NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
DBN HOLDING, INC., BDN LLC,
Appellants
v.
INTERNATIONAL TRADE COMMISSION,
Appellee
______________________
2017-2128
______________________
Appeal from the United States International Trade
Commission in Investigation No. 337-TA-854.
______________________
Decided: November 27, 2018
______________________
PETER J. BRANN, Brann & Isaacson, Lewiston, ME,
argued for appellants. Also represented by STACY O.
STITHAM, DAVID SWETNAM-BURLAND.
CLINT A. GERDINE, Office of the General Counsel,
United States International Trade Commission, Washing-
ton, DC, argued for appellee. Also represented by
DOMINIC L. BIANCHI, WAYNE W. HERRINGTON.
______________________
2 DBN HOLDING, INC. v. ITC
Before PROST, Chief Judge, MOORE and REYNA, Circuit
Judges.
REYNA, Circuit Judge.
DBN Holding, Inc. and BDN LLC appeal from a deci-
sion of the U.S. International Trade Commission, which
denied their petition to rescind or modify a civil penalty
order. The Commission denied the petition on the basis of
“res judicata” in light of our decision in DeLorme Publish-
ing Co. v. Int’l Trade Comm’n, 805 F.3d 1328 (Fed. Cir.
2015). We conclude that the Commission erred by relying
on res judicata because neither the Commission nor this
court has considered whether to rescind or modify the
civil penalty in light of the invalidity of the relevant
patent claims. We reverse and remand.
BACKGROUND
1. The Past Appeals
In September 2012, the U.S. International Trade
Commission (“Commission”) instituted a Section 337
investigation (Inv. No. 337-TA-854) to determine whether
imports by DeLorme Publishing Company, Inc.
and DeLorme InReach LLC (collectively, “DeLorme”) of 1
certain satellite communication devices infringed U.S.
Patent No. 7,991,380 (“the ’380 patent”). DeLorme exe-
cuted a Consent Order Stipulation, proposing to termi-
nate the investigation. J.A. 123–25. In April 2013, the
Commission terminated the investigation.
In May 2013, the Commission instituted an enforce-
ment proceeding based on allegations that DeLorme had
violated the Consent Order. The Commission ultimately
1 Appellant DBN Holding, Inc. was formerly known
as DeLorme Publishing Company, Inc. Appellant BDN
LLC was formerly known as DeLorme InReach LLC.
DBN HOLDING, INC. v. ITC 3
determined that DeLorme had violated the Consent Order
and assessed a civil penalty of $6.2 million.
Shortly after institution of the May enforcement pro-
ceeding, DeLorme filed a declaratory judgment action in
the Eastern District of Virginia, seeking judgment of
noninfringement and invalidity of certain claims of the
’380 patent. The claims challenged were the same claims
asserted in the Section 337 investigation. The district
court subsequently granted summary judgment of invalid-
ity in favor of DeLorme, finding that the claims asserted
in the enforcement proceeding and subject to the Consent
Order were invalid. The district court’s invalidity judg-
ment was issued after the Commission had assessed the
civil penalty in the enforcement proceeding.
The respective losing parties appealed the decisions of
both the Commission and the district court. This court
received the appeals for consideration as companion
cases. Prior to oral arguments, we asked for supple-
mental briefing on “[w]hat effect, if any, would an affir-
mance of the district court’s summary judgment of
invalidity in [the district court case] have on the [Com-
mission’s] enforcement of the Consent Order at issue in
this appeal?” J.A. 469. The Commission argued that if
we affirmed the invalidity judgment, further proceedings
before it would be necessary because the effect of the
invalidity of the patent had not been considered by the
Commission. DeLorme Publ’g Co. v. Int’l Trade Comm’n,
No. 2014-1572, Dkt. No. 64 at 3–4 (“ITC Suppl. Br.”). The
Commission pointed to 19 C.F.R. § 210.76, which “has
been used by the Commission to vacate civil penalties
which have been assessed for violation of a consent order,”
as the procedural mechanism for the further proceedings
it argued were necessary. Id.; see also J.A. 471–72; Cer-
tain Neodymium–Iron–Boron Magnets, Magnet Alloys,
and Articles Containing Same, Inv. No. 337-TA-372, 64
Fed. Reg. 56,515–16 (Oct. 20, 1999) (“Magnets”) (relying
on Section 337 and 19 C.F.R. § 210.76 as authority for
4 DBN HOLDING, INC. v. ITC
vacating a civil penalty order). According to the Commis-
sion, to seek modification “DeLorme [could] file a petition
under [19 C.F.R. §] 210.76 based on affirmance of the
invalidity judgment.” ITC Suppl. Br. at 4.
