Eaton Corp. v. United States

Slip Op. 05 - 121

UNITED STATES COURT OF INTERNATIONAL TRADE

- - - - - - - - - - - - - - - - - - - x
EATON CORPORATION, :

Plaintiff, :

v. : Court No. 05-00487

THE UNITED STATES OF AMERICA; DEPART- :
MENT OF HOMELAND SECURITY, UNITED
STATES CUSTOMS AND BORDER PROTECTION; :
and UNITED STATES INTERNATIONAL TRADE
COMMISSION, :

Defendants. :
- - - - - - - - - - - - - - - - - - - x

Opinion & Order
[Plaintiff's motion for preliminary order
of exclusion of certain German automated
mechanical transmission systems for med-
ium- and heavy-duty trucks granted.]

Dated: September 9, 2005

Miller & Chevalier Chartered (Sturgis M. Sobin, Joel W. Rog-
ers, Charles F.B. McAleer, Jr. and Daniel P. Wendt) for the
plaintiff.

Peter D. Keisler, Assistant Attorney General; Barbara S.
Williams, Attorney in Charge, International Trade Field Office,
Commercial Litigation Branch, Civil Division, U.S. Department of
Justice (Mikki Graves Walser and Marcella Powell); and Office of
Assistant Chief Counsel, U.S. Bureau of Customs and Border Pro-
tection (Michael W. Heydrich), of counsel, for defendants United
States of America and Department of Homeland Security, U.S. Customs
and Border Protection.

James M. Lyons, General Counsel, and Andrea C. Casson and
Michael Diehl for defendant U.S. International Trade Commission.

Neville Peterson LLP (John M. Peterson, George W. Thompson and
Curtis W. Knauss) and White & Case LLP (Lyle B. Vander Schaaf) for
proposed intervenor-defendant ArvinMeritor, Inc.

AQUILINO, Senior Judge: This case for judicial review of

alleged lack of enforcement by U.S. Customs and Border Protection
Court No. 05-00487 Page 2

("CBP") of the right(s) of the plaintiff U.S. patent holder was

commenced by the filing on August 19, 2005 of a summons, complaint,

application for a temporary restraining order and preliminary

injunction, and application for an immediate order to show cause in

connection therewith. That secondary application was granted, in

part upon the ground that but a week earlier, on August 12, 2005,

Eaton Corporation had come to this court with a motion for leave to

intervene as a party to ArvinMeritor, Inc. v. United States, CIT
No. 05-00461, only to learn upon the first call of that matter (via

order to show cause at the behest of that plaintiff) that the

government defendants and it had just executed a Stipulation of

Settlement and Dismissal pursuant to USCIT Rule 41(a)(1), which,

among other things, rescinded one form of certification pro-

mulgated by CBP in favor of another such form to apply with regard

to the Limited Exclusion Order (or "LEO"), 70 Fed.Reg. 19,094

(April 12, 2005), published by the U.S. International Trade

Commission ("ITC") in conjunction with its investigation requested

by Eaton Corporation pursuant to 19 U.S.C. §1337 and carried out

sub nom. Matter of Certain Automated Mechanical Transmission

Systems for Medium-Duty and Heavy-Duty Trucks and Components

Thereof, Inv. No. 337-TA-503. See ArvinMeritor, Inc. v. United

States, 29 CIT , Slip Op. 05-96 (Aug. 12, 2005).

In other words, the crux of the complaint of Arvin-

Meritor, Inc., which has interposed a motion for leave to intervene
Court No. 05-00487 Page 3

as a party defendant herein1, as well as of the complaint of Eaton

Corporation, was and is CBP enforcement of the ITC's Limited Ex-

clusion Order.

I

The defendants were ordered to show cause at a hearing

that commenced on August 24, 2005, why the plaintiff should not be

granted the requested, immediate, equitable relief and why joinder

of issue and discovery in connection therewith should not be ex-

pedited. Counsel for defendant(s) United States and CBP appeared

in opposition to all of the relief requested and also filed an

immediate motion to dismiss this action for lack of subject matter

jurisdiction pursuant to USCIT Rule 12(b)(1) or, in the alterna-

tive, to stay it, pending further administrative action. 2 Arvin-

Meritor, Inc.'s motion for leave to intervene was filed with a pro-

posed answer to plaintiff's complaint. It also has filed a motion

for leave to interpose a written response to plaintiff's applica-

tion for immediate relief.3
A

The complaint is not an exemplar of what USCIT Rule 8(a)

requires. To parse it (and the papers filed in support) for

1
This motion can be, and it hereby is, granted.
2
Defendant ITC has not yet filed a response to the com-
plaint, but it was well-represented by its counsel at the hear-
ing and has now submitted a written statement, which was receiv-
ed in chambers on September 8, 2005, that it "takes no position
on the substantive issues before the Court."
3
This motion of the [proposed] intervenor-defendant also
can be, and it hereby is, granted.
Court No. 05-00487 Page 4

purposes of this opinion, the ITC proceedings pursuant to 19 U.S.C.

§1337 began on or about January 2004 and resulted in an opinion

made public on May 9, 2005. See Plaintiff's Memorandum of Points

and Authorities, Exhibit 4. Among other things, it reports:

. . .[A] complaint filed by Eaton Corporation . . . of
Cleveland, Ohio . . ., as supplemented, alleged viola-
tions of section 337 of the Tariff Act of 1930 in the
importation into the United States, the sale for im-
portation, and the sale within the United States after
importation of certain automated mechanical transmission
("AMT") systems for medium-duty and heavy-duty trucks,
and components thereof, by reason of infringement of
claim 15 of U.S. Patent No. 4,899,279 ("the '279
patent"); claims 1-20 of U.S. Patent No. 5,335,566 ("the
'566 patent"); claims 2-4 and 6-16 of U.S. Patent No.
5,272,939 . . .; claims 1-13 of U.S. Patent No. 5,624,350
. . .; claims 1, 3, 4, 6-9, 11, 13, 14, 16 and 17 of U.S.
Patent No. 6,149,545 ("the '545 patent"); and claims 1-16
of U.S. Patent No. 6,066,071 . . .. The complaint and
notice of investigation named three respondents[:] ZF
Meritor, LLC ("ZF Meritor") of Maxton, North Carolina, ZF
Friedrichshafen AG ("ZFAG") of Freidrichshafen [sic],
Germany, and ArvinMeritor, Inc. . . . of Troy, Michigan.
Claim 15 of the '279 patent, claim 4 of the '566 patent,
and claims 1, 3, 6, 7, 11, 13, 16, and 17 of the '545
patent remained at issue at the time that the administra-
tive law judge ("ALJ") issued his final initial determi-
nation ("ID").

