The complaint alleges that the following entities (collectively, the “Proposed Respondents”) unlawfully import into the U.S., sell for importation, and/or sell within the U.S. after importation certain Blu-ray disc players, components thereof, and products containing the same that infringe one or more claims of U.S. Patent No. 6,263,505 (the ‘505 patent):

• D&M Holdings, Inc. of Japan
• D&M Holdings US, Inc. of Mahwah, New Jersey
• Denon Electronics (USA) LLC of Mahwah, New Jersey
• Funai Electric Co., Ltd. of Japan
• Funai Corp., Inc. of Rutherford, New Jersey
• Haier Group Corp. of China
• Haier America Trading, LLC of New York, New York
• Harman International Industries, Inc. of Stamford, Connecticut
• Inkel Corp. of South Korea
• LG Electronics, Inc. of South Korea
• LG Electronics U.S.A., Inc. of Englewood Cliffs, New Jersey
• Marantz America LLC of Mahwah, New Jersey
• Onkyo Sound & Vision Corp. of Japan
• Onkyo USA Corp. of Upper Saddle River, New Jersey
• Orion America, Inc. of Princeton, Indiana
• Orion Electric Co., Ltd. of Japan
• Panasonic Corp. of Japan
• Panasonic Corp. of North America of Seacaucus, New Jersey
• P&F USA, Inc. of Alpharetta, Georgia
• Philips Electronics North America Corp. of Andover, Massachusetts
• Pioneer Corp. of Japan
• Pioneer Electronics (USA) Inc. of Long Beach, California
• Samsung Electronics Co., Ltd. of South Korea
• Samsung Electronics America, Inc. of Ridgefield Park, New Jersey
• Sharp Corp. of Japan
• Sharp Electronics Corp. of Mahwah, New Jersey
• Sherwood America, Inc. of La Mirada, California
• Sony Corp. of Japan
• Sony Computer Entertainment, Inc. of Japan
• Sony Corp. of America of New York, New York
• Sony Electronics, Inc. of San Diego, California
• Sony Computer Entertainment of Foster City, California
• Toshiba Corp. of Japan
• Toshiba America Information Systems, Inc. of Irvine, California
• VIZIO, Inc. of Irvine, California
• Yamaha Corp. of Japan
• Yamaha Corp. of America of Buena Park, California
• Yamaha Electronics Corp., USA of Buena Park, California

According to the complaint, the ‘505 patent is directed to technology that “allows someone who is watching a movie on Blu-ray disc to access ‘fun facts’ about an actor or a scene without pausing the movie to do a search on the Internet.”  Supplemental information requested by the user is delivered and synchronized with the movie as it continues to play without the need for any additional computers or Internet browsers.

The complaint describes the infringing activities of the Proposed Respondents by dividing the Proposed Respondents into groups based on each Respondent and its subsidiaries, resulting in seventeen groups.  The complaint specifically identifies a number of allegedly infringing products associated with the various Proposed Respondents.

As to related litigation, the complaint describes that two ex parte reexamination requests have been filed against the ‘505 patent (one granted, and one deemed moot based on the other), and the reexamination process is ongoing.  The complaint states that Walker Digital filed a civil action on April 11, 2011, in the U.S. District Court for the District of Delaware accusing Proposed Respondents of infringing the ‘505 patent, and several defendants have requested a stay pending outcome of the reexamination proceedings.  The complaint also states that Walker Digital filed a civil action on April 22, 2011, in the U.S. District Court for the District of Delaware accusing six different defendants of infringing the ‘505 patent, although that case has been terminated. 

Walker Digital asserts that it meets both the economic and technical prongs of the domestic industry requirement, arguing that it has “made substantial investment in the exploitation of the ‘505 patent through licensing activities.”  Specifically, Walker Digital licensed the ‘505 patent to California-based electronics maker Oppo Digital Inc., a company that designs and sells digital electronics products, including Blu-ray disc players that practice the ‘505 patent.  The complaint also alleges that Walker Digital has licenses with other entities listed in a confidential filing. 

With respect to potential remedy, the complaint requests the Commission to issue a permanent limited exclusion order barring entry into the U.S. of Proposed Respondents’ Blu-ray disc players and components that infringe the ‘505 patent.  Walker Digital also requests permanent cease and desist orders directed against the Proposed Respondents, directing each domestic Proposed Respondent to cease and desist from importing, marketing, or selling Blu-ray disc players or components that infringe the ‘505 patent.

By way of background, the investigation was instituted on May 30, 2008.  PPC is the Complainant and there were eight respondents, none of whom were part of the Federal Circuit appeal, and four of whom ultimately defaulted.  PPC only sought a violation on appeal with respect to the four defaulting respondents – Hanjiang Fei Yu Electronics Equipment Factory, Zhongguang Electronics, Yangzhou Zhongguang Electronics Co., Ltd., and Yangzhou Zhongguang Foreign Trade Co., Ltd.  On October 13, 2009, ALJ Gildea issued his ID finding, inter alia, that the defaulting respondents were in violation of Section 337 by reason of infringement of U.S. Patent Nos. 5,470,257 (the ‘257 patent), in addition to 6,558,194, D519,076, and D440,539.  With respect to the ‘257 patent, which was the subject of the appeal, ALJ Gildea concluded that a domestic industry existed in the ‘257 patent, holding that PPC’s “CMP” connector practiced all elements of claim 1.

