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Patent Infringement Probe of Laser-Abraded Denim Garments Launched Despite Opposition

Monday, September 22, 2014
Sandler, Travis & Rosenberg Trade Report

The International Trade Commission has instituted investigation 337-TA-930 to determine whether imports of certain laser-abraded denim garments are violating Section 337 of the 1930 Tariff Act by reason of patent infringement. The products at issue are denim garments, including jeans and leggings, that have been abraded with a laser to apply designs or to simulate wear.

Complainants RevoLaze LLC and TechnoLines LLC request that after this investigation the ITC issue a general or limited exclusion order, which would direct U.S. Customs and Border Protection to prohibit the entry of the infringing products into the U.S., and cease and desist orders, which would require the named respondents to cease actions that violate Section 337, including selling infringing imported articles out of U.S. inventory. The respondents in this investigation are located in Canada, Italy, Sweden and the U.S.

The ITC launched this investigation despite being urged not to by the American Apparel and Footwear Association, the National Retail Federation, the Retail Industry Leaders Association, and the U.S. Fashion Industry Association, which asserted that granting the relief requested would have an adverse effect on the public interest and made the following arguments.

- The complainants are targeting the laser abrasion technology of two companies but this investigation does not go after them, citing instead importers of finished apparel products who are not directly responsible for any of the violations being claimed and do not have the detailed production information that is required for a patent infringement analysis.

- The complainants have filed a related patent infringement lawsuit against the listed respondents and the fundamental issue in that case will be validity of the same patents at issue here. To proceed with a Section 337 case prior to a formal determination of the validity of the underlying patents would be premature.

- A broad import restriction could significantly limit the use of all laser-based finishing technology, which would chill efforts to eliminate harmful sandblasting techniques for post-production finishes and create a serious risk to the health of workers.

- A general exclusion order could amount to an import restriction on an entire class of products (jeans with worn/distressed finish) given that U.S. Customs and Border Protection would have no definable way to determine how a particular product achieved a distressed look or to enforce an import restriction based on a specific distressing process. The order could therefore impact a large number of companies beyond those that are the subject of the investigation since a significant percentage of the denim products sold in the U.S. today involve some sort of post-production technique to achieve a distressed or worn look.

- The complainants currently own patents for a specific type of laser abrading technology but do not produce abraded denim garments. While they claim they are in the process of setting up a domestic industry, they do not currently have nor could they readily obtain the capacity needed to replace the volume of articles potentially subject to the requested exclusion order and/or cease and desist order within a commercially reasonable time.

- One of the patents asserted in the complaint will expire prior to the anticipated target completion date of the ITC’s investigation, raising concerns that “complainants’ true goal is to extract payment from the industry rather than an exclusion order.”

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