By Mike McCabe
Further to our April 22, 2010 post, ALJ E. James Gildea issued the public version of the Initial Determination on Violation of Section 337 and Recommended Determination on Remedy and Bond (“ID”) in Certain Cold Cathode Fluorescent Lamp (“CCFL”) Inverter Circuits and Products Containing the Same (Inv. No. 337-TA-666).

By way of background, the Complainants in this investigation are O2 Micro International Ltd. and O2 Micro Inc. (collectively, “O2 Micro”).  The Respondents are Monolithic Power Systems Inc. (“MPS”), ASUSTek Computer Inc. and ASUS Computer International America (“collectively, “ASUS”), and Microsemi Corporation (“Microsemi”) (collectively, the “Respondents”).

The ID found that no violation of Section 337 has occurred based on the Respondents’ importation into the United States, the sale for importation, or the sale within the United States after importation, of certain CCFL inverter circuits (including products containing such circuits, such as modules, boards, notebook computers and LCD products) by reason of infringement of the asserted claims of United States Patent No. 7,417,382 (the ‘382 patent). According to the ID, ALJ Gildea determined that:

(1)  None of the accused MPS or ASUS products literally infringe any of asserted claims 1, 2, 4, 7, 8, 9, 11, and 14 of the ‘382 patent;

(2)  Two groups of accused Microsemi inverter modules infringe certain of the claims of the ‘382 patent, and Microsemi directly infringes and induces infringement, but it has not engaged in contributory infringement;

(3)  None of the asserted claims of the ‘382 patent is invalid under 35 U.S.C. §§ 102, 103 or 112;

(4)  The ‘382 patent is not unenforceable for inequitable conduct or unclean hands; and

(5)  A domestic industry does not exist that practices the ‘382 patent.

A.  Infringement

     1.  MPS and ASUS

     Complainants accused certain MPS inverter controller product families of direct literal infringement of the ‘382 patent.  Complainants further accused a number of ASUS inverter modules, boards, notebook computers and LCD modules of infringement because they incorporate accused MPS inverter controllers.

     With respect to the accused MPS products, the main contested issue was whether those products meet the “timer circuit … for providing a time-out sequence of a predetermined duration” limitation as recited in independent claims 1 and 8.  ALJ Gildea concluded that none of the accused MPS products satisfy the timer circuit limitation.  Since all of the remaining asserted claims of the ‘382 patent depend from either claim 1 or claim 8, ALJ concluded that none of the accused MPS products infringe.  Furthermore, because all of the accused ASUS products incorporate the non-infringing MPS inverters, it was determined that the ASUS products likewise do not infringe any asserted claim of the ‘382 patent.

     2.  Microsemi

     O2 Micro accused Microsemi inverter circuits incorporating certain CCFL inverter modules, as well as a number of Microsemi inverter module families containing accused inverter controllers, of infringing the ‘382 patent.

     ALJ Gildea determined that the inverter modules in two of the accused groups of products contain inverter controllers that directly and literally infringe multiple claims of the ‘382 patent.  ALJ Gildea further concluded that Microsemi induced infringement of claims 1, 2, 4, 8, and 11 of the ‘382 patent, based largely on Microsemi’s demonstrated knowledge of the patent and the steps it took (via instructions and data sheets) to teach customers the infringing configuration of its products.  Finally, ALJ Gildea determined that Complainants failed to make a prima facie showing that Microsemi was liable for contributory infringement.

B.  Invalidity

     1.  Anticipation

     Respondents MPS and ASUS asserted that the ‘382 patent was anticipated by a prior art commercial product made and sold by MPS (the MP1010), which they say was created no later than October 2, 1998.  Respondents further asserted that the earliest date of invention of the ‘382 patent was July 22, 1999, and thus, that the MP1010 invalidated the ‘382 patent under 35 U.S.C. §102(g)(2).  Although Complainants presented evidence that the inventor of the ‘382 patent had conceived of the claimed invention by February 18, 1998, ALJ Gildea determined that the evidence was insufficient to justify the conclusion that the inventor had fully conceived of the invention of the ‘382 patent prior to July 22, 1999.  ALJ Gildea also determined that even though the MP1010 product qualifies as prior art, it does not anticipate any claim of the ‘382 patent because it lacks the timer circuit element recited in every asserted claim.

