Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 1 of 35

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA MICROSOFT CORPORATION, Plaintiff, ) ) ) v. ) ) UNITED STATES, ) ) U.S. DEPARTMENT OF HOMELAND ) SECURITY, ) 245 Murray Lane, S.W. ) Washington, D.C. 20528, ) ) U.S. CUSTOMS AND BORDER PROTECTION, ) 1300 Pennsylvania Avenue, N.W. ) Washington, D.C. 20229, ) ) JANET NAPOLITANO, ) U.S. Department of Homeland Security ) 245 Murray Lane, S.W. ) Washington, D.C. 20528, ) and ) THOMAS S. WINKOWSKI, ) U.S. Customs and Border Protection ) 1300 Pennsylvania Avenue, N.W. ) Washington, D.C. 20229 ) Defendants. )

No. 13-1063 (RWR)

DEFENDANTS OPPOSITION TO MICROSOFTS MOTION FOR PRELIMINARY INJUNCTION

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 2 of 35

STUART F. DELERY Acting Assistant Attorney General RONALD C. MACHEN JR. United States Attorney for the District of Columbia BRYANT G. SNEE Deputy Director PATRICIA M. McCARTHY Assistant Director STEPHEN C. TOSINI SEAN B. McNAMARA Senior Trial Counsels Department of Justice Civil Division Commercial Litigation Branch PO Box 480, Ben Franklin Station Washington, D.C., 20044 Tel: (202) 616-5196 Email: stephen.tosini@usdoj.gov August 2, 2013 Attorneys for Defendant

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 3 of 35

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA MICROSOFT CORPORATION, Plaintiff, v. UNITED STATES, ET AL., Defendants. ORDER On consideration of the motion for preliminary injunction filed by plaintiff, Microsoft Corporation, the governmental defendants response, and all other pertinent papers, it is hereby ORDERED that the motion is denied. ) ) ) ) ) ) ) ) )

No. 13-1063 (RWR)

______________________ CHIEF JUDGE Dated: ____________________ Washington, DC

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 4 of 35

TABLE OF CONTENTS BACKGROUND .............................................................................................................................1 ARGUMENT ..................................................................................................................................3 I. II. Standard Of Review For Preliminary Injunction .................................................................4 Microsoft Is Ineligible For Preliminary Injunctive Relief ...................................................4 A. Microsoft Is Unlikely To Succeed On The Merits...................................................4 1. 2. Introduction ..................................................................................................4 The Court Lacks Jurisdiction To Entertain This Case Under The APA ......5 a. b. 3. Section 337 Remedies Preclude APA Jurisdiction ..........................6 The Patent Laws Preclude APA Jurisdiction .................................12

This Case Should Be Rejected Because It Falls Within The ITCs Primary Jurisdiction .........................................................................12 Microsoft Will Not Succeed On The Merits ..............................................14 a. CBPs Enforcement Decisions Are Permissible Under The Correct Standard Of Review ........................................14 CBPs Decisions Are Not Arbitrary Or Capricious And Were In Accordance With Law .............................................16 i. CBPs Ruling Was Not Foreclosed By The Law Of The Case Or Unreasonable ...................................16 CBP Did Not Shift Any Burden To Microsoft ..................17 CBP Did Not Fail To Provide Fair Notice To Microsoft...18

4.

b.

ii. iii. c. B. C. D.

CBP Did Not Ignore Evidence Of Abandonment ..........................21

Microsoft Has Not Shown Irreparable Harm Absent Injunctive Relief ................22 The Balance Of Hardships Should Preclude An Injunction ..................................24 An Injunction Would Not Serve The Public Interest .............................................24

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 5 of 35

TABLE OF AUTHORITIES CASES

Aliotta v. Bair, 614 F.3d 556 (D.C. Cir. 2010) .......................................................................................... 18 Allina Health Servs. v. Sebelius, 756 F. Supp. 2d 61 (D.D.C. 2010) ...................................................................................... 4 Allnet Communication Serv., Inc. v. Nat'l Exchange Carrier Ass'n, 965 F. 2d 1118 (D.C. Cir. 1992) ....................................................................................... 12 American Road & Transp. Builders Ass'n v. E.P.A., 865 F. Supp. 2d 72 (D.D.C. 2012) .................................................................................. 5, 6 Bowen v. Massachusetts, 487 U.S. 879 (1988) .......................................................................................................... 10 Burlington Truck Lines v. United States, 371 U.S. 156 (1962) .......................................................................................................... 16 Califano v. Sanders, 430 U.S. 99 (1977) .............................................................................................................. 5 Corning Gilbert Inc. v. United States, 896 F. Supp. 2d 1281 (Ct. Int'l Trade 2013) ..................................................................... 15 Davis v. PBGC, 571 F.3d 1288 (D.C. Cir. 2009) ........................................................................................ 22 Dorfmann v. Boozer, 414 F. 2d 1168 (D.C. Cir. 1969) ......................................................................................... 4 Eaton Corp. v. United States, 395 F. Supp. 2d 1314 (Ct. Int'l Trade 2005) ..................................................................... 23 Enercon GmbH v. Int'l Trade Com'n, 151 F. 3d 1376 (Fed. Cir. 1998)........................................................................................ 12 FDIC v. Meyer, 510 U.S. 471 (1994) ............................................................................................................ 5 First Nat. Bank of Chicago v. Steinbrink, 812 F. Supp. 849 (N.D. Ill. 1993) ..................................................................................... 11 ii

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 6 of 35

Fornaro v. James, 416 F. 3d 63 (D.C. Cir. 2005) ......................................................................................... 6, 9 Fuji Photo Film Co., Ltd. v. Benun, 463 F. 3d 1252 (Fed. Cir. 2006).......................................................................................... 6 Fuji Photo Film Co., Ltd. v. Jazz Photo Corp., 394 F. 3d 1368 (Fed. Cir. 2005)........................................................................................ 12 Funai Elec. Co., Ltd. v. United States, 645 F. Supp. 2d 1351 (Ct. Int'l Trade 2009) ................................................................. 7, 23 Harrison v. PPG Indus., Inc., 446 U.S. 578 (1980) ............................................................................................................ 8 Heckler v. Chaney, 470 U.S. 821 (1985) .......................................................................................................... 15 Historic Eastern Pequots v. Salazar, --- F. Supp. 2d ----, 2013 WL 1289571 (D.D.C. 2013) ..................................................... 4 Jazz Photo Corp. v. United States, 439 F. 3d 1344 (Fed. Cir. 2006).................................................................................... 7, 11 Kyocera Wireless Corp. v. Int'l Trade Comm'n, 545 F. 3d 1340 (Fed. Cir. 2008).......................................................................................... 6 Lane v. Pena, 518 U.S. 187 (1996) ............................................................................................................ 5 McNutt v. Gen. Motors Acceptance Corp. of Indiana, 298 U.S. 178 (1936) ............................................................................................................ 5 Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) ...................................................................................................... 16, 21 Munaf v. Geren, 553 U.S. 674 (2008) ...................................................................................................... 3, 23 National Treasury Employees Union v. Helfer, 53 F. 3d 1289 (D.C. Cir. 1995) ......................................................................................... 17 Nat'l Treasury Employees Union v. Whipple, 636 F. Supp. 2d 63 (D.D.C. 2009) .................................................................................... 10

