12
Jan
By Alex Gasser
On January 14, 2011, the Federal Circuit is scheduled to hear oral arguments in Tessera, Inc. v. ITC, (2010-1176).

On December 21, 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 and products containing same by reason of infringement of U.S. Patent Nos. 5,663,106 (“the ‘106 patent”), 5,679,977, and 6,133,627 (collectively, “Asserted Patents”), which led to Investigation No. 337-TA-630.  The complaint named eighteen respondents, several of whom either settled out of the investigation or defaulted.  Those filing intervenor briefs include Elpida Memory, Inc., Elpida Memory (USA), Inc., (collectively, “Elpida”), Acer, Inc., Acer America Corporation, Nanya Technology Corporation, Nanya Technology Corporation, U.S.A., PowerChip Semiconductor Corporation, (collectively, “Acer”), and Kingston Technology Company, Inc. (“Kingston”) (collectively, “Respondents”).  An evidentiary hearing was held, and on August 28, 2009, ALJ Theodore R. Essex issued an Initial Determination (“ID”) finding no violation of Section 337 by Respondents with respect to any of the asserted claims of the Asserted Patents.   In particular, ALJ Essex determined that the accused products did not infringe the asserted claims of the ‘106 patent and the doctrine of patent exhaustion applied because all the chips that Respondents purchased from Tessera’s licensees were authorized by Tessera to be sold.

On October 30, 2009, the Commission determined to review the final ID in part.  Specifically relevant to the appeal, the Commission determined to review (i) the finding that the claim term “top layer” recited in claim 1 of the ’106 patent means “an outer layer of the chip assembly upon which the terminals are fixed,” (ii) the requirement that “the ‘top layer’ is a single layer,” and (iii) the finding that the claim term “thereon” recited in claim 1 of the ’106 patent requires “disposing the terminals on the top surface of the top layer.”  Upon review, the Commission modified, inter alia, ALJ Essex’s constructions of certain limitations in the ’106 patent.  However, the Commission’s modifications did not result in reversing ALJ Essex’s findings of no violation of Section 337 by the accused products.

According to Tessera’s opening and reply briefs, two primary issues are raised on appeal.  Further, these issues focused only on the ITC’s adjudication of the ’106 patent because the remaining patents would have expired before any exclusion order could effectively be put in place.  Thus regarding the ’106 patent, Tessera first asserted that the ITC improperly modified the correct claim construction of the ’106 patent when applying it to a second set of accused products.  In particular, Tessera argued that the ITC “added an unsupported supplemental requirement that the claimed ‘top layer’ could not include solder mask material.”  Second, Tessera asserted that “the ITC failed to revisit or correct [ALJ Essex’s] unnecessary and unprecedented departures from basic principles of patent exhaustion.”  Specifically, Tessera argued that the ITC’s application of the doctrine of patent exhaustion “transmutes a licensee’s willful failure to satisfy the preconditions of a license grant into a risk-free ‘authorization’ permitting all comers to use patented inventions for free.”

In its response brief, the ITC asserted that Tessera’s appeal is improper because it challenges several of the Commission’s factual findings that are supported by substantial evidence.  In this regard, the ITC asserted that Tessera “attempts to transform the Commission’s factual infringement finding into a claim construction issue in order to receive de novo review.”  Additionally, the ITC asserted that the Federal Circuit lacks jurisdiction to hear Tessera’s arguments with respect to the ITC’s application of the doctrine of patent exhaustion.  Specifically, the ITC asserted that Tessera’s appeal was untimely because it “filed its notice of appeal on January 28, 2010, more than 60 days after the Commission adopted the ALJ’s patent exhaustion finding on October 30, 2009 that finally disposed of Elpida and products purchased from Tessera’s licensees.”

Each of the intervenor briefs of Acer, Elpida and Kingston seeks affirmation of the ITC’s finding of no violation of Section 337 by the accused products.  In particular, the Acer and Kingston’s briefs both reiterate that the Commission’s determinations must be affirmed because Tessera improperly seeks de novo review of factual determinations that are supported by substantial evidence.  Elpida’s brief asserts that Tessera waived its right to appeal the ITC’s application of the doctrine of patent exhaustion with respect to its accused products because its appeal was untimely.  Elpida also argued that “[e]ven if jurisdiction existed, the Commission’s finding of exhaustion should be affirmed based on evidence of record showing that” its accused products were licensed and that “Tessera received and accepted royalty payments for those products.”
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