On November 12, 2015, this court issued its decisions
in both appeals. First, we summarily affirmed the district
court’s summary judgment of invalidity. DeLorme Publ’g
Co. v. BriarTek, 622 Fed. App’x. 912, 913 (Fed. Cir. 2015).
Second, we affirmed the Commission’s determination that
DeLorme had violated the Consent Order and its assess-
ment of the civil penalty. See DeLorme Publ’g Co. v. Int’l
Trade Comm’n, 805 F.3d 1328 (Fed. Cir. 2015) (“DeLorme
I”). Specifically, we held that the Commission acted
within the scope of its authority when it imposed the civil
penalty upon finding that DeLorme had violated the
Consent Order. Id. at 1335.
2. This Appeal
On December 22, 2015, DeLorme filed a petition be-
fore the Commission to rescind or modify the civil penalty
order pursuant to 19 C.F.R. § 210.76 in light of the judg-
ment of invalidity of the asserted claims of the ’380 pa-
tent. J.A. 467–78. DeLorme argued that the civil penalty
should be set aside or modified based on “changed condi-
tions in fact or law or in the public interest.” Id.; see also
19 C.F.R. § 210.76(a)(l). On April 4, 2017, the Commis-
sion denied DeLorme’s petition, stating that
[t]he “changed conditions” identified by DeLorme
in its petition are: (1) the EDVA invalidity judg-
ment; and (2) the affirmance of that judgment. As
noted above, the Federal Circuit found that it, ra-
ther than the Commission, should address the is-
sue of whether the affirmance of the EDVA
invalidity judgment affected the Commission’s en-
forcement determination and decided that issue
adversely to DeLorme, affirming the Commis-
sion’s enforcement determination. The full Court
DBN HOLDING, INC. v. ITC 5
denied DeLorme’s petition for hearing en banc
and the Supreme Court denied certiorari. The
public interest arguments raised by DeLorme in-
volve issues that could have been raised in the
appeal or were raised and rejected by the Federal
Circuit. The matter is therefore res judicata.
J.A. 7–8. DeLorme appeals the Commission’s decision to
deny its petition to rescind or modify the civil penalty.
DISCUSSION
DeLorme argues that the Commission misread our
DeLorme I opinion and erred when it refused, on the basis
of res judicata, to consider whether the civil penalty
should be rescinded or modified. We agree.
In an appeal of a denial of a petition to rescind or
modify a civil penalty order of the Commission pursuant
to 19 C.F.R. § 210.76, we review the Commission’s deci-
sion for abuse of discretion. See 5 U.S.C. § 706(2)(A). “An
abuse of discretion occurs where the decision is based on
an erroneous interpretation of the law, on factual findings
that are not supported by substantial evidence, or repre-
sents an unreasonable judgment in weighing relevant
factors.” Star Fruits S.N.C. v. United States, 393 F.3d
1277, 1281 (Fed. Cir. 2005). Whether, based on the facts
of this case, a claim is barred by the doctrine of res judica-
ta is a legal determination reviewed de novo. Faust v.
United States, 101 F.3d 675, 677 (Fed. Cir. 1996).
We first examine the Commission’s decision not to
consider DeLorme’s petition on the ground that “the
matter is . . . res judicata.” J.A. 8. The term res judicata
is used narrowly to “denote ‘claim preclusion’ and more
generally to denote either ‘claim preclusion’ or ‘issue
preclusion.’” Faust, 101 F.3d at 677. It is unclear wheth-
er the Commission was referring to issue preclusion or
claim preclusion. Under claim preclusion, a final judg-
ment on the merits of an action precludes relitigation of
6 DBN HOLDING, INC. v. ITC
issues that were or could have been raised by the parties
or their privies in that action. Allen v. McCurry, 449 U.S.