. . . The ALJ found a violation of section 337 by
reason of infringement of claim 15 of the '279 patent by
respondents. He did not find a violation based on in-
fringement of the asserted claims of the remaining
patents. Petitions for review were filed by Eaton, the
respondents, and the Commission investigative attorney
("IA") on January 21, 2005. All parties filed responses
to the petitions on January 28, 2005.

On February 24, 2005, the Commission issued a notice
that it had determined not to review the ALJ's final ID
on violation, thereby finding a violation of section 337.
70 Fed.Reg. 10112 (March 2, 2005). The Commission also
requested briefing on the issues of remedy, the public
interest, and bonding. Id. . . .
Court No. 05-00487 Page 5

Id., pp. 1-2. With regard to remedy,

all the parties agree that the appropriate remedy is a
limited exclusion order excluding AMT systems, manufac-
tured by or for the respondents, that infringe claim 15
of '279 patent and a cease and desist order directed to
the domestic respondent, ArvinMeritor. Moreover, the
parties agree that the orders should include a certifica-
tion provision and that the cease and desist order should
contain a record-keeping requirement. Finally, the par-
ties agree that the issuance of remedial orders directed
against the respondents' AMT systems would not be
contrary to public interest. The parties disagree, how-
ever, . . . about the scope of any certification provi-
sion or record-keeping requirement.

Eaton argues that the remedial orders should cover
all of respondents' AMT systems that infringe claim 15 of
the '279 patent and should not be limited to specific
models or types of transmissions. The respondents argue
that the orders should only cover AMT systems for medium-
duty and heavy-duty trucks that infringe the '279 patent
by blocking all gear change command output signals during
anti-lock brake system activity in the fully automatic
mode of operation. The respondents further argue that
any remedial orders should not cover its new FreedomLine
transmission system, which they argue does not infringe
claim 15 of the '279 patent.

We determine to issue both a limited exclusion order
excluding AMT systems for medium-duty and heavy-duty
trucks, and components thereof that infringe claim 15 of
the '279 patent, and a cease and desist order directed to
ArvinMeritor. . . .

Our limited exclusion order and cease and desist
order both include an exception for replacement parts
that are necessary to service infringing AMT systems
which were installed on trucks prior to the issuance of
our remedial orders. . . .

Our limited exclusion order also includes a certi-
fication provision that allows importation of AMT systems
or components thereof if the importer certifies that
these imports do not fall within the scope of the order.
We determine to direct the limited exclusion order
against the goods of all the respondents . . ..

Id., pp. 3-5. Furthermore,
Court No. 05-00487 Page 6

Eaton requests that the Commission strike portions
of the respondents' brief relating to the respondents'
new FreedomLine transmission, as well as the supporting
exhibits, because the new FreedomLine transmission was
not a part of the investigation.1 We deny Eaton's motion
to strike because we agree with the IA that the portion
of the respondents' submission subject to the motion to
strike "falls within the purview of the Commission's
request for briefing on the issues of remedy, the public
interest, and bonding." . . .

Id., pp. 6-7. The footnote "1" states that the respondents

do not seek a determination from the Commission regarding
whether or not their new transmission system infringes
claim 15 of the '279 patent, and we have not made such a
determination. We note that respondents may seek an ad-
visory opinion under Commission rule 210.79, 19 C.F.R.
§210.79, as to whether their new FreedomLine transmission
system falls within the scope of the limited exclusion
order.

Id. Finally, both the limited exclusion order and cease-and-desist
order were found to be in the public interest, and the ITC

determined to set the bond during the period of review of the

results of the investigation by the President at 100 percent of

entered valued. See id., pp. 7-9.

In fact, both of the orders were issued a month prior to

publication of the agency's opinion, on April 7, 2005. According

to the first of them:

Automated mechanical transmission systems for
medium-duty and heavy-duty trucks and components thereof
that infringe claim 15 of U.S. Patent No. 4,899,279 that
are manufactured abroad by or on behalf of, or imported
by or on behalf of, ZF Friedrichshafen AG, ArvinMeritor,
Inc., or ZF Meritor, LLC or any of their affiliated
companies, parents, subsidiaries, or other related busi-
ness entities, or their successors or assigns, are ex-
cluded from entry for consumption into the United States,
entry for consumption from a foreign trade zone, or
withdrawal from a warehouse for consumption, for the
Court No. 05-00487 Page 7

remaining term of that patent, except under license of
the patent owner, as provided by law, and except for
parts imported for use as a replacement for an identical
or substantially equivalent part, subassembly, or com-
ponents on an automated mechanical transmission system
for medium-duty or heavy-duty trucks imported into the
United States prior to the effective date of this Order.4

Moreover:

Pursuant to procedures to be specified by [CBP], as
[it] deems necessary, persons seeking to import automated
mechanical transmission systems and components thereof
that are potentially subject to this Order shall certify
that they are familiar with the terms of this Order, that
they have made appropriate inquiry, and thereupon state
that, to the best of their knowledge and belief, the
products being imported are not excluded from entry under
paragraph 1 of this Order. At its discretion, [CBP] may
require persons who have provided the certification
described in this paragraph to furnish such records or
analyses as are necessary to substantiate the certifica-
tion.5

