While the investigation involves multiple patents and numerous respondents, Complainants moved for temporary relief only against Respondents Traditional Sporting Goods, Inc., d/b/a Traditions Sporting Firearms and Ardesa, S.A., d/b/a Ardesa Firearms (the “Respondents”) in connection with U.S. Patent No. 7,814,694 (the ‘694 patent).  According to the ID, the ‘694 patent generally relates to a muzzle-loading firearm with a removable breech plug having a sealing element.

The motion for temporary relief was, in accordance with ITC precedent, analyzed under Federal Circuit guidelines for granting preliminary injunctions.  Specifically, ALJ Rogers assessed (1) the likelihood of the patentee’s success on the merits; (2) irreparable harm if the motion is not granted; (3) the balance of hardships between the parties; and (4) the public interest.

Likelihood of Success

ALJ Rogers first construed certain terms from claims 1, 10 and 11 of the ‘694 patent to determine likelihood of success.  Based on the construction, ALJ Rogers found that Respondents’ anticipation and obviousness arguments did not raise substantial questions of invalidity.

For alleged infringement of claims 1 and 11 of the ‘694 patent, the issue revolved around whether the accused Vortek rifle contained a “deformable seal element” and whether that seal element has a “stepped initial portion.”  ALJ Rogers determined that the evidence supports a finding that the Vortek rifle does, indeed, contain a deformable seal element.  He also found, however, that the seal element does not have a stepped initial portion and, therefore, Respondents had raised a substantial question of infringement.

Infringement of claim 10 hinged on the existence of a “seal element” and a nose portion of the breech plug.  Based on the analysis of claims 1 and 11 of the ‘694 patent, ALJ Rogers determined that the rifle has a seal element and also found it contained a nose portion of the breech plug.  Accordingly, ALJ Rogers determined that the Complainants demonstrated a likelihood of success on the merits regarding infringement of claim 10 of the ‘694 patent by the accelerator breech plug used with the Vortek rifle. 

Turning to the domestic industry analysis, ALJ Rogers determined that the unrebutted evidence supported a finding that both the technical and economic prongs have been satisfied.

Irreparable Harm

Complainants argued irreparable harm based on (1) price erosion; (2) exclusivity erosion; (3) loss of goodwill and reputation; and (4) unquantifiable lost sales and market share.  Complainants argued that the competition forced a lowering of prices, and in order to compete, Complainants were forced to put patented technology in lower-end models.

Respondents argued price erosion is compensable, Complainants cite no case law supporting “exclusivity erosion,” the loss of market share is speculative, and offered no evidence of lost sales.

ALJ Rogers found Complainants failed to prove price erosion and, even if they had, they failed to show causation.  ALJ Rogers also rejected the “exclusivity erosion” theory, finding it unsupported by statute or case law.  ALJ Rogers further determined that the loss of goodwill and reduced investment due to infringement to be speculative.

Balancing of Hardships

Because ALJ Rogers did not find a likelihood of success, he analyzed the balance of hardships only in the event that the Commission found a likelihood of success and irreparable harm on review.  ALJ Rogers found the balance of hardship favored neither Complainants nor Respondents.

Public Interest

Because ALJ Rogers did not find a likelihood of success or irreparable harm, he analyzed the public interest only in case the Commission found a likelihood of success and irreparable harm on review.  ALJ Rogers found that muzzle-loading firearms are not the type of products that implicate a critical public interest, so this factor would not preclude issuance of a temporary exclusion order.

Bond

On the issue of bond, ALJ Rogers determined that because Complainants did not demonstrate both of the first two preliminary injunction factors, bond is unnecessary.  ALJ Rogers did, however, conduct an analysis of bond in the event that the Commission determined on review that Complainants are entitled to a temporary exclusion order, but the bond amount was redacted from the public version of the ID.