90, 94 (1980). Under issue preclusion, “once a court has
decided an issue of fact or law necessary to its judgment,
that decision may preclude relitigation of the issue in a
suit on a different cause of action involving a party to the
first case.” Id. For either issue or claim preclusion to
apply, a second, separate case must exist. See id. Here,
where we have a continuation of the same proceeding,
Investigation Number 337-TA-854, neither issue nor
claim preclusion apply.
The Commission might have more appropriately re-
ferred to the basis of its denial of the petition as barred by
the “law of the case” doctrine, rather than generally
invoking “res judicata.” The law of the case doctrine
refers to courts’ general practice of refusing to reconsider
issues already decided. Messinger v. Anderson, 225 U.S.
436, 444 (1912); see also 18 Wright & Miller, Fed. Prac. &
Proc. Juris. §§ 4401–4402 (3d ed. 1998)
(“[R]econsideration of matters already resolved ordinarily
is referred to [as] law-of-the-case theory” or “direct estop-
pel.”). “The law of the case doctrine is limited to issues
that were actually decided, either explicitly or by neces-
sary implication” earlier in the litigation. Toro Co. v.
White Consol. Indus., Inc., 383 F.3d 1326, 1335 (Fed. Cir.
2004). For the law of the case to apply, this court would
have had to have decided the issues raised in this appeal,
explicitly or by necessary implication. As explained
below, neither the Commission nor this court has decided
whether the Commission should rescind or modify the
civil penalty in light of the district court’s grant of sum-
mary judgment of invalidity.
This court recognized in DeLorme I that 19 U.S.C.
§ 1337(f)(2) authorizes the Commission to impose a penal-
ty for violation of its orders, including consent orders,
subject to review by this court. San Huan New Materials
High Tech, Inc. v. Int’l Trade Comm’n, 161 F.3d 1347,
DBN HOLDING, INC. v. ITC 7
1352, 1355–56 (Fed. Cir. 1998). The procedure for re-
questing that the Commission modify or set aside such
orders is found at 19 C.F.R. § 210.76, entitled “Modifica-
tion or rescission of exclusion orders, cease and desist
orders, consent orders, and seizure and forfeiture orders”:
Whenever any person believes that changed con-
ditions of fact or law, or the public interest, re-
quire that an exclusion order, cease and desist
order, or consent order be modified or set aside, in
whole or in part, such person may request, pursu-
ant to section 337(k)(1) of the Tariff Act of 1930,
that the Commission make a determination that
the conditions which led to the issuance of an ex-
clusion order, cease and desist order, or consent
order no longer exist.
19 C.F.R. § 210.76(a)(1); see also id. § 210.76(a)(2).
We have affirmed the Commission’s authority to re-
scind or modify its orders under § 210.76. E.g., SiRF
Tech., Inc. v. Int’l Trade Comm’n, 601 F.3d 1319, 1324 n.2
(Fed. Cir. 2010) (noting that appellants may petition for
modification or rescission of certain orders under § 210.76
if “no longer in violation of [section 337]”) (alteration in
original); Epistar Corp. v. Int’l Trade Comm’n, 566 F.3d
1321, 1338 (Fed. Cir. 2009). The Commission has relied
on § 210.76 to vacate a civil penalty order after the parties
entered into a license agreement, even when this court
had affirmed the imposition of the same civil penalty.
Magnets, 64 Fed. Reg. at 56,515; San Huan, 161 F.3d at
1355–56.
Nothing in DeLorme I bars the Commission from mod-
ifying or rescinding the civil penalty order in this case
under 19 C.F.R. § 210.76. The Commission’s civil penalty
8 DBN HOLDING, INC. v. ITC
order was properly based on the six “EPROM factors” 2
and on the basis that the ’380 patent’s claims were valid.