As for the ITC Order to Cease and Desist, "[f]or the

remaining term of the respective patents" respondent ArvinMeritor,

Inc. has been forbidden to:

(A) import (including electronically) or sell for
importation into the United States covered products;

(B) market, distribute, offer for sale, sell, or
otherwise transfer (except for exportation), in the
United States imported covered products;

(C) advertise imported covered products;

(D) solicit U.S. agents or distributors for imported
covered products;

4
Plaintiff's Memorandum of Points and Authorities, Exhibit
5, p. 3, para. 1.
5
Id., p. 4, para. 3.
Court No. 05-00487 Page 8

(E) aid or abet other entities in the importation,
sale for importation, sale after importation, transfer,
or distribution of covered products; or

(F) furnish services to its customers, including
software technical support relating to covered product.6

The term "covered products" is defined to mean

automated mechanical transmission systems for medium-duty
and heavy-duty trucks and components thereof that in-
fringe claim 15 of U.S. Patent No. 4,899,279, including
Respondent's "FreedomLine" transmission systems, except
for parts imported for use as a replacement for an iden-
tical or substantially equivalent part, subassembly, or
component on an automated mechanical transmission system
for medium-duty or heavy-duty trucks imported into the
United States prior to the effective date of this Order.7
Besides the foregoing prohibited conduct, the Commission's order,

part IV specifies permitted conduct, and it requires specified

reporting per part V (under threat of possible criminal prosecution

for violation of 18 U.S.C. §1001) and record-keeping and inspection

under part VI.

Against this background at the ITC, plaintiff's complaint

avers, paragraph 5, that in

anticipation of this ultimate finding of infringement, on
information and belief, Respondents began work on a
redesigned AMT for use with medium-duty and heavy-duty
trucks . . . that they now allege no longer infringes the
relevant patent claim.

6. As is required by established court and Commis-
sion precedent, after an exclusion order issues, a re-
spondent seeking to import a redesigned version of the
product that was within the scope of the investigation
must either obtain an advisory opinion from the Commis-

6
Id., Exhibit 6, pt. III, pp. 2-3.
7
Id., p. 2, para. (G).
Court No. 05-00487 Page 9

sion or seek a determination of non-infringement from
Customs before such product is lawfully entitled to gain
admission into the customs territory of the United
States. Respondents to this section 337 investigation
have sought both, filing a request for an advisory
opinion at the Commission some four months ago which is
ongoing on an expedited basis, and, on information and
belief, filing a request for a determination from Customs
as to infringement of the redesigned AMT.[8]

7. To date, neither the Commission nor Customs
ha[s] made a determination as to whether or not Respond-
ents' redesigned AMT continues to infringe the '279
Patent.

8. Nevertheless, during the pendency of these two
reviews and since the issuance of the Limited Exclusion
Order, on information and belief, Respondents have
imported without regard to, and in brazen violation of,
that order.

9. On information and belief, at some point several
months after the issuance of the April 7, 2005 Limited
Exclusion Order, Customs began properly enforcing it
against Respondents and their imports began experiencing
some delays or detentions at the border. Thus, Respond-
ents began to pressure Customs to allow the importation
of the redesigned product asserting that it no longer
infringes. In particular, Respondents have sought to
convince Customs to allow for admission of the redesigned
AMTs through the misuse of the certification mechanism -
a mechanism designed solely to allow Customs to differen-
tiate and permit admission of legitimate trade and
products that were found not to be covered by the scope
of the exclusion order.

10. Respondents' efforts to pressure Customs to
allow admission of the redesigned AMTs via certification
culminated in a suit filed by ArvinMeritor in this Court
on August 5, 2005. . . . Court No. 05-00461. . . .

11. After th[at suit's] dismissal, Eaton sought
assurances from Customs that it would properly enforce
the exclusion order by not allowing admission of Respond-
ents' redesigned AMTs for use with medium-duty and heavy-

8
Underscoring in original.
Court No. 05-00487 Page 10

duty trucks based solely upon representations by Respon-
dents that they no longer infringe. Instead of ob-
taining such assurances, Eaton received a written
statement from Customs indicating that it would not
provide such assurances and would instead allow importa-
tion of the redesigned AMTs so long as the certification
letter agreed upon in the settlement was provided at the
time of importation.[9]

9
Id. Attached to plaintiff's Memorandum of Points and
Authorities as Exhibit 1 is a declaration of its lead counsel,
Sturgis M. Sobin, Esq., in support of this paragraph. That dec-
laration and its two attachments were marked at the continued
hearing in open court on August 25, 2005, as plaintiff's Exhib-
it 13 and offered in evidence. The court reserved decision on
defendants' objection to that proffer. Upon further delibera-
tion, that objection, in particular to paragraphs 4 and 5 of the
declaration, is overruled, and that exhibit is hereby received.

Attachment 1 thereto was sent in the name of Mr. Sobin on
August 17, 2005 to the Chief of CBP's Intellectual Property
Rights Branch, Office of Regulations & Rulings,

to establish the terms by which [Eaton Corporation]
will agree not to initiate an action at the U.S. Court
of International Trade ("CIT") based upon Customs'
recent actions with respect to the enforcement of the
[ITC] order.

Those terms were stated to be as follows:
! Your office ensures that FreedomLine transmissions
are excluded from entry until the ITC or Customs
conclusively determines that they do not infringe
claim 15 of the '279 patent;

! When sending the revised certification form to the
ports in accordance with notice of dismissal filed
at the CIT on August 12, 2005, your office attaches
to the certification express instructions to the
ports that transmissions must not be permitted entry
until permission is granted by your office based on
a conclusive determination of no infringement by ei-
ther Customs or the Commission and that transmissions
for use in medium-duty and heavy-duty trucks (i.e.,
those transmissions destined for the facility in Max-
ton, North Carolina) must be excluded from entry;

(footnote continued)
Court No. 05-00487 Page 11

12. The unlawful settlement, coupled with Customs'
subsequent express written statements documenting its
position that redesigned AMTs can enter the United States
if accompanied by an unverified certification by the Re-
spondents, represent an unlawful abdication of Customs
statutory requirement to enforce section 337 exclusion
orders by excluding from entry all products within the
scope of the order and violates Commission and court pre-
cedent regarding the proper enforcement of a limited
exclusion order.

