By Eric Schweibenz
Further to our December 19, 2011 post, the International Trade Commission (the “Commission”) on December 29, 2011, issued the public version of its opinion finding a violation of Section 337 and modifying the June 17, 2011 final Initial Determination (“ID”) issued by ALJ Carl C. Charneski in Certain Personal Data and Mobile Communication Devices and Related Software (Inv. No. 337-TA-710).

By way of background, the Complainants in this investigation are Apple Inc. and NeXT Software, Inc. (collectively, “Apple”) and the Respondents are High Tech Computer Corp., HTC America Inc., and Exedia, Inc. (collectively, “HTC”).  On July 15, 2011, ALJ Charneski determined that HTC violated Section 337 through its infringement of claims 1, 8, 15, and 19 of U.S. Patent No. 5,946,647 (the ‘647 patent) and claims 1, 2, 24, and 29 of U. S. Patent No. 6,343,263 (the ‘263 patent).  The ID found no violation of Section 337 with respect to U.S. Patent Nos. 5,481,721 (the ‘721 patent) and 6,275,983 (the ‘983 patent) because Apple had not demonstrated that HTC infringed the asserted claims of these patents or that Apple had satisfied the domestic industry requirement with respect to these patents.  The ID concluded that HTC had not demonstrated that any of the asserted patent claims are invalid.  See our September 2, 2011 post for more details. 

In sum, the Commission determined that HTC violated Section 337 by importing and selling articles that infringe claims 1 and 8 of the ‘647 patent, but reversed the ALJ’s finding of violation as to claims 15 and 19 of the ‘647 patent and as to the asserted claims of the ‘263 patent.  Lastly, the Commission affirmed the ALJ’s conclusion of no violation as to the ‘721 and ‘983 patents.

The ‘263 Patent

The ‘263 patent relates to a telecommunications interface for real-time processing.  The Commission first interpreted a limitation within claim 1, which required “at least one realtime application program interface (API) coupled between the subsystem and the realtime signal processing subsystem to allow the subsystem to interoperate with said realtime services.”  The parties and the ALJ agreed that “realtime” means “within a defined upper bounded time limit,” and thus the issue was whether the term “realtime” modified each term it precedes in the claims including “API,” as asserted by HTC and the Investigative Attorney (“OUII”), or whether any “API that allows realtime interaction between” subsystems is a “realtime API,” as proposed by Apple and adopted by ALJ Charneski.  The Commission determined that the API itself has defined upper bounded time limits, and that Apple’s and the ALJ’s construction “improperly reads the term ‘realtime’ out of the API limitation,” and renders the term “realtime” at most nominal and without any purpose of its own.  Under this revised construction, the Commission determined there is no genuine dispute that the identified API in both the HTC and Apple products do not operate within a “defined upper bounded time limit.”

The Commission also reviewed the construction of the term “device handler” within claims 1 and 24.  ALJ Charneski adopted Apple and OUII’s interpretation, namely: “software associated with an interface device that sets up dataflow paths, and also presents data and commands to a realtime signal processing subsystem.”  HTC previously sought to add the requirement that the device handler be “specific to the device,” but in its briefing on Commission review, the opinion held that HTC sought instead a different argument that “associated with” in the ALJ’s construction means that “the device handler must know…about the device it supposedly handles,” as opposed to the device “merely be[ing] somewhere in the data path for data that originated at the ‘device.’”  The Commission determined that HTC’s argument concerned the application of claim construction, rather than claim construction itself, and if it were a claim construction argument, it was waived.  The Commission determined that disagreements over an application of construction “do not themselves give rise to opportunities, after the fact, to change the agreed-upon or adopted constructions.”  As to infringement, the Commission agreed with the ALJ’s interpretation and determination that HTC’s accused products contain a device handler.

