By way of background, Complainant Georgia-Pacific Consumer Products LP of Atlanta, Georgia (“Georgia-Pacific”) filed a complaint with the ITC naming seventeen Respondents, alleging violations of Section 337 by infringement of claims 4-7 of U.S. Patent No. 6,871,815; claims 8-22 of U.S. Patent No. 7,017,856; claims 1-3 of U.S. Patent No. 7,182,289; and claims 4-22 of U.S. Patent No. 7,387,274.  All Respondents except Stefco Industries, Inc. (“Stefco”), Cellynne Corporation (“Cellynne”), and NetPak Elektronik Plastik ve Kozmetik Sanayi Ve Ticaret Ltd. (“NetPak”) were terminated from the investigation by consent order.  On December 30, 2010, ALJ Gildea issued an Initial Determination (“ID”) finding Stefco, Cellynne, and NetPak in default.  The ITC determined not to review the ALJ’s determination.

On July 21, 2011, ALJ Gildea issued the public version of an ID (dated July 12, 2011) granting Georgia-Pacific’s motion for summary determination that defaulting Respondents Stefco, Cellynne, and NetPak (collectively, the “Defaulting Respondents”) violated Section 337.  The ALJ also recommended that the ITC issue general exclusion orders and cease and desist orders and impose a bond of 100 percent on the Defaulting Respondents.  See our July 29, 2011 post for more details.  On August 19, 2011, the ITC determined not to review the ALJ’s determination and requested briefing on remedy, the public interest, and bonding.  Only Georgia-Pacific and the Commission investigative attorney (“OUII”) timely filed submissions. 

As to remedy, the ITC agreed with ALJ Gildea’s recommendation that a general exclusion order should issue.  The ITC reasoned that there is both a likelihood of circumvention of a limited exclusion order, in violation of Section 337(d)(2)(A), and that there is “(i) a pattern of violation and (ii) difficulty in identifying the source of the products,” in violation of Section 337(d)(2)(B).  Specifically, with respect to the “likelihood of circumvention” analysis, the ITC determined that infringing products can be made easily and at a low cost using well-established distribution channels, “in which molds for manufacturing infringing products may be resold and/or noninfringing molds may be retooled at low cost.”  With respect to the “pattern of violation” analysis, the ITC determined that Georgia-Pacific had identified “four nonrespondents that also may infringe the asserted patents, and identified 21 other nonrespondents that may infringe and could enter the market.”  In addition, the opinion explained that many of the products are often sold unlabeled, making it difficult to identify the source of the infringing goods.  The ITC also agreed with the ALJ that cease and desist orders were warranted as to Respondents Stefco and Cellynne because both maintain significant domestic inventories of infringing dispensers. 

The ITC further agreed with Georgia-Pacific and the OUII that a general exclusion order and cease and desist orders would not harm the public interest because there was no evidence that U.S. demand for the dispensers cannot be met by Georgia-Pacific or by the sale of non-infringing alternatives offered by Respondents and other nonrespondent distributors. 

Finally, as to bond, the ITC determined that because Georgia-Pacific leases its dispensers while most Respondents and nonrespondents sell their dispensers, it is impossible to calculate a bond based upon a set price differential between the product made by the domestic industry and the lower price of the infringing imported product.  The ITC also determined that a reasonable royalty rate could not be established for the infringing imported product because each Respondent in the investigation who did not default was terminated by consent order.  Accordingly, a bond set at 100 percent of the entered value for any electronic paper towel dispenser covered by the general exclusion order and cease and desist orders was determined to be appropriate during the period of Presidential review.

By way of background, the Complainant in this investigation is Motiva, LLC (“Motiva”) and the Respondents are Nintendo Co., Ltd. and Nintendo of America Inc. (collectively “Nintendo”).  As explained in our November 4, 2011 post, ALJ Rogers determined in the Initial Determination (“ID”) that there was no violation of Section 337.  Specifically, ALJ Rogers found that the accused Nintendo products do not infringe and that an industry does not exist in the U.S. that exploits the patents-in-issue, as required by 19 U.S.C. § 1337(a)(2). 

Motiva and the Commission investigative attorney filed petitions for review of portions of the ID.  Having examined the record of this investigation, the Commission determined to deny the petitions for review and, upon its own initiative, further determined to review “(1) a statement in the ID connecting the relevant level of skill in the art to the skill of the inventors, and (2) the relevant time frame for considering whether a domestic industry exists or is in the process of being established.”  See our January 10, 2012 post for more details. 