13. Given the overlapping roles of both Customs and
the Commission in issuing and enforcing section 337
remedial orders, the Commission should be required to
coordinate and communicate with Customs to ensure that
Customs is properly enforcing the Commission's orders and
that they are interpreted as intended.

! Your office, in cooperation with the ports or other
offices, immediately orders redelivery of all ship-
ments of FreedomLine transmissions that have been
entered without certifications;

! Your office provides express instructions to the ports
and to Respondents that all future entries of Freedom-
Line transmissions must be made by paper (not electron-
ically), and that a signed certification must be prom-
inently included in the documentation provided to Cus-
toms for each paper entry; and that presentation fo[r]
such certification does not authorize entry; and
! Your office will continue to provide Eaton Corpora-
tion a fair role in the efforts to determine whether
Respondents' allegedly redesigned FreedomLine trans-
missions infringe claim 15 of the '279 patent.

Attachment 2 to the Sobin declaration is a copy of the CBP
e-mail response to these terms on August 18, 2005, which states
that it cannot agree to them:

Pursuant to the settlement reached by the United States
and Plaintiffs in the CIT last week, CBP intends to
condition importation of merchandise potentially
subject to the Order upon provision of the agreed upon
certification letter at importation, consistent with
the express language of the Commission's April 7, 2005
Opinion on Remedies, Public Interest and Bonding, and,
paragraph 3 of the Exclusion Order itself.
Court No. 05-00487 Page 12

14. Further, given the previous unlawful admissions
of redesigned AMTs, Customs should be ordered to request
redelivery for all unliquidated entries of redesigned
AMTs that have entered since April 7, 2005, the date when
the Limited Exclusion Order issued.

ArvinMeritor, Inc.'s proposed answer, which the court

hereby orders filed with the record of this case, denies the fore-

going complaint paragraphs 8 to 14. As for the three immediately-

preceeding paragraphs, the intervenor-defendant answers as follows:

5. Admits that ZF Freidrichshafen [sic] AG and
ArvinMeritor redesigned their FreedomLine AMT system in
a way which ensures that the system does not infringe
Claim 15 of Eaton's United States Patent 4,899,279 . . .
and that such redesign efforts were undertaken after the
Commission ALJ issued his "initial determination" and
claim interpretation of the '279 patent in the underlying
investigation but before the ITC issued its LEO and ter-
minated the investigation. Denies the remainder of the
allegation.

6. Denies that any law or regulation requires
importers to obtain a pre-importation ruling concerning
whether particular goods infringe given patents or are
subject to exclusion under an exclusion order, including
the LEO which is the subject of this action, before such
product is lawfully entitled to gain admission into the
customs territory of the United States. Avers that
Customs is required to make a determination of ad-
missibility upon presentation of an entry of merchandise,
but not before. Admit [sic] that the Commission is con-
ducting an Advisory Opinion Proceeding regarding ZF and
ArvinMeritor's redesigned FreedomLine system. Deny [sic]
that ZF and/or ArvinMeritor were required by court or
Commission precedent to seek an Advisory Opinion. Denies
the remainder of this allegation.

7. Admits that the Commission has not completed its
Advisory Opinion Proceeding. Avers that the Commission's
Office of Unfair Import Investigations . . . has made a
staff recommendation that the Commission's . . . ALJ[]
rule that the redesigned FreedomLine AMT system does not
infringe Claim 15 of the '279 Patent and is not subject
Court No. 05-00487 Page 13

to the LEO. ArvinMeritor lacks information and belief
sufficient to form a judgment as to the truth of whether
or not Customs has made a determination as to whether or
not Respondents' redesigned AMT continues to infringe the
'279 patent and, there[]fore, ArvinMeritor denies such
allegation. Denies the balance of the allegation.

B

Thus has issue been partially joined -- save defendant

ITC's answer or response to the complaint10 and plaintiff's formal

response to the motion to dismiss11 that already has been interposed
on behalf of defendant(s) United States and CBP.

(1)

As indicated, the controversy before the court focuses on

CBP enforcement of the ITC's Limited Exclusion Order. On or about

the date of that order, April 7, 2005, the Chairman of the ITC

formally notified the Secretary of the Treasury12 of its issuance

10
USCIT Rule 12(a)(1)(A) affords the agency 60 days to
answer or otherwise respond to the complaint.
11
USCIT Rule 7(d) affords the plaintiff 30 days to respond
to this dispositive motion.
12
The Tariff Act of 1930, as amended, 19 U.S.C. §1337(d),
continues to require such notification of Treasury. While the
Homeland Security Act of 2002, Pub. L. No. 107-296, §403(1), 116
Stat. 2135, 2178 (Nov. 25, 2002), transferred "the functions,
personnel, assets, and liabilities" of the U.S. Customs Service
of the Department of the Treasury, "including the functions of
the Secretary of the Treasury relating thereto", to the new
Department of Homeland Security, the "Customs revenue functions"
were retained by Treasury per section 412(a)(1) of that Act, 116
Stat. 2179, and those functions were defined by section 415(4),
116 Stat. 2180, to mean, among other things, "[e]nforcing sec-
tion 337 of the Tariff Act of 1930". Cf. Vastfame Camera, Ltd.
v. Int'l Trade Comm'n, 386 F.3d 1108, 1110 n. 1 (Fed.Cir. 2004).

