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, the Complainants in this investigation are Avago Technologies Fiber IP Pte. Ltd., Avago Technologies General IP Pte. Ltd., and Avago Technologies Ltd. (collectively “Avago”).  The sole Respondent is Emcore Corporation (“Emcore”).  In the ID, ALJ Essex determined 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 because of infringement of claims 1, 2, 3, and 5 of U.S. Patent No. 5,359,447 (the ‘447 patent).  However, ALJ Essex found no violation of Section 337 with respect to U.S. Patent No. 5,761,229 (the ‘229 patent) and claim 6 of the ‘447 patent.  ALJ Essex determined that the asserted claims of the ‘447 patent are valid and enforceable.   ALJ Essex further determined that a domestic industry existed with respect to the ‘447 patent, but not with respect to the ‘229 patent since the technical prong for the ‘229 patent had not been satisfied.  He also found that Emcore did not have an implied license to practice the claims of the ‘447 patent.  Regarding the ‘229 patent, ALJ Essex determined that the asserted claim was valid, but not infringed.

The Patents

The ‘447 patent relates to an optical communication system using a relatively large-area vertical-cavity surface-emitting laser (“VCSEL”) where the laser has an opening larger than about eight micrometers and is coupled to a multimode optical medium.  The laser is driven into multiple transverse mode operation.  Claims 1, 2, 5, and 6 of the ‘447 patent were asserted.

The ‘229 patent relates to particular methods and apparatuses by which the intensity of light emitted by laser-based light sources having lasers with only one light-emitting face is controlled.  The only claim at issue was claim 8.

Claim Construction

ALJ Essex construed several disputed terms from the ‘447 patent.  Emcore argued that “multimode optical medium” should be construed as any medium through which multiple modes of an optical signal can propogate, thereby extending the scope to cover the atmosphere (and the prior art).  Avago and the Commission Investigative Staff proposed more restrictive constructions.  ALJ Essex construed the term to mean “a guided wave medium (e.g., an optical fiber or a waveguide) through which multiple modes of an optical signal can propagate.”  In addition, “optically coupled” was construed as meaning “acceptance of light into the multimode optical medium in an amount sufficient for the purposes of the application.”

For the ‘229 patent, Emcore argued that the preamble term “an integrated laser-based light source generating an output light beam having a controlled intensity” in claim 8 of the ‘229 patent should be limiting.  The ALJ found that the preamble did not limit the claim because claim 8 recites a complete invention and the preamble neither provides needed structure nor antecedent bases for any of the limitations in the body of the claim.

ALJ Essex construed the term “a laser having one and only one light-emitting face from which a light beam is radiated as a radiated light beam” as being limited to a laser that radiates a light beam from only one end of its cavity.  “The intensity at which the laser generates the radiated light beam with a signal-to-noise ratio above a threshold level being greater than a predetermined maximum intensity” was construed as requiring that the laser operate such that the signal-to-noise ratio of the light generated by the laser is above some threshold signal-to-noise ratio and the intensity of the light is greater than a predetermined maximum intensity.  “Predetermine maximum intensity” was construed as the targeted upper bound for the intensity of the signal.

Infringement

According to the ID, Emcore products incorporate laser transmitters and receivers, and are used for optical communication when assembled with an optical medium. The products include transmitters and receivers that have varying numbers of channels, ranging from 12 channel and 4 channel assemblies to individual laser transmitters and receivers.  None of Emcore’s accused products directly infringe any claims of the ’447 Patent by themselves, because (as acknowledged by Avago) “Emcore does not connect the parts together.”   However, the ALJ determined that Emcore’s customers or end users configure at least some of the accused products into an optical communication network that infringes certain claims of the ’447 Patent.  Specifically, the ALJ found that Emcore imported or sold within the United States at least a 12-channel parallel transmitter and receiver sets and 4-channel transceiver modules, which were established as comprising accused VCSEL arrays, which infringed claims 1, 2, 3, and 5 of the ‘447 patent.  However, according to the ID, Emcore did not infringe claim 6, which is further limited to the network in claim 1 “wherein the multi-mode optical medium comprises an optical waveguide,” because there was no proof that any Emcore product was coupled to an “optical waveguide.”