Upon reviewing the ID, the ITC adopted a different construction of claim 1’s “engagement means” limitation than ALJ Gildea, concluded that PPC’s CMP connector did not practice this limitation, and thus held that PPC had not satisfied the technical prong of the domestic industry requirement for the ‘257 patent.

On appeal, the parties agreed that the “engagement means” limitation is a means-plus-function limitation, and agreed upon the function, but disagreed with respect to the corresponding structure in the specification.  The Federal Circuit agreed with PPC (and with ALJ Gildea) that the “engagement means” limitation “should be construed to include only what is necessary to perform the function, and not import structures that, though present in the preferred embodiment, are not actually necessary.”  Accordingly, the Federal Circuit found that PPC satisfied the technical prong of the domestic industry requirement, removing “the final bar to finding violation of  § 337 as to the defaulting respondents.”  It entered judgment of a violation by the defaulting respondents, and remanded for further proceedings consistent with its opinion.  The Federal Circuit declined PPC’s invitation to direct entry of a general exclusion order, finding that this would be premature, “at least because the ITC has not made findings on the proper remedy and bonding.”

By way of background, and as reported in our February 11, 2009 and April 13, 2009 posts, the investigation was instituted on December 28, 2007, based on the complaint of Applica Consumer Products, Inc. of Miramar, Florida (“Applica”) and Waters Research Company of West Dundee, Illinois (“Waters”).  On December 1, 2008, ALJ Rogers determined that the Respondents Lucky Litter and OurPet’s violated Section 337 based on the importation, sale for importation, or sale after importation of certain self-cleaning litter boxes and components thereof by reason of infringement of claim 33 of the ‘847 patent.  The Commission reviewed and affirmed ALJ Rogers’ findings of infringement and that claim 33 was not invalid, and issued both limited exclusion orders and cease-and-desist orders against Lucky Litter and OurPet’s.

The Federal Circuit agreed with appellants that the construction adopted by the Commission – that “automatic operation position” be construed as “a position of the mode selector switch where combing is initiated in response to a cat exit” – was incorrect because neither the claim nor the specification provided support for limiting the term to a cat exit.  Further, the Federal Circuit found that the prosecution history showed that “the patentee viewed his invention more broadly and sought reissue to remove ‘cat exit sensor and delay means which are too limiting of the invention.’”

After determining the proper claim construction, the Federal Circuit then addressed the invalidity issue.  It agreed that claim 33 was not anticipated by the Carlisi reference since Carlisi did not disclose a mode selector switch, as required by the claim.  The Court found, however, that “even if Carlisi does not precisely disclose a mode selector switch, modifying Carlisi’s litter box to include such a switch would have been trivial to one of ordinary skill in the art.”

The intervenors (Applica and Waters) asserted alternative bases for supporting a violation of Section 337 on the basis that the Commission erred when construing terms in other asserted claims of the ‘847 patent, and that under their proposed constructions, the accused products would infringe those other claims.  The Court found these arguments “without merit” and concluded that there was no error in the Commission’s construction of these other claim terms.

By way of background, GL filed a complaint with the ITC against SiRF in 2007, alleging that  SiRF’s importation and sale of certain Global Positioning System (“GPS”) chips, chipsets, products, and software infringed the ‘346 patent, the ‘651 patent, the ‘000 patent, U.S. Patent No. 6,937,187 (the ‘187 patent), U.S. Patent No. 7,158,080 (the ‘080 patent), and U.S. Patent No. 6,417,801 (the ‘801 patent).  The ITC instituted an investigation (Inv. No. 337-TA-602).  ALJ Carl C. Charneski issued an initial determination on August 8, 2008, concluding that all asserted claims were valid and infringed.  SiRF and the Commission Investigative Staff petitioned for review of several of ALJ Charneski’s rulings, but the ITC determined to review only three:  (1) whether GL had standing to assert the ‘346 patent, (2) whether SiRF directly infringed the ‘651 patent, and (3) whether SiRF directly infringed the ‘000 patent.  The ITC declined to review aspects of the ALJ’s decision relating to claim construction, invalidity, and infringement.  On January 15, 2009, the ITC found that GL had standing to assert the ‘346 patent and that SiRF directly infringed both the ‘651 patent and the ‘000 patent.  The ITC did not address several issues raised by SiRF, including claim construction issues and whether the intervening In re Bilski decision rendered certain of the claims of the ‘187 patent and the ‘801 patent not eligible under 35 U.S.C. § 101.  The ITC issued a limited exclusion order and cease-and-desist orders, prohibiting the importation and sale of covered GPS devices.