iii

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 7 of 35

Nat'l Wrestling Coaches Ass'n v. Dep't of Educ., 366 F. 3d 930 (D.C. Cir. 2004) ........................................................................................... 5 Norton v. Southern Utah Wilderness Alliance, 542 U.S. 55 (2004) ............................................................................................................ 15 Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. de C.V., 901 F. Supp. 2d 54 (D.D.C. 2012) .................................................................................. 3, 4 Pennsylvania Mun. Authorities Ass'n v. Horinko, 292 F. Supp. 2d 95 (D.D.C. 2003) ...................................................................................... 5 Reiter v. Cooper, 507 U.S. 258 (1993) .......................................................................................................... 13 Salmon Spawning Recovery Alliance v. United States, 532 F. 3d 1338 (Fed. Cir. 2008)........................................................................................ 15 Sampson v. Murray, 415 U.S. 61 (1974) ............................................................................................................ 22 Sierra Club v. Jackson, 648 F.3d 848 (D.C. Cir. 2011) .......................................................................................... 14 Spansion, Inc. v. ITC, 629 F. 3d 1331 (Fed. Cir. 2010)........................................................................................ 23 Stanley v. Univ. of S. Cal., 13 F. 3d 1313 (9th Cir. 1994) ............................................................................................. 3 Steel Co. v. Citizens for a Better Env't, 523 U.S. 83 (1998) .............................................................................................................. 5 Swan v. Clinton, 100 F. 3d 973 (D.C. Cir. 1996) ........................................................................................... 5 Town of Sanford v. United States, 140 F. 3d 20 (1st Cir. 1998) .............................................................................................. 11 United States v. L.A. Tucker Truck Lines, 344 U.S. 33 (1952) ............................................................................................................ 24 United States v. Mead Corp., 533 U.S. 218 (2001) .......................................................................................................... 19

iv

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 8 of 35

United States v. Western Pac. R. Co., 352 U.S. 59 (1956) ............................................................................................................ 12 Univ. of Tex. v. Camenisch, 451 U.S. 390 (1981) ............................................................................................................ 3 U.S. Assn of Importers of Textiles & Apparel v. U.S. Dept of Commerce, 413 F. 3d 1344 (Fed. Cir. 2005) ......5 VastFame Camera, Ltd. v. Int'l Trade Comm'n, 386 F. 3d 1108 (Fed. Cir. 2004)................................................................................. passim Vermont Yankee Nuclear Power Corp. v. Natural Res. Def. Council, 435 U.S. 513 (1978) .......................................................................................................... 20 Washington Legal Found. v. Alexander, 984 F. 2d 483 (D.C. Cir. 1993) ........................................................................................... 5 Winter v. Natural Resources Def. Council, Inc., 555 U.S. 7 (2008) ................................................................................................................ 3 STATUTES AND REGULATIONS 5 U.S.C. 552 ............................................................................................................................... 21 5 U.S.C. 701(a)(2) ............................................................................................................... passim 5 U.S.C. 702 ........................................................................................................................ passim 5 U.S.C. 704 ........................................................................................................................ passim 5 U.S.C. 706 ........................................................................................................................ passim 18 U.S.C. 1905 ........................................................................................................................... 20 19 U.S.C. 1337 .................................................................................................................... passim 19 U.S.C. 1337(a)(1)(B) .............................................................................................................. 6 19 U.S.C. 1337(b) ...................................................................................................................... 13 19 U.S.C. 1337(c) ........................................................................................................................ 7 19 U.S.C. 1337(d)-(f) ................................................................................................................. 13 19 U.S.C. 1337(d)(1) ............................................................................................................... 2, 7 v

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 9 of 35

19 U.S.C. 1337(d)(2) ................................................................................................................... 6 19 U.S.C. 1337(f)(1) .................................................................................................................... 8 19 U.S.C. 1337(f)(2) .................................................................................................................... 8 19 U.S.C. 1514(a) ........................................................................................................................ 7 19 U.S.C. 1516 ........................................................................................................................... 21 28 U.S.C. 1295(a)(6).................................................................................................................... 7 28 U.S.C. 1331 ............................................................................................................................. 5 28 U.S.C. 1581(a) ........................................................................................................................ 7 35 U.S.C. 281 et seq................................................................................................................... 12 35 U.S.C. 284 ............................................................................................................................. 12 19 C.F.R. 103.2(b) ..................................................................................................................... 21 19 C.F.R. 103.23(b)(6)............................................................................................................... 21 19 C.F.R. 177 et seq.. ................................................................................................................. 19 19 C.F.R. 210.75 ................................................................................................................. passim 19 C.F.R. 210.75(a)...................................................................................................................... 8 19 C.F.R. 210.75(b)(1)................................................................................................................. 8 19 C.F.R. 210.75(c)...................................................................................................................... 8 19 C.F.R. 210.76 .................................................................................................................... 8, 24 19 C.F.R. 210.77 ........................................................................................................................ 24 19 C.F.R. 210.77(a)...................................................................................................................... 8 19 C.F.R. 210.79 .................................................................................................................... 8, 24

vi

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 10 of 35

FEDERAL RULES Fed. R. Civ. P. 12(b)(6)................................................................................................................. 14

MISCELLANEOUS Attorney Generals Manual on the Administrative Procedure Act 108 (1947) ........................... 15

vii

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 11 of 35

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA MICROSOFT CORPORATION, Plaintiff, v. UNITED STATES, ET AL., Defendants. ) ) ) ) ) ) ) ) )

No. 13-1063 (RWR)

DEFENDANTS OPPOSITION TO MICROSOFTS MOTION FOR PRELIMINARY INJUNCTION The governmental defendants (collectively United States) respectfully respond to the motion for preliminary injunction filed by plaintiff, Microsoft Corporation (Microsoft). As we demonstrate below, this Court should deny Microsofts motion. The Court lacks jurisdiction to entertain this case, and Microsoft entirely fails to establish entitlement to the extraordinary remedy of compelling Government to action. BACKGROUND This case arises from a patent dispute before the United States International Trade Commission (ITC). Microsoft filed a complaint at the ITC alleging that Motorola Mobility, Inc. (Motorola) Android smartphones had infringed U.S. Patent No. 6,370,566 (the 566 patent), owned by Microsoft. As a result, the ITC issued a limited exclusion order pursuant to 19 U.S.C. 1337 (section 337), ordering that unlicensed mobile devices, associated software, and components covered by claims 1, 2, 5, or 6 of the 566 patent and manufactured abroad or imported by or on behalf of Motorola were, with limited exception, excluded from entry for consumption into the United States. Certain Mobile Devices, Associated Software, and Components Thereof, Inv. No. 337-TA-944, Limited Exclusion Order, 1 (May 18, 2012) (Pl.

