13-09-30 Microsoft Opposition to Government's Motion to Dismiss

7/27/2019 13-09-30 Microsoft Opposition to Government's Motion to Dismiss

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

MICROSOFT CORPORATION,

Plaintiff,

v.

UNITED STATES OF AMERICA, et al.

Defendants.

Case No. 13-1063 (RWR)

MICROSOFT CORPORATIONS OPPOSITION TO

GOVERNMENT DEFENDANTS MOTION TO DISMISS

Joseph R. Guerra (D.C. Bar No. 418532)Paul J. Zidlicky (D.C. Bar No. 450196)

Brian R. Nester (D.C. Bar No. 460225)

SIDLEY AUSTIN LLP1501KStreet, N.W.

Washington, D.C. 20005

Telephone: 202-736-8000

Facsimile: 202-736-8711

Richard A. Cederoth

SIDLEY AUSTIN LLP

1 S. Dearborn Street

Chicago, Illinois 60603

Telephone: 312-853-7000

Facsimile: 312-853-7036

Counsel for Plaintiff Microsoft Corporation

September 30, 2013

Case 1:13-cv-01063-RWR Document 56 Filed 09/30/13 Page 1 of 26


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TABLE OF AUTHORITIES

Page(s)

CASES

Am. Assn of Cruise Passengers v. Cunard Line, Ltd.,

31 F.3d 1184 (D.C. Cir. 1994) .................................................................................................17

Am. Natl Ins. Co. v. FDIC,642 F.3d 1137 (D.C. Cir. 2011) .................................................................................................5

Am. Rd. & Transp. Builders Assn v. EPA,865 F. Supp. 2d 72 (D.D.C. 2012) .............................................................................................9

Am. Trading Transp. Co. v. United States,

841 F.2d 421 (D.C. Cir. 1988) ...........................................................................................18, 19

Amador County v. Salazar,640 F.3d 373 (D.C. Circ. 2011) .............................................................................................6, 7

American Tel. & Tel. Co. v. FCC,

978 F.2d 727 (D.C. Cir. 1992) .................................................................................................15

APCC Servs., Inc. v. Worldcom, Inc.,

305 F. Supp. 2d 1 (D.D.C. 2001) .......................................................................................13, 14

Ashcroft v. Iqbal,556 U.S. 662 (2009) ...................................................................................................................4

Assiniboine & Sioux Tribes of the Fort Peck Indian Reservation v. Norton,527 F. Supp. 2d 130 (D.D.C. 2007) .........................................................................................13

Atlantic Richfield Co. v. United States,

774 F.2d 1193 (D.C. Cir. 1985) ...............................................................................................18

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ............................................................................4

Bowen v. Massachusetts,

487 U.S. 879 (1988) ...............................................................................................................6, 7

Bowen v. Mich. Acad. of Family Physicians,476 U.S. 667 (1986) ...................................................................................................................6

Bryant v. Pepco,730 F. Supp. 2d 25 (D.D.C. 2010) .............................................................................................4

Cook v. FDA,

2013 WL 3799987 (D.C. Cir. July 23, 2013) ................................................................3, 10, 11



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Corning Gilbert, Inc. v. United States,

896 F. Supp. 2d 1281 (CIT 2013) ............................................................................................11

Delta Air Lines, Inc. v. Export-Import Bank,

718 F.3d 974 (D.C. Cir. 2013) .................................................................................................10

Eaton v. United States,395 F. Supp. 2d 1314 (C.I.T. 2005), vacated on other grounds,Eaton Corp. v. United

States ..............................................................................................................................2, 12, 15

Fornaro v. James,

416 F.3d 63 (D.C. Cir. 2005) .............................................................................................1, 8, 9

Garcia v. Vilsack,

563 F.3d 519 (D.C. Cir. 2009) ...................................................................................................6

Golden Holiday Tours v. CAB, 531 F.2d 624 (D.C. Cir. 1976) .....................................................19

Jerome Stevens Pharms., Inc. v. FDA,

402 F.3d 1249 (D.C. Cir. 2005) .................................................................................................5

Lee v. United States,570 F. Supp. 2d 142 (D.D.C. 2008) ...........................................................................................5

National Wrestling Coaches Assn v. Dept. of Educ.,366 F.3d 930 (D.C. Cir. 2004) .................................................................................................12

Norton v. Southern Utah Wilderness Alliance,

542 U.S. 55 (2004) ...................................................................................................................11

Owens v. District of Columbia,

631 F. Supp. 2d 48 (D.D.C. 2009) .............................................................................................5

Reiter v. Cooper,

507 U.S. 258 (1993) .................................................................................................................17

Salmon Spawning & Recovery Alliance v. United States,

532 F.3d 1338 (Fed. Cir. 2008), opinion withdrawn ...............................................................10

Tooley v. Napolitano, 556 F.3d 836 (D.C. Cir. 2009) .....................................................................5

Total Telecommunications Services, Inc. v. American Tel. and Tel. Co., 919 F. Supp. 472

(D.C. Cir. 1996) .......................................................................................................................16

Washington Legal Foundation v. Alexander,

984 F.2d 483 (D.C. Cir. 1993) .................................................................................................12