SiRF appealed the ITC decision.  In its appeal,  SiRF asserted that the investigation should have been terminated as to the ‘346 patent because of lack of standing due to the failure to join a co-owner of the patent.  Specifically, SiRF argued that the invention was conceived while the inventor worked for another company, and that the other company should be deemed a co-owner of the patent.  In reaching its decision to affirm the ITC’s finding that GL had standing, the Federal Circuit considered the language of the inventor’s employee agreement with the other company.  That agreement required that employees assign “all inventions… which are related to or useful in the business” to the company.  The Federal Circuit agreed with the ITC’s findings that SiRF did not prove that the ‘346 patent was “related to or useful in” the other company’s business, and thus failed to establish that the other company was a co-owner of the patent.

Regarding the ‘651 and ‘000 patents, SiRF asserted that it did not infringe the two patents because it did not perform all of the steps in the method claims since, according to SiRF, certain steps of the method claims directed to satellite communication were performed by customers and end users.  The ITC found joint infringement of such method claims.  However, the Federal Circuit did not address joint infringement.  Instead, the Court reviewed the claim construction, and concluded that SiRF directly infringed the claims.

According to the Federal Circuit’s claim construction, the “communicating” step of claim 1 of the ‘651 patent and the “transmitting” step of the ‘000 patent are not limited to direct communication or transmission.  Accordingly, SiRF performed these steps by initiating the process of communicating or transmitting, if the files are actually transmitted to the end users.  No downloading – the step completed by the receiver- is required by the claim.  The Federal Circuit also considered the construction of the “processing” limitation in claim 1 of the ‘651 patent, and the “representing” step in claim 1 of the ‘000 patent.  The parties agreed that these steps must take place in the mobile GPS device.  SiRF asserted that this meant the end users had to initiate the steps.  The Federal Circuit disagreed, and found that SiRF infringed since its devices and software dictate the performance of the “processing” and representing” steps.  The Federal Circuit noted that “once the GPS receiver is enabled and ready to process the data, only SiRF’s actions are involved in ‘processing’ or ‘representing’ the data.”  Since SiRF performed all of the steps, the Federal Circuit found direct infringement.

The Federal Circuit found SiRF’s arguments regarding certain issues which the ITC declined to review unpersuasive, including issues regarding claim construction in the ‘080 patent, the ‘801 patent, and the ‘187 patent.  However, the Federal Circuit did comment on SiRF’s In re Bilski argument.  SiRF asserted that the methods of the ‘801 and ‘187 patents do not meet the “tied to a particular machine or apparatus” or “transforms a particular article into a different state or thing” tests announced in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008), rendering the claims not patent-eligible under 35 U.S.C. § 101.  SiRF contended that the claimed methods could be performed entirely in the human mind.  The Federal Circuit disagreed.  The Court noted that claim 1 of the ‘801 patent required “pseudoranges” to estimate the distance from “the GPS receiver to a plurality of GPS satellites.”  Claim 1 of the ‘187 patent requires the estimation of “states” that are “associated with the satellite signal receiver, and the formation of a “dynamic model… to compute [the] position of the satellite signal receiver.”  The Court found that the methods could not be performed without the use of a GPS receiver, and that the presence of the GPS receiver placed a “meaningful limit on the scope of the claims.”  Thus, the Court held that the claims of the ‘801 and ‘187 patents were directed to patentable subject matter.

By way of background, on May 12, 2006, the Commission instituted an investigation based on a complaint filed by Amgen asserting a violation of Section 337 in the importation into the United States, sale for importation, or sale within the United States after importation of certain products and pharmaceutical compositions containing recombinant human erythropoietin by reason of infringement of certain claims U.S. Patent No. 5,441,868 (the ‘868 patent), U.S. Patent No. 5,547,933 (the ‘933 patent), US. Patent No. 5,618,698 (the ‘698 patent), U.S. Patent No. 5,621,080 (the ‘080 patent), U.S. Patent No. 5,756,349 (the ‘349 patent), and U.S. Patent No. 5,955,422 (the ‘422 patent).  The notice of investigation named Roche Holding Ltd. of Basel, Switzerland; F. Hoffman-La Roche, Ltd. of Basel, Switzerland; Roche Diagnostics GmbH of Mannheim, Germany; and Hoffman La Roche, Inc. of Nutley, New Jersey (collectively, “Roche”) as respondents.

On August 31, 2009, after a remand of the original investigation from the United States Court of Appeals for the Federal Circuit (see our May 1, 2009 post for more details), Amgen moved for summary determination that Roche violated Section 337 by importing and using a pegylated erythropoietin product that infringed claims of the ‘868 patent, the ‘933 patent, the ‘698 patent, and the ‘422 patent. Amgen also requested a limited exclusion order that would preclude importation of Roche’s product regardless of the party seeking to import such product.  Roche did not oppose Amgen’s motion for purposes of this investigation.  The Commission Investigative Staff (“OUII”) also did not oppose Amgen’s motion, but indicated that the motion did not resolve an asserted claim of the ‘349 patent or certain asserted claims of the ‘933 patent.