For the ‘229 patent, Avago argued that certain Emcore products infringed claim 8 of the ‘229 patent.  However, ALJ Essex determined that Avago failed to prove that the accused products met the “the intensity at which the laser generates the radiated light beam with a signal-to-noise ratio above a threshold level being greater than a predetermined maximum intensity” and the “coupling means coupling such a fraction of the radiated light beam to the light sensor means that the output light beam has a signal-to-noise ratio greater than the threshold level and an intensity less than the predetermined maximum intensity” limitations, especially because Avago and its experts never actually measured the signal-to-noise ratio in the accused products.

Invalidity

Emcore argued that certain claims of the ‘447 patent were anticipated by two references, Banwell and Von Lehman.  The ALJ found the claims not anticipated because the references did not disclose the use of a “multimode optical medium,” and Emcore did not prove that this was inherently in the references.  Moreover, the Von Lehman reference used air as the media, not the multi-mode optical media as defined in the claim construction.  Emcore also argued that the claims of the ‘447 patent were obvious, but the ALJ found that they did not meet the clear and convincing evidence standard.  Further, the commercial success and skepticism of others regarding the invention supported the ALJ’s finding of non-obviousness.

Emcore argued that the ‘229 patent was anticipated by or obvious over certain Japanese patent publications, both of which were considered by the PTO during prosecution.  The ALJ found that these references did not disclose or otherwise suggest the limitations related to the signal-to-noise ratio.  Moreover, the commercial success regarding the invention supported the finding of non-obviousness.  The ALJ found the asserted claim of the ‘229 patent not anticipated and not obvious.

Licensing

Emcore argued that it had an implied license to practice the asserted claims of the ‘447 patent as a result of the conduct between Emcore and Avago.  Alternatively, they argued that Avago must grant them a license on reasonable and non-discriminatory terms as stated in multi-source agreements that Avago and Emcore participated in.  The ALJ rejected all of Emcore’s arguments regarding licensing.

Unenforceability

Emcore also argued that the ‘447 patent was unenforceable because of inequitable conduct during its prosecution.  Specifically, they argued that certain statements made in response to rejections were misleading.  The ALJ found that such statements were intended to be advocacy, and were not material misrepresentations.  The ALJ also found no evidence of intent to deceive, and thus rejected Emcore’s unenforceability argument.

Domestic Industry

The ALJ found that certain Avago products are used in networks that meet the requirements of claim 1 of the ‘447 patent, thus meeting the technical prong of the domestic industry requirement.  He also found that Avago met the economic prong of the domestic industry requirement.  However, because Avago did not prove that Avago products meet the signal-to-noise ratio elements of claim 8 of the ‘229 patent, the ALJ found that Avago did not meet the technical prong of the domestic industry requirement for the ‘229 patent.

Remedy and Bond

With respect to remedy, ALJ Essex recommended that if the Commission finds a violation of Section 337, it should issue a limited exclusion order directed to the accused products that infringe claims 1, 2, 3, and 5 of the ‘447 patent.  He also recommended that the Commission issue a cease and desist order directed to Emcore, and recommended a bond set at 3% as a reasonable royalty rate.

According to the Order, Nokia served document requests on January 26 and February 11, 2010.  Nokia served its Notice of Examination of Apple’s corporate witnesses on February 15, 2010.  Apple did not produce any documents or identify any witnesses.  On March 15, 2010, Nokia filed its motion, seeking an order compelling Apple to (1) produce responsive documents within ten days, and (2) make corporate-designee witnesses available for deposition no later than March 31, 2010.  Nokia also asked ALJ Gildea to order Apple to produce those corporate witnesses without the condition that Nokia take the deposition of those witnesses in their individual capacities at the same time.

