By Eric Schweibenz and John Presper
Further to our November 18, 2016 post, on December 1, 2016, Chief ALJ Charles E. Bullock issued the public version of the Initial Determination (“ID”) finding no violation of Section 337 in Certain Air Mattress Systems, Components Thereof, and Methods of Using The Same (Inv. No. 337-TA-971).

By way of background, this investigation is based on an October 16, 2015 complaint filed by Select Comfort Corp. and Select Comfort SC Corp. (collectively, “Select Comfort”) alleging violation of Section 337 in the importation into the U.S. and sale of certain air mattress systems and components thereof by Respondents Sizewise Rentals LLC, American National Manufacturing Inc., and Dires LLC (d/b/a Personal Comfort Bed) (collectively, “Respondents”) that infringe one or more claims of U.S. Patent Nos. 5,904,172 (“the ’172 patent”) and 7,389,554 (“the ’554 patent”). See our October 19, 2015 and November 17, 2015 posts for more details on the complaint and Notice of Investigation, respectively.

According to the ID, Select Comfort accused the following controllers of infringing claims 2, 6, 9, 12, 16, 20, 22, and 24 of the ’172 patent: (1) Gen 3 Arco; (2) Gen 3 Koge; and (3) the Platinum 5000 and Platinum 6000. ALJ Bullock found that the Gen 3 Koge controller infringes claim 12 of the ’172 patent, and that all the accused controllers infringed claim 16, but that claims 2, 6, 9, 20, 22, and 24 were not infringed because none of the accused controllers continuously monitor pressure using a processor in conjunction with the transducer, as required by those claims. The ALJ further found that the technical prong of domestic industry was satisfied for the ’172 patent by Select Comfort’s SC Advanced Dual Air Technology (ADAT) Firmness Control System, the SleepIQ Firmness Control System, and the Comfortaire Q10 which practice claims 12, 16, and 20. In addition, ALJ Bullock rejected each of Respondents’ § 102, § 103, § 112, and § 305 arguments regarding invalidity of the ’172 patent.

With respect to the ’554 patent, Select Comfort accused various models of the PC Flexhead and corresponding Instant Comfort FlexHead of infringing claims 1, 5, 6, 16, and/or 26. ALJ Bullock found that none of these claims were infringed because the accused products do not practice the “air posturizing sleep surface” limitation required by the claims. The ALJ also found that Select Comfort failed to show that its various Sleep Number products practice claims 1 and 16, and therefore that Select Comfort failed to satisfy the technical prong of the domestic industry for the ’554 patent. As to the validity of the ’554 patent, ALJ Bullock rejected each of Respondents’ § 112 and § 103 arguments. The ALJ further determined that Respondents failed to establish that the ’554 patent is unenforceable due to inequitable conduct.

Regarding the economic prong of domestic industry, ALJ Bullock found that Select Comfort did not specify which investments in plant and equipment are allocable to the ’172 patent and which are allocable to the ’554 patent. Specifically, the ALJ agreed with Respondents that Select Comfort improperly combined domestic industry articles when summarizing its purported investments and activities, observing that the products covered by the ’172 patent are control units with air pumps while the products allegedly covered by the ’554 patent are split-top mattresses, and that Select Comfort was required to allocate investments and activities for each article. While noting Commission precedent holding that a precise allocation of expenses among various domestic industry products is not necessary, ALJ Bullock determined that such precedent “cannot mean that Select Comfort's proposed allocation is acceptable; i.e. allocating 100% of the rental expenses to the ’172 patent, and then a portion of those same expenses to the ’554 patent DI products.” Accordingly, the ALJ found that Select Comfort did not show a domestic industry for either patent under Section 337(a)(3)(A). With respect to employment of labor or capital under Section 337(a)(3)(B), ALJ Bullock also agreed with Respondents that Select Comfort failed to allocate employee compensation between the ’172 patent domestic industry products and the ’554 patent domestic industry products. Thus, the ALJ determined that the economic prong of domestic industry was not met for either asserted patent.

In the event the Commission finds a violation, ALJ Bullock recommended issuance of a limited exclusion order (“LEO”) prohibiting the importation of Respondents air controllers and air mattress systems found to infringe the asserted patents, but not issuance of cease-and-desist orders. The ALJ also recommended no bond during the Presidential review period. Finally, ALJ Bullock recommended denial of Respondents’ request that the Platinum 6000 be exempt from any LEO that may issue for the ’172 patent because Respondents did not show that the remedial order would have an adverse effect on public health and welfare in the U.S., competitive conditions in the U.S. economy, the production of like or directly competitive products in the U.S., or U.S. consumers.