By way of background, the Complainant in this investigation is FlashPoint Technology, Inc. (“Flashpoint”) and the remaining Respondents are HTC Corp. and HTC America, Inc. (collectively, “HTC”).  The patents-in-suit are U.S. Patent Nos. 6,262,769 (the ‘769 patent) and 6,163,816 (the ‘816 patent).  According to the ID, ALJ Luckern determined that no violation of Section 337 occurred by HTC.  Specifically, ALJ Luckern determined, inter alia, that (i) Flashpoint failed to show that the asserted claims of the ‘796 and ‘816 patents are infringed, (ii) it has been established that the asserted claims of the ‘816 patent are invalid under 35 U.S.C. § 102(b) (on sale bar), (iii) it was not established that the asserted claims of the ‘769 and ‘816 patents are invalid in view of prior art, (iv) Flashpoint’s rights under the ‘816 and ‘769 patents were not exhausted with respect to HTC’s accused Windows Phone 7 products, and (v) Flashpoint did not establish a domestic industry with respect to either of the ‘769 or ‘816 patents.    

Flashpoint’s complaint originally named Respondents Nokia Corp. and Nokia, Inc.; Research in Motion Ltd. and Research in Motion Corp.; HTC Corporation and HTC America, Inc.; LG Electronics, Inc., LG Twin Towers, LG Electronics USA, Inc. and LG Electronics MobileComm USA, Inc.  The Nokia, Research in Motion and LG Respondents were terminated from the investigation, leaving only the HTC Respondents.

Flashpoint alleged direct and indirect infringement of claims 1-7, 11-13, 16-23, 26 and 30-32 of the ‘769 patent (a method and system for image capture, rotation and display in a digital camera) and claims 1-5, 8-13 and 16 of the ‘816 patent (system and method for retrieving capability parameters in an electronic hand-held device.)  According to Flashpoint, HTC’s phones running Android 2.1 or higher infringed both patents and its phones running Windows 7 infringed the ‘769 patent.  Flashpoint selected the Droid X as a representative product for the Android phones and the HD7 as exemplary for Windows 7 phones.   The Commission investigative attorney (“OUII”) agreed with Flashpoint that the Android and Windows 7 phones infringed the ‘769, but argued that Flashpoint failed to prove infringement of the ‘816 patent.

In response, HTC alleged non-infringement and that the patents were anticipated, obvious and invalid due to the on-sale bar.

ALJ Luckern applied his claim construction and determined that neither the Droid X nor the HD7 infringed any of the asserted patent claims.  ALJ Luckern further determined that Flashpoint’s infringement arguments for the ‘816 patent were contrary to his claim construction and conflicted with its own expert’s testimony.  Since those phones were representative of all the phones, he held that none of the accused phones infringed.

Next up were HTC’s various invalidity allegations.  HTC argued that the ‘769 patent was obvious under various combinations of references and the ‘816 patent was anticipated.  OUII agreed with the former allegation and disagreed with the latter.  As part of its obviousness/anticipation defense, Flashpoint had argued they were entitled to the date of conception rather than the date of filing.  ALJ Luckern held that Flashpoint failed to prove diligence in reducing the invention to practice and that the inventor’s testimony was uncorroborated.  

ALJ Luckern also held that the references HTC cited in attacking the ‘769 patent disclosed the elements of the claim, but that HTC failed to prove the motivation or the manner by which these references would have been combined.  He also rejected the anticipation argument.  In this regard, ALJ Luckern held that the reference disclosed most of the elements of the ‘816 patent, but all the elements in the reference existed outside the device while the ‘816 patent claims required that they be “contained on a handheld device.”  ALJ Luckern further determined that the ‘816 patent was invalid due to the on-sale bar.

In addition, ALJ Luckern found that Flashpoint failed to prove the technical prong of the domestic industry requirement.  Flashpoint argued certain Motorola devices practiced the ‘769 patent and Apple also licensed and practiced the patent.  Based on his claim construction, ALJ Luckern rejected these arguments.  Likewise, he held that the Motorola devices did not practice the ‘816 patent either.

Regarding remedy and bonding, if the Commission ultimately found a violation in this investigation, ALJ Luckern recommended a limited exclusion order and no bond.

The motion, filed on July 22, 2011, sought an order compelling Complainant Rambus to: (i) complete its production of prior litigation materials by a date certain; (ii) provide a comprehensive list of prior litigation documents withheld on the basis of third-party confidentiality; (iii) provide a list, identifying by production number, all prior litigation trial transcripts and exhibits; and (iv) provide a list, identifying by production number, all prior litigation deposition transcripts and exhibits.