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 12 of 35

Mem. Ex. H). Pursuant to 19 U.S.C. 1337(d)(1), United States Customs and Border Protection (CBP) administers ITC exclusion orders at the border. On May 25, 2012, Motorola requested that CBP allow it to import certain redesigned mobile devices that Motorola asserted were not covered by the ITCs exclusion order. Headquarters Ruling (HQ) H226615 (April 25, 2013) (Pl. Mem. Ex. M). In particular, Motorola requested that CBP issue an administrative ruling pursuant to 19 C.F.R. Part 177. Motorolas request informed CBP that it had redesigned certain devices to remove the ability to generate meeting requests when using Microsoft Exchange ActiveSync protocols and described the features that were removed in the modified devices. Id. at 6-10. According to Motorola, the devices did not infringe. Id. at 1. CBP issued HQ H226615 in response to Motorolas request. Microsoft requested revocation of HQ H226615 on two grounds. First, Microsoft contended that the ITC had found the Google functionality present on the legacy devices to infringe. Pl. Mem. Ex. A at 1. Second, even absent consideration of Google functionality, Microsoft contended that the redesigned devices do not successfully avoid infringement. Id. Motorola opposed. CBP subsequently issued HQ H242025 (Jun. 24, 2013) and HQ H242026 (Jun. 24, 2013) in which it found that the record did not support Microsofts allegations regarding Google functionality and the redesigned Motorola devices. In its suit, Microsoft contends that CBPs decision not to exclude Motorolas phones pursuant to the ITCs order was arbitrary and capricious. Complaint (Cmpl.) 2. Microsoft asserts that CBP erred by concluding that Microsoft abandoned its claim before the ITC that Motorolas Google functionality infringed its patent. Cmpl. 8. Microsoft further alleges that CBP failed to provide Microsoft with proper notice before issuing its decision, and that CBP inappropriately shifted the burden to Microsoft to prove that Motorolas phones should be

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 13 of 35

excluded. Cmpl. 9-10. Microsoft seeks injunctive and declaratory relief compelling CBP to exclude certain redesigned smartphones from the United States and to order redelivery of certain merchandise already imported. Cmpl. 15-16. ARGUMENT I. Standard Of Review For Preliminary Injunction A plaintiff seeking a preliminary injunction must establish (1) that it is likely to succeed on the merits; (2) that it will suffer irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips in plaintiffs favor; and (4) that an injunction is in the public interest. Winter v. Natural Resources Def. Council, Inc., 555 U.S. 7, 20 (2008) (citing Munaf v. Geren, 553 U.S. 674, 689-690 (2008)). A preliminary injunction is an extraordinary and drastic remedy; it is never awarded as of right. Munaf, 553 U.S. at 689-90 (citations omitted) (reversing grant of preliminary injunction in which courts below did not assess whether there was a likelihood of success on the merits). Microsoft cannot meet any prong here. When, as in this case, a plaintiff seeks a preliminary injunction compelling an agency to act, plaintiffs face an additional hurdle. The purpose of a preliminary injunction is merely to preserve the relative positions of the parties until a trial on the merits can be held. Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981). If the requested relief would alter, not preserve, the status quo, the court must subject the plaintiffs claim to a somewhat higher standard. Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. de C.V., 901 F. Supp. 2d 54, 56 (D.D.C. 2012) (internal quotations omitted); see Stanley v. Univ. of S. Cal., 13 F.3d 1313, 1319 (9th Cir. 1994) (holding that, where a party seeks mandatory preliminary relief that goes well beyond maintaining the status quo pendente lite, courts should be extremely cautious about issuing a preliminary injunction.). Although this Circuit has neither adopted nor rejected a

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 14 of 35

heightened burden as a doctrinal matter . . . it is common practice . . . to proceed with extreme caution when the injunction would alter the status quo. Paleteria, 901 F. Supp. 2d 54, 57 n.1 (citing Allina Health Servs. v. Sebelius, 756 F. Supp. 2d 61, 70 n.5 (D.D.C. 2010)); see also Dorfmann v. Boozer, 414 F.2d 1168, 1173 (D.C. Cir. 1969) (The power to issue a preliminary injunction, especially a mandatory one [that would alter the status quo], should be sparingly exercised.) (internal quotation marks omitted). II. Microsoft Is Ineligible For Preliminary Injunctive Relief Microsofts request for a preliminary injunction should be denied. As demonstrated below, Microsoft is unlikely to succeed on the merits and suffers no irreparable harm. Moreover, the balance of equities tips in the Governments favor and an injunction is not in the public interest. A. Microsoft Is Unlikely To Succeed On The Merits 1. Introduction

Microsoft is unlikely to succeed on the merits. As an initial matter, this Court lacks jurisdiction to entertain Microsofts challenge to CBPs decision not to enforce the limited exclusion order against redesigned devices. Microsoft cites no precedent for what it asks the Court to do, and we are aware of none. That no district court has ever considered a challenge of this kind highlights the jurisdictional flaw at the heart of Microsofts case other, wellestablished avenues of redress deprive this Court of jurisdiction under the Administrative Procedure Act (APA). Indeed, Microsoft seeks to short-circuit the detailed statutory and regulatory procedures that empower the ITC and, ultimately, the United States Court of Appeals for the Federal Circuit to consider and decide patent infringement claims in the importing context. Microsoft also ignores the right to remedies under domestic patent law, rights

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 15 of 35

that Microsoft is already pursuing. No district court has ever found jurisdiction to entertain this type of shoe-horned trade complaint. This Court should not be the first. In the same vein, this Court should dismiss this case because the ITC retains primary jurisdiction to consider interpretations of its own orders. Moreover even assuming that jurisdiction exists, Microsoft still could be unlikely to succeed on the merits of its claim, because CBPs actions in this matter have been reasonable. 2. The Court Lacks Jurisdiction To Entertain This Case Under The APA __

This Court must consider jurisdiction as a threshold matter. Steel Co. v. Citizens for a Better Envt, 523 U.S. 83, 94 (1998). Absent jurisdiction, this Court cannot rule on a motion for a preliminary injunction. U.S. Assn of Importers of Textiles & Apparel v. U.S. Dept of Commerce, 413 F.3d 1344, 1348 (Fed. Cir. 2005); Pennsylvania Mun. Authorities Assn v. Horinko, 292 F. Supp. 2d 95, 101 (D.D.C. 2003). Microsoft bears the burden of demonstrating subject-matter jurisdiction. McNutt v. Gen. Motors Acceptance Corp. of Indiana, 298 U.S. 178, 188-89 (1936). If Microsoft cannot meet its burden, the Court must dismiss. Steel Co., 523 U.S. at 94. Sovereign immunity is jurisdictional in nature, FDIC v. Meyer, 510 U.S. 471, 475 (1994), and any waiver must be express[ed] in statutory text. Lane v. Pena, 518 U.S. 187, 192 (1996). Microsoft attempts to invoke the Courts jurisdiction pursuant to 28 U.S.C. 1331 and 19 U.S.C. 1337. Alone, neither statute waives sovereign immunity. Swan v. Clinton, 100 F.3d 973, 981 (D.C. Cir. 1996); Historic Eastern Pequots v. Salazar, --- F. Supp. 2d ----, 2013 WL 1289571 (D.D.C. 2013). The APA, however, when it provides a cause of action, can both waive sovereign immunity and form a basis for jurisdiction in tandem with section 1331. Califano v. Sanders, 430 U.S. 99, 107 (1977); American Road & Transp. Builders Assn v. E.P.A., 865 F. 5