(footnote continued)
Court No. 05-00487 Page 14

and forwarded a copy of that written notification to the Chief of

the CBP Intellectual Property Rights Branch. See CIT No. 05-00461

Complaint Exhibit C. On or about April 26, that Branch promulgated

a form for certification by any would-be importer (under penalty

Nonetheless, effective May 15, 2003, such (or some) func-
tion(s) were seemingly delegated to the Department of Homeland
Security as a part of Treasury Department Order 100-16, to wit:

. . . Consistent with the transfer of the functions,
personnel, assets, and liabilities of the United States
Customs Service to the Department of Homeland Security
as set forth in Section 403(1) of the Act, there is
hereby delegated to the Secretary of Homeland Security
the authority related to the Customs revenue functions
vested in the Secretary of the Treasury as set forth in
sections 412 and 415 of the Act, subject to the follow-
ing exceptions . . . [,]

which include "copyright and trademark enforcement" but make no
specific mention of either section 337 enforcement or of any en-
forcement as pertains to patents. Delegation of Authority to
the Secretary of Homeland Security, 68 Fed.Reg. 28,322 (May 23,
2003). See also CBP Decision 03-24, 37 Cust.B. & Dec. No. 37,
p. 17 (Sept. 10, 2003)(revising C.F.R. Title 19 to reflect
changes caused by the creation of the Department of Homeland
Security and the consequent governmental reorganization) and
19 C.F.R. part 0 (2005).
Such apparent delegation notwithstanding, that regulatory
scheme continues (as of April 1, 2005) to maintain that, if

the Commission finds a violation of section 337, or
reason to believe that a violation exists, it may
direct the Secretary of the Treasury to exclude from
entry into the United States the articles concerned
which are imported by the person violating or suspected
of violating section 337.

19 C.F.R. §12.39(b). Paragraph 6 of Treasury Department Order
reserves that agency's "right to rescind or modify this Delega-
tion of Authority, promulgate regulations, or exercise authority
at any time based upon the statutory authority reserved to the
Secretary by the Act".
Court No. 05-00487 Page 15

for perjury) of familiarity with the Commission's exclusion order

and that

the articles being imported are not excluded from entry
under paragraph 1 of the Order because:

a. The articles being imported are not automated me-
chanical transmission systems for use in medium-
duty or heavy-duty trucks or components thereof
that infringe claim 15 of U.S. Patent 4,899,279; or

b. The articles being imported are parts, not including
complete transmissions, imported for use as replace-
ments for an identical or substantially equivalent
part, subassembly, or component on automated mechan-
ical transmission systems which were installed in
medium-duty or heavy-duty trucks prior to April 7,
2005.

Ibid., Exhibit E, second sheet, para. 3. Then on May 19, 2005, the

CBP Branch Chief notified the parties to the ITC proceedings that

"further consideration and review . . . determined that the orig-

inally drafted certification necessitated certain revision for

adequate CBP enforcement." Plaintiff's Memorandum of Points and

Authorities, Exhibit 7, second sheet. Whereupon that revision of

the form's paragraph 3(a) was introduced, to wit:

The articles being imported are not automated
mechanical transmission systems for use in medium-duty or
heavy-duty trucks or components thereof[.]

Id., third sheet. The contents of the form otherwise remained in

haec verba the original version.

That revision became the object of ArvinMeritor, Inc.'s

complaint in CIT No. 05-00461, and which resulted in CBP's return

to that paragraph's original language in conjunction with the im-
Court No. 05-00487 Page 16

mediate Stipulation of Settlement and Dismissal filed therein. See

id., Exhibit 9. And it also led to commencement of this action one

week later.

II

The only "count" of plaintiff's complaint is labelled

"Declaratory Judgment". Its ensuing prayer for relief is subdi-

vided into ten parts, including:

(1) declaring that Customs' enforcement position as
to the redesigned automated mechanical transmission sys-
tems for medium-duty and heavy-duty trucks is arbitrary,
capricious and an abuse of discretion;

(2) setting aside Customs' enforcement position as
to the redesigned automated mechanical transmission
systems for medium-duty and heavy-duty trucks;

(3) ordering the Commission and Customs to commun-
icate as to the proper interpretation and scope of the
exclusion order and the proper applicability of the cer-
tification provision;

(4) ordering Customs to exclude (under 19 U.S.C.
§1337(d)(1)) or seize where appropriate (under 19 U.S.C.
§1337(i)) the redesigned automated mechanical transmis-
sion systems for medium-duty and heavy-duty trucks and
not allow admission of redesigned automated mechanical
transmission systems for medium-duty and heavy-duty
trucks even if accompanied by certification unless a
determination of non-infringement is made by either the
Commission or Customs;

(5) declaring that the redesigned automated mechani-
cal transmission systems for medium-duty and heavy-duty
trucks are subject to the Commission Limited Exclusion
Order unless or until a determination of non-infringement
is made by either the Commission or Customs;

(6) ordering Customs to seek redelivery immediately
of all unliquidated entries of redesigned automated
mechanical transmission systems for medium-duty and
heavy-duty trucks that have been admitted into the
customs territory of the United States since April 7,
2005;
Court No. 05-00487 Page 17

(7) ordering Customs to issue explicit instructions
to the ports, to ArvinMeritor, and ZF stating that (a)
all future importations covering automated mechanical
transmission systems must be entered using paper docu-
ments (and not electronic means), and must prominently
include a signed certification where appropriate; and (b)
any redesigned automated mechanical transmission systems
for medium-duty and heavy-duty trucks are not entitled to
admission into the United States unless a determination
of non-infringement is made by either the Commission or
Customs[.]

This prayer also includes a specific request for grant of Plain-

tiff's Motion for Temporary Restraining Order and Preliminary In-

junction that was filed simultaneously with it. The proposed form

of order accompanying that motion essentially recites the language

of the foregoing paragraphs (4), (5) and (7), as well as of (8), to

be in effect from the date of its entry "until and including the

trial on the merits of this case".