On December 22, 2009, Amgen moved to terminate the investigation with respect to certain claims of the ‘933 patent, the ‘080 patent, and the ‘698 patent.  In addition, on December 31, 2009, Amgen filed a supplemental motion for summary determination with respect to an asserted claim of the ‘349 patent.  Roche did not oppose these motions.  OUII did not oppose Amgen’s motion to terminate the investigation in part, but did oppose Amgen’s supplemental motion for summary determination.

According to the April 6 notice, the Commission has determined to grant Amgen’s motion to terminate the investigation with respect to claims 4, 5, and 11 of the ‘933 patent, claims 4 and 6 of the ‘080 patent, and claims 4 and 5 of the ‘698 patent.  The Commission has determined that further briefing is necessary to decide the motion for summary determination.

The parties were requested to brief their positions on the following issues:

1)   How does the United States Court of Appeals for the Federal Circuit’s decision in Amgen Inc. v. F Hoffman-La Roche Ltd, 580 F.3d 1340 (Fed. Cir. 2009), vacating certain aspects of the decision by the United States District Court of Massachusetts in Amgen Inc. v. F Hoffinan-La Roche, Ltd., No. 05-12237-WGY (D. Mass. Oct. 2, 2008), affect Amgen’s original motion for summary determination filed on August 31,2009, for each asserted claim?  With respect to this issue, the parties were asked to address the Commission’s February 3, 2009 opinion in Certain Semiconductor Integrated Circuits Using Tungsten Metallization and Products Containing Same, Inv. No. 337-TA-648.

2)   If the Commission can proceed with respect to any claim(s), the parties were asked to explain whether the Commission should apply the principles of claim or issue preclusion to the district court case and what standard the Commission should apply.

3)  Can the Commission apply claim or issue preclusion to the permanent injunction order issued by the district court on December 22,2009, and if so, to what effect?  With respect to this issue, the parties were asked to address whether the signed stipulation formed part of the district court’s judgment, and, if so, does Amgen rely on the stipulation for claim or issue preclusion?

4)   If the Commission denies Amgen’s motions for summary determination with respect to any claims, how should the Commission proceed with respect to those claims?

The Commission also asked for written submissions that address the form of remedy, if any, that should be ordered, on public interest, and bonding.  If a party seeks exclusion of an article from entry into the United States for purposes other than entry for consumption, the Commission noted that the party should so indicate and provide information establishing that activities involving other types of entry either are adversely affecting it or likely to do so.

The Complainants in this investigation are Avago Technologies Fiber IP Pte. Ltd., Avago Technologies General IP Pte. Ltd., and Avago Technologies Ltd.  The sole Respondent is Emcore Corporation.

According to the notice, ALJ Essex held that a violation of Section 337 occurred in connection with the importation into the U.S., sale for importation, or sale within the U.S. after importation of certain optoelectronic devices, components thereof, and products containing same by reason of infringement of claims 1, 2, 3, and 5 of U.S. Patent No. 5,359,447 (the ‘447 patent).  ALJ Essex further determined that no such violation of Section 337 had occurred with respect to U.S. Patent No. 5,761,229 (the ‘229 patent) and claim 6 of the ‘447 patent.

ALJ Essex also determined that the ‘447 patent is not invalid, not unenforceable, and a domestic industry exists with respect to the ‘447 patent.  The notice further stated that Respondent did not have an implied license to practice the asserted claims of the ‘447 patent.  ALJ Essex additionally determined that the asserted claim of the ‘229 patent was not invalid, but neither the asserted claim of the ‘229 patent nor claim 6 of the ‘447 patent were infringed.  Finally, ALJ Essex held that while the economic prong of the domestic industry requirement for the ‘229 patent had been satisfied, the technical prong for the ‘229 patent had not been satisfied.

The notice issued by ALJ Essex released only the title pages and conclusions of law sections of the ID.  We will provide additional information once the public version of the ID issues in its entirety.

By way of background, the Complainant in this investigation is General Electric Co. (“GE”) and the Respondents are Mitsubishi Heavy Industries, Ltd., Mitsubishi Heavy Industries America, Inc. (“MHIA”), and Mitsubishi Power System, Inc. (“MPSA”) (collectively, “MHI”).  On August 7, 2009, ALJ Carl C. Charneski issued the Initial Determination (“ID”) finding that a violation of Section 337 had occurred by Mitsubishi Heavy Industries, Ltd. and MPSA with respect to claim 121 of the asserted ‘039 patent, and claim 15 of the asserted ‘985 patent.  ALJ Charneski further determined in the ID that there was no violation with respect to these claims by MHIA.  Additionally, ALJ Charneski determined in the ID that there was no violation of Section 337 by any party with respect to claims 5, 7, and 8 of the asserted ‘221 patent.  See our October 29, 2009 post for more details.  On October 8, 2009, the Commission issued a notice determining to review the ID, except the issue of importation and the intent finding underlying the ALJ’s inequitable conduct determination.  See our October 8, 2009 post for more details.  The imported products are variable speed wind turbines and the specialized power circuits that allow them to safely adapt to modern power grids.  The patents-in-suit each deal with problems encountered with attaching the turbines to the power grids.

