In the Order, ALJ Bullock denied a joint motion filed by Complainant and Respondents to amend the Ground Rules to include provisions addressing electronic service, the time of Discovery Committee meetings, the timing for exchanging privilege logs and contents thereof, the timing and format of document production, the protection of inadvertently produced privileged or work-product protected materials, and the scope of expert discovery.  The Commission Investigative Staff did not oppose the joint motion. 

According to the Order, ALJ Bullock denied the motion noting that it is “inappropriate to amend the Ground Rules in the manner suggested by the Private Parties.”  In any event, ALJ Bullock determined that “the Private Parties are free to enter into a private agreement or stipulation regarding, inter alia, electronic service, the scope of expert discovery, and the inadvertent production of privileged information or work-product protected materials.”  Lastly, ALJ Bullock noted that he will not enforce any private agreements and the parties are thus responsible for resolving any disputes on their own.

In the Order, ALJ Bullock granted a joint motion filed by Complainant Cypress Semiconductor Corporation (“Cypress”) and Respondent Alcatel-Lucent (“ALU”) to terminate the investigation based upon Cypress’s withdrawal of the First and Second Amended Complaint, in their entirety, as against ALU.

The Investigation remains pending against several other Respondents.

By way of background, this investigation was instituted on April 20, 2011 based on CK’s complaint alleging a violation of Section 337 by Respondents Nintendo of America, Inc. and Nintendo Co., Ltd. (collectively, “Nintendo”) for the importation into the U.S. and sale of certain video game systems and wireless controllers and components thereof, including Nintendo’s Wii wireless game system and controllers.  See our March 23, 2011 and April 21, 2011 posts for more information. 

According to the Order, CK filed a motion to serve a supplemental expert report alleging “Nintendo introduced certain claim construction arguments for the first time in the rebuttal expert report” and “Nintendo improperly refused to agree to a mutual exchange of claim constructions and signaled an intent to withhold its claim construction until the due date for rebuttal expert reports and the close of fact discovery.”  As a result, CK argued that it did not have an opportunity to take fact discovery or have its experts analyze these untimely constructions.  In response, Nintendo countered that both sides should be required to submit supplemental expert reports since neither side exchanged claim constructions at an early point.  Nintendo also argued that its claim construction position was not due any earlier according to the procedural schedule, and that it is unnecessary to seek leave to supplement an expert report since “supplementation is allowable under the Ground Rules and Commission Rules.” 

ALJ Bullock determined that CK had the better position on this issue, specifically rejecting Nintendo’s argument that the motion seeking leave to file a supplemental expert report was unnecessary.  The ALJ stated that he “generally requires parties to move for leave to serve supplemental expert reports” and that “CK has good cause to supplement its expert report.”  Accordingly, CK’s motion for leave to serve a supplemental report was granted.

CK argued to strike Nintendo’s supplemental expert report, asserting that it was served “long after the due date for opening and rebuttal expert reports” and “Nintendo failed to seek leave to file the supplemental report, even though it was outside of the time permitted by the procedural schedule.”  Nintendo opposed this motion, contending that there was no deadline for supplemental reports, and again asserting that “parties were permitted to supplement their expert reports without motions practice.” 

In this instance, ALJ Bullock found Nintendo’s arguments persuasive, noting that “contrary to CK’s assertions, the procedural schedule does not set forth any deadline for serving supplemental reports” and thus, Nintendo’s supplemental report was not untimely.  Therefore, even though the ALJ’s general practice is to require parties to move for leave to serve supplemental reports, CK’s motion to strike the expert report filed without such leave was denied.

In Order No. 23, ALJ Bullock granted a joint motion filed by Complainant Cypress Semiconductor Corporation (“Cypress”) and Respondent Alcatel-Lucent USA, Inc. (“ALU USA”) to terminate the Investigation based on a settlement agreement between Cypress and ALU USA.

In Order No. 25, ALJ Bullock granted a joint motion filed by Cypress and Respondents Nokia Siemens Networks BV and Nokia Siemens Networks US LLC (collectively, “NSN”) to terminate the Investigation based on a settlement agreement between Cypress and NSN.

In the Order, ALJ Bullock included provisions for the early exchange of claim terms, claim construction expert reports, Markman briefs, and a Markman hearing on April 5, 2012.  ALJ Bullock also determined that the evidentiary hearing will commence on November 9, 2012.  The Initial Determination is due on March 22, 2013 and the target date for completing the investigation is July 22, 2013.