     2.  Obviousness

     Respondents MPS and ASUS asserted that the asserted claims of the ‘382 patent are invalid as obvious based on the combination of U.S. Patent No. 5,384,516 (Kawabata) and various other secondary references.  ALJ Gildea disagreed.  He determined that a number of the elements of the independent claims of the ‘382 patent were not found in Kawabata or any of the other references, individually or in combination.  Furthermore, because the independent claims were not obvious, none of the dependent claims was determined to be obvious based on the applied references.

     3.  Written Description

     Respondents also asserted that the ‘382 patent fails to meet the written description requirement of 35 U.S.C. §112 because the specification fails to adequately describe the “timer circuit” element of independent claims 1 and 8.  ALJ Gildea disagreed and determined that, when reasonably considered in context, the timer circuit element is more than adequately described in the specification.  He also disagreed with Respondent Microsemi’s assertion that there is insufficient disclosure to support the “signal conditioning” element of the claims and concluded that Microsemi had waived this argument by failing to raise it in its prehearing brief.   Accordingly, ALJ Gildea determined that the ‘382 patent was not invalid for failure to comply with the written description requirement.

     4.  Indefiniteness

     MPS and ASUS attempted to assert that the ‘382 patent also is invalid for indefiniteness.  Those respondents failed, however, to assert indefiniteness as an issue in their Post-Hearing Brief.  Accordingly, ALJ Gildea determined that this issue was waived.

C.  Inequitable Conduct

MPS and ASUS asserted that the inventor of the ‘382 patent, Dr. Lin, committed inequitable conduct by submitting what was asserted to be a false declaration to the PTO, by withholding material prior art, and by “hiding” material references that were “buried” in voluminous submissions of prior art (over 500 references), and that his conduct was done with deceptive intent.  ALJ Gildea rejected each of these contentions.

ALJ Gildea thus determined that with respect to each of the Respondents’ assertions, they had failed to show that the asserted wrongful act was either material to patentability, or that the conduct was carried out with the requisite intent to deceive or mislead the PTO.  Accordingly, ALJ Gildea rejected Respondents’ inequitable conduct affirmative defenses.

D.  Unclean Hands

MPS and ASUS also asserted, based on the same core of operative facts relating to their inequitable conduct defense, that O2 Micro’s infringement claims should be dismissed under the doctrine of “unclean hands.”  ALJ Gildea rejected this argument for a number of reasons.

First, the legal basis for the unclean hands defense was a Federal Circuit decision that upheld a trial court’s inherent power to sanction a party’s bad faith conduct, including unclean hands, arising in front of the trial court.  See Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369 (Fed. Cir. 2001).  ALJ Gildea distinguished Aptix on the basis that the ITC is not a trial court and it does not share the same inherent contempt powers as a district court.  Furthermore, MPS and ASUS failed to provide any precedent showing that such an “unclean hands” type defense had ever successfully been alleged in a Section 337 action.

Second, ALJ concluded that for the same reasons that Respondents’ inequitable conduct defense had failed, there was not clear and convincing evidence that O2 Micro acted with unclean hands in the prosecution of its claims involving the ‘382 patent.  Accordingly, the unclean hands defense was rejected.

E.  Domestic Industry

ALJ Gildea determined that Complainants failed to satisfy the technical prong of the domestic industry analysis.  In particular, he found that O2 Micro’s products failed to meet the timer circuit limitations of independent claims 1 and 8 of the ‘382 patent.  Thus, ALJ Gildea concluded that Complainants’ products do not practice claims 1 and 8 of the ‘382 patent.  Although ALJ Gildea previously had determined that O2 Micro had satisfied the economic domestic industry prong, since O2 Micro had failed to satisfy the technical prong of the domestic industry requirement, he reversed his previous determination with respect to the economic domestic industry requirement.

F.  Conclusion and Remedy

Even though certain of Respondent Microsemi’s accused products were found to infringe the ‘382 patent, ALJ Gildea concluded that since O2 Micro had failed to prove that a domestic industry exists, none of the Respondents was found to have violated Section 337 for any of the asserted claims of the ‘382 patent.  Thus, it was determined that no remedy was warranted.

ALJ Gildea further stated that if the ITC were to find a violation of the ‘382 patent, then a limited exclusion order would be proper.  ALJ Gildea further stated that should the Commission find that Section 337 has been violated with respect to Respondents ASUS or Microsemi, then he would recommend that the Commission issue a cease and desist order directed to those respondents but not with respect to MPS.