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 16 of 35

Supp. 2d 72, 81 (D.D.C. 2012). Nevertheless, if another statute provides an adequate remedy in a court, 5 U.S.C. 704, then the APA neither provides a cause of action nor waives sovereign immunity. Id. (citing Washington Legal Found. v. Alexander, 984 F.2d 483, 486 (D.C. Cir. 1993); Fornaro v. James, 416 F.3d 63, 66 (D.C. Cir. 2005); Natl Wrestling Coaches Assn v. Dept of Educ., 366 F. 3d 930, 947 (D.C. Cir. 2004)). And if the statute providing the adequate remedy channels review to the courts of appeals, it eliminates the federal question jurisdiction that the district courts would otherwise enjoy. Id. (citing Harrison v. PPG Indus., Inc., 446 U.S. 578, 584 (1980)). Two statutory schemes provide adequate remedies sufficient to bar any claim by Microsoft that the APA provides a waiver of sovereign immunity in this case. The first is section 337 itself. The second is the patent laws. a. Section 337 Remedies Preclude APA Jurisdiction

Microsoft possesses a host of remedies under section 337 and the ITCs implementing regulations, which precludes APA jurisdiction. Among its duties related to international trade, the ITC investigates and adjudicates claims that a party is importing or has imported items that infringe a valid United States patent. 19 U.S.C. 1337(a)(1)(B). If the ITC determines that an importer is infringing a patent, the ITC will issue a limited exclusion order, which governs the parties before the ITC, or it may issue a general exclusion order, covering a broader range of circumstances. Kyocera Wireless Corp. v. Intl Trade Commn, 545 F.3d 1340, 1356 (Fed. Cir. 2008). The purpose of both types of orders is to exclude infringing goods from entering the United States. 19 U.S.C. 1337(d)(2). The ITC does not, however, directly implement its orders at the border. Rather, the statute entrusts the Treasury Department (currently through CBP) with that responsibility. 19 U.S.C.

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 17 of 35

1337(d)(1). Accordingly, after the ITC issues an exclusion order, the ITC notifies CBP of the order, and CPB shall, through the proper officers, refuse entry to subject goods. Id. Judicial review of the ITCs and CBPs actions in section 337 cases may be pursued in two ways. Most directly, after the ITC makes a determination under section 337, an adversely affected party may appeal within 60 days to the Federal Circuit. 19 U.S.C. 1337(c); 28 U.S.C. 1295(a)(6). This direct review is happening in this case both Microsoft and Motorola have appealed the ITCs order to the Federal Circuit, which is scheduled to hear argument on August 6, 2013. Fed. Cir. Docket Nos. 12-1445 and 12-1535. The other avenue of judicial review, though more limited, is through the United States Court of International Trade. Pursuant to 19 U.S.C. 1514(a), an importer may protest a decision by CBP to exclude entry pursuant to an ITC exclusion order. See, e.g., Jazz Photo Corp. v. United States, 439 F.3d 1344, 1347-48 (Fed. Cir. 2006). If CBP denies an importers protest, the importer may challenge that denial in the Court of International Trade. 28 U.S.C. 1581(a); Jazz Photo Corp., 439 F.3d at 1347. As Microsoft correctly points out, however, only importers may challenge CBPs exclusion decisions in the Court of International Trade because of that courts jurisdictional limitations; other parties at the ITC, such as Microsoft, have no cause of action in the Court of International Trade. Funai Elec. Co., Ltd. v. United States, 645 F. Supp. 2d 1351 (Ct. Intl Trade 2009). Despite these statutory limitations, patent holders still possess further administrative and judicial remedies. The Federal Circuit has held that the ITC possesses the statutory authority to enforce its own orders. VastFame Camera, Ltd. v. Intl Trade Commn, 386 F.3d 1108, 1113 (Fed. Cir. 2004). Indeed, the ITCs regulations provide a road map for complainants like Microsoft to pursue their rights before the ITC, and, if necessary, the Federal Circuit. The ITCs

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 18 of 35

enforcement regulations offer both informal and formal proceedings. 19 C.F.R. 210.75. Informal enforcement proceedings may be conducted by the [ITC] with respect to any act or omission by any person in possible violation of any provision of an exclusion order . . . . 19 C.F.R. 210.75(a). The ITC then may issue such orders as it deems appropriate to implement and insure compliance with the terms of an exclusion order. Id. The regulation governing formal proceedings allows a complainant in the original investigation, such as Microsoft, to file a complaint setting forth alleged violations of any exclusion order . . . . 19 C.F.R. 210.75(b)(1). The ITCs enforcement proceeding could also result in the issuance of a cease and desist order, which is enforceable through substantial civil penalties. Id.; see also 19 U.S.C. 1337(f)(1) (entitled [c]ease and desist orders; civil penalty for violation of orders). The ITC may also bring suit in district court to enforce cease and desist orders against importers. 19 U.S.C. 1337(f)(2); 19 C.F.R. 210.75(c). If Microsoft believed that Motorolas imports were as flagrant and obvious a violation of the exclusion order as it purports, Microsoft could also seek temporary emergency relief before the ITC. This relief would function almost exactly like a preliminary injunction pending formal proceedings. See 19 C.F.R. 210.77(a). Microsoft could also seek modification of the exclusion order expressly to include the redesigned products it claims are infringing. See 19 C.F.R. 210.76. Moreover, as it did with respect to the ITCs initial exclusion order in this case, Microsoft could appeal to the Federal Circuit a decision by the ITC concerning enforcement. See, e.g., Vastfame, 386 F.3d at 1110 (noting that Fuji filed a complaint with the [ITC] requesting enforcement and advisory proceedings to determine whether VastFame and others had violated the general exclusion order). Lastly, Microsoft may seek an advisory opinion from the ITC concerning the exclusion orders scope. 19 C.F.R. 210.79.