Respondents alleged that based on Rambus’s document production, it was impossible to determine if they had produced all the requested documents.  Respondents also sought production of all prior litigation materials and to provide a list of all prior litigation transcripts and exhibits so that Respondents could determine what materials were related to the prior litigation.

Rambus argued that it was working diligently to produce documents and that certain materials could not be produced due to third-party confidentiality.  During the course of briefing, Rambus began a rolling production of certain documents.  As a result, Respondents narrowed their request to an order compelling Rambus to: (i) produce all remaining deposition exhibits listed as not yet produced, as well as any remaining unproduced prior litigation trial exhibits; (ii) produce a list that identifies the trial exhibits that correspond with the trial transcripts that Rambus has already listed in Exhibit 5 of its opposition; and (iii) provide a list of prior litigation materials being withheld on the basis of third-party confidentiality.

ALJ Essex granted the motion in part.  Regarding request 1, he found that Rambus had produced all the materials except for materials withheld due to third-party confidentiality with two different parties – Hynix and Micron.  ALJ Essex found there was nothing to compel regarding the Hynix materials as they had properly been withheld.  As for certain FTC exhibits, Rambus argued the FTC exhibits contained third-party confidential material.  ALJ Essex noted, however,  Rambus waited until after the close of discovery to contact Micron for permission to produce the materials.  Finding the delay unexplained and unacceptable, ALJ Essex permitted Rambus until September 5, 2011 to produce the FTC exhibits or provide a detailed statement to Respondents explaining why they can not produce the materials.

Rambus originally marked the prior litigation exhibits only by production number and then provided production number ranges for the exhibits.  Rambus argued they had no master list of exhibits.  ALJ Essex ordered Rambus to identify exhibits from the prior litigation by exhibit number.  ALJ Essex noted that if Rambus needed to identify its exhibits it would have no problem doing so.  Therefore, he ordered a list produced.

Finally, ALJ Essex ordered that Rambus provide a list of withheld trial exhibits.

By way of background, Complainants Hewlett-Packard Company and Hewlett-Packard Development Company, L.P. (collectively, “HP”) accused Respondents MicroJet Technology Co., Ltd. (“MicroJet”); Asia Pacific Microsystems, Inc. (“APM”); Mipo Technology Limited; Mipo Science & Technology Co., Ltd.; Mextec d/b/a Mipo America Ltd.; SinoTime Technologies, Inc.; and PTC Holdings Limited (“PTC”) of infringing certain claims of U.S Patent Nos. 6,234,598; 6,309,053; 6,398,347; 6,412,917; 6,481,817; 6,402,279; and 6,412,917.

All of the Respondents, with the exception of MicroJet, APM and PTC have either previously settled or been found in default.  HP also withdrew allegations of infringement of the ‘917 patent.

The patents-at-issue generally relate to inkjet cartridges and integrated circuits (ICs) used to control inkjets for printing.  APM provides ICs to MicroJet and PTC for use in those companies’ inkjet cartridges.

Subject Matter Jurisdiction

As an initial matter, APM contested subject matter jurisdiction.  APM argued, since that their sales of ICs to APM and MicroJet took place overseas, APM never imported any goods into the United States.  ALJ Rogers rejected this challenge, noting that HP did not accuse APM of importation of infringing products.  Rather, HP accused them of sale for importation and, under this standard, HP showed that APM sold infringing articles and knew or should have known that those articles would be imported into the US.

Claim Construction

The ‘598 patent was the only patent for which the parties identified limitations that ALJ Rogers needed to construe.  Claim 1 of the ‘598 patent reads, in part, “A printhead for an inkjet printer, comprising…”  HP argued that “printhead” was not a limitation, but merely a statement of intended use.  APM and the Commission Investigative Staff (“OUII”) argued that the specification of the patent makes it clear “printhead” is a limitation.  ALJ Rogers agreed and adopted OUII’s proposed construction that “printhead” means “the element of a printer that applies the mark or image to the print media.”