Weinstein v. Bradford, 423 U.S. 147 (1975)............................................................................18, 19



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STATUTES

5 U.S.C. 702 ..............................................................................................................................6, 8

19 U.S.C. 1337 ....................................................................................................................passim

OTHERAUTHORITIES

19 C.F.R. 113.62 .........................................................................................................................14

19 C.F.R. 210.75 .....................................................................................................................8, 14

19 C.F.R. 210.76 .....................................................................................................................8, 15



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INTRODUCTION

In their Motion to Dismiss (Motion), the government Defendants (CBP) make the

same arguments that they raised in their Opposition to Microsofts Motion for Preliminary

Injunction. Microsoft has already refuted these arguments once. See Microsoft Corporations

Reply Brief in Support of Its Motion for Preliminary Injunction at 1-2, 3-11 (Aug. 14, 2013)

(Filed Under Seal) (Microsoft Reply Br.). Yet CBP simply repeats its jurisdictional claims a

second time, without even acknowledging, much less addressing, most of the defects Microsoft

previously identified.

Thus, CBP once again fails to acknowledge the strong presumption favoring judicial

review of agency action under the Administrative Procedure Act (APA), and CBPs burden to

identify clear and convincing evidence that Congress had a contrary intent with respect to CBP

decisions permitting imports. CBP once again claims that remedies before the International

Trade Commission (ITC) foreclose judicial review of its import-permitting decisions, yet CBP

nowhere addresses, much less refutes, Microsofts showing that the ITC has no authority to

review CBPs decision or to provide the full relief Microsoft seeks. Indeed, CBP once again

fails to cite any case that even suggests that APA review of one agencys action is foreclosed by

a remedy administered by a differentagencyan agency that has no authority to consider the

propriety of the first agencys actions or provide the full relief sought in Court. Instead, CBP

again relies onFornaro v. James, 416 F.3d 63 (D.C. Cir. 2005), a case it describes as strikingly

similar to this one. Motion at 9. Yet, CBP does not refute Microsofts showing that the

underlying statutein that case created an exclusive remedial schemea showing CBP does not

and cannot make with respect to 337. Indeed, it is telling that, in its proposed amicus brief, the

ITC does not endorse CBPs claims that the administrative remedies the ITC has adopted to

implement 337 foreclose judicial review of CBPs decisions in this case.



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The primary jurisdiction arguments raised by CBP and the ITC are equally groundless.

In fact, the ITC confirms that the scope of its prior ruling can be resolved based on preclusion

principles, ITC Br. at 3precisely the kind of issues that courts routinely decide, and that

require no specialized patent expertise. InEaton Corp. v. United States, 395 F. Supp. 2d 1314

(C.I.T. 2005), vacated on other grounds,Eaton Corp. v. United States, Fed. Cir. Dkt. No. 05-

1565 (Oct. 28, 2005) (Attacment B to Defendants Opposition to Microsofts Motion for a

Preliminary Injunction),the ITC submitted a letter explaining the scope of its prior decision to

the Court of International Trade (CIT). Instead of taking that same helpful approach here,

however, the ITC argues that Microsoft should be subjected to a 12 to 15 month delay (during

which infringing Motorola products can enter the United States with impunity) and forced to re-

litigate before the ITC an issue that Microsoft already won. The ITC claims such delay is

reasonable, notwithstanding the facts that (1) it cannot address CBPs conduct or its refusal to

enforce the exclusion order, (2) it cannot provide Microsoft the full relief it seeks in this

proceeding, and (3) it acknowledges that patented technology is subject to rapid change. ITC Br.

at 2.

In the end, the various arguments that CBP and the ITC advance cannot disguise, or

justify, the extraordinary immunity from oversight asserted by CBP. If accepted, these

arguments would lead to the conclusion that no onenot this Court, the ITC, or the CITcan

review CBPs decisions refusing to enforce an exclusion order. CBP thus contends that a statute

that requiresCBP to enforce such orders,see id. 1337(d)(1) (CBP shall . . . refuse . . . entry),

somehow grants CBP unreviewable discretion to allow the import of infringing products. The

D.C. Circuit recently rejected a materially identical argument, holding that there was jurisdiction

to review FDAs refusal to exclude imported non-complying drugs because the governing statute



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included clear guidelines for FDA to follow. See Cook v. FDA, 2013 WL 3799987, at *5 (D.C.

Cir. July 23, 2013) (agreeing that the ordinary meaning of shall is must). Here, too, CBPs

decisions allowing the import of Motorolas infringing products in violation of the mandatory

requirements of the Exclusion Order and 19 U.S.C. 1337 are subject to judicial review. CBPs

Motion should be denied.

BACKGROUND

CBPs Motion largely ignores the allegations set forth in Microsofts Complaint, which,

at this stage, are accepted as true and viewed in the light most favorable to Microsoft. In this

action, Microsoft seeks to compel CBP to comply with its mandatory statutory obligation to

exclude from import articles that the ITC ruled violate Microsofts patent rights under federal

law. Complaint (Compl.) 3. As a remedy for Motorolas violation of Microsofts patent

rights, the ITC issued an Exclusion Order that mandates the exclusion from entry into the United

States of Motorola devices that infringe Microsofts patent rights. Id. 4. CBP has violated its

mandatory duty by allowing the importation of infringing Motorola devices. Id. CBP has

allowed Motorola to re-litigate in secret issues that Motorola lost before the ITC, thereby

granting Motorola precisely the relief that the [ITC] expressly refused to grantafter full, fair

and open litigation. Id.