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 19 of 35

The above remedies under section 337 and the ITCs implementing regulations provide Microsoft with more than adequate redress for all claims raised in its complaint. These alternative remedies deprive this Court of jurisdiction to entertain this case. Indeed, this case is strikingly similar to Fornaro, in which the District of Columbia Circuit held that the APA did not waive sovereign immunity to allow a district court challenge to an Office of Personnel Management (OPM) decision when review was available at the Federal Circuit. Fornaro, 416 F.3d at 64-66. In that case, law enforcement officers challenged OPMs decision not to notify members of a prospective class of claimants and provide enhanced retirement benefits resulting from earlier Federal Circuit case law. Id. at 65. OPMs ruling was appealable to the Merit Systems Protection Board (MSPB) and ultimately to the Federal Circuit. Id. at 66. The Court held that allowing plaintiffs to challenge OPMs action in district court would plainly undermine the whole point of channeling review of benefits determinations to the MSPB and from there to the Federal Circuit. Id. at 68. This approach, the Court explained, would also: (a) reintroduce the haphazard arrangements for administrative and judicial review of personnel action, involving resort to the district courts through various forms of action, including suits for mandamus, injunction, and declaratory judgment, that Congress sought to replace in the CSRA [Civil Service Retirement Act]; (b) erode the primacy of the MSPB for administrative resolution of disputes and the primacy of the Federal Circuit for judicial review; and (c) impermissibly create a right of access to the courts more immediate and direct than the CSRA provides, thus fracturing the unifying authority of the MSPB, and undermining the consistency of interpretation by the Federal Circuit envisioned by the Act. Id. at 68-69 (internal quotations, brackets, ellipses, and citations omitted). Not all APA district court actions involving the CSRA are prohibited, but those that are allowed involve limited challenges, for example, to system-

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 20 of 35

wide rulemaking. See, e.g., Natl Treasury Employees Union v. Whipple, 636 F. Supp. 2d 63, 69 (D.D.C. 2009). Like the challenge to OPMs actions under the CSRA in Fornaro, allowing Microsofts challenge here to proceed would upset a carefully crafted statutory mechanism that provides an adequate remedy for parties like Microsoft. Such a result is impermissible. As demonstrated above, CBPs implementation of ITC exclusion orders is reviewed by the Federal Circuit. If the Court considers Microsofts challenge, the Court would be forced to review CBPs interpretation of the ITCs exclusion order and to construe what that order means, even though the ITC already has a process in place for such determinations. Review of this Court would be in the District of Columbia Circuit, when it would otherwise occur in the Federal Circuit, which is certainly an adequate forum. Such a splitting of review between the regional circuits and the Federal Circuit similarly ignores the Supreme Courts teaching regarding the APA. See Bowen v. Massachusetts, 487 U.S. 879, 908 (1988) (declining to split the review of 5 U.S.C. 704 final agency actions regarding Medicaid between the courts). Microsoft cannot involve this Court and suddenly create a right of access to judicial review where none before existed. Allowing Microsoft to do so would circumvent the longstanding process by which parties return to the ITC and seek clarification, modification, and enforcement of exclusion orders. This right of access would mean a right to injunctive relief and declaratory judgments that before were the sole province of the ITC and CBP. The ITC can clarify and enforce its own rulings, and that power, coupled with available review in the Federal Circuit, deprives this Court of jurisdiction. Moreover, that Microsofts remedy before the ITC might inconvenience it because it might obtain injunctive relief more quickly here (which is questionable given the ITCs ability to grant emergency relief) is of no moment. See Town of

10

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 21 of 35

Sanford v. United States, 140 F.3d 20, 23 (1st Cir. 1998) (explaining that [a] legal remedy is not inadequate for purposes of the APA because it is procedurally inconvenient for a given plaintiff, or because plaintiffs have inadvertently deprived themselves of the opportunity to pursue that remedy.); First Nat. Bank of Chicago v. Steinbrink, 812 F. Supp. 849, 854 (N.D. Ill. 1993) (Not only is an administrative proceeding pending which addresses the very same issues . . . , but a viable opportunity for review exists in the appellate courts once a final enforcement order is issued. The only inadequacy with this remedy is that the Bank must endure the added expense and inconvenience of final adjudication in the administrative proceedings and subsequent review in the Seventh Circuit.). Indeed, Microsofts correct judicial remedy was pursued by Fuji in the disposable camera cases. Fuji, like Microsoft, filed a complaint at the ITC against an importer (including Jazz Photo) that Fuji claimed was infringing its patents. Jazz Photo, 439 F.3d at 1346-47. Just as the ITC did here for Microsoft, the ITC agreed with Fuji, and issued an exclusion order. Id. at 1347. Two years later, Fuji returned to the ITC seeking institution of a formal enforcement proceeding to enforce the Exclusion Order against Jazz Photos and others. Id. The ITC agreed with Fuji that Jazz Photo had violated the exclusion order. Id.; see also VastFame, 386 F.3d at 1110 (discussing ITC post-exclusion order proceedings). Had it been adversely affected by the ITCs ruling, Fuji could have appealed, but instead, Jazz Photo sued in the Court of International Trade, challenging CBPs exclusion of certain disposable cameras stemming from the ITCs enforcement decision. Id. In sum, Microsofts remedies before the ITC and the Court of Appeals for the Federal Circuit are adequate and have been pursued before. This Court accordingly lacks jurisdiction to entertain this case pursuant to the APA.

11

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 22 of 35

b.

The Patent Laws Preclude APA Jurisdiction

The patent laws also provide Microsoft with an adequate remedy one that Microsoft is already pursuing. 35 U.S.C. 281 et seq. Patent holders may initiate infringement actions for which they are entitled to seek damages. 35 U.S.C. 284; Fuji Photo Film Co., Ltd. v. Jazz Photo Corp., 394 F.3d 1368 (Fed. Cir. 2005) (patent remedies sought while section 337 case before ITC). Microsoft already sued Motorola in the United States District Court for the Western District of Washington, alleging that Motorola was infringing the 566 patent by, among other things, making, using, offering to sell or selling in the United States, or importing into the United States, products and/or services that are covered by one or more claims of the 566 patent . . . W.D. Wash. Cmpl. at 36 (emphasis added). Attachment A. Like Microsofts available remedies before the ITC and the Federal Circuit, Microsofts pursuit in district court of a case for patent infringement concerning the devices at issue in this very case demonstrates that Microsoft possesses adequate remedies sufficient to deprive this Court of jurisdiction. 3. Alternatively, This Case Should Be Rejected Because It Falls Within The ITCs Primary Jurisdiction___________________________

The Court should also decline to exercise jurisdiction because the cases subject matter falls within the ITCs primary jurisdiction. The primary jurisdiction doctrine promotes proper relationships between the courts and administrative agencies charged with particular regulatory duties. United States v. Western Pac. R. Co., 352 U.S. 59, 63-64 (1956). No fixed formula exists for applying the doctrine. Id. at 64. Instead, the doctrine rests both on a concern for uniform outcomes (which may be defeated if disparate courts resolve regulatory issues inconsistently) . . . and on the advantages of allowing an agency to apply its expert judgment. Allnet Communication Serv., Inc. v. Natl Exchange Carrier Assn, 965 F.2d 1118, 1120 (D.C.

