Federal Circuit Reverses And Remands In InterDigital Appeal (2010-1093)

On August 1, 2012, the Federal Circuit issued its opinion in InterDigital Commc’ns, LLC v. Int’l Trade Comm’n (2010-1093).  This was an appeal by InterDigital Communications, LLC and InterDigital Technology Corporation (collectively, “InterDigital”) from the International Trade Commission’s (the “Commission”) final determination in Certain 3G Mobile Handsets and Components Thereof (Inv. No. 337-TA-613) that Nokia Inc. and Nokia Corp. (collectively, “Nokia”) had not violated Section 337 in connection with the importation into the U.S., sale for importation, or sale within the U.S. after importation of certain 3G mobile handsets and components thereof.  See our October 19, 2009 post for more details.

In the opinion, the Federal Circuit reversed the Commission’s findings that Nokia did not infringe InterDigital’s U.S. Patent Nos. 7,190,966 (the ‘966 patent) and 7,286,847 (the ‘847 patent), and remanded for further proceedings.  In particular, the Federal Circuit found that the ITC had erred in its construction of the claim terms “code” and “increased power level,” which in turn had led to erroneous determinations of non-infringement.  The Federal Circuit also rejected an argument by Nokia that the Commission’s decision could be upheld because InterDigital’s licensing activities were allegedly insufficient to satisfy the domestic industry requirement.

The ‘966 and ‘847 patents relate to wireless cellular telephone technology, and focus on an apparatus and methods for controlling transmission power during the “handshake” portion of a wireless cellular communication.  The ‘847 patent is a continuation of the ‘966 patent.  At the ITC, former Chief ALJ Paul J. Luckern construed the claim term “code” to mean “a spreading code or a portion of a spreading code.”  ALJ Luckern construed the claim term “increased power level” to mean that “the power level of a transmission is higher than that of a previous transmission” and “the power level of a code signal increases during transmission.”  See our September 23, 2009 post for more details.  The Commission determined not to review these claim constructions.

With respect to the claim term “code,” the Federal Circuit found that the ALJ had erred in limiting the term to spreading codes.  Instead, the term should have been construed in accordance with its plain meaning, and thus have been found “broad enough to cover both a spreading code and a non-spreading code.”  The Federal Circuit relied on the doctrine of claim differentiation in making this determination, finding that since a dependent claim recited, in full, “The subscriber unit of claim 1 wherein the same code is a spreading code,” it was improper to limit the term “code” in claim 1 to a spreading code.  Accordingly, under the Federal Circuit’s broader construction, the ALJ’s determination that Nokia did not infringe the ‘966 and ‘847 patents needed to be reversed.

With respect to the claim term “increased power level,” the Federal Circuit found that the ALJ had erred in limiting the term to mean that the power level of a code signal increases during transmission.  According to the Federal Circuit, the plain language of the claims “clearly covers both continuous and stepped power increases,” and the specification does not restrict the scope of the invention to a system in which the power increases continue in the course of each transmission.  Thus, the Federal Circuit found that the ALJ should have construed “increased power level” to include both intermittent and continuous increases in power.  Moreover, as with the construction of “code,” the Federal Circuit found that this claim construction error with respect to “increased power level” had led the ALJ to improperly conclude that Nokia had not infringed the ‘966 and ‘847 patents.

Nevertheless, Nokia argued that the Commission’s final determination of no violation of Section 337 could be affirmed on alternative grounds.  In particular, Nokia argued that InterDigital’s patent licensing activities did not satisfy the domestic industry requirement because InterDigital had failed to establish that there was a U.S. industry “relating to the articles protected by the patent.”  However, the Federal Circuit rejected this argument based on the plain language of 19 U.S.C. § 1337(a)(3)(C), which allows the domestic industry requirement to be satisfied if there is a “substantial investment in [the patent’s] exploitation,” where the exploitation is achieved by various means, including “licensing.”  The Federal Circuit also noted that both the legislative history of the statute and numerous prior decisions by the Commission supported the idea that licensing alone could satisfy the domestic industry requirement.  Accordingly, the Federal Circuit declined to uphold the Commission’s final determination of no violation on this proposed alternative ground.

The Federal Circuit also rejected an argument by Nokia that Nokia could not infringe the ‘966 and ‘847 patents because the scrambling codes in the Nokia system are not transmitted.  According to the opinion, neither the ALJ nor the Commission had addressed this argument, and it would  therefore have been improper for the Federal Circuit to uphold the Commission’s final determination on this basis.  However, the Federal Circuit noted that Nokia was free to raise the issue on remand.

In view of the above, the Federal Circuit reversed the Commission’s final determination of no violation of Section 337 and remanded for further proceedings.

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