Invalidity

ALJ Rogers, in Order 31, had earlier held that the ‘053, ‘347, ‘017, ‘817 and ‘279 patents were valid.  See our January 13, 2011 post for more details.  Accordingly, the ID dealt only with APM’s validity challenge in connection with the ‘598 patent – alleging obviousness and lack of enablement and written description.  The challenge, however, was contingent upon the ALJ agreeing with HP and finding that “printhead” is not a limitation.  The construction of the term mooted APM’s challenge, but ALJ Rogers also noted that APM’s challenges to validity failed on the merits as APM put forth arguments based on conjecture and selective reading of testimony.

Infringement

Before making any determinations on infringement, ALJ Rogers ruled on a dispute between HP and the Respondents.  HP analyzed only a representative class of inkjet cartridges.  Based on these analyses, HP then accused certain named inkjet cartridges as well as all “clones” of these cartridges.  ALJ Rogers found allegations against the “clones” to be too broad and vague and, therefore, limited infringement assertions to tested cartridges and those cartridges specifically listed by HP.

The ‘598 Patent

HP alleged MicroJet, PTC, and APM infringed certain claims of the ‘598 patent directly and indirectly.  ALJ Rogers found that HP offered undisputed expert testimony that MicroJet and PTC directly infringed.  He found, however, that APM did not directly infringe because the claim requires a “printhead” and APM only produces wafers with integrated circuits.

With respect to induced infringement, ALJ Rogers further determined that MicroJet knew about all of the asserted HP patents and reviewed them closely.  They then sold the print cartridges to downstream manufacturers to be used in an infringing manner.  ALJ Rogers also held that HP failed to prove APM had knowledge of the patents and, therefore, found that APM did not induce infringement.

Regarding contributory infringement, HP accused only APM, citing to expert testimony including testimony that the circuitry of the wafers APM sold are too complex to have any other use than in an inkjet.  APM argued that there are non-infringing uses for printheads, such as using non-ink liquids.  ALJ Rogers rejected APM’s argument, pointing out that the issue is whether the wafer itself, not the printhead, had non-infringing uses.  He found that it did not have any substantial non-infringing uses.

The ‘053, ‘347, ‘817 and ‘297 Patents

According to the ID, HP provided unrebutted evidence regarding infringement of the remaining patents.  Accordingly, ALJ Rogers determined that MicroJet and PTC directly infringed, but APM did not; MicroJet induced infringement but APM did not; and APM contributed to infringement.

Domestic Industry

Summary determination establishing that HP satisfied the economic prong had been granted in Order No. 30 (see our March 9, 2011 post for more details) so the only remaining issue was the technical prong.  HP and the Staff agreed that HP put forth sufficient evidence establishing that HP’s products practiced the claims of the patents.  Respondents did not address the technical prong.

Remedy & Bonding

HP sought a general exclusion order pursuant to 19 U.S.C. §§ 1337(d)(1) (circumvention) and (d)(2) (pattern of violation).  HP argued that MicroJet (the importing entity) does not put its logo on products, making it easy for them to circumvent a limited exclusion order either directly or by using downstream sellers.  HP also argued that Respondents’ pattern of violation warranted a general exclusion order.  ALJ Rogers recommended a general exclusion order based on circumvention but found HP did not prove a pattern of violation.

ALJ Rogers also recommended a bond of 100% of the entered value.  Though it is HP’s burden to prove need for the bond, MicroJet and PTC both failed to participate.  Therefore, there is no reliable information by which the Commission can set a bond by eliminating the differential between the domestic and imported/infringing product.

Order No. 21 (dated October 13, 2010) denied Respondents’ Panasonic Corporation, Panasonic Corporation of North America, Victor Company of Japan Limited, JVC Americas Corp., Best Buy.com, LLC, Best Buy Purchasing, LLC, Best Buy Stores, L.P., B & H Foto & Electronics Corp., Buy.com Inc., Liberty Media Corporation, QVC, Crutchfield Corporation, Wal-Mart Stores, Inc., and Computer Nerds International (collectively, the “Respondents’) motion for summary determination that Complainant Freescale Semiconductor, Inc. (“Freescale”) had failed to satisfy the technical prong of the domestic industry requirement with respect to U.S. Patent No. 7,199,306.  The Commission Investigative Staff (“OUII”) opposed the motion.