In its opposition filed March 25, 2010, Apple argued that Nokia’s motion to compel should be denied as moot or premature.  Apple pointed out that, as of the time Nokia filed its motion, the parties were still engaged in negotiations regarding document production and neither party had produced any documents.  Moreover, Apple argued that it was prepared to produce a large volume of documents from at least 11 custodians, beginning on March 29, 2010 – which Apple characterized as exactly what Nokia sought with its motion to compel.

Regarding corporate designees, Apple argued that Nokia had not yet formally served its Notice of Examination, having only provided Apple with a courtesy copy.  Moreover, Apple objected to the scope and appropriateness of Nokia’s notice, but explained that it was working to identify witnesses and dates.  Apple noted that Nokia had yet to identify any witnesses or dates for deposition.

Apple argued that Nokia’s request that Apple produce corporate witnesses without the condition that Nokia take the deposition of those witnesses in their individual capacities at the same time was unreasonable.  Pointing out that the ITC disfavors multiple depositions of the same party, Apple argued that Nokia should be prepared to depose witnesses in both their corporate and individual capacity at the same time or offer good cause as to why additional examination is necessary.   Finally, pointing out that Nokia had yet to identify a witness it intends to depose twice, Apple argued that Nokia’s request was hypothetical, and not ripe for consideration.

The Commission Investigative Staff (“OUII”) generally supported Nokia’s motion because Apple had failed to produce documents or identify witnesses, despite their stated intent to do so in the near future.  OUII argued that Apple had sufficient time to comply.  However, OUII agreed with Apple, arguing that Nokia’s request regarding taking corporate and individual depositions separately was not ripe for adjudication.

In the Order, ALJ Gildea noted the expedited pace of Section 337 investigations and that the hearing in this matter was scheduled for November 30, 2010.  ALJ Gildea determined that Apple’s delay was unwarranted and ordered it to produce responsive documents, beginning March 29, 2010, completing the process by April 2, 2010.  He also ordered Apple to provide as soon as possible, and no later than April 2, 2010, the identities of persons with knowledge of the topics in Nokia’s Notice of Examination, along with proposed dates for depositions.  Lastly, ALJ Gildea found Nokia’s request regarding the separation of corporate and individual depositions not ripe for adjudication.

The patent at issue is a reissue patent.  All of the claims depend from claim 1.  Claim 1, as originally issued, was directed to “a glove” having certain characteristics, including “having elastic properties such that when stretched from the initial configuration to fit about the hand, the elastomeric material conforms to the configuration of the hand, initially exerting a predetermined pressure on the hand…”  In reissue, claim 1 was amended.  For convenience, elements below added to the claim in reissue are indicated by underlining, with deleted elements indicated by striking through the words.  As amended, claim 1 is directed to “a closely fitting glove . . . having a thickness and elastic properties such that the glove is capable of being stretched to fit closely about the hand and when stretched from the initial configuration to fit closely about the hand, the elastomeric material conforms to the configuration of the hand, initially exerting an initial a predetermined pressure on the hand…”

A claim construction hearing was held on December 13, 2007.  Of particular interest was the change of the term “predetermined pressure” to “initial pressure.”  The ALJ issued an order on March 14, 2008, construing the terms in dispute.  The ALJ determined that “predetermined pressure” meant “the amount of pressure decided in advance that will be exerted on the hand of the glove after the glove is donned.”

After denying all motions for summary determination, the ALJ held an evidentiary hearing from May 19 to May 27, 2008.  On August 25, 2008, the ALJ issued an initial determination concluding that certain of the claims of the ‘616 patent were infringed.  The ALJ rejected respondents’ arguments that the claims were invalid for anticipation, obviousness, failure to disclose the best mode, lack of enablement, and indefiniteness.  The ALJ also rejected respondents’ arguments that the claims were unenforceable due to inequitable conduct.  The ALJ found the claims invalid, however, under 35 U.S.C. § 251 as having been impermissibly broadened during reissue, and due to a defective reissue declaration.

Tillotson filed its petition for review on September 8, 2008.  The Commission reviewed the construction of the term “predetermined pressure,” invalidity under 35 U.S.C. § 251, invalidity due to a defective reissue declaration, no invalidity due to failure to disclose the best mode, and no invalidity due to lack of enablement.  The Commission affirmed the ALJ’s findings on December 22, 2008.

