Hoverboards May be a Thing of the Past if Segway Has its Way

Hoverboards May be a Thing of the Past after the ITC issued an Order barring the products after Segway claimed they infringed their patents.
March 23, 2016

backtothefuture

The International Trade Commission (“ITC”) has become an increasingly popular venue for intellectual property infringement actions.[1] The ITC, along with U.S. Customs and Border Patrol, allows and prohibit the importation of infringing products into the United States. The ITC has become an attractive forum because of their relatively speedy decisions, usually 11-18 months, from commencement of a lawsuit.[2] The ITC is also very popular because of the harsh remedies it imposes on infringers. While the ITC cannot award money damages, it can issue exclusion orders which prevent infringing products from entering the US and cease and desist orders stopping the sale of infringing products already in the US.[3] While District Court patent cases have to apply a stringent four-factor test described in eBay Inc. v. MercExchange, LLC, 547 U.S. 388 (2006),[4] the ITC does not need to apply this test to issue exclusion or cease and desist orders.[5] Subsequently, these so called Section 337 investigations have burgeoned over the last several years and just recently dealt a major blow to the hoverboard industry.[6]

The current case was brought by Segway against a number of foreign infringers, many based in China, regarding the infringement over “balance-oriented personal transporters” using technology covered by Segway’s patents.[7] The ITC holding[8] will likely limit the number of hoverboards in the US severely since the ITC issued a general exclusion order as opposed to a limited exclusion order. Limited exclusion orders are narrow in scope and are directed at specific infringing products from specific sources.[9] General exclusion orders are broad in scope and cover any infringing product, irrespective of its source, and even where the source was not a party to the underlying investigation.[10] The current ITC Order bars the unlicensed entry into the U.S. of “certain personal transporters that infringe one patent asserted in this investigation.”

While the use of hoverboards in the U.S. has declined in recent months due to hoverboard fires[11], the use of them will decline even more with the current ITC Order. Howerboards, which were once thought of as the technology of the future, may now become a thing of the past.

 


[1] Enforcing IP Rights in the ITC, World Intellectual Property Review (2007), available at http://www.brinksgilson.com/files/203.pdf.

[2] Contrary to the traditional District Court route, which can take over 2-3 years for a patent infringement action to conclude.

[3]ITC Section 337 Investigations: Patent Infringement Claims, Practical Law Company (2012), available at http://www.gibsondunn.com/publications/Documents/LyonITCSection337InvestigationsPatentInfingementClaims.pdf.

[4] Id.

[5] Id.

[6] Segway Just Dealt a Huge Blow to the Hoverboard Industry, Mashable (2016), available at http://mashable.com/2016/03/16/segway-hoverboard-patent/?utm_cid=mash-com-fb-main-link#ioYAOSP3pZqf.

[7] Id.

[8] See ITC Orders 031516, Scribd (2016), available at https://www.scribd.com/doc/305016191/Itc-Orders-031516.

[9] John C. Evans, Ph.D., and Ric Macciaroli, ITC Remedial Orders in the Real World, Jones Day (2007), available at http://www.jonesday.com/files/Publication/1237eed8-9556-430a-acff-971d9c188dc9/Presentation/PublicationAttachment/3242b57d-4fd0-4c98-90dd-9c7e290ad8a6/ITC%20Remedial%20Orders.pdf.

[10] Id.

[11] See 13-year-old Saves 2 children after Hoverboard Explodes into Flames at Home, Mashable (2016), available at http://mashable.com/2016/01/19/hoverboard-house-fire-uk/#V7SXhY9xfsqr.

Anuj Gupta

Anuj Gupta is a third year law student hoping to pursue Entertainment law (specialize in Internet privacy and entertainment law). Prior to law school, he worked at the Smithsonian where his short film was shown as part of a permanent exhibition. This past summer he worked as a Privacy and Public Policy team at Facebook. He currently works with an entertainment attorney based in LA and at the Network Advertising Initiative.