A

Typically, a temporary restraining order issues, if at

all, at the commencement of an action. Initial reading of all

plaintiff's papers upon receipt on August 19, 2005 induced the

court to order the expedited hearing on August 24 (and 25) but not

to grant theretofore or thereat a restraining order pending

deliberation and promulgation of this opinion.

The complaint pleads subject-matter jurisdiction pursuant

to 28 U.S.C. §1581(i)(3) "because [this case] involves 'embargoes

or other quantitative restrictions on the importation of merchan-
Court No. 05-00487 Page 18

dise for reasons other than the raising of revenue'"; and pursuant

to 28 U.S.C. §1581(i)(4) "because it involves 'administration and

enforcement with respect to matters referred to in paragraph[](3)

of . . . subsection [1581(i)] and subsections (a)-(h) of . . .

[1581]'".

As pointed out above, the motion of defendant(s) United

States and CBP to dismiss is based upon claimed lack of jurisdic-

tion. All four numbered affirmative defenses pleaded on behalf of

ArvinMeritor, Inc. are jurisdictional. See generally [Proposed]
Answer of Defendant-Intervenor ArvinMeritor, Inc., pp. 13-17. See

also id., paras. 15-17. The second avers lack of a justiciable

case or controversy; the third is a simple allegation that the

plaintiff has failed to demonstrate jurisdiction over the matter

pursuant to 28 U.S.C. §1581(i); and the fourth avers that this is

a collateral attack on the ITC's Limited Exclusion Order and

certification provision contained therein which should have been

pursued (but was not) via appeal to the U.S. Court of Appeals for

the Federal Circuit under 19 U.S.C. §1337(c) and 28 U.S.C.

§1295(a)(6).

As for the first asserted affirmative defense, paragraph

58 thereof incorporates by reference the answer's preceding para-

graphs, number 17 of which avers in part that,

to the extent this action seeks a declaratory judgment
related to the admissibility of merchandise, it falls
within this Court's 28 U.S.C. §1581(h) jurisdiction.
Court No. 05-00487 Page 19

Avers that plaintiff has not made the showing of irrepar-
able harm required to establish subject matter jurisdic-
tion under that jurisdictional provision. . . . Further
avers that a declaratory judgment is the only relief
available to plaintiffs under that basis of the Court's
jurisdiction. . . .

See id., paras. 60-66.

At the commencement of the hearing on August 24, 2005,

counsel for the plaintiff could not parry this first affirmative

defense, and notwithstanding the labelling of count I of its com-

plaint. See Transcript ("Tr."), pp. 38-42. And, after due de-

liberation, this court hereby concludes that it does not have

subject-matter jurisdiction under 28 U.S.C. §1581(h).

At this stage of proceedings, the court cannot, and

therefore does not, conclude that it does not have jurisdiction

pursuant to section 1581(i) of Title 28, U.S.C. That is, it is not

imperative that the court conclusively determine jurisdiction over

the case as a predicate to ruling on the merits of threshold

equitable relief. In U.S. Ass'n of Importers of Textiles & Ap-
parel v. United States, 413 F.3d 1344, 1348 (Fed.Cir. 2005), for

example, while reversing a Court of International Trade grant of a

preliminary injunction, the court of appeals nevertheless found "no

abuse of discretion in the trial court's decision to delay

consideration of the government's motion to dismiss [for lack of

subject-matter jurisdiction] until briefing was completed." Pend-

ing receipt of plaintiff's response brief (and defendant ITC's re-
Court No. 05-00487 Page 20

sponse), suffice it to report that this court has re-read the

opinion of the five-circuit-judge panel, which affirmed the Court

of International Trade's section 1581(i) jurisdiction over a case

in which there had been no protestable exclusion of the goods in

issue by Customs. Vivitar Corp. v. United States, 761 F.2d 1552,

1557-60 (Fed.Cir. 1985), cert. denied, 474 U.S. 1055 (1986). But

compare K Mart Corp. v. Cartier, Inc., 485 U.S. 176 (1988), with

id., 485 U.S. at 191-96 (Scalia, J., dissenting).

B

The record reflects that plaintiff's counsel properly

understand their burdens of persuasion with regard to both subject-

matter jurisdiction and grant of a preliminary injunction. As to

the latter, they recognize that, in

analyzing whether Eaton is entitled to injunctive re-
lief[,] the Court must balance four factors:

(1) The threat of immediate, irreparable harm to
Eaton;

(2) Eaton's likelihood of success on the merits;

(3) Whether the public interest would be served
by the issuance of injunctive relief; and

(4) Whether the balance of hardships favors Eaton.

Plaintiff's Memorandum of Points and Authorities, p. 16, citing

Kemet Electronics Corp. v. Barshefsky, 21 CIT 701, 702, 969 F.Supp.

82, 84 (1997), citing Zenith Radio Corp. v. United States, 710 F.2d
806, 809 (Fed.Cir. 1983); Int'l Maven, Inc. v. McCauley, 12 CIT 55,
Court No. 05-00487 Page 21

56-57, 678 F.Supp. 300, 301 (1988)(application for temporary

restraining order).

(1)

This court and others have held that the severity of the

injury the moving party will sustain without injunctive relief is

in inverse proportion to the showing of likelihood of success on

the merits. E.g., Wolverine Tube (Canada), Inc. v. United States,

23 CIT 76, 78, 36 F.Supp.2d 410, 413 (1999), citing Makita Corp. v.
United States, 17 CIT 240, 250, 819 F.Supp. 1099, 1108 (1993);

Ceramica Regiomontana, S.A. v. United States, 7 CIT 390, 395, 590

F.Supp. 1260, 1264 (1984); American Air Parcel Forwarding Co. v.

