Introduction

In May 2016, Segway INC filed a complaint before the International Trade Commission (“ITC” or “the Commission”) against Swagway LLC. They alleged violations and infringement of six patents and two trademarks’ rights. Segway INC.’s contention was about Swagway’s self-balancing hoverboard products. Particularly, SWAGWAY X1, X2 and SWAGTRON T1, T3 infringing Segway’s trademarks.

On 16 August 2016, Segway filed another complaint before the commission against additional respondents. Both complaints were consolidated and assigned to an Administrative Law Judge (ALJ). Thus, only two patents and trademarks infringement remained when the complaint reached the ALJ.

In March 2017, Swagway moved a motion for partial termination due to a proposed consent order.

Discussion

In the ALJ’s decision, the respondents were found not to have infringed on the patents. Swagway was found only to have infringed on Segway’s trademark. That is the trademark on SWAGWAY X1 and X2, excluding SWAGTRON T1 and T3. The ALJ further held that any pending motion not adjudicated was denied. Thus, Swagway’s consent order motion got rejected.

Nevertheless, the ITC modified, reviewed and adopted the ALJ’s final decision. Although, the commission did not comment on the denial of the motion. Dissatisfied, Swagway appealed to the United States Court of Appeal for the Federal Circuit (the “Federal Circuit”).

Their significant ground of appeal was that the commission placed the wrong weight on the actual confusion. If not, it would have arrived at a different decision. Swagway brought two arguments before the Federal Circuit. The first was that ITC erred when it decided there was an infringement of the trademark. The second was that the failure to enter the proposed consent order was incorrect.

 Swagway argued that the Federal Circuit should give no preclusive effect to the commission’s trademark decision as it would affect a pending case before a district court. Then, they would withdraw their argument concerning the consent order motion.

On 9 May 2017, the Federal Circuit affirmed ALJ’s findings. However, it gave no preclusive effect to the final decision of the commission. As a result, Segway filed petitions for the rehearing of the case. The Federal Circuit granted the petitions.

On 14 August 2019, the Federal Circuit reviewed and reissued its previous decision after rehearing the suit. The Federal Circuit held that the commission did not err on the weight placed on the confusion factor. Therefore, it upheld the final decision of the commission on trademark infringement.

The Federal Circuit vacated its earlier position that the ITC’s decision would have no preclusive effect. The premise of its decision was on section 337 of the Tariff Act, 1990.

Swagway’s consent order motion was also denied in the rehearing. Thus, Swagway was not entitled to any relief concerning the denial.

Conclusion

The consent order motion sought by Swagway was the pre-trial hearing of trademark issues, placing reliance on the Administrative Procedure Act. The Federal Circuit affirmed the commission’s decision on this because the motion was brought too late.

Source: http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/18-1672.Opinion.8-14-2019.pdf

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