DeLorme I, 805 F.3d at 1332–33. To be clear, we rejected
DeLorme’s argument that the Commission’s penalty was
“grossly excessive,” but we did not divest the Commission
of the authority to later rescind or modify its civil penalty
order in light of the invalidity judgment, nor did we hold
that the invalidity judgment should have no impact on
any such future assessment.
The Commission apparently misunderstood this court
when we said that “the penalty or sanction cannot be
vacated by subsequent events such as invalidation of the
claims.” Id. at 1336 (discussing ePlus, Inc. v. Lawson
Software, Inc., 789 F.3d 1349 (Fed. Cir. 2015)). This
statement relates to the principle that, where the order
upon which a civil penalty is based is final and no longer
subject to appeal, rescission of that civil penalty is not
necessarily required upon invalidation of the claims
without consideration of other factors. See id.
In ePlus, we held that a compensatory civil award for
violating a non-final injunction “must be set aside in light
of the cancellation of [the] claim” on which the injunction
was based. ePlus, 789 F.3d at 1361 (emphasis added).
We did not decide “whether civil contempt sanctions
would survive if the injunction had been final at the time
the district court imposed civil contempt sanctions.” Id.
2 We have affirmed the Commission’s use of six fac-
tors in determining the amount of a civil penalty. See
San Huan, 161 F.3d at 1362. The six “EPROM factors”
are (1) the good or bad faith of the respondent, (2) the
injury to the public, (3) the respondent’s ability to pay, (4)
the extent to which the respondent has benefited from its
violations, (5) the need to vindicate the authority of the
Commission, and (6) the public interest. DeLorme I, 805
F.3d at 1333.
DBN HOLDING, INC. v. ITC 9
at 1358. We also observed that “[i]t is well established
that ‘[v]iolations of an order are punishable as criminal
contempt even though the order is set aside on ap-
peal . . . or though the basic action has become moot.’” Id.
(quoting United States v. United Mine Workers of Am.,
330 U.S. 258, 294 & n.60 (1947)). We noted that, in
contrast to a civil award, if the defendant had been found
guilty of criminal contempt, the resulting penalties
“would not be set aside simply because” the claim forming
the basis of an injunction had been cancelled. ePlus, 789
F.3d at 1356 (emphasis added).
In DeLorme I, we observed that the punitive nature of
the civil penalty, which is paid to the government, makes
it more akin to a criminal sanction than the civil con-
tempt sanctions in ePlus. 805 F.3d at 1336 & n.4. Here,
the civil penalty is based on a final, non-reviewable Con-
sent Order drafted by DeLorme that has “attributes of
both contracts and of judicial decrees” and is distinct from
the non-final, reviewable injunction in ePlus. Id. at 1333.
There is no requirement that the civil penalty in this case
be rescinded simply because the ’380 patent’s claims were
invalidated. Our holding in DeLorme I that the invalida-
tion of the ’380 patent’s claims had no retroactive effect on
the Consent Order does not bar the Commission from
determining whether to modify or rescind the civil penalty
under 19 C.F.R. §§ 210.76(a)(1) or (a)(2). 3 The court in
DeLorme I did not decide whether the Commission should
rescind or modify the civil penalty in light of the final
invalidity judgment, a question that could not have been
raised or decided earlier in the case. See Beloit Corp. v.
Valmet Oy, 742 F.2d 1421, 1423 (Fed. Cir. 1984) (“[T]his
court does not sit to review what the Commission has not
3 As discussed above, the Commission has relied on
§ 210.76 to vacate a civil penalty.
10 DBN HOLDING, INC. v. ITC
decided”). The Commission’s application of res judicata
was therefore error.
CONCLUSION
We hold that the Commission is not barred from reas-
sessing the EPROM factors and determining whether to
modify or rescind the civil penalty pursuant to 19 C.F.R.
§ 210.76 based on the final judgment of invalidity. The
Commission erred in finding DeLorme’s arguments were
barred by res judicata. We therefore reverse the Commis-
sion’s res judicata determination and remand for the
Commission to consider whether to rescind or modify the
civil penalty in light of the final judgment of invalidity of
the relevant claims of the ’380 patent.
REVERSED AND REMANDED
COSTS
No costs.