According to the Order, ALJ Luckern found that, based on the record and the fact that all reasonable inferences are to be drawn in Freescale’s favor, the Respondents did not meet their burden of establishing failure to satisfy the technical prong.

Order No. 22 (dated October 15, 2010) denied Freescale’s motion for summary determination of infringement of claim 1 of U.S. Patent No. 5,715,014 by the Respondents. 

In support of their opposition, Respondents argued, in part, that there are clearly issues of factual dispute and Freescale failed to construe the claim.  OUII opposed the motion because Freescale conducted an infringement analysis without a proper construction of the claim which would allow Respondents the opportunity to come forward with disputed material facts.  OUII further opposed the motion as it was filed before expert discovery had been taken which deprived the ALJ of beneficial expert opinions.  ALJ Luckern denied the motion based on the existence of disputed facts which were brought to light in Respondents’ response to Freescale’s statement of allegedly undisputed facts filed in support of its motion.

Order No. 23 (dated October 19, 2010) denied Freescale’s motion for summary determination of infringement of claims 1 and 2 of the ‘306 patent by the Respondents.

Respondents argued, among other things, that Freescale could not meet its burden of showing no triable issue of fact and had failed to provide a claim construction.  OUII did not respond to the motion.  ALJ Luckern held that Freescale’s failure to construe claim terms was fatal to its motion.

Respondents filed the motion seeking a stay until the completion of the Federal Circuit NVidia Appeal on a closely related investigation (Inv. No. 337-TA-661) or until December 31, 2001, whichever comes first.

According the Order, there are five factors to consider, when deciding whether to grant a stay.

1.  The state of discovery and the hearing date

Respondents argued the case was in the early stages and discovery had just begun.  Rambus and OUII responded that discovery is progressing and documents and interrogatory responses have already been exchanged.

ALJ Essex found this factor neutral in determining whether to grant the stay.  Specifically, ALJ Essex determined that while discovery had commenced, it had only been for a couple of months and the hearing date was more than 7 months away.

2.  Whether a stay will simplify the issues and hearing of the case

Respondents urged a stay until the Federal Circuit issued opinions in the NVidia Appeal and two consolidated district court cases (the ”Micron/Hynix cases”).  Respondents argued the former would clarify issues relating to some of the patents in the case, while the latter would provide guidance in the spoliation of evidence issues in the case.  Rambus and OUII argued that the Micron/Hynix cases relate to different patents and thus will not resolve any issues in this investigation and the effect of the NVidia Appeal is purely speculative.

ALJ Essex found this factor weighed against granting a stay.  In particular, ALJ Essex determined that if the Federal Circuit upholds the Commission’s decision in the NVidia Appeal, it would not impact this investigation since the Micron/Hynix cases involve different patents.

3.  The undue prejudice or clear tactical disadvantage to any party

Respondents argued a stay would not prejudice Rambus.  Rambus had filed a concurrent district court case in which they could be awarded damages for any period in which the stay was in place.  Rambus and OUII responded that the stay would amount to a royalty-free license for the duration of the stay, as the ITC cannot award damages.

ALJ Essex agreed with Rambus and OUII.  Specifically, ALJ Essex found that while damages may be available in the district court, Respondents failed to show that these damages are sufficient to compensate for the continued import injury to Rambus.  Furthermore, the ITC is required to complete the investigation as quickly as possible.  These factors weighed against issuing a stay.

4.  The stage of the parallel proceedings

Respondents argued that the NVidia Appeal and Micron/Hynix cases were both further along than the present investigation with an opinion on Micron/Hynix expected “imminently” and an NVidia opinion expected in the next year.

ALJ Essex rejected Respondents’ argument, finding this factor weighed against a stay.  The NVidia opinion is not expected in the near future while the Micron/Hynix opinions will have little, if any, effect on the investigation.

5.  The efficient use of Commission resources

Respondents advocated a stay as a means of conserving resources by avoiding the need to “re-do” portions of the investigation if they conflicted with the Federal Circuit opinions.  Rambus and OUII argued that, for the reasons articulated in the earlier factors, a stay would not be an efficient use of the Commission’s resources.