As to the validity of the ‘263 patent, the Commission agreed with HTC and OUII that the ALJ’s findings constituted legal error.  According to the opinion, in finding that AT&T’s prior art VCOS system did not anticipate the asserted claims, the ALJ appeared to compare the VCOS system to certain prior art central to the ‘263 patent’s prosecution history, essentially assuming that the VCOS system was similar to the prosecution history’s prior art, and if the ‘263 patent were patentable over the prosecution’s prior art, then the ‘263 patent should be patentable over the VCOS system.  However, the Commission found this error rendered moot by the Commission’s revised construction of “realtime API” that required the API itself to operate within a defined upper bounded time limit - a construction under which HTC did not contend the VCOS system anticipates the ‘263 patent’s claims.  Nonetheless, the Commission determined that if “realtime API” were construed as requested by Apple and found by the ALJ, the VCOS system would anticipate the ‘263 patent, because contrary to the ALJ’s findings, the Commission determined the VCOS system indeed would have such a “realtime API” and a claimed “device handler.”

The ‘647 Patent

The ‘647 patent relates to identifying certain “structures” - i.e., names, phone numbers, or email addresses - in a document and then highlighting them on a display so that a user can perform a linked action on the particular structure (for example, dialing a telephone number).  Claim 1 requires “linking actions to the detected structures” while claim 15 requires “linking at least one action to the detected structure.”  The ALJ adopted Apple’s construction of these “linking” phrases, namely: “linking detected structures to computer subroutines that cause the CPU to perform a sequence of operations on the particular structures to which they are linked.” HTC did not challenge this interpretation on review, and the Commission granted review on infringement and invalidity of the ‘647 patent.

The Commission first determined that the ALJ’s invalidity analysis for the ‘647 patent erroneously relied upon the ‘647 patent’s alleged use of the term “structure,” rather than an agreed-upon construction by the parties, namely, “an instance of a pattern, where a ‘pattern refers to data, such as grammar, regular expression, string, etc., used by a pattern analysis unit to recognize information in a document, such as dates, addresses, phone numbers, etc.”  The ALJ determined that the mere search of a database of contact names and subsequent comparison to entered text cannot constitute detecting a “structure,” and at least on that basis determined that a so-called “Perspective” prior art system did not invalidate claims in the ‘647 patent.  The Commission determined that the ALJ’s invalidity analysis was incorrect (1) for not relying upon the construction of “structure” agreed-upon by the parties and used in the ALJ’s infringement analysis, and (2) because the specification and preferred embodiment of the ‘647 patent did not support the ALJ’s narrow interpretation used in the invalidity analysis.  The Commission determined that the prior art “Perspective” system automatically linked contact information to a contact by recognizing that a contact exists and putting the name in bold - and on that basis, the Commission determined that independent claim 15 and its dependent claim 19 were invalid, since each of those claims required only one action.  Claim 1, and its dependent claim 8, however, were determined by the Commission not to be invalidated by the “Perspective” system because claims 1 and 8 require multiple linked actions, and HTC was unable to show that this prior art contained an “analyzer server” for “linking actions to the detected structures,” or a “user interface” for enabling the selection of a “linked action.”

As to infringement of claims 1 and 8, the Commission summarily affirmed the ALJ’s determination for the reasons set forth in the ID.  As to claim 15 (and dependent claim 19), HTC argued that the steps of method 15 must be performed exactly in order, but the Commission determined that the “Perspective” system invalidates claim 15 regardless whether the steps must be performed in the order in which they appear, or whether the enabling section to claim 15’s selection of the structure is one or two steps, and so the Commission deemed these infringement defenses moot, and did not reach them.

After the Commission determined to review the ALJ’s ID, HTC filed a motion for summary determination with the Commission on October 17, 2011, wherein HTC argued that reexamination proceedings concerning the ‘647 patent provided HTC with intervening rights that precluded the issuance of an exclusion order against HTC as to the ‘647 patent.  In an order to show cause why HTC’s motion was procedurally permitted, the Commission observed that Rule 210.18 required filing a motion for summary determination “at least 60 days before the date fixed for any hearing,” and any motion for termination (not involving settlement, consent order, or arbitration agreement) under Rule 210.21(a) must be made “prior to the issuance of an initial determination on violation of Section 337.”  HTC asserted in response that Rule 210.18(a) allows late filing for summary determination under exceptional circumstances when “good cause” exists, and Rule 201.4(b) provides the Commission with authority to waive or suspend a procedural rule when the Commission finds “good and sufficient reason therefore, provided the rule is not a matter of procedure required by law.”  The Commission rejected HTC’s arguments, determining that Rule 210.18(a) specifically cites that the “presiding administrative law judge” (rather than Commission) determines whether good cause exists to permit a tardy motion for summary determination, and Rule 201.4(b)’s authority for the Commission to waive or suspend procedural rules does not “provide a basis for permitting the substantive filing HTC seeks to make.”  The Commission additionally denied intervening rights on the grounds that (1) no reexamination certificate had issued yet, and thus HTC’s argument was premature; (2) the basis for the alleged intervening rights - an Apple statement that the ‘647 patent describes linking an action directly to the detected structure - is not different from the position taken by Apple during the ITC proceedings; and (3) the September 21, 2011 Federal Circuit Marine Polymer Technologies, Inc. v. Hemcon Inc. decision relied upon by HTC was inapposite, since unlike in this proceeding, in Marine Polymer the patentee made arguments and claim withdrawals amounting to narrowed claim scope.