The first point addressed by the Commission related to level of one skilled in the art.  According to the opinion, in evaluating Nintendo’s obviousness and invalidity arguments ALJ Rogers had to determine “what experience one of ordinary skill in the art would have had at the time of the relevant inventions.”  The ALJ rejected Nintendo’s definition of one skilled in the art as having at least a master’s degree and five years of relevant experience because this standard would exclude both named inventors, and “a definition of one of ordinary skill in the art that excludes both inventors cannot be correct.”  As such, the ALJ adopted a lower standard, concluding that one of ordinary skill in the art would have a bachelor’s degree in computer science or electrical/computer engineering and three to five years of relevant experience. 

Although the Commission did not disturb the ALJ’s definition of one skilled the art, the Commission clarified that “we do not adopt the ALJ’s statement connecting the relevant level of skill in the art to skill of the inventors,” vacating the ALJ’s conclusion that a definition that excluded the inventors “cannot be correct.”  Specifically, the Commission referred to relevant Federal Circuit precedent that states “it is only that hypothetical person who is presumed to be aware of all the pertinent prior art.  The actual inventor’s skill is irrelevant to the inquiry.”  Standard Oil Co. v. American Cyanamid Co., 774 F.2d 448, 454 (Fed. Cir. 1985).

The second point addressed by the Commission was related to the relevant time for evaluating the existence or establishment of a domestic industry, although, again, the Commission did not disturb the ALJ’s findings.  The Commission agreed with the ALJ’s determination in the context of this investigation that the “date for determining whether a domestic industry exists is the filing date of the complaint.”  However, the Commission went on to clarify that in some scenarios evidence subsequent to the filing of the complaint may be considered, such as “when a significant and unusual development has occurred after the complaint has been filed,” referring to several cases.  In other words, the Commission explained that it is not a bright line rule, and “in appropriate situations based on the specific facts and circumstances of an investigation, the Commission may consider activities and investments beyond the filing of the complaint.”

By way of background, the Complainants in this investigation are Apple Inc. and NeXT Software, Inc. (collectively, “Apple”) and the Respondents are High Tech Computer Corp., HTC America Inc., and Exedia, Inc. (collectively, “HTC”).  On July 15, 2011, ALJ Charneski determined that HTC violated Section 337 through its infringement of claims 1, 8, 15, and 19 of U.S. Patent No. 5,946,647 (the ‘647 patent) and claims 1, 2, 24, and 29 of U. S. Patent No. 6,343,263 (the ‘263 patent).  The ID found no violation of Section 337 with respect to U.S. Patent Nos. 5,481,721 (the ‘721 patent) and 6,275,983 (the ‘983 patent) because Apple had not demonstrated that HTC infringed the asserted claims of these patents or that Apple had satisfied the domestic industry requirement with respect to these patents.  The ID concluded that HTC had not demonstrated that any of the asserted patent claims are invalid.  See our September 2, 2011 post for more details. 

In sum, the Commission determined that HTC violated Section 337 by importing and selling articles that infringe claims 1 and 8 of the ‘647 patent, but reversed the ALJ’s finding of violation as to claims 15 and 19 of the ‘647 patent and as to the asserted claims of the ‘263 patent.  Lastly, the Commission affirmed the ALJ’s conclusion of no violation as to the ‘721 and ‘983 patents.

The ‘263 Patent

The ‘263 patent relates to a telecommunications interface for real-time processing.  The Commission first interpreted a limitation within claim 1, which required “at least one realtime application program interface (API) coupled between the subsystem and the realtime signal processing subsystem to allow the subsystem to interoperate with said realtime services.”  The parties and the ALJ agreed that “realtime” means “within a defined upper bounded time limit,” and thus the issue was whether the term “realtime” modified each term it precedes in the claims including “API,” as asserted by HTC and the Investigative Attorney (“OUII”), or whether any “API that allows realtime interaction between” subsystems is a “realtime API,” as proposed by Apple and adopted by ALJ Charneski.  The Commission determined that the API itself has defined upper bounded time limits, and that Apple’s and the ALJ’s construction “improperly reads the term ‘realtime’ out of the API limitation,” and renders the term “realtime” at most nominal and without any purpose of its own.  Under this revised construction, the Commission determined there is no genuine dispute that the identified API in both the HTC and Apple products do not operate within a “defined upper bounded time limit.”