ALJ Essex found this factor also weighed against a stay.  In particular, ALJ Essex determined that while the NVidia opinion could save the Commission resources, that argument is based on the assumption that NVidia would prevail at the Federal Circuit.  In any event, issues relating to other patents in the investigation, unrelated to the NVidia Appeal, would still have to be resolved by the Commission.

* * * * *

With four factors weighing against a stay and one neutral, ALJ Essex denied Respondents’ motion.

According to the ID, ALJ Gildea determined that no violation of Section 337 had occurred by Apple in the importation into the United States, the sale for importation, or the sale within the United States after importation of certain electronic devices, including mobile phones, portable music players, or computers by reason of infringement of U.S. Patent Nos. 6,518,957 (the ‘957 patent), 6,714,091 (the ‘091 patent), 6,834,181 (the ‘181 patent), 6,895,256 (the ‘256 patent), or 6,924,789 (the ‘789 patent).  ALJ Gildea also determined that a domestic industry exists that practices the ‘789 patent, but not the ‘091 patent, the ‘181 patent, and the ‘256 patent.

The Asserted Patents and The Accused Devices

U.S. Patent No. 6,714,091

The ‘091 patent discloses a voltage controlled oscillator assembly that regulates the output power of one or more oscillators.  Nokia alleged that claims 1-12 of the ‘091 patent are infringed by the iPhone 3G, 3GS and 4; the iPad WiFi and WiFi+ 3G; and the iPod Touch.

All of the asserted claims of the ‘091 patent claim that “the output power is controlled by applying a variable current bias.”  Nokia argued that the accused products infringe because, during design of the chips it was possible to choose different current biases; that is, “variable” requires only a capability to be changed during design, not an action during operation.  The ALJ rejected this as contrary to the specification and prosecution history of the patent.  Based on this rejection of Nokia’s theory, the Apple products were held to not infringe.

U.S. Patent No. 6,834,181

The ‘181 patent discloses a mobile communication device, mechanically designed for combining an antenna and a speaker in a common chamber, in order to reduce the size of the device, which enhances the bass tone of the speaker.  Nokia alleged that claims 1-6 and 8 of the ‘181 patent are infringed by the iPhone 3G, 3GS and 4.

All of the asserted claims require (1) a housing structure, (2) a common chamber for carrying a speaker and radio frequency component, and (3) multiple acoustic chambers in the common chamber.  While ALJ Gildea found that the accused devices all contained elements (1) and (2), he held that they did not have multiple acoustic chambers “wherein the sum of the volumes of said multiple acoustic cavities provide a speaker chamber having a acoustic volume tor provide a desired acoustic characteristic from the speaker.”  ALJ Gildea agreed with Apple that the accused products do not have cavities that are connected in order to sum the volume.

U.S. Patent No. 6,895,256

The ‘256 patent discloses a mobile phone that includes a camera and a processor that enables the device to send and receive camera signals via the internet.  Nokia alleged claims 1 and 16 of the ‘256 patent were infringed literally, or under the doctrine of equivalents, by the iPhone 3GS and 4; and the 4th Generation iPod Touch.

The ‘256 patent uses the terms “mobile terminal” and “mobile phone” interchangeably.  Based on this usage, ALJ Gildea held that the iPod Touch was not a “mobile terminal” since it could only communicate over very short distances.

As for the iPhones, Nokia alleged they include a single-chip camera module that provides a control bus signal and an integrated mobile terminal processor that is responsive to that control bus signal, as required by all the asserted claims.  ALJ Gildea agreed with Apple that none of its image sensors provide a control bus signal as understood in the art.  Therefore, there is no literal infringement of the claims.

Nokia also argued that the transfer of information from the single-chip camera module to the integrated mobile terminal processor constituted infringement under the doctrine of equivalents.  ALJ Gildea rejected this allegation as it was supported only by general statements by Nokia’s witnesses without providing any rationale or particularized analysis.