12

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 23 of 35

Cir. 1992). Although the doctrine of primary jurisdiction need not deprive the Court of jurisdiction, this Court may, if the parties would not be unfairly disadvantaged, dismiss a case without prejudice pursuant to the doctrine. Reiter v. Cooper, 507 U.S. 258, 268-69 (1993). As explained above, the ITC is charged in section 337 with excluding from import items that infringe valid patents. The ITC has exclusive jurisdiction to determine whether a violation of section 337 has occurred, including infringement of asserted patents, and to issue exclusion orders upon finding a violation of section 337. Pursuant to both section 337 and its implementing regulations, the ITC also has jurisdiction to enforce compliance with its orders. 19 U.S.C. 1337(b), (d)-(f); 19 C.F.R. 210.75 et seq. The Federal Circuit has recognized the ITCs technical expertise. See, e.g., Enercon GmbH v. Intl Trade Comn, 151 F.3d 1376, 1382 (Fed. Cir. 1998). Given the clear route of review before the ITC that Microsoft resisted by filing suit here, the Court should decline to entertain this suit and instead allow the ITC to interpret and enforce its own order. If the Court creates an avenue for review of CBP rulings on ITC matters, a split of authority with no uniform mechanism for review in a single court of appeals will become possible, depending on where a party elects to seek relief. Further, and as in Allnet, the posture of Microsofts suit as a declaratory judgment action strengthens the case for primary jurisdiction because Federal declaratory judgments are available as a matter of judicial discretion, not as of right . . . and are not to be used to pre-empt and prejudge issues that are committed for initial decision to an administrative body or special tribunal. 965 F. 2d at 1121 (internal citations omitted).

13

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 24 of 35

4.

Microsoft Will Not Succeed On The Merits

Even assuming that the Court possesses jurisdiction to entertain Microsofts complaint, Microsofts claim still would be likely to fail because CBP acted lawfully and reasonably. a. CBPs Enforcement Decisions Are Permissible Under The Correct Standard Of Review_________________________

Microsoft misstates the governing standard in its motion and complaint by attempting to apply the standard of review for review of final agency actions to what is in fact an attempt to compel agency action [allegedly] unlawfully withheld. 5 U.S.C. 706(1). Microsoft thus fails to state a claim pursuant to Fed. R. Civ. P. 12(b)(6), because CBPs decision not to exclude redesigned smartphones was discretionary and cannot be compelled pursuant to section 706(1). Sierra Club v. Jackson, 648 F.3d 848, 853-55 (D.C. Cir. 2011) (citing 5 U.S.C. 701(a)(2) committed to agency discretion exemption from APA review). Microsoft contends that [t]he case arises from Defendants unlawful and arbitrary refusal to enforce an order of the United States International Trade Commission, Pl. Mem. at 1, and that it seeks injunctive and declaratory relief requiring [CBP] to comply with a mandatory Limited Exclusion Order. Cmpl. at 2. Microsoft then treats CBPs purported nonenforcement of the ITCs exclusion order as a final agency action under the APA, 5 U.S.C. 702. Pl. Mem. at 16. Microsoft asserts that it may seek to compel enforcement by way of a Court decision holding CBPs alleged non-enforcement arbitrary and capricious under 5 U.S.C. 706(2)(A), see Pl. Mem. at 16-28 (argument pursuant to section 706(a)(A)), instead of the correct provision, under which Courts may compel agency action unlawfully withheld only under very limited circumstances. 5 U.S.C. 706(1). As the unanimous Supreme Court recognized, and contrary to the premise of Microsofts suit, the only agency action that can be compelled under the APA is action legally required. 14

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 25 of 35

This limitation appears in 706(1)s authorization for courts to compel agency action unlawfully withheld. Norton v. Southern Utah Wilderness Alliance, 542 U.S. 55, 63 (2004) (SUWA) (quoting 5 U.S.C. 706(1)) (emphasis by Court). A claim under 706(1) can proceed only where a plaintiff asserts that an agency failed to take a discrete agency action that it is required to take. Id. (emphasis by Court). Indeed, section 706(1) empowers a court only to compel an agency to perform a ministerial or non-discretionary act, or to take action upon a matter, without directing how it shall act. Id. (quoting Attorney Generals Manual on the Administrative Procedure Act 108 (1947) (emphasis by Court); see also Heckler v. Chaney, 470 U.S. 821, 831 (1985) (decisions not to enforce are unreviewable under APA because they are committed to agency discretion by law under 5 U.S.C. 701(a)(2)); Salmon Spawning Recovery Alliance v. United States, 532 F. 3d 1338, 1345 (Fed. Cir. 2008) (rejecting attempt to compel CBP to enforce Endangered Species Act (ESA) against alleged importers of ESA-listed salmon); Corning Gilbert Inc. v. United States, 896 F. Supp. 2d 1281, 1289 (Ct. Intl Trade 2013) (unlike ministerial actions that courts may compel under section 706(1), CBP may have to go beyond the mechanical application of [an exclusion order].). To be sure, we do not contend that CBP possesses unbounded discretion to ignore ITC exclusion orders. Rather, when faced with containers of redesigned merchandise at the border, some level of discretion necessarily inures to CBP to deny or allow entry by determining whether those imports fall within or outside the scope of the ITCs exclusion. Indeed, Microsoft implicitly recognized this practical reality by not contending that exclusion of redesigned products is a ministerial or discrete agency action that [CBP] is required to take, SUWA, 542 U.S. at 63 (emphasis by Court), whenever CBP implements an exclusion order. Microsofts claim thus fails to state a claim for which relief may be granted for that reason alone.

15

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 26 of 35

b.

CBPs Decisions Are Not Arbitrary Or Capricious And Were In Accordance With Law_______________________________

Even if this Court reviews CBPs actions under the (incorrect) arbitrary and capricious standard that Microsoft advances, Pl. Mem. 16-17, Microsofts claims still must fail. The scope of review under the arbitrary and capricious standard is narrow and a court is not to substitute its judgment for that of the agency. Motor Vehicle Mfrs. Assn of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). [T]he agency must examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made. Id. (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962)). Courts thus consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. Id. (citations omitted). CBP was reasonable and thus it more than met this deferential standard. i. CBPs Ruling Was Not Foreclosed By The Law Of The Case Or Unreasonable

Microsoft first contends that it will succeed because CBPs ruling was foreclosed by the ITCs order. Pl. Mem. 18-20. Microsoft is mistaken. CBPs ruling that Motorolas redesigned devices were not covered by the ITCs exclusion order is entirely reasonable. Microsofts contentions hinge on a misreading of a two-sentence footnote in the ITCs opinion. Pl. Mem. Ex. G. As Microsoft notes, Motorola asserted that any exclusion order should not extend to the accused products use of Googles servers and Googles synchronization protocol to synchronize calendar objects. ITC Op. 24, n.12. The ITC declined to consider this issue because it was raised by Motorola for the first time in a responsive brief. Id. This footnote does not say what Microsoft claims it says. The footnote does not say that the ITCs exclusion order covers products that use Googles servers and protocol. All the