The ‘721 Patent

The ‘721 patent is directed to facilitating object oriented messaging with a procedural operating system, and of the three asserted claims, independent claim 1 recites a method, and dependent claims 5 and 6 add more steps to the method. 

The Commission first addressed the construction of “processing means” - specifically, “first processing means” and “second processing means” included in each of the asserted claims.  ALJ Charneski adopted HTC’s and OUII’s arguments that “processing means” invoked 35 U.S.C. §112 ¶ 6, and the ALJ determined that the method steps of the claims were recited functions of the “processing means” and further agreed with HTC’s identified corresponding structures from the specification.  Before the ALJ, Apple argued that the claims should not be construed under 35 U.S.C. §112 ¶ 6, and before the Commission, Apple argued that if the claims are to be construed under 35 U.S.C. §112 ¶ 6, then the function should be “processing” and that a general purpose computer performs that function.  The Commission disagreed with the ALJ’s construction and agreed instead with Apple’s argument that “processing means” should be construed under 35 U.S.C. §112 ¶ 6, the function should be “processing” and that a general purpose computer performs that function.  The Commission determined that Apple’s construction more closely aligns with the prosecution history and preserves the claims as methods, rather than converting the claims to apparatuses, which was a concern for the Commission under the ALJ’s analysis.

As to validity, HTC argued the ‘721 patent was anticipated by a 1988 Ph.D. thesis by John Bennet (“Bennet”), or in the alternative, rendered obvious by a combination of Bennet and prior art called “Mach messages.”  The ALJ did not address the validity question because of his means-plus-function construction of the “processing means” limitations.  One issue was whether Bennet was “based on an operating system,” as required by the claims, and the Commission determined that Bennet could not anticipate, because HTC had not shown that “the pertinent messages are specific to any particular operating system.”  However, the Commission did find the asserted claims of the ‘721 patent obvious over the combination of Bennet and “Mach messages,” which in turn was operating-system based.  Although Apple pointed to certain compatibility issues between the two systems, the Commission rejected Apple’s arguments, determining instead that Apple had not demonstrated that choosing one protocol over another, “is anything more than a design choice.”  

The Commission also reviewed the construction of “dynamic binding,” which the ALJ had construed by combining aspects of HTC’s and the OUII’s proposed constructions, such that the term was defined as: “permitting messages to be bound to the actual methods to be invoked depending on the class of the receiver, allowing objects of any classes that implement a given method to be substituted for the target object at run time.  Apple proposed a broader definition, and the dispute revolved around whether dynamic binding requires, as set forth in the specification of the ‘721 patent, that the “actual method corresponding to the class of target object does not need to be determined until the message must be sent.”  The Commission agreed with the ALJ’s construction, and determined that the description of dynamic binding used in the specification was definitional, and did not merely describe aspects of a preferred embodiment.  The Commission also determined that the ALJ’s construction was supported by a similar definition of dynamic binding recited in a NeXTSTEP manual, a public document by NeXT, the assignee listed on the face of the patent.

As to infringement of the ‘721 patent, the Commission determined that Apple had waived its infringement claims, because it advanced new infringement theories for the first time on review.  The Commission determined that simply because the ID departed slightly from HTC’s proposed construction does not permit new infringement theories, and that “Apple bore the burden of demonstrating infringement and with it the risk that its theories would not result in infringement under all possible constructions of disputed claim terms.”

The ‘983 Patent

Apple asserted claims 1 and 7 from the ‘983 patent, which involves subject matter similar to the ‘721 patent.