U.S. Patent 6,924,789

The ‘789 patent discloses a user interface with keypad (or keymat) able to provide two types of user input – through keys that actuate a respective switch and through an “integrally disposed impedance sensor” that would permit a user to, for example, control a focus on a display of the electronic apparatus.  Nokia alleged the iPod Classic and iPod Nano 5th Generation infringed claim 5 of the ‘789 patent under the doctrine of equivalents.

Claim 5 of the ‘789 patent states that the keymat and impedance sensor are “coextensive” which was construed to mean “having the same spatial boundaries.”  Apple presented evidence that the sensors beneath the wheel of the iPod did not extend to the edge of the wheel and were, therefore, not coextensive.  Nokia, however, presented evidence that the gap was minimal.  ALJ Gildea found that Nokia proved infringement under the doctrine of equivalents.

Later in the ID, ALJ Gildea agreed with Apple that claim 5 of the ‘789 patent is anticipated by the “110 Application.”

This was the only claim held invalid by ALJ Gildea, despite Apple raising a number of invalidity defenses, including anticipation, obviousness, and failure to disclose the best mode against some or all of the claims of each asserted patent.

Domestic Industry

ALJ Gildea held that Nokia established the economic prong of the domestic industry requirement for all of the asserted patents.  However, ALJ Gildea determined that only the ‘789 was practiced by Nokia in the United States and thus Nokia failed to establish the technical prong of the domestic industry requirement for the ‘091 patent, the ‘181 patent, and the ‘256 patent.

Remedy and Bond

Nokia and the Commission Investigative Staff asked for a limited exclusion order should the Commission find a violation.  Apple argued that a limited exclusion order is not warranted because Nokia’s domestic industry is waning.  In the alternative, Apple asked the Commission to impose a quarterly reporting requirement on Nokia.

ALJ Gildea recommended that in the event the Commission finds a Section 337 violation, a limited exclusion order and cease and desist order should issue.  ALJ Gildea further recommended that if the Commission deems a reporting requirement appropriate, an annual, rather than quarterly, reporting requirement should be considered.

The parties also differed on bond.  Nokia argued for a 100% bond because prices fluctuated widely making it impossible to use price comparisons as a basis for determining the bond, and because it would be inappropriate to base a bond on reasonable royalty due to Nokia’s cross-license agreement.  Apple argued for a lower bond – 1% to be exact – owing to the fact that Nokia’s request relies “solely on unsworn attorney argument.”  They also argued that Nokia’s phones undersell Apple’s phones and thus a price differential analysis would be inappropriate.

ALJ Gildea found that both parties had submitted insufficient information to determine a bond rate.  He suggested that if the Commission finds a violation they should require the parties to re-submit arguments on bond.

By way of background, the Complainant in this investigation is Hewlett-Packard Co. (“HP”).  Comptree Ink, InkPlusToner.com, SmartOne Services LLC, and Zhuhai Gree Magneto-Electric Co., Ltd. were terminated from the Investigation due to settlement agreements or consent orders.  The following remaining seven Respondents (collectively, “the Defaulting Respondents”) failed to answer the Complaint and were found in default: Zhuhai National Resources & Jingjie Imaging Products Co., Ltd. of China; Mipo International Ltd. of Hong Kong; Mextec Group Inc. d/b/a Mipo America Ltd. of Miami, Florida (“Mextec”); Shanghai Angel Printer Supplies Co. Ltd. of China; Shenzhen Print Media Co., Ltd. of China; Tatrix International of China; and Ourway Image Co., Ltd. of China.

On August 30, 2010, ALJ Essex granted HP’s motion for summary determination that a domestic industry exists and that the Defaulting Respondents violated Section 337 with respect to claims 6 and 9 of U.S. Patent No. 6,089,687 ( the ‘687 patent) and claims 1, 5, and 6 of U.S. Patent No. 6,264,301 ( the ‘301 patent).  ALJ Essex further provided recommendations as to a remedy, should a violation ultimately be found by the Commission.