First, Motorola asked the ITC to grant it a transition period during which it would

continue to import infringing devices while it tried to develop a non-infringing alternative.

Compl. 5. Although the ITC rejected Motorolas request for a transition period, CBP granted

Motorola relief that the ITC had expressly denied. Id. Second, Motorola asked the ITC to limit

the Exclusion Order so that it would not bar importation of phones that provide the infringing

calendar function using Google servers and synchronization components. Id. 6. Although



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ITC denied Motorolas request to narrow the Exclusion Order to allow the import of such

devices, CBP issued rulings that granted Motorola the same relief that the ITC had denied. Id.

Prior to seeking relief in this Court, Microsoft requested that CBP revoke its April 25,

2013 ruling (April 25 Ruling) which allowed the import of Motorola devices in violation of the

Exclusion Order. Id. The basis of the April 25 Ruling was that Motorola had redesigned its

mobile phones so that they no longer included a calendar application that performed the step of

generating email requests. In its revocation request, Microsoft showed that this rationale was

demonstrably wrong because Motorolas redesigned devices still included a calendar application

that generated e-mail meeting requests through the use of Google servers. Id. 69.

In response, CBP issued a ruling on June 24, 2013 (June 24 Ruling) that nowhere

disputes Microsofts showing that Motorolas redesigned products continue to infringe

Microsofts patent rights because they still generate e-mail meeting requests. Id. 72. The June

24 Ruling nevertheless refuses to revoke CBPs April 25 Ruling and allows Motorola to continue

to import infringing devices. Id. 73-78. As a result of these rulings, CBP is violating its

mandatory obligations by allowing Motorola to import infringing products in violation of the

Exclusion Order and 19 U.S.C. 1337.

ARGUMENT

The standards governing motions to dismiss under Federal Rule of Civil Procedure

12(b)(1) and 12(b)(6) are well established. A motion to dismiss should be denied if the plaintiff

has alleged facts to state a claim to relief that is plausible on its face. Bryant v. Pepco, 730 F.

Supp. 2d 25, 28 (D.D.C. 2010) (quotingBell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

All material factual allegations in the Complaint are accepted as true and construed in favor of

the plaintiff. See Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). As this Court has explained, [i]n

passing on a motion to dismiss, whether on the ground of lack of jurisdiction over the subject



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matter or for failure to state a cause of action, the allegations of the complaint should be

construed favorably to the pleader.Lee v. United States, 570 F. Supp. 2d 142, 146 (D.D.C.

2008) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)); accord Am. Natl Ins. Co. v.

FDIC, 642 F.3d 1137, 1139 (D.C. Cir. 2011). So long as the pleadings suggest a

plausiblescenario to show that the pleader is entitled to relief, a court may not dismiss. Owens

v. District of Columbia, 631 F. Supp. 2d 48, 53 (D.D.C. 2009) (quoting Tooley v. Napolitano,

556 F.3d 836, 839 (D.C. Cir. 2009)). And although the district court may consider materials

outside the pleadings in deciding whether to grant a motion to dismiss for lack of jurisdiction, . . .

the court must still accept all of the factual allegations in [the] complaint as true. Jerome

Stevens Pharms., Inc. v. FDA, 402 F.3d 1249, 1254 (D.C. Cir. 2005).

Application of these standards compels the conclusion that CBPs Motion should be

denied. The APA authorizes the Court to review CBPs rulings that allow import of infringing

Motorola devices and CBPs failure to recall such Motorola products already imported into the

United States. See Compl. 19 (citing 5 U.S.C. 551(13)). Microsoft has suffered legal wrong

and has been adversely affected and aggrieved by agency action through CBPs refusal to

enforce Microsofts Exclusion Order issued by ITC pursuant to 19 U.S.C. 1337. Id. 80.

Contrary to CBPs arguments, no statute or regulation precludes judicial review of CBPs

conduct, and enforcement of the Exclusion Order is not committed to CBPs discretion by law.

Id. 81. Rather, Section 337 and the Exclusion Order impose mandatory obligations that CBP

has violated through (i) the grant of an unauthorized transition period, (ii) the April 25 Ruling

and June 24 Ruling, which allow the import of infringing Motorola articles, and (iii) the refusal

to recall infringing products that CBP has allowed into the United States. Id. 82-85. As a



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result, the Court has jurisdiction under the APA to set aside CBPs rulings and to compel CBP to

comply with its obligations under Section 337 and the Exclusion Order.

I. THIS COURT HAS JURISDICTION UNDER THE APA.A. The Court Has Jurisdiction Under The APA To Require CBP To Enforce

The Exclusion Order.

As set forth fully in Microsofts Reply in Support of Preliminary Injunction, the APA

provides that a person suffering legal wrong because of agency action, 5 U.S.C. 702, may

obtain judicial review of any [a]gency action made reviewable by statute and final agency

action for which there is no other adequate remedy in a cour t. Id. 704 (emphasis added).