16

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 27 of 35

footnote says is that Motorola raised the issue only at the conclusion of ITC proceedings, in a manner that prevented the administrative law judge, Microsoft, and the Commission from addressing it. So when Motorola and Microsoft brought this issue to CBPs attention, CBP needed to look beyond the footnote. CBP needed to determine whether, in fact, Motorolas Google synchronization was at issue before the ITC. The ITCs opinion is silent on the question, so to make its determination, CBP analyzed the record. Pl. Mem. Ex. A (HQ H242025) at 2-7. Indeed, CBP carefully considered the record developed by the parties before the ITC given that Motorolas failure to raise the issue on a timely basis before the administrative law judge precluded the ITCs adjudication of the issue. CBP examined the deposition testimony of both Motorolas and Microsofts expert witnesses. Id. at 10. CBP considered Microsofts updated claim chart, which did not refer to Googles technology. Id. CBP also considered Microsofts pre- and post-hearing briefs, which also did not address the issue. Id. CBPs consideration of the ITCs opinion and the record before the ITC to determine whether Motorolas smartphones were covered by the ITCs order was reasonable. CBP considered all relevant factors and its conclusion was logically drawn from the record and reasonably articulated. In these circumstances, this Court should not substitute its judgment for that of CBP. National Treasury Employees Union v. Helfer, 53 F.3d 1289, 1292-93 (D.C. Cir. 1995). ii. CBP Did Not Shift Any Burden To Microsoft

Microsoft next claims that CBP wrongly allocated the burden of proof to Microsoft to prove that Motorolas smartphones were covered by the ITCs exclusion order. Pl. Mem. 20-22. This is wrong because CBP expressly ruled that Motorola bore the burden to demonstrate noninfringement and held Motorola to that standard.

17

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 28 of 35

As Microsoft concedes, CBPs rulings explain that an exclusion order shifts the burden of proof to would-be importers to prove that their products are not covered by an exclusion order. Pl. Mem. Ex. M. (HQ H226615) at 6; Pl. Mem. Ex. A (HQ H242025) at 9. Despite CBPs clear statement, Microsoft maintains that CBPs use of the phrase Microsoft points to at page 10 of HQ H242025 somehow demonstrates that CBP impermissibly shifted the burden of proof to Microsoft. This is absurd. CBP first ruled on Motorolas request without consulting Microsoft. Pl. Mem. Ex. M (HQ H226615). There, CBP considered the evidence provided by Motorola and found that Motorola had proven that its redesigned smartphones were not covered by the exclusion order. Id. Microsoft then asked CBP to revoke that ruling. In doing so, Microsoft made arguments and, in making its arguments, Microsoft pointed to evidence. As a result, CBP merely noted that Microsoft had pointed to evidence that the agency found unpersuasive. CBP did not shift any burden; it merely considered Microsofts contentions and found that they did not overcome Motorolas demonstration that its redesigned smartphones were not covered by the exclusion order. Nor did CBP impose an improper standard for claim abandonment. Pl. Mem. at 22. Microsoft appears to maintain that, because it raised its infringement claim regarding the use of Google technology in an exhibit to its complaint before the ITC, Microsoft did not abandon that claim in later filings when it submitted a revised chart that did not address Google technology. Id. A party may abandon a claim after raising it in a complaint by not pressing for it in a later motion. Aliotta v. Bair, 614 F.3d 556, 562-63 (D.C. Cir. 2010). CBPs conclusion that Microsoft abandoned its claim with respect to Google technology was thus entirely reasonable.

18

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 29 of 35

iii.

CBP Did Not Fail To Provide Fair Notice To Microsoft

Microsoft erroneously claims that CBP failed to notify Microsoft that CBP was shifting the burden to Microsoft to prove that Motorola devices should be excluded. Pl. Mem. 23-25. As an initial matter, Microsoft identifies no authority requiring CBP to provide notice in the manner that Microsoft claims. Pl. Mem. at 23-25. Microsoft asserts only that notice must be given for formal proceedings. Id. at 24. The proceedings here were governed by 19 C.F.R. 177 et seq., and were not formal proceedings. Rather, rulings made under Section 177 are far removed . . . from notice-and-comment process . . . . United States v. Mead Corp., 533 U.S. 218, 231 (2001). CBP had no obligation to provide Microsoft notice before issuing its rulings. Aside from the issue of required notice, Microsoft also contends that it was harmed because CBP transformed its revocation request into a request for a new ruling. Microsoft is wrong. Nothing about how CBP treated Microsofts request was improper. Motorola initially asked CBP to allow importation of smartphones that it had redesigned purportedly to avoid the infringement covered by the ITCs order. Pl. Mem. Ex. M (HQ H226615). In particular, Motorola contended to CBP that it had redesigned its smartphones to avoid generating emails when scheduling calendar events using Microsofts ActiveSync Exchange Protocol. Id. at 3, 9. CBP considered Motorolas arguments and agreed. Id. at 9. After obtaining a copy of the ruling, Microsoft sought revocation on two grounds. Pl. Mem. Ex. A (HQ H242025). First, Microsoft asserted that Motorolas devices still infringed because they sent emails using Google technology. Id. at 1-2. Second, Microsoft contended that the redesigned smartphones continued to infringe by using Microsoft technology. Id. at 2. CBP addressed these two contentions in separate rulings, both issued on June 24. Id.

19

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 30 of 35

Microsoft does not make clear exactly what wrong CBP allegedly committed. Motorola did not request that it be allowed to import smartphones that used only Google technology, presumably because Motorola interpreted the ITCs order not to cover those devices because Motorola believed that they were not at issue before the ITC. Instead, Motorola requested a ruling about smartphones using Microsoft technology. CBP ruled that Motorolas redesigned devices were not covered. Microsoft challenged that ruling by arguing that CBP had missed an important issue that Motorolas smartphones were still generating email requests using Google technology. As demonstrated above, CBP examined Microsofts argument carefully, considering both the ITCs opinion and the record before the ITC. CBP found that the record did not support a finding that using Google technology was specifically accused and found to infringe at the ITC. Microsoft disagrees with that conclusion, but it does not successfully demonstrate that CBPs process in reaching its decision was in any way unlawful. Microsofts other procedural complaints are equally meritless. There is simply no bar preventing CBP from communicating with importers and domestic interested parties on an ex parte basis. Similarly, Microsoft identifies no authority that compels CBP to hold adversarial proceedings every time an importer or domestic interested party contacts the agency regarding imports. Rather, it is well established that interested parties are entitled only to those administrative proceedings that are mandated by statute or regulation. Vermont Yankee Nuclear Power Corp. v. Natural Res. Def. Council, 435 U.S. 513, 543-44 (1978). In addition, adversarial proceedings of the sort that Microsoft envisions may very well require CBP to divulge trade secrets absent authority. In particular, the proceedings sought by Microsoft would require disclosure of Motorolas proprietary designs to Microsoft, despite the criminal prohibition upon such disclosure under the Trade Secrets Act. 18 U.S.C. 1905. Other

20

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 31 of 35

customs information, such as the identity of importers, the ports of entry used, and the content of entries, are also considered proprietary information belonging to the importer. See, e.g., 19 C.F.R. 103.23(b)(6) (barring disclosure if [d]isclosure would improperly reveal confidential commercial information without the owners consent (e.g., entry information)); 19 C.F.R. 103.2(b) (applying disclosure provisions of Freedom of Information Act, 5 U.S.C. 552, subsection (b)(4) of which excludes from disclosure trade secrets and commercial or financial information obtained from a person and privileged or confidential.). In sum, there is no basis for CBP to share commercial information with an importers competitors. In that vein, the only statute that provides for CBP investigations at the behest of domestic interested parties does not focus on any entries of merchandise. Rather, the investigation focuses solely on how CBP should classify for tariff purposes imported merchandise identical to that produced or sold by the domestic petitioner. The particulars of any importation are wholly absent from that provision. See 19 U.S.C. 1516 (setting forth procedures and standards). d. CBP Did Not Ignore Evidence Of Abandonment