United States, 1 CIT 293, 300, 515 F.Supp. 47, 53 (1981). Here,

counsel claim there are two "overriding" issues:

(1) whether . . . [CBP] may abdicate its mandatory duty
imposed by 19 U.S.C. §1337(d)(1) to refuse entry of
products covered by the Commission's remedial orders to
the adjudicated infringer through a flawed self-certifi-
cation process; and (2) whether . . . the Commission may
refrain from taking actions within its powers to ensure
its orders are enforced consistent with the statute and
precedential law.

Plaintiff's Memorandum of Points and Authorities, pp. 1-2.

(a)

With respect to the first issue, plaintiff's position is

patent: paragraph 3 of the Limited Exclusion Order , supra, when

read in conjunction with the ITC's opinion, supra, prohibits the

importation of AMT systems for medium- and heavy-duty trucks at

this time by intervenor-defendant ArvinMeritor, Inc.
Court No. 05-00487 Page 22

The first business day after this case commenced with an

order to show cause for expedited hearing, August 22, 2005, CBP

sent a written request to the ITC for clarification "as soon as

possible" as to the certification provisions of its Limited Exclu-

sion Order. Defendants' Opposition to Plaintiff's Motion, Exhibit

1, second page. That request recited in toto paragraphs 1 and 3 of

the order, supra, and specifically asked

whether the certification provision referenced in para-
graph 3 of the Order is intended to extend to the
importation of "redesigned" automated mechanical trans-
missions.

The Commission's formal answer to CBP after the hearing

in open court had concluded, and which was thereafter received in

camera on September 1, 2005, was:

It does not.13
Further:

An interpretation of the certification provision
such that "redesigned" AMTS may be imported based on a
certification by the importer that the re-designed AMT
does not infringe the patent at issue is contrary to the
Commission's Opinion in Certain Automated Mechanical
Transmissions for Medium-Duty and Heavy-Duty Trucks and
Components Thereof . . . [Public Version, May 9, 2005).
The . . . Opinion notes respondents' request that any
remedial order exempt its newly designed "FreedomLine"
AMTS, which respondents alleged did not infringe. Id. at
4. The Commission implicitly rejected that request by
directing respondents to request an advisory opinion if
they want a Commission determination as to whether a
newly designed AMTS does not infringe the patent at
issue, and thus does not come within the scope of the
Order. Id. at 6-7, n. 1.

13
Written response from ITC Secretary to Assistant Com-
missioner, CBP Office of Regulations & Rulings, p. 2 (Aug. 26,
2005).
Court No. 05-00487 Page 23

An interpretation of the subject certification
provision such that the provision would apply to re-
designed AMTS for which no determination on infringement
has been made by either the Commission or Customs would
be contrary to the Commission's long-standing practice.
The Commission includes certification provisions in its
exclusion orders only where Customs is unable to deter-
mine by inspection whether an imported product violates
a particular exclusion order. In this case, a certifica-
tion provision was included in the Order because Customs
is not able to determine by inspection whether a particu-
lar AMTS falls within one of the categories of imports,
referenced above, that are exempted from the Order. The
Commission did not find, however, that Customs is unable
to determine by inspection whether newly designed AMTS
fall within the scope of the Order.

By Order of the Commission.14

At the outset of the hearing, Commission counsel had

advised the court that CBP had asked his agency to clarify its

intent with regard to certification, that the defendant ITC would

respond on an expedited basis, and that this might be an

efficient resolution . . . to let the Commission explain
further what it meant, and then Customs can understand
and potentially leave the certification as is . . . or
change it, depending on what the Commission renders.

Aug. 24 Tr., pp. 18-19. See Aug. 25 Tr., pp. 195-96 (closing
argument of counsel for defendant(s) United States and CBP).

Further:

14
Id. at 2-3. The court is now in receipt of the following
written reaction to this order on behalf of defendant(s) United
States and CBP:

. . . Notwithstanding the Commission's response,
defendants stand by their position, as set forth
in defendants' opposition and argued before the
Court during the show cause hearing . . ..
Court No. 05-00487 Page 24

. . . [W]e would submit that there is no need to order
the Commission to do something that it [i]s already in
the process of doing on an expedited basis. We are
. . . working feverishly to issue this clarification.

Aug. 24 Tr., p. 20.

Not only is the court grateful for defendant ITC's ex-

peditious response, it recognizes, as it must, that the Commission

has paramount authority and responsibility under section 337 of the

Tariff Act. Its opinion and resultant orders have set the sub-

stantive law of this case, and its post-hearing submission quoted

above has added to that law. The court can only conclude that that

clarification buttresses the position of the plaintiff herein on

the merits of its application for immediate equitable relief. It

also draws into question CBP's immediate compromise of Arvin-

Meritor, Inc.'s complaint in CIT No. 05-00461, thereby casting

aside the very certification CBP itself came to conclude on May 19,

2005 was necessary "for adequate . . . enforcement." Plaintiff's

Memorandum of Points and Authorities, Exhibit 7, second sheet.

Indeed, when a member of Congress apparently questioned that

language, the agency offered the following explanation, in part:

CBP's intent in constructing the certification
language, which we believe is consistent with the ITC's
intent, was to exempt from the exclusion replacement
parts and also AMT systems that do not fall within the
scope of the exclusion order, i.e., for use in other
commercial applications such as in buses and cranes. In
the Commission Opinion, the ITC clearly identified the
infringing products as AMT systems for medium-duty and
heavy-duty trucks, and components thereof. We believe
that the certification language provided for in the ITC's
limited exclusion order was not intended to allow
importation of putative non-infringing re-designs. It is
Court No. 05-00487 Page 25

CBP's understanding that the exclusion order requires
that shipments of AMTs for medium-duty and heavy-duty
trucks and components thereof should be excluded, unless
they are accompanied by a certification certifying that
the articles being imported are not excluded from entry
because they do not fall within the scope of the order
(i.e., are not for use in medium-duty or heavy-duty
trucks), or that the articles are replacement parts for
use in existing AMT systems installed prior to the
issuance of the order.