There is a strong presumption that Congress intends judicial review of administrative action.

Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 670 (1986). Accordingly, the APAs

limitations on review must be construed narrowly. Amador County v. Salazar, 640 F.3d 373,

379-80 (D.C. Cir. 2011). Indeed, the Supreme Court has stressed that 704s adequate

remedy exception should not be construed to defeat the [APAs] central purpose of providing a

broad spectrum of judicial review of agency action. Bowen v. Massachusetts, 487 U.S. 879,

903 (1988). To overcome the strong presumption of reviewability, therefore, a court must find

clear and convincing evidenceof a contrary legislative intent, Amador County, 640 F.3d at

380 (quotingMich. Acad. of Family Physicians, 476 U.S. at 67172) (internal quotation marks

omitted; emphasis added), such as where statutes. . . defined the specific procedures to be

followed in reviewing a particular agencys action, and an APA action would duplicate the

previously established special statutoryprocedures relating to specific agencies,Bowen, 487

U.S. at 903;see also Garcia v. Vilsack, 563 F.3d 519, 523 (D.C. Cir. 2009) (requiring a

showing of clear and convincing evidence that Congress intended an alternative remedy to

restrict access to judicial review under the APA).



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These governing principles foreclose CBPs jurisdictional arguments. Microsoft has

alleged that it has suffered legal harm because CBPs April 25 Ruling and June 24 Ruling are

final agency action that violates CBPs mandatory obligation to enforce the Exclusion Order

issued by the ITC. Compl. 79-87. As a result, CBP has permitted (and is permitting) the

import of Motorola devices that infringe Microsofts patent rights in violation of the Exclusion

Order and CBPs statutory obligations under 19 U.S.C. 1337. Compl. 88-95, 96-103, 104-

109.

In response, CBP notes that Congress provided for judicial review of I TC decisions

under 337, and authorized suits by importersto challenge CBP decisions to excludeproducts.

Motion at 7. But these provisions do not divest this Court of jurisdiction here. Microsoft does

not challenge any ITC decision, nor does it challenge a decision by CBP to excludeproducts.

Because Congress has not defined the specific procedures to be followed in reviewing a CBP

decision that permitsimports, this APA suit cannot duplicate the previously established special

statutory procedures relating to such CBP decisions. Bowen, 487 U.S. at 903. And it is well

established . . . that the existence of a judicial review provision covering certain actions under a

statute does not preclude judicial review of other actions under the same statute. Amador

County, 640 F.3d at 381.

Undaunted, CBP argues that APA review is barred because Microsoft can seek an

enforcement order from the ITC and then obtain review of the ITCs decision in the Federal

Circuit. Motion at 7-9. This claim fails at the outset, however, because no statutedefines the

ITCs administrative remedies as specific procedures to be followed in reviewing a [CBP]

action. Bowen, 487 U.S. at 903. The mere fact that these remedies are a permissible



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implementation of 337 is not evidence that Congressintended such remedies to be eclusive or

to foreclose judicial review under the APA of CBP decisions permitting imports.

In addition, CBPs argument rests on an inaccurate portrayal of the ITCs regulations,

which do not provide for any review of CBPs decisionor authorize the ITC to compel CBP to

demand the return of items improperly admitted. First, the informal enforcement proceedings

defendants cite are irrelevant. Id. at 8. They can be initiated only by the ITC, not Microsoft.

Compare 19 C.F.R. 210.75(a) (informal proceedings may be conducted by the [ITC]) with

id. 210.75(b) (ITC may institute formal enforcement proceedings upon the filing by the

complainant in the original investigation . . . of a complaint setting forth alleged violations of any

exclusion order). Second, formal proceedings would involve de novo litigation against

Motorola, including full discovery to develop a new factual record. 19 C.F.R. 210.75, 210.76.

CBP would not be a party to these proceedings, and the ITC would not review CBPs rulings or

the propriety of the procedures CBP used to render them. Id. Nor could the ITC require CBP to

demand the return of articles that CBP improperly admitted. See id. 210.75(b)(6). Thus, CBP

claims that a regulation promulgated by the ITCthat does not empower the ITC to review CBP

decisions or to compel CBP to order the recall of products that were improperly admitted under

the April 25 Ruling and June 24 Rulingprovides clear and convincing evidence that Congress

intended to foreclose APA review of CBP decisions allowing imports. None of CBPs

authorities supports this claim.

CBP argues thatFornaro v. James, 416 F.3d 63 (D.C. Cir. 2005), is strikingly similar

to this case. Motion at 9. ButFornaro did not even turn on 704s adequate remedy

provision. Instead, the D.C. Circuit ruled that 702 of the APA did not waive sovereign

immunity for a challenge to an Office of Personnel Management (OPM) benefits policy



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because anotherstatute, the Civil Service Reform Act (CSRA), barred the relief sought. See

Fornaro, 416 F.3d at 66(quoting 702s proviso that the APA confers no authority to grant

relief if any other statute . . . expressly or impliedly forbids the relief which is sought). The

Court stressed the exclusivity of the remedial and review provisions of the CSRA, which

authorized OPM to adjudicate all claims for benefits, and provided for review of OPM decisions,

first, by the Merit System Protection Board, and then by the Federal Circuit. Id. at 66-68.