According to Tillotson’s opening brief, the first issue on appeal is whether the Commission incorrectly defined the term “predetermined” in the product claim to require a mental step in contradiction to the intrinsic evidence.  Further, Tillotson asserts that the Commission further erred in finding the ‘616 claims broadened during reissue, absent any evidence that any product or structure would not infringe the claims before the reissue amendments but would infringe them after the reissue amendments.  A related second issue, according to Tillotson, is whether the ITC erred in holding the reissue declarations defective.

In its brief, Tillotson alleges that the Commission’s definition of “predetermined pressure” is legally improper because it conflicts with the intrinsic record.  According to Tillotson, the ITC-determined definition — “the amount of pressure decided in advance that will be exerted on the hand of the glove after the glove is donned”– is inconsistent with the ‘616 patent’s specification because the specification does not require that the first pressure be known before the glove is donned.  Further, Tillotson asserts that the requirement that pressure be decided in advance was alleged to be an improper “cognitive step” for a product claim.  Instead, Tillotson argues that the specification only requires that the first pressure be known in advance of a later pressure measurement, and requires no mental step.  With this interpretation, changing the term “predetermined pressure” to “initial pressure” does not change the scope of the claim.  Accordingly, there was no impermissible broadening of the claim during reissue.  Tillotson also asserts that its reissue declarations were, in fact, proper, as the substitution of terms was well-explained in the declarations.

The Commission, in its brief, asserts that the construction of the term “predeterrmined” by the ALJ was proper.  Further, the Commission argues that the patentees did improperly broaden the claims of the ‘616 patent during reissue because a glove that exerts an initial pressure would not meet the “predetermined pressure” limitation in the original claims if the initial pressure was not, in fact, predetermined.  Thus, the reissued claim is broader in scope.  The Commission further asserts that the amendment during the reissue was not sufficiently explained in the reissue declarations.

The Smart Glove/Henry Schein Intervenors, in their brief, assert that the ITC properly defined the term “predetermined pressure.”  They further assert that the ITC correctly found that the claims of the ‘616 patent were improperly broadened in the reissue, and that the ITC correctly found the reissue declarations improper.  In addition, they assert that the ITC erred in finding that the ‘616 patent was not invalid due to Tillotson’s failure to disclose the best mode for practicing its invention.

In its reply brief, Tillotson emphasizes that the claim as a whole was not broadened by the reissue application, even if the Commission’s claim construction is correct.  It asserts that there is no evidence that any glove would infringe the reissue claims that would not also infringe the original claims.  In addition, Tillotson argues that the ALJ’s rejection of the respondent’s best mode defense was correct, and further that the intervenors’ best mode argument is an improper issue for appeal because the Commission did not rely on the ALJ’s rejection of the best mode defense.

By way of background, Global Locate, Inc. (“GL”) filed a complaint with the ITC against SiRF Technology (“SiRF”) in April 2007, alleging violation of Section 337 by SiRF’s importation and sale of certain Global Positioning System (“GPS”) chips, chipsets, products, and software, which allegedly infringed certain patents owned by GL.  The patents at issue included U.S. Patent No. 6,606,346 (“the ‘346 patent”), U.S. Patent No. 6,704,651 (“the ‘651 patent”), U.S. Patent No. 6,651,000 (“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 complaint named SiRF and four of its customers as respondents.  Broadcom Corporation is also a complainant.  The Commission instituted an investigation (Inv. No. 337-TA-602) and an evidentiary hearing was held.  On August 8, 2008, ALJ Carl C. Charneski issued an initial determination 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 3:  (1) whether GL had standing to assert the ‘346 patent, (2) whether SiRF directly infringes the ‘651 patent, and (3) whether SiRF directly infringes the ‘000 patent.

On January 15, 2009, the ITC found that GL had standing to assert the ‘346 patent and that SiRF directly infringes both the ‘651 patent and the ‘000 patent.  According to SiRF’s briefs, 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 two patents, the ‘187 patent and the ‘801 patent not patent-eligible.  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.