Id., Exhibit 8, p. 3 (emphasis added).

Whatever the answer to the questions of Congress and the

court, CBP's current form of certification, which was consented to

in court by agency counsel on August 12, 2005, is not in accordance

with the law governing this case.

(b)

As for the second of plaintiff's "overriding" issues, of

course the ITC cannot refrain from taking steps within its

authority to ensure that its orders are enforced consistent with

the law, nor is there any evidence on the record herein to the

contrary. Indeed, at the outset of the hearing its counsel cor-

rectly viewed plaintiff's requested equitable relief "as being

against Customs, rather than against anything that the Commission

has done." Aug. 24 Tr., p. 17.

More so than ever, the public has a strong interest in

protecting and enforcing, when need be, U.S. intellectual property

rights. It also has such interest in fair, if not genuinely free,

trade among the nations of the world, which interest is not neces-

sarily advanced by overly-aggressive, even litigious or monopolist-
Court No. 05-00487 Page 26

ic, practices. This case seems to have elements of all these phe-

nomena, but the court cannot find that whatever their precise

balance tips against grant of the preliminary relief for which the

plaintiff prays. Surely, it is not in the public interest to per-

mit CBP not to carry out the precise mandate of the U.S. Interna-

tional Trade Commission.

As for the balance of any resultant hardships that a pre-

liminary injunction could entail, the court cannot fathom how its

direct object, CBP, would be injured. Of course, witnesses for

both plaintiff Eaton Corporation and intervenor-defendant Arvin-

Meritor, Inc. took the stand at the hearing to testify as to how,

from their particular perspectives, this case could cause their

respective sky to fall, to borrow a closing metaphor of counsel on

both sides. See Aug. 25 Tr., pp. 183, 195. Suffice it to state

that the record developed has evidence of injury to both firms that

could be exacerbated by this case. Compare Aug. 24 Tr., pp. 132-

35, 166; Plaintiff's Exhibit 2, paras. 21-22 with Aug. 25 Tr., pp.

92-160. Until such time as the ITC issues the advisory opinion re-

quested by the respondents before it 15, however, the court cannot

15
Plaintiff's counsel informed the court on September 7,
2005 that the ITC ALJ has

denied the Motion for Summary Determination . . .
sought by the section 337 respondents as to non-
infringement of their redesigned FreedomLine AMT
product.

Cf. [Proposed] Answer of Defendant-Intervenor ArvinMeritor, Inc.,
para. 7, supra.
Court No. 05-00487 Page 27

find as a matter of public fact herein that they are no longer in

violation of an Eaton Corporation patent and thereby entitled to an

unencumbered balancing of their claimed hardship.

The Court of Appeals for the Federal Circuit has opined

that the

very nature of the patent right is the right to exclude
others. Once the patentee's patents have been held to be
valid and infringed, he should be entitled to the full
enjoyment and protection of his patent rights. The
infringer should not be allowed to continue his infringe-
ment in the face of such a holding. A court should not
be reluctant to use its equity powers once a party has so
clearly established his patent rights.

Smith Int'l, Inc. v. Hughes Tool Co., 718 F.2d 1573, 1581 (1983).
Furthermore, in

matters involving patent rights, irreparable harm has
been presumed when a clear showing has been made of pa-
tent validity and infringement. This presumption derives
in part from the finite term of the patent grant, for
patent expiration is not suspended during litigation, and
the passage of time can work irremediable harm.

Bell & Howell Document Mgmt. Products Co. v. Altek Systems, 132
F.3d 701, 708 (Fed.Cir. 1997), quoting with continuing approval

H.H. Robertson, Co. v. United Steel Deck, Co ., 820 F.2d 384, 390

(Fed.Cir. 1987).

Here, of course, there is a clear showing of patent

validity but not yet of infringement thereof by the ITC respond-

ents' redesigned FreedomLine AMTs. That issue is properly still
Court No. 05-00487 Page 28

before the Commission. But the essence of its clarification on

August 26, 2005 to CBP with regard to that redesign's entry into

the United States is caution-- for the time being, which would also

be the essence of the requested preliminary injunction. That is,

not to grant that interim relief, and then to have the ITC formally

determine that the redesigned FreedomLine still violates plain-

tiff's patent, would engender the irreparable harm that the law is

intended to prevent.

III

In view of the foregoing, plaintiff's motion for a pre-

liminary injunction should be, and it hereby is, granted. The

defendants United States of America and Department of Homeland

Security, United States Customs and Border Protection and their

officers, employees, servants, successors and assigns are each

hereby forthwith enjoined until further order of the court from

permitting entry for consumption into the United States, entry for

consumption from a foreign trade zone, or withdrawal from a ware-

house for consumption, of that merchandise manufactured abroad by

or on behalf of, or imported by or on behalf of, ZF Friedrichshafen

AG, ArvinMeritor, Inc., or ZF Meritor, LLC or any of their af-

filiated companies, parents, subsidiaries, or other related busi-

ness entities, or their successors or assigns, that has been or

still is within the purview of the investigation of the United

States International Trade Commission pursuant to 19 U.S.C. §1337
Court No. 05-00487 Page 29

sub nom. Matter of Certain Automated Mechanical Transmission

Systems for Medium-Duty and Heavy-Duty Trucks and Components There-

of, Inv. No. 337-TA-503, and of the plain English16 of the Limited

Exclusion Order, 70 Fed.Reg. 19,094 (April 12, 2005), and written

clarification sent by the United States International Trade

Commission to the Department of Homeland Security, United States

Customs and Border Protection on or about August 26, 2005, which

have issued as a result of the aforesaid Inv. No. 337-TA-503.

So ordered.

Dated: New York, New York
September 9, 2005

Thomas J. Aquilino, Jr.
Senior Judge

16
Aug. 24 Tr., pp. 16, 17, 26, 34, 44; Aug. 25 Tr., p. 193.