In its opinion, the Commission reversed the ALJ’s determination of violation of Section 337 with respect to the ‘039 and ‘985 patents, and affirmed the ALJ’s determination of no violation with respect to the ‘221 patent.  The Commission also found no infringement of the ‘039 and ‘221 patents, and that GE failed to satisfy the domestic industry requirement with respect to the ‘985 patent.

The ‘039 Patent

The Commission first reviewed the ALJ’s determination that the phrase “inverter controller means” of claim 121 was not a means-plus-function claim term.  ALJ Charneski had reasoned that sufficient structure was present in claim 121 because one of ordinary skill in the art would understand the meaning of “inverter controller,” relying on the testimony of GE’s expert.  However, the Commission found that the testimony did not establish that one of ordinary skill would know how to program the computer to achieve this function other than by looking at the specification, and thus claim 121 falls under 35 U.S.C. 112 ¶ 6.  The Commission also reviewed the ALJ’s determination that the phrase “inverter for supplying output electricity” did not contain a limitation that the inverter be located on the grid- or line-side of the generator (as opposed to the generator-side), finding that the term “output” indicates that the claim phrase in fact refers to an inverter on the line-side from which the electricity for the grid emerges.

The Commission then reviewed the ALJ’s determination that the accused products practice claim 121 literally, finding that the converter control unit (“CCU”) in the imported turbines does not perform the function of the “inverter controller means” because it is not responsive to a power factor control signal within the meaning of the patent, and does not operate using a structure that is the same or equivalent to the power factor controller and inverter control unit disclosed in the patent.  The Commission also found that the accused products do not literally meet the “inverter for supplying output electricity” limitation because the inverter in the imported turbines is not on the line-side of the generator and does not supply output AC to the grid.

Regarding the doctrine of equivalents, the Commission found that the CCU in the accused products was not equivalent to the claimed “inverter controller means” limitation, agreeing with MHI that its CCU operates differently because it controls the active switches of the rotor-side converter and did not perform the claimed function of controlling the active switches of an inverter for supplying output energy.  The Commission also found that the MHI CCU was not equivalent to the claimed “inverter for supplying output electricity,” agreeing with MHI that the rotor-side inverter was not equivalent to the grid-side inverter because the former does not supply output AC electricity despite supplying reactive power, and because the rotor-side inverter supplies power at an angle that varies.

The Commission reversed ALJ Charneski’s determination that GE satisfied the domestic industry requirement for the ‘039 patent.  Because it was undisputed that there was no difference between the GE products and MHI products for the purposes of analyzing whether the products were covered by the ‘039 patent, the Commission found that GE had not satisfied the technical prong of the domestic industry requirement for the same reasons that it found that MHI did not literally infringe claim 121.

Although the Commission affirmed ALJ Charneski’s determination that claim 121 was adequately described in the specification, it noted that ALJ Charneski analyzed written description under an incorrect claim construction.  According to the Commission, once “inverter control means” was understood as a means-plus-function claim, then it was construed as possessing the corresponding structure of the specification and equivalents thereof, and thus was adequately described in the patent.  The Commission took no position on enablement because the parties did not focus their arguments on the issue.

With respect to obviousness, the Commission did not take issue with ALJ Charneski’s analysis that none of the prior art suggested output of electricity at a desired power factor angle in response to a power factor control signal, or how to achieve this.

The ‘221 Patent

The Commission reviewed ALJ Charneski’s determination that the term “predetermined value” in claim 5 is not dependent solely on the value of current, finding ALJ Charneski’s construction erroneous in light of the plain language of the claim, the specification, and expert testimony.  The Commission instead construed “predetermined value” as a value of current, and thus found that claim 5 requires the turbine to measure current or an adequate proxy thereof to determine whether the current has declined to a level previously decided upon.

Next, the Commission reviewed ALJ Charneski’s determination that the accused products literally met each limitation of claims 5, 7 and 8, particularly the “predetermined value” limitation of the “emergency unit” in independent claim 5.  The Commission reversed ALJ Charneski on the grounds that the imported turbines did not measure an adequate proxy for current as required by the claims.  The Commission also reversed ALJ Charneski’s determination of infringement under the doctrine of equivalents, finding no evidence that the accused products achieve the release of rotor current feed-in when the current drops to a predetermined value “in the sense that it coincides with a decline to a predetermined value of current.”

As to the domestic industry requirement, the Commission affirmed ALJ Charneski’s determination that GE did not prove that it satisfied the “releasing” limitation of claim 5, either literally or under the doctrine of equivalents.  Thus, GE did not satisfy the technical prong of the domestic industry requirement, and the Commission therefore found no violation of Section 337 with respect to the ‘221 patent.

