ITC Terminates Bond Forfeiture Proceeding In Certain Semiconductor Chips With Minimized Chip Package Size (337-TA-605)

On November 2, 2012, the International Trade Commission (the “Commission”) issued a notice and order granting a joint motion to terminate the bond forfeiture proceeding between Tessera, Inc. (“Tessera”) and Freescale Semiconductor, Inc. (“Freescale”) based on a settlement agreement in Certain Semiconductor Chips With Minimized Chip Package Size and Products Containing Same (Inv. No. 337-TA-605).

By way of background, the Commission issued its final disposition of the underlying investigation in May 2009, finding a violation of Section 337 by reason of infringement of Tessera’s U.S. Patent Nos. 5,852,326 and 6,433,419 and issuing a limited exclusion order (“LEO”) and cease and desist orders against various respondents, including Freescale.  On May 21, 2012, Tessera moved for summary determination of bond forfeiture by Freescale, seeking to have the bonds posted by Freescale pursuant to the LEO and cease and desist order forfeited, as well as payment of any pre-judgment interest.  On September 18, 2012, ALJ Theodore R. Essex issued an Initial Determination in Order No. 73 granting-in-part Tessera’s motion, finding that Freescale’s entire posted bond amount is subject to forfeiture, but that Tessera is entitled to only 62.1% combined market share.  The ALJ also found that Tessera is entitled to pre-judgment interest from May 2009 to September 18, 2012, the date Order No. 73 issued.  See our October 12, 2012 post for more details.

According to the notice and order, Tessera and Freescale filed a joint motion to terminate the bond forfeiture proceeding on October 9, 2012 based on a settlement stipulation entered into between the parties.  The motion indicated that, as of the date of the motion, Freescale paid Tessera the amount owed according to Order No. 73, and that Tessera “releases and discharges Freescale from any and all claims arising out of Freescale’s activities during the Presidential review period with respect to the patents asserted in this investigation ….”  In granting the motion, pursuant to 19 C.F.R. § 210.50(b)(2), the Commission found no evidence that termination of the investigation would prejudice the public interest or that settlement would adversely impact the public health and welfare, competitive conditions in the U.S. economy, the production of like or directly competitive articles in the U.S., or U.S. consumers.  Since all other respondents were previously terminated from the investigation, the termination of Freescale resolved all remaining issues and thus terminated the investigation in its entirety.

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