The Commission first reviewed the construction of the term “loading,” which the ALJ had construed after adopting Apple’s contentions, to mean “loading is not limited to physical copying, but includes virtual copying as well.”  The opinion referred to the ID to define “virtual copying” of a method as “a process of putting into executable program memory a pointer to the method’s existence elsewhere.”  HTC argued for a construction that excluded such virtual copying, and on review pointed to the plain meaning of “load” and additionally argued that the ‘983 patent’s prosecution history disclaimed virtual copying.  Although the Commission rejected HTC’s plain meaning argument due to the specification’s use of “copying” to include virtual copying, the Commission agreed that Apple indeed disclaimed “virtual loading” by distinguishing the virtual copying of prior art.  The Commission acknowledged that this construction possibly excludes Apple’s preferred embodiment, but the preference to avoid doing so is not absolute.

The Commission also reviewed the term “selectively load required object-oriented methods.”  The ALJ had rejected Apple’s arguments to construe the term as requiring loading a “class” of methods rather than just the required methods themselves.  The Commission affirmed the ALJ’s construction as supported by the plain meaning of the claims, and the prosecution history of the ‘983 patent. 

As to invalidity, the Commission determined that HTC demonstrated the prior art loaded classes, but did not offer an invalidity analysis under the Commission’s construction of “selectively,” which excludes class loading.  The Commission determined that but for this particular requirement, the claims of the ‘983 patent would be invalid.

With respect to infringement, the Commission determined summarily that HTC’s accused products did not meet the “loading” and “selectively load” limitations construed above.  The Commission additionally determined that HTC’s products did not practice claim limitations calling for “executable program memory.”  Based on the Commission’s prior determination that Apple disclaimed pointing to a method already in executable program memory, the Commissioned determined that the issue is whether the accused products (i) “determine during runtime” if object oriented methods are already in executable program memory, and (ii) whether methods are loaded “into” the executable program memory at runtime as called for by claims 1 and 7.  The Commissione determined that the accused products do not infringe the executable program memory” limitations at least because as found by the ALJ, all methods in the accused devices are loaded into the task address space at startup and are therefore loaded prior to runtime.  The Commission took no position on whether Apple’s domestic industry product practices this claimed limitation.


The Commission determined that the appropriate remedy is a limited exclusion order prohibiting the entry of HTC’s personal data and mobile communications devices and related software into the U.S. that infringe claims 1 or 8 of the ‘647 patent.  The Commission also determined that the public interest factors enumerated in Section 337 do not preclude the issuance of the limited exclusion order.  With respect to U.S. consumers, and public health and welfare effects, the Commission rejected many of HTC’s arguments as applying to Android phones generally, rather than just HTC’s Android phones.  The Commission determined that the relief to be granted by the Commission would be directed solely to HTC’s Android smartphones, and ample substitutes exist for these HTC phones.

Notwithstanding the foregoing, the Commission determined that in light of competitive conditions in the U.S. economy, and submissions by T-Mobile that it would have difficulty substituting HTC’s Android smartphones in the short term, the exclusion of HTC devices subject to the order would be delayed for approximately four months, and will commence on April 19, 2012, to provide a transition period for U.S. carriers.  Moreover, the Commission determined that HTC may import refurbished handsets to be provided to consumers as replacements under warranty or an insurance contract (whether the warranty or contract is offered by HTC, a carrier, or by a third party) until December 19, 2013.  The Commission further emphasized that “[t]his exemption does not permit HTC to call new devices ‘refurbished’ and to import them as replacements.”

The Commission agreed with the ALJ’s recommendation that no cease-and-desist order against HTC is needed, citing evidence that “HTC surrenders all title and interest to its commercial products when they arrive and are warehoused in the United States.”  The Commission further agreed that Apple failed to satisfy its burden that a bond is required during the Presidential review period, in view of evidence “that the HTC and Apple products are similarly priced (before carrier subsidies).”

Commissioner Pinkert concurred with his colleagues as to the appropriate remedy, but wrote separately to express his additional views.  In this respect, Commissioner Pinkert “emphasize[d] that the existence of substitutes for the infringing devices does not obviate consideration of the likely impact of exclusion on the range of choices available to consumers.”  Commissioner Pinkert added: “Such impact may warrant more searching inquiry in other investigations.”