The ‘985 Patent

The Commission did not review ALJ Charneski’s finding of no deceptive intent by the patentee in failing to name Thomas Wilkins as an inventor of the ‘985 patent, and thus determined that GE did not commit inequitable conduct.  However, MHI argued that GE lacked standing to assert the ‘985 patent based on ALJ Charneski’s finding that Wilkins was a proper inventor who was improperly left off the final patent application.  The Commission disagreed, finding that although Wilkins was an unnamed inventor and GE provided no showing that he had an obligation to assign the patent to GE (nor did GE join Wilkins as a party to the investigation), Wilkins is nevertheless not named on the patent and therefore lacks such legal title as to make him a co-owner of the patent.  The Commission further found that Wilkins has an equitable interest that can be perfected to legal title upon application to the USPTO or through correction by a district court under 35 U.S.C. § 256, but that the Commission lacked the authority to correct inventorship under any statutory provision.

The Commission reviewed the ALJ’s determination that the limitation “shunt current from the inverter and generator rotor” in claim 15 cannot require a crowbar or other shunting circuit between the rotor and the rotor-side converter, finding that the shunt circuit cannot be within the inverter and still shunt current “from” the inverter, and thus construing the term to mean that the shunt circuit is not located within the converter.  Because the shunt circuit in GE’s turbine did not shunt current from the inverter because it was located within the inverter, the Commission found that GE did not literally satisfy this requirement of claim 15.  The Commission further found that GE did not satisfy the function/way/result test for equivalence, in particular because of the manner by which the switches inside the GE inverter shunt the circuit.  Moreover, the Commission noted that the purpose of the shunt was to protect the inverter from high currents, whereas the components that the ‘985 patent sought to protect were being subjected to high current in the GE turbines.  Thus, the Commission found that GE did not practice the asserted claim of the ‘985 patent and therefore did not satisfy the domestic industry requirement with respect thereto.  The Commission took no position on the other disputed issues raised with respect to the ‘985 patent.

By way of background, Sony and Philips jointly developed the standard for CD-R and CD-RW discs which they called the “Orange Book” standard.  The Court held that U.S. Patent Nos. 4,999,825 and 5,023,856 (the “Raaymakers patents”), claiming an analog method of encoding discs, undeniably relate to the Orange Book.  Another patent, Sony’s U.S. Patent No. 4,942,565 (the “Lagadec patent”) claims a digital method of encoding, which is incompatible with the analog standard.  One of the claims in the Lagadec patent, however, is arguably broad enough to fall within the Orange Book.  Philips, the party responsible for licensing the patents, pooled all three patents together.  Princo took a license, but when it stopped paying royalties, Philips initiated an action before the ITC.

As a defense to the infringement claim, Princo made two patent misuse arguments before the ITC.  First, Princo argued that the package license was an illegal tying arrangement, because it required licensing the Lagadec patent which was not necessary for the Orange Book Standard.  Second, Princo argued that Sony and Philips had entered into an agreement to not license the Lagadec patent separately from the patents in the pool.  The Federal Circuit panel rejected Princo’s first misuse argument but remanded to the Commission for further analysis of the second allegation.  Specifically, the panel ordered the Commission to determine whether there was, in fact, such an agreement and whether Lagadec was a potentially viable alternative to the Orange Book standard.

In response to the panel opinion, the Commission, plaintiff U.S. Philips Corporation and Princo all filed petitions for rehearing en banc.  The Federal Circuit denied Princo’s petition but granted the ITC’s and Philips’ petitions.  The Court asked for briefing from the parties addressing the second misuse theory.

The ITC argues that the Federal Circuit erroneously ordered a remand on an issue that was never before the Commission.  According to the ITC, no party raised the issue of whether Sony and Philips had entered into an agreement not to license the Lagedec patent as competitive technology to the Orange Book.

In its brief, Philips agrees with the ITC that it is not proper to remand to the ITC for findings on the existence of an agreement when Princo, who had the burden of proving the existence of an agreement, never sought those findings before the Commission.  Furthermore, Princo never proved existence of an agreement nor identified a market that such an agreement might have harmed.  According to Philips, both of these factors are essential to proving a patent misuse case.

Philips also asserts that, even if the issue had been raised and an agreement existed, it could not be the basis of a patent misuse defense without an unprecedented and unwarranted expansion of misuse law.  According to Philips, since the Lagadec patent stemmed from a joint effort by Sony and Philips to develop CD-R/RW technology, any agreement not to license separately is a reasonable ancillary restraint that has the pro-competitive effect of encouraging joint ventures.  Because such an agreement is facially reasonable, the proper standard by which to analyze any alleged agreement is under a rule of reason, rather than the lower per se standard.  Under the rule of reason standard, Princo failed to prove patent misuse.  Princo did not present proof of a relevant market, did not prove actual or likely competitive harm, and did not prove that the Lagadec patent would be used to enter a relevant market to compete with the Orange Book.

