By Tom Fisher
On June 9, 2010, the Federal Circuit is scheduled to hear oral argument in Spansion, Inc. v. Int’l Trade Comm’n, (2009-1460, -1461, -1462, -1465).

By way of background, on April 17, 2007, Tessera, Inc. (“Tessera”) filed a complaint alleging violations of Section 337 in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain semiconductor chips with minimized chip package size or products containing the same by reason of infringement of U.S. Patent Nos. 6,433,419 (“the ‘419 patent”) and 5,852,326 (“the ‘326 patent”).  The complaint named Spansion, Inc. and Spansion, LLC (collectively, “Spansion”), Freescale Semiconductor, Inc. (“Freescale”), ATI Technologies, Ulc. , ST Microelectronics N.V., and Qualcomm Inc. (“Qualcomm”) (collectively, “Appellants”) as respondents.  On May 21, 2007 the Commission instituted an investigation (Inv. No. 337-TA-605).  An evidentiary hearing was held, and on December 1, 2008 ALJ Theodore R. Essex issued an Initial Determination (“ID”).  In the ID, ALJ Essex found no violation of Section 337 with respect to the ‘419 and ‘326 patents.  ALJ Essex also determined that the patents were not indefinite under 35 U.S.C. § 112, ¶ 2, and not anticipated under 35 U.S.C. § 102.

On December 15, 2008, the Commission determined to review the ID in part, specifically, (1) whether Appellants’ accused devices directly infringe the asserted claims of the ‘419 and ‘326 patents, and (2) whether Tessera waived any argument that the accused products indirectly infringe the ‘419 patent.  On May 20, 2009, the Commission issued a Final Determination reversing the ALJ’s determination that Appellants did not infringe asserted claims 1-11, 14, 15, 19, and 22-24 of the ‘419 patent and claims 1, 2, 6, 12, 16-19, 21, 24-26, and 29 of the ‘326 patent.  The Commission also reversed the ALJ’s determination that Tessera had waived any argument that the accused products indirectly infringe the ‘419 patent and determined that Appellants contributorily infringed the ‘419 patent.  All of ALJ Essex’s remaining determinations, including those concerning claim construction, domestic industry, and validity were adopted by the Commission.  With respect to remedy, the Commission issued a limited exclusion order (“LEO”), prohibiting the unlicensed entry of Appellants’ infringing semiconductor chips with limited chip package size and products incorporating those chips that are manufactured abroad.  In addition, the Commission issued cease and desist orders against Qualcomm, Freescale, and Spansion.

According to Appellants’ opening and reply briefs to the Federal Circuit, four primary issues are raised on appeal.  First, Appellants assert that the ITC improperly concluded that the accused semiconductor packages possess the movement claimed by the ‘419 and ‘326 patent.  Specifically, Appellants assert that Tessera’s expert testimony was unreliable and should not be accorded evidentiary value because movement of the baseline package, a claimed element of the patents-in-suit, was measured using finite element modeling, based on numerous assumptions and, therefore, does not accurately represent whether the actual product infringes the asserted claims.

Second, Appellants argue that the ITC mistakenly read limitations into the claims of the asserted patents in order to find the terms “moveable” terminals or “movement” of terminals definite under 35 U.S.C. § 112, ¶ 2.

Third, Appellants assert that even if found liable for infringement, the Commission’s issuance of a LEO was in error, as the ITC did not meaningfully consider the public interest in its decision to grant injunctive relief.  Appellants argue that the public welfare is not served by enforcing Tessera’s patents, which were found invalid by the PTO’s Central Reexamination Unit.

Fourth, Appellants argue that the ITC’s decision and orders prohibiting contributory infringement of the ‘419 patent should be vacated because once Tessera and Motorola, Inc. (“Motorola”), an initial party to this action, entered into a licensing agreement, there was no act of direct infringement as required to establish liability for contributory infringement.

With respect to Appellants’ first argument, the Commission asserts in its brief that Tessera’s use of finite element analysis was based upon “realistic input parameters” and a “solid theoretical foundation” and, therefore, could be used to accurately determine the amount of movement in the accused package.  Further, the Commission notes that the language of the ‘419 and ‘326 patent only requires an accused package to be “capable” of movement, and that Tessera’s direct-loading test showed this, notwithstanding any differences between Tessera’s finite element models and printed circuit boards in actual use.

Regarding Appellants’ second issue, the Commission asserts that the term moveable is rendered definite by the ‘419 and ‘326 patent’s intrinsic evidence.  Similarly, the Commission contends that one skilled in the art would understand the meaning of the term as shown by prior adjudications before Judge Wilken (U.S. District Court for the N.D. Cal.) finding the term “movement,” as used in the ‘326 patent, not indefinite.

In response to Appellants’ third argument, the Commission asserts that the on-going PTO reexamination proceedings should not be considered on appeal, as its decision to grant exclusionary relief was neither arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.

Finally, in response to the Appellants’ contributory infringement arguments, the Commission asserts that it is not clear what effect, if any, Motorola’s dismissal from the case after the Commission issued its final determination would have on an analysis of contributory infringement.  Further, the Commission argues that because Appellants have not exhausted all available administrative remedies concerning this issue, the Commission should hear new questions raised by the Motorola settlement before Appellants can seek judicial review.

In its intervenor brief, Tessera argues, as does the Commission, that its direct-loading tests showed that Appellants’ packaging exhibited the movement limitations claimed in the asserted patents, thereby proving infringement.  Additionally, Tessera relies on Judge Wilken's claim construction, referenced above, and subsequent Commission decisions adopting Judge Wilken’s reasoning to assert that the claim term “movement” is not indefinite as used in the ‘419 and ‘326 patents.  Tessera also maintains that the Commission’s decision to grant exclusionary relief properly considered the effect of the ongoing PTO reexamination proceedings on the public welfare.

With regard to contributory infringement of the ‘419 patent, Tessera asserts that because Appellants design their packages to be mounted to a printed circuit board and specifically instruct their customers as to how to attach the packages, a direct infringer exists and the Commission’s determination of contributory infringement should be upheld, notwithstanding the Motorola settlement agreement.

* Christopher Ricciuti is a summer associate at Oblon Spivak