UNITED STATES INTERNATIONAL TRADE COMMISSION
`
`Washington, D.C.
`
`In the Matter of
`
`CERTAIN FLOCKED SWABS, PRODUCTS
`CONTAINIG FLOCKED SWABS, AND
`METHODS OF USING SAME
`
` Inv. No. 337-TA-1279
`
`ORDER NO. 23:
`
`INITIAL DETERMINATION TERMINATING INVESTIGATION
`AS TO VECTORNATE
`
`(November 15, 2021)
`
`On October 22, 2021, Complainants Copan Italia S.p.A. and Copan Industries, Inc.
`
`(collectively, “Copan”) and Respondents Vectornate Korea Ltd. and Vectornate USA, Inc.
`
`(collectively, “Vectornate”) filed a joint motion (1279-024; EDIS Doc. ID 754892) to terminate
`
`this investigation as to Vectornate based upon settlement. On November 2, 2021, the Office of
`
`Unfair Import Investigation (“Staff”) filed a response (EDIS Doc. ID 755735) supporting the
`
`joint motion. No other party filed a response to the joint motion to terminate the investigation as
`
`to Vectornate.
`
`Under Commission Rule 210.21(a)(2), “[a]ny party may move at any time to terminate an
`
`investigation in whole or in part as to any or all respondents on the basis of a settlement . . . .”
`
`19 C.F.R. § 210.21(a)(2). In order to terminate the investigation on the basis of a settlement
`
`agreement, the moving party or parties must file a motion to terminate with “copies of the
`
`licensing or other settlement agreements, any supplemental agreements, any documents
`
`referenced in the motion or attached agreements, and a statement that there are no other
`
`PUBLIC VERSION
`
`

`

`
`agreements, written or oral, express or implied between the parties concerning the subject matter
`
`
`
`
`
`of the investigation.” Commission Rule 210.21(b)(1) (19 C.F.R. § 210.21(b)(1)).
`
`The joint motion complies with Commission Rule 210.21. In particular, the confidential
`
`settlement agreement is attached to the motion to terminate as Exhibit B. The public version of
`
`the settlement agreement is attached to the motion to terminate as Exhibit A.1 Copan and
`
`Vectornate “represent that there are no other agreements between them, whether written or oral,
`
`express or implied, relating to the subject matter of this Investigation.” Joint Motion at 2.
`
`When considering a motion to terminate based upon a settlement agreement, the
`
`Commission Rules require the Administrative Law Judge to “consider and make appropriate
`
`findings in the initial determination regarding the effect of the proposed settlement on the public
`
`health and welfare, competitive conditions in the U.S. economy, the production of like or directly
`
`competitive articles in the United States, and U.S. consumers.” 19 C.F.R. § 210.50(b)(2). Copan
`
`and Vectornate submit that “termination of this Investigation as to Vectornate at this stage of the
`
`proceedings poses no threat to the public interest” and “will not have any adverse impact on the
`
`public health and welfare and/or competitive conditions in the United States.” Joint Motion at 2-
`
`3. Staff states that it “is not aware of any evidence that termination will prejudice or adversely
`
`impact the public interest.” Staff Response at 2. The movants and Staff further note that the
`
`public interest generally favors resolving litigation through settlement so as to conserve both
`
`public and private resources. Joint Motion at 2-3; Staff Response at 2. The undersigned finds
`
`that termination of this investigation does not impose any undue burdens on the public health and
`
`1 The settlement agreement is attached as Attachment 1 hereto.
`
`- 2 -
`
`
`PUBLIC VERSION
`
`

`

`
`welfare, competitive conditions in the United States economy, production of like or directly
`
`
`
`
`
`competitive articles in the United States, or United States consumers.
`
`Accordingly, it is the Initial Determination of the undersigned that Copan’s unopposed
`
`motion to terminate this investigation as to Vectornate (1279-024) is hereby GRANTED.
`
`Respondents Vectornate Korea Ltd. and Vectornate USA, Inc are hereby terminated from this
`
`Investigation.
`
`This Initial Determination, along with supporting documentation, is hereby certified to
`
`the Commission. Pursuant to 19 C.F.R. § 210.42(h), this Initial Determination shall become the
`
`determination of the Commission unless a party files a petition for review of the Initial
`
`Determination pursuant to 19 C.F.R. § 210.43(a), or the Commission, pursuant to 19 C.F.R. §
`
`210.44, orders, on its own motion, a review of the Initial Determination or certain issues, herein.
`
`SO ORDERED.
`
`
`
`
`
`
`Monica Bhattacharyya
`Administrative Law Judge
`
`
`
`- 3 -
`
`
`PUBLIC VERSION
`
`