Because this statutory regime was exclusive, it could not be supplemented by the recognition

of additional rights to judicial review having their sources outside of the CSRA. Id. at 66

(emphasis added).

Here, by contrast, no opinions from the Supreme Court [or the D.C. Circuit] make clear

that the ITC regulations CBP cites are exclusive, and may not be supplemented by an APA

suit. Because the ITC has no authority to review CBP decisions, Microsoft is not seeking relief

that is the sole province of the ITC, Motion at 11, and this suit cannot erode the primacy,

or fractur[e] the unifying authority, of the ITC with respect to CBP decisions, id. at 10

(quotingFornaro, 413 F.3d at 69). Nor can this suit undermine the primacy of the Federal

Circuit. Id. (quotingFornaro, 413 F.3d at 69). Because the CIT and the ITC have no authority

to review CBP decisions permitting imports, the Federal Circuit has no authority to review such

CBP decisions. Thus, the statutory and regulatory provisions that channel[] review of CIT and

ITC decisions to the Federal Circuit, Motion at 6, cannot eliminate APA review of CBP import-

permitting decisions. By contrast, in the decisions that CBP cites, APA challenges were barred

because the plaintiff could challenge in the court of appeals the decisions they sought to

challenge in District Court. See Am. Rd. & Transp. Builders Assn v. EPA, 865 F. Supp. 2d 72,

81 (D.D.C. 2012) (statute provided for review of EPA action in the court of appeals, and



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Nor does this case involve a discretionary action that CBP has unlawfully withheld.

Motion at 16-17. Microsoft is challenging express rulings, including a final order denying its

revocation request. As the Supreme Court explained inNorton v. Southern Utah Wilderness

Alliance, 542 U.S. 55 (2004), [a] failure to act is not the same thing as a denial. The latter is

the agencys act of saying no to a request; the former is simply the omission of an action without

formally rejecting a request. Id. at 63. CBPs June 24 Ruling said no to [Microsofts

revocation] request, and is thus an order,see id. at 62, subject to APA review. As Cook

makes clear, moreover, once this Court rules that CBPs reasons for not complying with its

mandatory duty to refuse entry are invalid, it can enjoin CBP to refuse entry and to require re-

delivery of items improperly admitted. See Exh. Q to Pl. Reply Mem. in Support of Preliminary

Injunction (permanently enjoining FDA from permitting the entry of non-compliant drugs and

ordering it to recall admitted drugs).2

CBP claims that Cookis distinguishable because CBP was faced with importations of

new merchandise that did not exist at the time of the ITCs exclusion order. Motion at 19. The

whole premise of CBPs June 24 Ruling, however, was that the relevant features of the

redesign were present on the accused devices at the time of the ITC Investigation. June 24

Ruling at 11. Moreover, what did exist at the time CBP acted was an ITC ruling rejecting the

premise of Motorolas re-design claim. Motorola had asked the ITC to limit the scope of its

(Fed. Cir. 2008), opinion withdrawn and replaced550 F.3d 1121 (Fed. Cir. 2008), the court held that enforcement

decisions under the Endangered Species Act were unreviewable because provision at issue made clear the

discretionary nature of the defendants enforcement powers stating only that officers maydetain for inspection and

inspect any package, crate, or other container . . .; maymake arrests; and maysearch and seize. Id. at 1129(emphasis in original). In Corning Gilbert, Inc. v. United States, 896 F. Supp. 2d 1281 (CIT 2013), the CIT simply

noted that CBP may sometimes have to look at evidence and analyze whether the importer, particularly a non-party

[to the ITC proceedings], has established non-infringement, and that CBP has discretion to compel an importer to

substantiate its claims. Id. at 1289. The CIT did not state that CBP has unreviewable discretion to decline toenforce exclusion orders.

2 In Cook, the Court reversed the District Courts recall ordernotbecause agencies cannot be compelled to complywith mandatory duties, but because the relief affected absent indispensable parties. See 2013 WL 3799987 at *10.



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exclusion order so that it would not extend to the accused products use of Googles servers and

Googles synchronization protocol to synchronize calendar objects. Compl. 50 (quoting

Commn Op. at 24 n.12). It is indisputable that the ITC rejected that request. Id. 50-53. The

ITCs ruling establishes that the Exclusion Order does, in fact, cover devices that have been

redesigned to use . . . Googles servers and synchronization protocols to synchronize calendar

objects, whether or not those redesigns existed at the time that the ITC denied Motorolas

request and issued its Exclusion Order. That ruling is binding on CBP unless and until it is

overturned by the Federal Circuit or altered in some fashion by the ITC itself. See 19 U.S.C.

1337(d);see also Eaton, 395 F. Supp.2d at 1327 (ITCs opinion and resultant orders have set

the substantive law of this case).

Finally, CBP argues that APA review is foreclosed because Microsoft has sued Motorola

for infringement under the patent laws. Motion at 13. In cases such as Washington Legal

Foundation v. Alexander, 984 F.2d 483 (D.C. Cir. 1993), andNational Wrestling Coaches Assn

v. Dept. of Educ., 366 F.3d 930 (D.C. Cir. 2004), the court concluded that a direct right of action

against third-parties that engage in unlawful discrimination foreclosed an APA suit against the

government for failing to enforce Title VIs antidiscrimination rules against those third-parties.