The Commission also reviewed the construction of the term “device handler” within claims 1 and 24.  ALJ Charneski adopted Apple and OUII’s interpretation, namely: “software associated with an interface device that sets up dataflow paths, and also presents data and commands to a realtime signal processing subsystem.”  HTC previously sought to add the requirement that the device handler be “specific to the device,” but in its briefing on Commission review, the opinion held that HTC sought instead a different argument that “associated with” in the ALJ’s construction means that “the device handler must know…about the device it supposedly handles,” as opposed to the device “merely be[ing] somewhere in the data path for data that originated at the ‘device.’”  The Commission determined that HTC’s argument concerned the application of claim construction, rather than claim construction itself, and if it were a claim construction argument, it was waived.  The Commission determined that disagreements over an application of construction “do not themselves give rise to opportunities, after the fact, to change the agreed-upon or adopted constructions.”  As to infringement, the Commission agreed with the ALJ’s interpretation and determination that HTC’s accused products contain a device handler.

As to the validity of the ‘263 patent, the Commission agreed with HTC and OUII that the ALJ’s findings constituted legal error.  According to the opinion, in finding that AT&T’s prior art VCOS system did not anticipate the asserted claims, the ALJ appeared to compare the VCOS system to certain prior art central to the ‘263 patent’s prosecution history, essentially assuming that the VCOS system was similar to the prosecution history’s prior art, and if the ‘263 patent were patentable over the prosecution’s prior art, then the ‘263 patent should be patentable over the VCOS system.  However, the Commission found this error rendered moot by the Commission’s revised construction of “realtime API” that required the API itself to operate within a defined upper bounded time limit – a construction under which HTC did not contend the VCOS system anticipates the ‘263 patent’s claims.  Nonetheless, the Commission determined that if “realtime API” were construed as requested by Apple and found by the ALJ, the VCOS system would anticipate the ‘263 patent, because contrary to the ALJ’s findings, the Commission determined the VCOS system indeed would have such a “realtime API” and a claimed “device handler.”

The ‘647 Patent

The ‘647 patent relates to identifying certain “structures” – i.e., names, phone numbers, or email addresses – in a document and then highlighting them on a display so that a user can perform a linked action on the particular structure (for example, dialing a telephone number).  Claim 1 requires “linking actions to the detected structures” while claim 15 requires “linking at least one action to the detected structure.”  The ALJ adopted Apple’s construction of these “linking” phrases, namely: “linking detected structures to computer subroutines that cause the CPU to perform a sequence of operations on the particular structures to which they are linked.” HTC did not challenge this interpretation on review, and the Commission granted review on infringement and invalidity of the ‘647 patent.

The Commission first determined that the ALJ’s invalidity analysis for the ‘647 patent erroneously relied upon the ‘647 patent’s alleged use of the term “structure,” rather than an agreed-upon construction by the parties, namely, “an instance of a pattern, where a ‘pattern refers to data, such as grammar, regular expression, string, etc., used by a pattern analysis unit to recognize information in a document, such as dates, addresses, phone numbers, etc.”  The ALJ determined that the mere search of a database of contact names and subsequent comparison to entered text cannot constitute detecting a “structure,” and at least on that basis determined that a so-called “Perspective” prior art system did not invalidate claims in the ‘647 patent.  The Commission determined that the ALJ’s invalidity analysis was incorrect (1) for not relying upon the construction of “structure” agreed-upon by the parties and used in the ALJ’s infringement analysis, and (2) because the specification and preferred embodiment of the ‘647 patent did not support the ALJ’s narrow interpretation used in the invalidity analysis.  The Commission determined that the prior art “Perspective” system automatically linked contact information to a contact by recognizing that a contact exists and putting the name in bold – and on that basis, the Commission determined that independent claim 15 and its dependent claim 19 were invalid, since each of those claims required only one action.  Claim 1, and its dependent claim 8, however, were determined by the Commission not to be invalidated by the “Perspective” system because claims 1 and 8 require multiple linked actions, and HTC was unable to show that this prior art contained an “analyzer server” for “linking actions to the detected structures,” or a “user interface” for enabling the selection of a “linked action.”

As to infringement of claims 1 and 8, the Commission summarily affirmed the ALJ’s determination for the reasons set forth in the ID.  As to claim 15 (and dependent claim 19), HTC argued that the steps of method 15 must be performed exactly in order, but the Commission determined that the “Perspective” system invalidates claim 15 regardless whether the steps must be performed in the order in which they appear, or whether the enabling section to claim 15’s selection of the structure is one or two steps, and so the Commission deemed these infringement defenses moot, and did not reach them.