`

`ATTACHMENT 1
`ATTACHMENT1
`PUBLIC
`PUBLIC
`
`

`

`SETTLEMENT AGREEMENT
`
`This Settlement Agreement (“Agreement”) is made as of October 15, 2021 (“Effective
`Date”) between Copan Italia S.p.A., of Brescia, Italy, its Affiliates, and Copan Industries, Inc.
`of San Antonio, Puerto Rico (collectively, “Copan”), on the one hand, and Vectornate Korea
`Co., Limited, of Jangseong, Jeonnam, Korea, Vectornate USA, Inc. of Mahwah, New Jersey,
`d/b/a Medsckenker (“Vectornate USA”), and their Affiliates [collectively, “Vectornate”], on the
`other hand. As used in this Agreement, “Party” refers to either Copan or Vectornate, and
`“Parties” refers to Copan and Vectornate collectively.
`
`WHEREAS, Copan filed a complaint entitled Certain Flocked Swabs, Products
`Containing Flocked Swabs, and Methods of Using Same, in the United States International Trade
`Commission on July 9, 2021, seeking to institute an investigation, which named Vectornate
`Korea Limited and Vectornate USA, Incorporated as respondents; and an investigation pursuant
`to the complaint was instituted on August 27, 2021 as No. 337-TA-1297 (“ITC Proceeding”);
`
`WHEREAS, the ITC Proceedings concern and address the importation into the United
`States and sale after importation into the United States of flocked swab(s) and/or any product(s)
`that contain at least one imported flocked swab as packaged for commercial sale;
`
`WHEREAS, Copan and Vectornate now desire to settle and resolve the dispute between
`them concerning the ITC Proceeding, on the terms and conditions set forth in this Agreement;
`and,
`
`WHEREAS, Copan and Vectornate desire and agree to form a commercial relationship
`for the purchase and sale of flocked swabs and related products within the United States;
`
`NOW, THEREFORE, in consideration of the above premises and the mutual agreements
`and other good and valuable consideration, the receipt and sufficiency of which are
`acknowledged by the Parties, the Parties intending to be legally bound, agrees as follows:
`
`1.0
`
`DEFINITIONS
`
`“Affiliates” means, with respect to a person, corporation, or other entity, any other
`1.1
`person, corporation or entity that directly or indirectly controls, or is controlled by, or is under
`common control with such corporation or entity. For the purposes of this definition, “control”
`means the ownership, directly or indirectly, of fifty percent (50%) or more of the voting equity of
`such entity, but such person, corporation, or entity shall be an Affiliate only for so long as such
`control exists. For the avoidance of doubt, Copan Diagnostics, Inc. is an Affiliate of Copan Italia,
`S.p.A.
`
`“Accused Product” means (i) any flocked swab that is imported into the United
`1.2
`States by Vectornate and that Copan alleges to infringe one or more claims of U.S. Patent No.
`9,011,358 (“the ’358 Patent”), U.S. Patent No. 9,173,779 (“the ’779 Patent”) and U.S. Patent No.
`10,327,741 (“the ’741 Patent”) (collectively “Asserted Patents”), and/or (ii) any product that, as
`packaged for commercial sale in the United States, contains at least one flocked swab that was
`
`1
`
`