According to SiRF’s opening and reply briefs, the issues on appeal involve six patents.  Regarding the ‘346 patent, the issue is whether the investigation should have been terminated as to this patent because of lack of standing due to the failure to join a co-owner of the patent.  Specifically, SiRF argues 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.  Regarding the ‘651 and ‘000 patents, there are several issues.  First, SiRF questions whether the ITC erred in ruling that SiRF infringes the two patents on the ground that SiRF performs all of the steps in the method claims.  SiRF argues that they do not perform all of the steps in the method claims directed to satellite communication because customers and end users perform some of the steps.  Alternatively, they argue that certain of the steps of those same claims are not performed in the U.S.  As a related issue, SiRF questions whether the ITC violated its duty under the Administrative Procedures Act by failing to address SiRF’s argument that all of the steps of claim 1 of the ‘651 patent and the ‘000 patent are not performed in the U.S.  SiRF also questions whether the ITC’s infringement determination as to the ‘651 patent is based on an erroneous claim construction of “satellite ephemeris,” whether the ITC’s infringement determination as to the ‘000 patent is based on an erroneous claim construction of “satellite signals,” and whether the ITC erred in finding that the Zhao patent did not anticipate claims in the ‘000 patent.

Regarding the ‘080 patent, SiRF characterizes the issue as whether the ITC’s infringement determination is based on an erroneous claim construction of “long-term satellite tracking data.”  Regarding the ‘801 and ‘187 patents, the issues on appeal include whether the ITC erred in ruling that the asserted method claims recite processes that are patent-eligible under 35 U.S.C. § 101.  SiRF argues 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).  Finally,  SiRF questions whether the ITC erred in finding that SiRF meets the “dynamic model” and “sequential estimator” limitations of the ‘187 patent claims.

According to the Commission’s Brief in support of the ITC’s final determination, the issues on appeal also involve the same six patents.  Regarding the ‘346 patent, the Commission sees the issue as whether it properly rejected SiRF’s challenge to GL’s standing to assert the patent.  Regarding the ‘651 and ‘000 patents, the Commission sees the issues as (1) whether it correctly construed “satellite ephemeris” in the ‘651 patent, consistent with the definition in the patent, (2) whether it  correctly construed  “satellite signals” in the ‘000 patent, consistent with a preferred embodiment, (3) whether it  correctly found that SiRF directly infringes the two patents because SiRF controls performance of all of the claimed steps in the U.S., and (4) whether substantial evidence supports its finding that the Zhao patent did not anticipate the asserted claims of the ‘000 patent.  Regarding the ‘080 patent, the Commission characterizes the issue as whether the term “long-term satellite tracking data” merely requires that the “satellite tracking data,” as a whole, be “long term.”  Regarding the ‘801 and ‘187 patents, the Commission sees the issues on appeal as whether the process claims in the ‘801 and ‘187 patents are tied to a particular machine, such as a GPS receiver, and whether substantial evidence supported the Commission’s finding that certain SiRF products infringe asserted claims of the ‘187 patent.

In Broadcom and GL’s (collectively “GL”) Intervenor Brief, GL argues (1) that the Commission’s determination of the ownership of the ‘346 patent was correct, (2) that the Commission properly rejected SiRF’s claim of no liability due to either divided infringement, or performance of some steps outside the U.S., (3) that the Commission properly construed “satellite ephemeris” in the ‘651 patent and “satellite signals” in the ‘000 patent, (4) that the Commission correctly found that the Zhao reference did not anticipate the asserted claims of the ‘000 patent, (5) that the Commission properly construed “long-term satellite tracking data” in the ‘080 patent, (6) that the ‘’801 and ‘187 patents claim patentable subject matter, and (7) that the Commission properly found that SiRF infringes the ‘187 patent.