Philips further asserts, even if the agreement existed and was anticompetitive, it could not be used as the basis for a misuse defense.  According to Philips, the misuse defense applies only where the patentee conditions a license on terms that improperly expand the patent grant.  For the ITC to find misuse — where Philips never tried to impose license conditions going beyond the terms of the patents in the Orange Book — would be an “unprecedented and unwise expansion of the misuse defense.”

Princo, on the other hand, asserts in its brief that it (and the Commission Investigative Staff ) did argue to the Commission that Philips and Sony had an agreement to suppress competition.  According to Princo, it asserted at the ITC that Philips decided to combine with its competitors and create a patent pool and this created a horizontal restraint of trade.  Princo also points to arguments it made about how the cost of patent licenses went down when the Taiwan Fair Trade Commission ordered the pool licensors to license the patents individually.  Princo also points to arguments it made that when Philips and Sony tied essential and non-essential patents in the pool, they ensured there would be no competing standard.  According to Princo, there is sufficient argument and evidence on the record to support its patent misuse allegation.

Princo also asserts that the Commission did, in fact, address Princo’s horizontal competition-suppression theory in its final determination.  As to the waiver arguments made by the ITC and Philips, Princo asserts that it raised the issues in its opening brief on appeal and that the ITC and Philips both addressed the merits of its argument substantively, without asserting that these issues had been waived.  In other words, Princo asserts that the waiver argument has been waived.

Oral argument in this case is scheduled for March 3 at 2:00 p.m.

The complaint alleges that the following proposed respondents (collectively, “Respondents”) unlawfully import into the U.S., sell for importation, and sell within the U.S. after importation certain dynamic random access memory semiconductors (“DRAMs”) and downstream goods containing the same, which allegedly infringe Infineon’s U.S. Patent Nos. 5,480,051, 5,422,309, 5,397,664, and 7,071,074 (“the asserted patents”):

• Elpida Memory Inc. of Japan
• Elpida Memory (USA) Inc. of Sunnyvale, California
• Rexchip Electronics Corp. of Taiwan
• Kingston Technology Co. Inc. of Fountain Valley, California
• Kingston Technology (Shanghai) Co. Ltd. of China
• Kingston Technology Far East Co. Ltd. of Taiwan
• Kingston Technology Far East (M) Sdn. Bhd. of Malaysia
• Payton Technology Corp. of Fountain Valley, California
• A-Data Technology Co. Ltd. of Taiwan
• A-Data Technology (USA) Co. Ltd. of Hacienda Heights, California
• Apacer Technology Inc. of Taiwan
• Apacer Memory America Inc. of Milpitas, California
• Buffalo Inc. of Japan
• Buffalo Technology (USA), Inc. of Austin, Texas
• Corsair Memory of Fremont, California
• Corsair Memory (Taiwan) of Taiwan
• Mushkin Inc. of Englewood, Colorado
• Mushkin APAC of Malaysia
• Transcend Information Inc. of Taiwan
• Transcend USA of Orange, California

According to the complaint, the asserted patents relate to semiconductor memory chips. In particular, the inventions relate to methods for anisotropically etching aluminum layers during the fabrication of integrated circuits, producing a metallization level having contacts and interconnects that connect the contacts, manufacturing a phase mask for projection lithography, and placing, sizing, and shaping dummy structures within integrated circuits.

In the complaint, Infineon alleges that Elpida Memory Inc., Elpida Memory (USA) Inc., and Rexchip Electronics Corp. (collectively, “Elpida”) manufacture, import, sell for importation, and sell after importation into the U.S. certain DRAM modules that infringe the asserted patents, and that all Respondents manufacture, import, sell for importation, and sell after importation into the U.S. downstream goods containing Elpida DRAM modules that infringe the asserted patents.

Regarding domestic industry, Infineon states that it has made significant investments in plant, equipment, labor, and capital in the U.S. with respect to Infineon products protected by the asserted patents.  In particular, Infineon points to its large manufacturing facilities in California, Michigan, and Pennsylvania.  Additionally, Infineon states that it has made substantial investments in the exploitation of the asserted patents in the U.S. through research and development, engineering, licensing, product development, testing, and quality control, particularly pointing to its strategic alliances with third party U.S. technology companies and its substantial investments in research and development activities in upstate New York.

Regarding potential remedy, Infineon requests that the Commission issue a general exclusion order, a limited exclusion order “specifically directed to each named Respondent and its subsidiaries and affiliates,” and a cease-and-desist order prohibiting the sale and distribution within the U.S. of Elpida DRAMs and all downstream goods containing the same that infringe the asserted patents.

By way of background, the Complainants in this investigation are LSI Corporation and Agere Systems Inc. (collectively, “Complainants”) and the Respondents are Tower Semiconductor, Ltd. (“Tower”), Jazz Semiconductor (“Jazz”), Qimonda AG, Powerchip Semiconductor Corporation (“Powerchip”), Grace Semiconductor Manufacturing Corporation (“Grace”), Integrated Device Technology, Inc. (“IDT”), Spansion, Inc. (“Spansion”), and Nanya Technology Corporation (“Nanya”) (collectively, “Respondents”).