`

`imported in the United States by Vectornate and that Copan alleges to infringe one or more
`claims of the Asserted Patents. A non-exhaustive list of Accused Products is attached as Exhibit
`A.
`
`2.0
`
`SALE AND DISTRIBUTION OF PRODUCT
`
`No Sale or Distribution of Accused Products. Vectornate agrees that as of the
`2.1
`Effective Date, Vectornate and its Affiliates will cease to market, advertise, offer for sale, and/or
`distribute Accused Products, unless authorized by Copan to do so; except that Vectornate shall
`be entitled to exhaust Vectornate’s existing inventory of Accused Products. The existing
`inventory shall be the inventory of Accused Products in Vectornate’s possession as of the
`Effective Date. Vectornate agrees and acknowledges that a breach of Section 2.1 shall constitute
`a material breach of the Agreement.
`
`2.2 Copan Product Presence on Website Catalogue/Comparable Products. No later
`than fourteen (14) days after, the Effective Date, Vectornate USA shall add Copan catalog
`numbers and descriptions to their website catalog for the Copan products that are comparable to
`the Accused Products presently offered for sale on the website catalog. For clarity,
`“comparable” as used in this section shall mean comparable in the intended use of the product.
`The parties acknowledge and agree that as of the Effective Date, a comparable Copan product
`exists for every flocked swab that Vectornate offers for sale in the United States. In the event
`that Vectornate in the future desires to import, market, advertise, distribute or sell in the United
`States a product for which it contends that no comparable Copan product exists, Vectornate shall
`confer with Copan prior to introducing such product to the United States market.
`
`2.2.1 For each Accused Product that Vectornate ceases to offer for sale, in accordance
`with Section 2.1, Vectornate USA agrees to provide on its website a link to a comparable Copan
`product.
`
`Sales and Inventory Disclosure; Requirements Forecasting. No later than ten
`2.3
`(10) days after the Effective Date:
`
`2.3.1. Vectornate USA shall provide to Copan sufficient data and information from
`which Copan can ascertain (i) Vectornate USA’s inventory on-hand of Accused Products, as of
`the Effective Date, and (ii) Vectornate USA’s sales volume, or usage rate, of all Accused
`Products for the six months prior to the Effective Date.
`
`2.3.2. Vectornate USA shall provide to Copan a written forecast of Vectornate USA’s
`purchase and order requirements for Copan products for the ninety (90) day period beginning on
`and after the Effective Date. All such forecasts shall be an estimate only and shall not bind
`Vectornate to any specific purchase and order requirements.
`
`If Vectornate USA issues a purchase order to Copan, which provides, inter alia, a
`2.4
`commercially reasonable lead time for Copan to fulfill the order as requested in the purchase
`order, and Copan is unable to (a) provide, within three (3) business days of the date of receipt of
`the purchase order, written acceptance of the purchase order agreeing to the aforesaid lead time
`
`2
`
`

`

`or (b) provide Vectornate USA timely with products requested in the purchase order, in such an
`event Vectornate USA shall have the ability and the authority from Copan to source the products
`requested in the unfulfilled purchase order(s) from another third-party (“Outsourced Products”),
`to the extent necessary to secure the volume and type of products that Copan was unable to
`fulfill. In the event the aforesaid third-party is located outside the United States, Copan will
`provide to Vectornate cooperation necessary to effectuate the contemplated importation of the
`Outsourced Products into the United States, including without limitation filing of appropriate
`documentation with the U.S. International Trade Commission, the U.S. Customs and/or another
`applicable agency. For purposes of this Section, a presumptively reasonable lead time for Copan
`to fulfill an order from Vectornate USA in response to the receipt by Copan of a purchase order
`shall be two (2) weeks. Vectornate will not be liable for any claim of patent infringement
`concerning the marketing, advertisement, offer for sale, importation, sale after importation, or
`distribution of swabs purchased pursuant to this Section.
`
`Vectornate/Medschenker Branded Combination Products. Nothing in this
`2.5
`Agreement shall restrict Vectornate’s ability to market, advertise, sell, offer to sell, or distribute a
`Vectornate or Medschenker branded bundled flocked swab product including (i) a non-swab
`product, such as a transfer medium, vial or collection tube, obtained from a source other than
`Copan, as long as the product, as bundled for commercial sale, includes at least one flocked swab
`purchased from Copan, or another source, only as permitted under Section 2.4.
`
`3.0
`
`COVENANT
`
`Copan and its Affiliates covenant not to sue Vectornate, or its manufacturers,
`3.1
`suppliers, distributors, customers or end users for a claim of patent infringement concerning the
`marketing, advertisement, sale, offer for sale, importation, sale after importation, or distribution
`of Accused Products within the United States (i) for activity that occurred prior to the Effective
`Date, (ii) relates to the authorized exhaustion of inventory under Section 2.1 of this Agreement,
`and/or Vectornate USA’s exercise of the rights granted in Section 2.4 of this Agreement. This
`covenant shall run with each of the Asserted Patents”, as well as to any and all U.S. patents
`(collectively “Related Patents”) issuing or issued from patent applications to which any of the
`Asserted Patents directly or indirectly claims priority, or which directly or indirectly claim
`priority to any of the Asserted Patents, and shall be made of record as part of the terms and
`conditions of any assignment of said Asserted Patents and said Related Patents.
`
`4.0
`
`RELEASE
`
`Copan, on behalf of itself and its respective officers, directors, parents,
`4.1
`subsidiaries, Affiliates, predecessors, successors, employees, shareholders, agents, members,
`managers, attorneys and representatives (collectively, the “Copan Releasing Parties”) hereby
`release and forever discharge each of Vectornate, its officers, directors, parents, subsidiaries,
`Affiliates, predecessors, successors, employees, shareholders, agents, members, managers,
`attorneys, representatives, manufacturers, suppliers, distributors, customers and end users
`(collectively, the “Vectornate Released Parties”) from any and all accrued or unaccrued actions,
`causes of action, claims, allegations, demands, rights, obligations, liabilities, civil actions,
`monetary relief, injunctive relief or any other type of relief, known or unknown, at law or in
`
`3
`
`