In the Order, ALJ Bullock set May 10, 2013 as the target date for completing the investigation (which is sixteen months after institution of the investigation).

In addition, ALJ Bullock directed the parties to submit discovery statements and proposed procedural schedules by January 20, 2012.

Lastly, the Order also included ALJ Bullock’s ground rules governing the conduct of the investigation.

In the Order, ALJ Bullock set July 22, 2013 as the target date for completing the investigation (which is nineteen months after institution of the investigation).  ALJ Bullock determined that there is good cause for setting a target date exceeding sixteen months in this investigation in light of “the complexity of the asserted technology and the number of claims at issue.”

In addition, ALJ Bullock directed the parties to submit discovery statements and proposed procedural schedules by January 18, 2012.  ALJ Bullock also determined that “a Markman hearing [in this investigation] will be beneficial and assist in streamlining the issues for the evidentiary hearing.”  ALJ Bullock therefore noted in the Order that the Markman hearing will commence on April  5, 2012 and the evidentiary hearing in this matter will commence on November 9, 2012.

According to the Order, Complainant Overland Storage, Inc. (“Overland”) moved to strike certain arguments in Respondents’ joint post-hearing reply brief on the basis that Respondents had failed to assert these arguments in their pre-hearing or initial post-hearing briefs.  In Order No. 33, ALJ Bullock granted-in-part Overland’s motion and ordered the Respondents to submit a revised joint-reply post-hearing brief where all references to testing in the U.S. regarding the technical prong of the domestic industry requirement were removed.  Respondents failed to submit the revised post-hearing reply brief.  

Respondents International Business Machines Corp. (“IBM”) and Dell, Inc. (“Dell”) were terminated from the Investigation based upon a settlement agreement.  Because it was unclear from the joint post-hearing briefs what issues remained now that IBM and Dell were no longer in the Investigation, ALJ Bullock directed the private parties to submit revised post-hearing briefs.  The parties submitted these revised briefs on December 19, 2011.   

Upon reviewing the parties briefs, ALJ Bullock determined that BDT’s brief included arguments that were already stricken by his prior Order No. 33.  In light of BDT’s failure to submit a revised reply brief in response to Order No. 33 and its insertion of arguments that were already ordered to be removed by Order No. 33, ALJ Bullock determined that “BDT’s reply brief is hereby stricken in its entirety” and noted that “[s]uch blatant disregard of an Order is not only unacceptable, but shall not be tolerated.”

By way of background, the Complainant in this investigation is HTC Corporation (“HTC”) and the Respondent is Apple Inc. (“Apple”).  In the ID, ALJ Bullock determined that no violation of Section 337 had occurred by Apple in the importation into the U.S., sale for importation, or sale within the U.S. after importation of certain portable electronic devices and related software.  As detailed below, the ALJ found that Apple does not infringe various claims of U.S. Patent Nos. 6,999,800 (the ‘800 patent), 5,541,988 (the ‘988 patent), 6,320,957 (the ‘957 patent), and 7,716,505 (the ‘505 patent).  ALJ Bullock also found that the asserted claims are not invalid.  Lastly, the ALJ found that a domestic industry exists with respect to the ‘988 and ‘957 patents, but not with respect to the ‘800 and ‘505 patents.  Because the domestic industry analyses in the ID are heavily redacted, we have not provided a separate discussion of these issues below.

The Dialer Patents

Infringement:

The ‘988 patent and ‘957 patent are directed to telephone dialers.  Based on the claim constructions established, ALJ Bullock determined that Apple’s products do not practice the “keypad,” “manually operable selector,” “and manually operable scanning device” of the asserted claims and thus do not infringe the ‘988 or ‘957 patents either literally or under the doctrine of equivalents. 

Specifically, ALJ Bullock determined that “the claimed ‘keypad’ must be one that can enter letters and numbers” and since the Apple products have separate keypads for entering letters or numbers, “HTC has failed to show, by a preponderance of the evidence, that Apple’s accused products satisfy the ‘a keypad to generate a sequence of indicia corresponding to a telephone number’ limitation of claim 1 of the ‘988 patent and claim 8 of the ‘957 patent.”

With regard to the “manually operating scanning device/scanning control device,” construed as a sliding or rotary-type control, HTC argued that the combination of touchscreen, touch processor, and associated software in the accused products “provide a sliding or sliding-type control that enables a user to look through and select information on a particular page.”  Apple argued that HTC was attempting to inappropriately equate “control by sliding” with a finger on the touchscreen with a “sliding-type control” as set forth in the claim construction of the scanning control device.  ALJ Bullock agreed, noting that “the only thing that moves or slides is the user’s finder, which even HTC concedes cannot be part of the claimed apparatus,” and determined that “because the accused products lack a physical moveable ‘sliding-type control,’ they do not infringe the Dialer patents.”

