the subject ID with modification. In particular, the Commission strikes 
the ``wholly groundless'' legal standard discussion and analysis at 
pages 11-12 and 16 of the subject ID, including the following 
statements: (1) ``[T]he ALJ then must make a secondary inquiry to 
determine whether the assertion of arbitrability is `wholly 
groundless.' If it is determined that the assertion of arbitrability is 
not `wholly groundless.' '' ID at 11. (2) ``Therefore, Hesai's claim 
for arbitration is not `wholly groundless.' '' ID at 11-12. (3) ``In 
other words, the demand for arbitration is `not wholly groundless.' '' 
ID at 16. The Supreme Court previously overruled the ``wholly 
groundless'' exception, holding that ``[w]hen the parties' contract 
delegates the arbitrability question to an arbitrator, a court may not 
override the contract . . . even if the court thinks that the argument 
that the arbitration agreement applies to a particular dispute is 
wholly groundless . . . In sum, we reject the `wholly groundless' 
exception.'' Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. 
Ct. 524, 529-31 (2019).
    The Commission also addresses a typographical error at page 10 of 
the subject ID by modifying ``See id. at ] 9.5'' to state ``See id. at 
] 9.4.'' This is a citation for the sentence in the subject ID that 
states ``[t]he Choice of Law for purposes of construing the Settlement 
Agreement is designated as California law,'' and Section 9.4 of the 
Settlement Agreement on ``Governing Law'' is the section that 
determines the choice of law for the Settlement Agreement.
    With regard to Ouster's notice of recent developments, the 
Commission finds that, under the facts of this investigation, Hesai's 
separately filed inter partes review petitions do not prevent the 
Commission from determining that the investigation must be terminated 
in favor of arbitration. The Commission also notes that the Settlement 
Agreement provides that ``either Party shall have the right to 
challenge the validity and enforceability of any Patent in defense to a 
suit or assertion of a claim relating to any such Patent that is 
brought against a Party or alleging infringement by a Licensee Product 
or a Velodyne Product.'' Settlement Agreement section 3.4 (``Contesting 
Validity'').
    The investigation is terminated.
    The Commission vote for this determination took place on October 
10, 2023.
    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: October 11, 2023.
Lisa Barton,
Secretary to the Commission.
[FR Doc. 2023-22754 Filed 10-13-23; 8:45 am]
BILLING CODE 7020-02-P