On September 21, 2009, ALJ Charneski issued the initial determination (“ID”) finding no violation of Section 337.  The ID held “that each accused process of each Respondent  practices each of the claims[1, 3, and 4]” asserted against it, but [Respondents] also “established by clear and convincing evidence that claims 1, 3, and 4 of [U.S. Patent No. 5,227,335 (the ‘335 patent)] are invalid due to anticipation in view of IBM Process A.”  ALJ Charneski found that a domestic industry existed for the ‘335 patent based on Complainants’ licensing activities.

The asserted claims relate to methods of fabricating an integrated circuit by depositing a tungsten layer by chemical vapor deposition covering a glue layer consisting of a conducting nitride.  The Complainants accused several of Respondents’ processes of infringement, but these processes were identified only in the heavily-redacted portion of the ID.

Infringement

ALJ Charneski interpreted four claim terms within the ‘335 patent.  Complainants argued that “depositing” as used in the patent, did not include forming a layer through nitridization.  ALJ Charneski disagreed, relying upon applicants’ reference during prosecution to Titanium Nitride being “deposited,” and the ‘335 specification reciting that “depositing” includes “well known techniques,” and nitridization “is a well known technique.”

The Complainants and Respondents disagreed on the meaning of a “glue layer” and whether this layer required actual contact between the underlying dielectric layer and the tungsten. ALJ Charneski held that while the nitride itself within the glue layer need not contact the dielectric, “in order to have good adhesion to both the underlying dielectric layer and the tungsten (i.e. to adhere to them, which is the very nature of a glue) the glue layer must come into contact with them.”

Additionally, ALJ Charneski held that the “exposed underlying material” covered by the glue layer in claim 1 is not limited to silicon or metallic silicides on the substrate, denying the interpretation requested by IDT.

Finally, contrary to IDT and Grace’s arguments,  ALJ Charneski interpreted “etching” in claim 4 to include chemical mechanical polishing.

ALJ Charneski held that “IDT’s non-infringement defense turns largely on disputed claim constructions.”  ALJ Charneski’s rejection of IDT’s proposed constructions of “glue layer,” “exposed underlying material” and “etching,”  are “key to IDT’s arguments.”  Accordingly, ALJ Charneski found that the “IDT Process [ ] meets every element of claims 1, 3, and 4.” He similarly found Grace’s non-infringement arguments to “hinge primarily on its [rejected] proposed construction” of “glue layer” and “etching,” and its process also met “every element of claims 1, 3, and 4.”  Nanya, Powerchip and Spansion relied upon a  rejected construction of “depositing” for non-infringement.  For at least this reason, ALJ Charneski held that Nanya’s process meets every element of claims 1 and 4, Powerchip’s process meets every element of claim 1, and Spansion’s process meets every element of claims 1, 3, and 4.  ALJ Charneski additionally stated that the accused processes of Jazz and Tower met every element of claim 1.

Invalidity

According to the ID, in late October 1985, an IBM research team signed an invention disclosure form (“IDF”) that eventually led to the issuance of U.S. Patent No. 5,760,475.  The IDF included a “Process A” that depicts “a glue layer in which a layer of titanium is sputtered onto the surface and then thermal annealed in nitrogen (nitridized).”  Respondents asserted that “Process A”  anticipated claims 1, 3, and 4 of the ‘335 patent under 35 U.S.C. §102(g).

Complainants argued that IBM suppressed and concealed Process A “to gain a competitive edge over its rivals.”  ALJ Charneski rejected this argument.  He found that the seventeen month gap between the IDF and filing of a patent application was within the six to 24 month period IBM commonly took to review and file a patent application.  ALJ Charneski additionally noted that during the seventeen month gap, IBM continually worked to commercialize and improve part of the invention relating to the glue layer, and this additional work was described in the specification of the IBM ‘475 patent.

Complainants additionally argued that IBM’s Process A did not include all limitations of claim 1, because it did not disclose “depositing” a glue layer containing at least one nitride.   This argument, however, relied upon Complainant’s rejected construction argument that “depositing” not including “nitridization.”   ALJ Charneski further held that “Process A” anticipated dependent claims 3 and 4 of the ‘335 patent.

Domestic Industry

Complainants asserted that the ‘335 patent played a prominent role in their licensing activities, with an in-house licensing program (with employees across four states), substantial payments to outside counsel and consultants, and substantial royalty revenue.  Respondents challenged the alleged nexus between the ‘335 patent and Complainants’ licensing activities, and demanded that Complainants “break out or account for expenditures specifically for the ‘335 patent.”  ALJ Charneski noted an absence of any authority requiring Complainants to separately break out expenses to show a nexus.  He agreed with the Complainant and the Commission Investigative Staff that a sufficient nexus between the ‘335 and substantial licensing activities had been shown, and that the domestic industry requirement was satisfied.

Please see our November 30, 2009, January 22, 2010, and January 29, 2010 posts for more details about this investigation.