In so ruling, the D.C. Circuit emphasized that Congress considered private suits to end

discrimination not merely adequate but in fact the propermeans for individuals to enforce Title

VI. Washington Legal Found., 984 F.2d at 486 (emphasis in original).

Here, Microsoft already pursued a direct remedy against Motorola under 337. It is

suing under the APA because CBP failed to enforce the exclusion order Microsoft obtained in

that direct action, depriving Microsoft of the benefit of its 337 victory. There is no evidence

that Congress viewed an infringement suit for damages to be the proper means for a patentee



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to enforce 337. To the contrary, treating an infringement suit as an adequate remedy is

tantamount to ruling that an exclusion order is, in essence, a gratuitous benefit that CBP can

nullify with impunity. Congress plainly did not share that view when it conferred rights under

337 in addition toany other provision of law. 19 U.S.C. 1337(a) (emphasis added).

In short, there is noevidencemuch less clear and convincing evidencethat Congress

intended to foreclose APA challenges to CBP failures to enforce such orders.

B. Judicial Resolution Of This Case Is Not Barred By The Doctrine Of PrimaryJurisdiction.

CBP and the ITC are wrong to contend that the doctrine of primary jurisdiction bars

judicial resolution of Microsofts claims. Motion at 13-15; ITC Br. 1-10. The doctrine of

primary jurisdiction is to be invoked sparingly. Assiniboine & Sioux Tribes of the Fort Peck

Indian Reservation v. Norton, 527 F. Supp. 2d 130, 137 (D.D.C. 2007);APCC Servs., Inc. v.

Worldcom, Inc., 305 F. Supp. 2d 1, 13 (D.D.C. 2001). Here, CBP and the ITC argue, in essence,

that Microsoft should be subjected to a year of delay and required to re-litigate an issue it has

already won once before the ITC. The arguments they advance do not justify such an unjust

result.

Because the ITC has no authority to review CBP decisions, issues such as whether CBP

acted arbitrarily and capriciously cannot lie within the agencys discretion or require[] the

exercise of agency expertise. APCC Servs., 305 F. Supp. 2d at 13. In attempting to show

otherwise, the ITC claims that the case involves highly complex issues of patent infringement,

a voluminous administrative record and findings concerning the structure and operation of

Motorola products as well as disposition of Motorolas affirmative defenses. ITC Br. 5. All of

these factors are irrelevant here. As the ITC acknowledges on the very next page, [t]he core of

Microsofts argument is found in paragraph 8 of its complaint, in which Microsoft alleges that



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CBP must exclude Motorolas redesigned products because the ITC ruled that Motorola had

waived its abandonment claim.Id. at 6 (quoting Compl. 8). Thus, Microsofts claim

presents straightforward issues of preclusion,see id. at 3, 7issues that courts decide on a

routine basis and that are thus well within the conventional expertise of judges. APCC Servs.,

305 F. Supp. 2d at 13.

The ITC nevertheless claims that [i]t would be a straightforward matter for the

Commission to characterize its own decisions. ITC Br. at 7. But this argument overlooks

several critical facts. First, although the ITC can explain its ruling, it has no authority to review

the propriety of CBPs decisions or to grant the full relief Microsoft seeks. The ITCs

procedures are designed only to determine disputes between private parties involving unfair

methods of competition and unfair acts in the importation of articles. Id. at 1 (quoting 19

U.S.C. 1337). The procedures that ITC points to as the option most like the relief Microsoft

seeks are acknowledged to be limited to provide relief only against those who were parties

to the first Commission investigation. Id. at 3 (discussing 19 C.F.R. 210.75(b)). Thus, the

ITC could only issue yet another order in new proceedings in which CBP would not be a party.3

And even if ITC could review CBPs unlawful determinations, ITC only has the authority to

grant prospective relief and could not order the recall of imported infringing products that

Microsoft seeks in this proceeding. See Compl. 31, Prayer for Relief at iii; 19 C.F.R. 113.62

(mandating that CBP shall order the recall of infrining products improperly imported within the

past 30 days).

3 ITC has no authority (1) to rule that CBP violated its legal obligation to enforce the ITCs exclusion order, Compl.

88-95; (2) to rule or declare that CBPs April 25 Ruling and June 24 Ruling were arbitrary and capricious, id. 96-103, 110-112; or (3) to declare that CBPs grant of a transition period was unlawful, id. 104-109.



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Second, the process of obtaining an ITC explanation of its decision is unnecessary

(because Courts can resolve preclusion and waiver issues) and, contrary to the ITCs claim, there

is ample reason to believe that Commission proceedings will be . . . time-consuming. Id. at 8.

Indeed, Microsoft previously explained that it typically takes the ITC more than a year to resolve

challenges to the enforcement of an exclusion order, and that the agency has only employed its

procedures for temporary emergency relief once in three decades. Microsoft Reply Br. at 10.