According to the ID, O2 Micro and LG executed a Memorandum of Understanding between them on July 30, 2009.  They represented in their joint motion that there were no other agreements between O2 Micro and LG concerning the subject matter of the investigation.  O2 Micro and LG asserted that termination of the investigation “would pose no threat to the public interest” and would result in “conservation of the parties’ time and resources.”

The Commission Investigative Staff (“Staff”) supported the motion because it complied with the procedural requirements of Commission Rule 210.21(b)(1).  Further, the Staff found that, though the entered agreement contemplated a more detailed agreement, it was “sufficiently binding to provide ‘an appropriate basis on which to terminate this investigation…’”  Moreover, the Staff argued that the agreement appeared to settle all existing disputes between O2 Micro and LG.  The Staff also supported the motion because the dismissal was not contrary to the public interest.

ALJ Gildea found that O2 Micro and LG complied with the requirements of 19 C.F.R. § 210.21 (b).  Noting that “termination of litigation under these circumstances as an alternative method of dispute resolution) is generally in the public interest,” ALJ Gildea agreed with O2, LG, and the Staff, and granted the motion to terminate the investigation with respect to LG.

According to the Order, Commission Rule 210.14(b)(2) provides that the presiding ALJ may allow amendments to the pleadings under conditions that avoid prejudicing the public interest and the rights of the parties if disposition on the merits will be facilitated, or if other good cause is shown.  ALJ Luckern noted that the ITC typically favors allowing respondents to amend their answer, however, an unjustified delay in presenting an affirmative defense may show that there is no good cause to amend the pleading.

Nintendo sought to amend its answer to add inequitable conduct defenses based on Hillcrest’s failure to disclose several references cited in Office Actions rejecting a Hillcrest-owned application directed to similar subject matter, Application No. 11/286,702 (“the ‘702 application”).  In addition, Nintendo sought to add an inequitable conduct defense based on Hillcrest’s misrepresentations that it had small entity status during the prosecution of the asserted patents.  Nintendo argued that there was good cause for the amendment because certain information came to light only with recent discovery in the instant investigation.

The Commission Investigative Staff (“Staff”) opposed Nintendo’s motion arguing that much of the “recently” discovered information had been publicly available well-before Nintendo filed the motion.  Moreover, Staff argued that Nintendo had access to the file histories of the patents at issue since the beginning of the investigation, and could have learned about the small entity status in these papers.  Further, the image file wrapper of the ‘702 application was publicly available on the USPTO’s website.  The Staff also argued that allowing Nintendo to amend its answer would unduly prejudice the Staff and Hillcrest because fact and expert discovery were already closed, and the hearing in the investigation was scheduled to begin on May 11, 2009. 

Finding that Nintendo had established good cause, ALJ Luckern granted the motion to amend the Answer.  He found that Nintendo’s assertions that recent discovery revealed the identity and extensive experience of Hillcrest’s primary counsel in charge of its patent portfolio were not challenged by the Staff.  ALJ Luckern further found that the Staff and Hillcrest would not be unduly prejudiced because there was sufficient time before commencement of the hearing, because the burden of proving inequitable conduct was on Nintendo, not Hillcrest, and because Hillcrest and the Staff had access to all of the relevant facts.

Section 337(a)(3)(C) provides for a domestic industry based on “substantial investment” in certain activities, including licensing of a patent.  Hillcrest sought summary determination that its licensing activities satisfied the domestic industry requirement because of its investments in negotiating licenses.  Hillcrest relied on the assertions of one of its own officers in an attempt to prove its contentions.

Respondents Nintendo Co., Ltd. and Nintendo of America, Inc. (“Respondents”) argued that the motion should be denied, as did the Commission Investigative Staff.  The Staff argued that there were genuine issues of fact as to whether all of Hillcrest’s investments in negotiating licenses could be used to satisfy the domestic industry requirement, as section 337(a)(3)(C) requires that “the activities of engineering, research and development and licensing are actually related to the asserted intellectual property right.”

Viewing the evidence in the light most favorable to Respondents, ALJ Luckern determined that there were genuine issues of fact as to whether Hillcrest’s licensing activities satisfied the domestic industry requirement, and denied Hillcrest’s motion.