Lastly, Microsoft contends that CBP ignored evidence submitted by Microsoft. Pl. Mem. 26-27. The authority cited by Microsoft concerns an agencys obligation to consider all important aspects of a problem. See, e.g., Motor Vehicle Mfrs., 463 U.S. at 43. Microsoft first concedes that CBPs ruling demonstrates that CBP did consider Microsofts evidence; CBP just did not find it persuasive. Pl. Mem. 26. Microsofts next contends that CBP failed to consider that Motorola did not raise an argument when requesting more time to respond to an expert report. Id. Microsoft does not explain how Motorolas failure proves anything, let alone how this failure was somehow an important aspect of the issue before CBP.

21

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 32 of 35

B.

Microsoft Has Not Shown Irreparable Harm Absent Injunctive Relief

In addition to no likelihood of success on the merits, Microsoft does not even attempt to proffer evidence that it would be irreparably harmed absent injunctive relief. Rather, Microsoft hinges its claim on the fact that sovereign immunity bars APA money judgments against the United States, allegedly preventing redress of its complaint. Pl. Mem. at 30. Yet Microsoft currently seeks damages from Motorola in its infringement action in the Western District of Washington. Moreover, Microsoft concedes at page 6 of its motion that, [r]ather than exclude others from using its patented technology, Microsoft has licensed use of the 566 patent under defined circumstances to most of the industrys leading smartphone manufacturers, including Nokia, Apple, Samsung, Research In Motion, HTC, AsusTek, Kyocera, Pantech, and Sony. In sum, the harm that Microsoft alleges does not stem from Motorolas imports. Rather, it stems from Motorola not licensing the 566 patent in the same manner as most of the industry. That can easily be redressed should Microsoft prevail in its patent suit. Rather than being irreparably harmed by a possible delay in recovery of licensing fees from Motorola, the temporary loss of income, ultimately to be recovered, does not usually constitute irreparable injury. Sampson v. Murray, 415 U.S. 61, 90 (1974); see also Davis v. PBGC, 571 F.3d 1288, 1294-95 (D.C. Cir. 2009) (explaining that plaintiffs cannot establish irreparable harm. The only alleged injuries in this case are economic. The pilots complain that they are not getting enough money from the PBGC. If they succeed in their suit on the merits, the PBGC will have to give them the money they request.). In fact, Microsofts allegation of harm leads to the perverse result that, even if it cannot demonstrate harm sufficient to enjoin an alleged infringer, it nevertheless can establish

22

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 33 of 35

irreparable harm in a case against the Government seeking to compel enforcement against the same alleged infringer. Similarly, Microsofts reliance on Spansion, Inc. v. ITC, 629 F.3d 1331 (Fed. Cir. 2010) to reduce its burden to show harm is misplaced. Pl. Mem. at 27-29. In that case, the court held that a petitioner need not demonstrate irreparable harm to obtain an ITC exclusion order. But that is not the case here, where Microsoft seeks a preliminary injunction to compel CBP to act. Spansion did not limit binding Supreme Court precedent requiring courts to apply the four-prong test before awarding injunctive relief. Munaf, 553 U.S. 674. Lastly, Microsofts attempt to advance a lightened standard for injunctive relief based on the Court of International Trades decision in Eaton Corp. v. United States, 395 F. Supp. 2d 1314 (Ct. Intl Trade 2005), is misplaced. There, the court issued a preliminary injunction to prevent an importer from importing redesigned merchandise pending an ITC proceeding on whether the redesigned merchandise infringed the patent subject to a limited exclusion order. At the time, the court expressly refused to assess its own jurisdiction. Id. at 1162. Eaton is unavailing because, first, the Federal Circuit immediately rejected the courts decision and allowed continued importation of allegedly infringing merchandise. That court held that it was likely legal error for the trial court to issue an injunction without considering the important jurisdictional issues in that case. Eaton Corp. v. United States, Fed. Cir. Dkt. No. 05-1565 (October 28, 2005) Order at 5. Attachment B. Second, the Court of International Trade later concluded that it lacked jurisdiction to entertain the very type of claim asserted in Eaton. Funai, 645 F. Supp. 2d at 1357.

23

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 34 of 35

C.

The Balance Of Hardships Should Preclude An Injunction

In contrast to the lack of immediate irreparable harm that Microsoft would suffer absent injunctive relief, the Governments administration of the customs laws would be significantly harmed by short-circuiting the regulatory process for administration and enforcement of exclusion orders before the ITC. 19 C.F.R. 210.75, 210.76, 210.77, 210.79. Indeed, Congress entrusted the ITC with the authority to determine the need for and the scope of exclusion orders in the first instance and, under the regulations above, the ITC is a correct forum for determining whether Motorolas redesigned smartphones infringe on Microsofts patent. D. An Injunction Would Not Serve The Public Interest

As previously discussed, Microsofts attempt to bypass available avenues for relief harm the administration of the customs laws. Rather than following the process set forth in the ITCs regulations, Microsoft seeks an extraordinary remedy of a preliminary injunction under the assumption that Motorolas redesigned products infringe the 566 patent, without even asking the agency entrusted by Congress to determine in the first instance whether Microsofts contentions are meritorious. Although the ITC regulations do not set forth mandatory administrative prerequisites for filing suit, they do provide explicit administrative remedies, and may result in decisions appealable as of right to the Federal Circuit. In light of the administrative remedies that Microsoft elected to eschew, [s]imple fairness to those who are engaged in the tasks of administration, and to litigants, requires as a general rule that courts should not topple over administrative decisions unless the administrative body not only has erred but has erred against objection made at the time appropriate under its practice. United States v. L.A. Tucker Truck Lines, 344 U.S. 33, 37 (1952). That is the case here because the ITC could have issued decisions upon redesigned merchandise, resolving Microsofts complaints without burdening this Court.

24

Case 1:13-cv-01063-RWR Document 22 Filed 08/02/13 Page 35 of 35

For these reasons, we respectfully request that the Court deny Microsofts motion for preliminary injunction. Respectfully submitted, STUART F. DELERY Acting Assistant Attorney General RONALD C. MACHEN JR. United States Attorney for the District of Columbia BRYANT G. SNEE Deputy Director /s/ PATRICIA M. McCARTHY Assistant Director /s/ STEPHEN C. TOSINI (DC Bar No. 470415) /s/ SEAN B. McNAMARA Senior Trial Counsels Department of Justice Civil Division Commercial Litigation Branch PO Box 480, Ben Franklin Station Washington, D.C., 20044 Tel: (202) 616-5196 Email: stephen.tosini@usdoj.gov August 2, 2013 Attorneys for Defendant

25