The ITC nowhere refutes these facts. Having previously declined to clarify its ruling at the

request of the CBP, and having failed to submit an explanation of its decision to this Court

(despite providing such an explanation to the CIT in a similar case, see Eaton, 395 F. Supp. 2d at

1326 & n.13), the ITC seeks a referral of the matter without providing any commitment that it

would address Microsofts claims on an expedited basis. To the contrary, it argues that a delay

of 12 to 15 months is perfectly acceptable. ITC Br. at 9.

That contention is belied by its own recognition that [p]atents protect technology, and

technology is, by nature, marked by rapid change. Id. at 2. And a delay of over a year is

patently unfair given the administrative law shell game,American Tel. & Tel. Co. v. FCC, 978

F.2d 727, 732 (D.C. Cir. 1992), Microsoft has already endured. After Microsoft prevailed on its

claims before the ITC, Motorola could have appealed the ITCs refusal to narrow the exclusion

order or subsequently sought relief from the ITC. See 19 C.F.R. 210.76 (authorizing importers

to seek modification of exclusion orders). Instead, CBP allowed Motorola to engage in secret re-

litigation of issues it had lost, then permitted Motorola to import devices withoutguidance from

the ITC. ITC Br. 3 (the issue has not been presented to [ITC]). Now that its conduct has been

challenged, CBP claims that while i twas free to decide the scope of the exclusion order without

guidance from the ITC, this Court cannot do so in order to determine the propriety of CBPs



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actions. Similarly, CBP effectively argues that importers who lose 337 cases can evade the

ITC and seek relief from CBP, with a further right to appeal CBPs decisions to the CIT. But

patentees who win 337 cases cannot challenge CBP rulings that deprive them of their victory,

and must instead re-litigate before the ITC. Such an obviously inequitable result should not be

permitted where, as here, this Court possesses the judicial expertise to resolve the

straightforward legal issues of preclusion raised by Microsoft.

Nor has Microsoft contributed to the delay. In Total Telecommunications Services, Inc.

v. American Tel. and Tel. Co. 919 F. Supp. 472 (D.C. Cir. 1996), for example, an extended

period of delay for a primary jurisdiction referral was permissible because the plaintiff had

brought and then voluntarily dismissed a similar action in a separate jurisdiction all the while

recognizing that the agency had to resolve the underlying merits. 919 F. Supp. at 482. Here,

the ITC does not need to resolve the underlying merits because it has already done so. ITC Br. 3

(only issues are claim preclusion and issue preclusion). Microsoft promptly challenged CBPs

final ruling that denied Microsoft its requested relief.4

Finally, APA review does not create a risk of a split of authority. Motion at 14; ITC

Br. at 7. If this Court invalidates CBPs April 25 and June 24 Rulings, CBP will be required to

bar entry of Motorolas phones. If Motorola subsequently obtains modification of the exclusion

order by the ITC, the exclusion order at issue here would be replaced by a modified exclusion

order. The courts decision would have no impact on such a modified order, and thus, no

conflict could arise.

4 ITC misleadingly claims that Microsofts concerns trace back to at least early May. ITC Br. at 9. Microsoftexpeditiously requested that CBP revoke its ruling because it was precluded by the ITCs decision. Without

obtaining input from the ITC, CBP denied Microsofts request on June 24, 2013, when CBP issued the ruling

identifying entirely different grounds that Microsoft now challenges. Microsoft then expeditiously prepared aComplaint and Memorandum in support of a preliminary injunction.



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At the very least, if this Court finds that referral to the ITC is required to clarify the scope

of the ITCs Exclusion Order, this case should be stayed pending ITCs resolution. Reiter v.

Cooper, 507 U.S. 258, 268 (1993)(primary jurisdiction . . . requires the court to enable a

referral to the agency, staying further proceedings so as to give the parties reasonable

opportunity to seek an administrative ruling);Am. Assn of Cruise Passengers v. Cunard Line,

Ltd., 31 F.3d 1184, 1187 (D.C. Cir. 1994) (In general, when primary jurisdiction lies with an

administrative agency, the district court should stay the proceedings in front of it, not dismiss the

suit). A stay, rather than dismissal, would be required because Microsoft would be unfairly

disadvantaged if this case were dismissed. Reiter, 507 U.S. at 268. Indeed, referral to the ITC

would preclude review of CBPs unlawful actions. Microsoft could not seek a declaratory

judgment that CBPs grant of a transition period violated its statutory obligations and was

arbitrary and capricious or that CBPs April 25 and June 24 Rulings were unlawful. Compl.

88-112. Microsoft also could not seek the recall of previously imported infringing products.

Any proceeding before the ITC without relief in this Court would only allow for Motorola to re-

litigatein secretissues that Motorola lost before the Commission and for CBP to grant

precisely the same relief that the ITC expressly denied. Id. 4. For these reasons, if this Court

finds that a referral is required, we request that this Court stay proceedings to permit Microsoft to

obtain the ultimate relief that only this Court can provide.

II. THIS COURT HAS AUTHORITY TO REVIEW MICROSOFTS REQUEST FORDECLARATORY JUDGMENT THAT CBPS GRANT OF A TRANSITION

PERIOD WAS UNLAWFUL.