Since the “manually operable selector” was construed to be “a part moveable by hand used [to select]” HTC argued that the touchscreens of the accused products meet this limitation in a number of ways, including selecting user groups from within phone contacts, directory entries in a favorite or recent page, etc.  Apple argued that “because there are no moveable parts, there is no infringement.”  ALJ Bullock agreed with Apple, determining that since the touchscreen is not moveable, nor are any virtual buttons, and thus “HTC has failed to prove by a preponderance of the evidence that Apple’s accused products literally infringe claim 1 of the ‘988 patent or claim 8 of the ‘957 patent.” 

Invalidity:

Apple unsuccessfully attempted to argue that the Dialer patents are not entitled to their earliest priority dates, alleging that the first applications fail to disclose the claimed “discrete pages” and “page selection device.”  ALJ Bullock agreed with HTC that there was sufficient disclosure of these limitations to warrant a priority date of at least May 6, 1992, and thus three references identified by Apple were eliminated as prior art.  ALJ Bullock determined that Apple’s “cursory assertions and conclusory arguments” regarding the remaining two references were insufficient to meet the clear and convincing standard necessary to invalidate the Dialer patents.

Power Management Patents

Infringement:

In heavily redacted portions of the opinion relating to the ‘800 patent, ALJ Bullock determined that the elements “switching the PDA system from normal mode to sleep mode when the PDA system has been idle for a second period of time” and “implementing a power detection method comprising steps of: detecting an amount of power of a source in the power system; switching the mobile phone system to off mode when the detected amount is less than a first threshold; and switching the PDA system to off mode when the detected amount is less than a second threshold” were not met by the accused products, and therefore Apple did not infringe the ‘800 patent.

In similarly heavily redacted portions of the opinion relating to the ‘505 patent, ALJ Bullock determined that the elements “maintaining only sufficient power to restore the device,” “when the remaining power of the battery exceed[s] the amount, supplying power to the volatile memory and accessing data from the non-volatile memory to initiate the normal device operation” and “determining whether the remaining power of the battery exceeds an amount required for a normal device operation” were not met by the accused products, and therefore Apple did not infringe the ‘505 patent.

Invalidity:

ALJ Bullock held that the ‘800 patent was entitled to its priority date and that the prior art devices relied upon by Apple do not teach all the limitations of claim 1, and therefore the ‘800 patent is valid in light of these devices.  The details of the invalidity section in relation to the ‘800 patent are heavily redacted.  ALJ Bullock also determined that the ‘505 patent was entitled to its priority date, and the single reference relied on by Apple did not anticipate the ‘505 patent or render it obvious, noting that “Apple makes nothing more than a one-paragraph cursory argument that the claims of the ‘505 patent are invalid.  This is the extent of Apple’s argument.  Accordingly…making superficial assertions and conclusory arguments is insufficient for Apple to meet the clear and convincing standard necessary to invalidate the ‘505 patent.”

In light of the above, ALJ Bullock determined that there was no violation of Section 337 based on infringement of the ‘800, ‘505, ‘957, and ‘988 patents.

Remedy and Bond

In the event that the ITC finds a violation of Section 337, ALJ Bullock recommended that the ITC issue a limited exclusion order “that covers all of Apple’s accused portable electronic devices and related software found to infringe the asserted patents.”  ALJ Bullock further recommended that if the ITC determines a violation of Section 337 has occurred, a cease and desist order against Apple should issue.  Lastly, the ALJ also recommended that a bond not be required during the Presidential review period.

ITC Review

As explained in our December 20, 2011 post, the ITC has determined to review the ID in part with respect to the ‘800 patent, and has terminated the investigation with respect to the ‘500, ‘988, and ‘957 patents.

In the Order, ALJ Bullock denied a joint motion filed by Complainant Cypress Semiconductor Corporation (“Cypress”) and Respondents Nokia Siemens Networks BV and Nokia Siemens Networks US LLC (collectively, “NSN”) to terminate the investigation on the grounds that Cypress and NSN have entered into a settlement agreement.  Specifically, ALJ Bullock denied the joint motion because the parties did not file a public version of the subject settlement agreement as required by Commission Rule 210.21(b).  Accordingly, ALJ Bullock denied the joint motion without prejudice.