After reviewing the relevant portions of the record, the Commission determined to follow the recommendations of ALJ Essex and issued a general exclusion order with respect to claims 6 and 9 of the ’687 patent and claims 1, 5, and 6 of the ’301 patent, and a cease and desist order against Mextec with respect to the same claims.  Specifically, the Commission determined that a general exclusion order was appropriate because HP demonstrated the difficulty in identifying and preventing infringing suppliers, due to the high demand and relatively low production costs for toner.  The Commission also agreed that a cease and desist order was appropriate for Mextec, a domestic company with an inventory of infringing toner.  The public interest consideration further weighed in HP’s favor as the public interest favors respect for intellectual property rights and HP showed it could satisfy the demand for toner in the United States.  Finally, the Commission approved a 100% bond during the Presidential review period.

Respondents Freescale Semiconductor, Inc., Freescale Semiconductor Japan Ltd., Freescale Semiconductor Malaysia Sdn. Bhd., Freescale Semiconductor Singapore Pte. Ltd., Freescale Semiconductor Taiwan Ltd., Freescale Qiangxin (Tianjin) IC Design Co., Ltd., Freescale Semiconductor (China) Limited, Mouser Electronics, Inc, Motorola, Inc., Newark Electronics Corporation, and Newark Corporation (collectively “Respondents” or “Freescale”) – sought to amend their responses to assert an inequitable conduct defense regarding U.S. Patent No. 5,933,364 (the ’364 patent).  Respondents argued that they only learned of the underlying facts from documents recently produced by Complainant Panasonic Corporation (“Panasonic”) and in a recent deposition of one of the ’364 patent’s co-inventors.  The Commission Investigative Staff supported the motion because the above information was disclosed by Panasonic during discovery and would not prejudice the parties.

Panasonic opposed the motion, arguing that Freescale delayed taking the discovery which led to the disclosure.  They also complained they would be prejudiced as discovery is now closed and they will be unable to conduct any discovery on the new inequitable conduct allegation.

In granting the motion, ALJ Charneski determined that Freescale worked diligently during discovery – noting that delays in depositions were due, in part, to the logistics of scheduling depositions in Japan, and that it was not possible for Freescale to plead inequitable conduct when they responded to the amended complaint.  He further found that all the documents relating to inequitable conduct were in the possession, custody and control of Panasonic, and so they would not be prejudiced by granting the motion.

The complaint alleges that a host of proposed respondents from Guangzhou China, Texas and California – T&T Hanbag Industrial Co., Ltd., Sanjiu Leather Co., Ltd. of Guangzhou, Meada Corporation (d/b/a Diophy International), Pacpro, Inc., Jianyon Zheng, Alice Bei Wang, Trendy Creations, Inc., The Inspired Bagger, and House of Bags, unlawfully import into the U.S., sell for importation, and/or sell within the U.S. after importation certain handbags, luggage, accessories and packaging thereof that infringe U.S. Trademark Registration Nos. 297,594, 1,643,625, 1,653,663, 1,875,198, 2,773,107, 2,177,828, 2,181,753, and 1,519,828.

The Inspired Bagger and House of Bags are alleged to be in the business of purchasing counterfeit bags from China and selling them in the United States.

As for the other proposed respondents, Louis Vuitton alleges that husband and wife team Jianyon Zheng and Alice Bei Wang “own, operate or control large-scale international counterfeiting and infringing enterprises targeting Louis Vuitton, among other brands.”  The Complaint alleges that Zheng and Wang created an elaborate set of shell corporations, including the other proposed respondents (with the exception of The Inspired Bagger and House of Bags).

Louis Vuitton also alleges Zheng and Wang hide ownership and structure by dissolving and reincorporating various organizations.  In fact, Louis Vuitton points to one entity controlled by Zheng that Louis Vuitton alleges was dissolved days after he met with Louis Vuitton to discuss counterfeiting allegations.  Due to the frequent dissolution and reincorporation of companies, Louis Vuitton believes there may be other undiscovered entities controlled by Zheng or Wang.

The proposed respondents are accused of infringing numerous marks protecting Louis Vuitton’s famous Toile Monogram Mark by selling bags that are either counterfeit (and, in some cases, advertised as “knockoffs”) or have confusingly similar design elements.

Louis Vuitton argues it satisfies the domestic industry prong due to its production facility in San Dimas, California which employs numerous workers and produces, among other things, bags with the Toile Monogram Mark.

Louis Vuitton seeks a permanent exclusion order and permanent cease and desist order.