CBP contends that Microsofts request for a declaratory judgment that CBPs grant of a

transition period to permit the import of Motorolas infringing devices was unlawful is now moot

and unreviewable because the transition period has expired. Motion at 15. This contention is

wrong. CBP cannot evade review through issuance of unlawful orders that expire before review



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can be sought. Far from mooting a plaintiffs claim, a reques[t] to review short-term agency

orders capable of repetition mandatesprospective declaratory relief in appropriate cases.Am.

Trading Transp. Co. v. United States, 841 F.2d 421, 426 (D.C. Cir. 1988) (emphasis added).

Microsofts request satisfies the standards for a declaratory judgment in review of short-term

agency orders capable of repetition.

First, CBPs transition period was in its duration too short to be fully litigated prior to

cessation or expiration. Id. at 425 (quoting Weinstein v. Bradford, 423 U.S. 147, 149 (1975)).

CBP granted Motorola a transition period without providing notice to Microsoft of Motorolas

request, much less an opportunity to address it. See Compl. 4. In fact, CBP informed

Microsoft on January 11, 2013 that it would exclude Motorolas infringing devices. Id. 59.

However, in April 2013, after engaging in ex parte communications with Motorola, CBP granted

a transition period during which Motorola could import devices that violated ITCs Exclusion

Order. Id. 5. Microsoft did not learn of the transition period until the following month on May

1, 2013, at which time Microsoft immediately requested that CBP exclude Motorolas phones

until and unless it made a determination with respect to Motorolas proposed redesign. Id.

64-65. Despite CBPs promise to resolve Microsofts request before expiration of the

transition period on June 1, 2013, the transition period expired by the time that CBP issued its

June 24 Ruling. Id. 70-71. CBPs grant of a transition period is reviewable because it was

too short to be litigated fully. Courts have found far longer periods to be prohibitively short in

duration. See, e.g.,Atlantic Richfield Co. v. United States, 774 F.2d 1193, 1198 (D.C. Cir. 1985)

(finding that a six-month permit was too short to be fully litigated).

Second, there is a reasonable expectation that [Microsoft will be] subjected to the same

action again. Am. Trading Transp., 841 F.2d at 425 (quoting Weinstein v. Bradford, 423 U.S.



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147, 149 (1975)). CBP has engaged in a pattern ofex parte discussions with Motorola in issuing

rulings, namely the rulings that granted Motorola a transition period and that permitted Motorola

to import redesigned devices. Compl. 4-5. Microsoft has a reasonable expectation that

CBP will continue this practice and, without prior notice to Microsoft, may grant Motorola future

unlawful transition periods. Such an expectation is even more reasonable given that CBP has

changed its position in the past. CBP originally informed Microsoft that it would exclude

Motorolas infringing imports only to then, a mere two months later, grant Motorola the

permissions it had told Microsoft it would deny. Id. 59. Thus, based on CBPs conduct,

including its ex parte discussions with Motorola and its decisions, and changes of position,

without prior notice, Microsoft has a reasonable fear that CBP will consider, and grant,

additional grace periods to Motorola without prior notice to Microsoft. Id. 107. Without a

declaratory judgment from this Court, Microsoft will remain exposed to the risk that the agency

will simply accept, on faith, Motorolas assertions that a new transition period is necessary

without notice or opportunity for Microsoft to respond. See Am. Trading Transp., 841 F.2d at

426.

Microsoft has properly sought a remedy . . . in the nature of a declaration that the action

taken was wrongful, in hopes that that will deter similar acts in the future. Id. (quoting Golden

Holiday Tours v. CAB, 531 F.2d 624, 626 (D.C. Cir. 1976)). This Court has authority to grant

Microsofts request.



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CONCLUSION

For these reasons, and those set forth in Microsofts Memorandum and Reply in Support

of Its Motion for Preliminary Injunction, Microsoft respectfully requests that CBPs Motion to

Dismiss pursuant to Rule 12(b)(1) and Rule 12(b)(6) be denied.

Dated: September 30, 2013 Respectfully Submitted,

/s/ Brian R. NesterRichard A. Cederoth Joseph R. Guerra (D.C. Bar No. 418532)

SIDLEY AUSTIN LLP Paul J. Zidlicky (D.C. Bar No. 450196)

1 S. Dearborn Street Brian R. Nester (D.C. Bar No. 460225)Chicago, Illinois 60603 SIDLEY AUSTIN LLP

Telephone: 312-853-7000 1501KSTREET

,N.W.Facsimile: 312-853-7036 Washington, D.C. 20005

Telephone: 202-736-8000

Facsimile: 202-736-8711

Counsel for Plaintiff Microsoft Corporation



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CERTIFICATE OF SERVICE

I hereby certify that on this 30th day of September, 2013, I filed MICROSOFT

CORPORATIONS OPPOSITION TO GOVERNMENT DEFENDANTS MOTION TO

DISMISS with the U.S. District Court for the District of Columbia via CM/ECF, which willcause to be served upon:

Stephen C. TosiniU.S. Department of Justice, Civil Division

1100 L Street, N.W.

Room 1266Washington, D.C. 20530

Paul F. BrinkmanQuinn Emanuel Urquhart & Sullivan, LLP

1299 Pennsylvania Avenue, N.W.

Washington, D.C. 20004

/s/ Brian R. Nester

Brian R. Nester


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