`

`equity, that the Copan Releasing Parties ever had, now have, or, in the future, may claim to have,
`against the Vectornate Released Parties, by reason of any act, failure to act, cause of matter
`occurring or existing on or before the Effective Date of this Agreement, including, but not
`limited to, Vectornate’s and its suppliers’, distributors’, customers’ and end users’ marketing,
`advertisement, sale, offer for sale, importation, distribution, or use of the Accused Products.
`
`5.0
`
`TERMINATION FROM ITC PROCEEDING
`
`Promptly upon full execution of the Agreement, the Parties agree to file jointly a
`5.1
`Motion to Terminate Pursuant to Settlement Agreement, which shall request the dismissal of all
`allegations and claims asserted against Vectornate Korea Limited, and Vectornate USA in the
`ITC Proceeding. Each Party shall bear its own attorneys’ fees and costs.
`
`6.0
`
`TERM AND TERMINATION
`
`This Agreement shall not be binding on the Parties until it has been signed below
`6.1
`by both Parties, at which time it shall be deemed effective as of the Effective Date. The
`Agreement shall remain in full force and effect until April 1, 2024. At that time, the covenant of
`Section 3.1 and the release of Section 4.1 shall remain in effect in perpetuity.
`
`Other than as set forth Section 6.1, this Agreement may only be terminated by
`6.2
`mutual written agreement of the Parties.
`
`7.0
`
`ASSIGNABILITY
`
`Neither Party may grant or assign any rights or delegate any duties under this
`7.1
`Agreement to any third party without the prior written consent of the other, which consent shall
`not unreasonably withheld, and any attempted assignment without such consent shall be null and
`void.
`
`Notwithstanding the foregoing, a Party may grant or assign the rights and duties
`7.2
`of this Agreement to any successor in interest of the Parties, including but not limited to a
`purchaser of a majority interest in a Party, or the purchase of substantially all of the assets of a
`Party relating to its swab business.
`
`8.0
`
`CONFIDENTIALITY
`
`Except to the extent required by any applicable securities regulation or accounting
`8.1
`rule, the Parties agree that the terms and provisions of this Agreement shall be kept confidential,
`and shall not be disclosed in any manner, except as reasonably necessary to enforce and/or give
`meaning the terms of this Agreement. The Parties agree, however, that if asked by a third-party
`about Vectornate and the ITC Proceedings, the Parties may respond that the Parties have
`resolved the dispute between them on confidential terms and have agreed to a commercial
`relationship concerning flocked swabs and related products for the United States market; and that
`Vectornate has agreed to cease importing, distributing, an/or offering for sale the Accused
`
`4
`
`

`

`Products within the United States. Each Party shall also have the right, at its sole discretion, to
`issue a press release, subject to the terms and restrictions of this Section.
`
`If either Party receives a subpoena or discovery order from a court or agency of
`8.2
`competent jurisdiction, compliance with which would require the production of this Agreement,
`the receiving Party shall give the other Party to this Agreement at least ten (10) business days
`advance notice of its intent to comply with the subpoena or discovery order, so that the non-
`receiving Party may take whatever steps it deems necessary to protect the confidentiality of this
`Agreement.
`
`9.0
`
`NOTICE
`
`All notices required or permitted to be given in accordance with this Agreement
`9.1
`shall be in writing and shall be deemed delivered (i) upon receipt if delivered by hand, (ii) the
`next business day after being sent by prepaid, nationally-recognized, overnight air courier or
`service, (iii) five (5) business days after being sent by registered or certified mail, return receipt
`requested and postage prepaid, or (iv) upon transmittal when transmitted by electronic mail with
`confirmation of receipt.
`
`9.2 All notices shall be addressed as follows:
`
`9.2.1 Vectornate:
`
`
`John K. Kim
`
`Lewis Roca
`201 East Washington St.
`Phoenix, AZ 85004
`
`602.262.0207
`(Jkim@lewisroca.com)
`
`9.2.2 For Copan:
`
`
`
`
`
`James M. Wodarski
` Mintz Levin
`
` One Financial Center
` Boston, MA 02111
`
` 617.348.1855
`(jwodarski@mintz.com)
`
`10.0 MISCELLANEOUS
`
`Sean Yeom
`Vectornate USA, Inc.
`10 Industrial Ave, Suite 4
`Mahwah, NJ 07430
`201.482.9835
`(sean.y@medschenker.com)
`
`Lorenzo Fumagalli, General Counsel
`Copan Group
`Via Francesco Perotti, 10, 25125
`Brescia, BS, Italia
`+39 030 2687203
`(Lorenzo.Fumagalli@copangroup.com)
`
`10.1 The Agreement may be executed in several counterparts, each of which is deemed
`to be an original but all of which constitute one and the same instrument.
`
`5
`
`

`

`PUBLIC VERSION
`
`Each Party and its counsel have reviewed and approved the Agreement, and
`10.2
`accordingly any presumptionorrule of construction permitting ambiguities to be resolved
`against the drafting party shall not be employedin the interpretation or application ofthe
`Agreement.
`
`The headingsinserted into this Agreement are for reference onlyand are not
`10.3.
`intended to form anypart of the operative portion of the Agreement, and theyshall not be
`employedin the interpretationor application of the Agreement.
`
`The Agreement shall be construed, and the relationship of the Parties determined,
`10.4
`in accordance with the laws of the State of New York, notwithstanding any choice-of-law
`principle that might dictate the use of a different governing law.
`
`10.5 Agreement to Arbitrate. The Parties agree that anyandall disputesarising outof,
`or resulting from, or related to, this Agreement, shall be resolved througharbitration before a
`single arbitrator, under the auspices of the American Arbitration Association, and in accordance
`with the AAA Commercial Arbitration Rules. The locationofthe arbitration hearing shall be
`NewYork, NewYork. Forclarity, the Parties understand and agree that this arbitration
`provisionshall be givenits broadest possible interpretation and scope. The prevailing Party in
`anyarbitration proceeding shall be entitled to an awardof its attorneys’ fees and costs associated
`with the arbitration.
`
`IN WITNESS WHEREOF,this Agreement has been duly executed by the Parties to be
`effective as of the Effective Date.
`
`COPAN ITALIA,S.p.A, and
`
`VECTORNATE KOREACO., LTD,
`
`2 AN INDUSTRIES. INC. VECTORNATE USA, INC,
`
`

`

`EXHIBIT A
`
`VECTORNATE’S FLOCKED SWAB PRODUCTS
`
`AC1000 - flocked swab (discontinued)
`AC1100 - NP CAVWAB nasopharengel
`AC2100 - OP CAVWAB oropharengral
`AC3100P / B - Mid turbinate CAVWAB swab
`AC4100 - anterior nare CAVWAB swab
`SCS30 - 1 AC1100 + transport medium kit in blister pack
`
`7
`
`