After the Commission determined to review the ALJ’s ID, HTC filed a motion for summary determination with the Commission on October 17, 2011, wherein HTC argued that reexamination proceedings concerning the ‘647 patent provided HTC with intervening rights that precluded the issuance of an exclusion order against HTC as to the ‘647 patent.  In an order to show cause why HTC’s motion was procedurally permitted, the Commission observed that Rule 210.18 required filing a motion for summary determination “at least 60 days before the date fixed for any hearing,” and any motion for termination (not involving settlement, consent order, or arbitration agreement) under Rule 210.21(a) must be made “prior to the issuance of an initial determination on violation of Section 337.”  HTC asserted in response that Rule 210.18(a) allows late filing for summary determination under exceptional circumstances when “good cause” exists, and Rule 201.4(b) provides the Commission with authority to waive or suspend a procedural rule when the Commission finds “good and sufficient reason therefore, provided the rule is not a matter of procedure required by law.”  The Commission rejected HTC’s arguments, determining that Rule 210.18(a) specifically cites that the “presiding administrative law judge” (rather than Commission) determines whether good cause exists to permit a tardy motion for summary determination, and Rule 201.4(b)’s authority for the Commission to waive or suspend procedural rules does not “provide a basis for permitting the substantive filing HTC seeks to make.”  The Commission additionally denied intervening rights on the grounds that (1) no reexamination certificate had issued yet, and thus HTC’s argument was premature; (2) the basis for the alleged intervening rights – an Apple statement that the ‘647 patent describes linking an action directly to the detected structure – is not different from the position taken by Apple during the ITC proceedings; and (3) the September 21, 2011 Federal Circuit Marine Polymer Technologies, Inc. v. Hemcon Inc. decision relied upon by HTC was inapposite, since unlike in this proceeding, in Marine Polymer the patentee made arguments and claim withdrawals amounting to narrowed claim scope.

The ‘721 Patent

The ‘721 patent is directed to facilitating object oriented messaging with a procedural operating system, and of the three asserted claims, independent claim 1 recites a method, and dependent claims 5 and 6 add more steps to the method. 

The Commission first addressed the construction of “processing means” – specifically, “first processing means” and “second processing means” included in each of the asserted claims.  ALJ Charneski adopted HTC’s and OUII’s arguments that “processing means” invoked 35 U.S.C. §112 ¶ 6, and the ALJ determined that the method steps of the claims were recited functions of the “processing means” and further agreed with HTC’s identified corresponding structures from the specification.  Before the ALJ, Apple argued that the claims should not be construed under 35 U.S.C. §112 ¶ 6, and before the Commission, Apple argued that if the claims are to be construed under 35 U.S.C. §112 ¶ 6, then the function should be “processing” and that a general purpose computer performs that function.  The Commission disagreed with the ALJ’s construction and agreed instead with Apple’s argument that “processing means” should be construed under 35 U.S.C. §112 ¶ 6, the function should be “processing” and that a general purpose computer performs that function.  The Commission determined that Apple’s construction more closely aligns with the prosecution history and preserves the claims as methods, rather than converting the claims to apparatuses, which was a concern for the Commission under the ALJ’s analysis.

As to validity, HTC argued the ‘721 patent was anticipated by a 1988 Ph.D. thesis by John Bennet (“Bennet”), or in the alternative, rendered obvious by a combination of Bennet and prior art called “Mach messages.”  The ALJ did not address the validity question because of his means-plus-function construction of the “processing means” limitations.  One issue was whether Bennet was “based on an operating system,” as required by the claims, and the Commission determined that Bennet could not anticipate, because HTC had not shown that “the pertinent messages are specific to any particular operating system.”  However, the Commission did find the asserted claims of the ‘721 patent obvious over the combination of Bennet and “Mach messages,” which in turn was operating-system based.  Although Apple pointed to certain compatibility issues between the two systems, the Commission rejected Apple’s arguments, determining instead that Apple had not demonstrated that choosing one protocol over another, “is anything more than a design choice.”  

The Commission also reviewed the construction of “dynamic binding,” which the ALJ had construed by combining aspects of HTC’s and the OUII’s proposed constructions, such that the term was defined as: “permitting messages to be bound to the actual methods to be invoked depending on the class of the receiver, allowing objects of any classes that implement a given method to be substituted for the target object at run time.  Apple proposed a broader definition, and the dispute revolved around whether dynamic binding requires, as set forth in the specification of the ‘721 patent, that the “actual method corresponding to the class of target object does not need to be determined until the message must be sent.”  The Commission agreed with the ALJ’s construction, and determined that the description of dynamic binding used in the specification was definitional, and did not merely describe aspects of a preferred embodiment.  The Commission also determined that the ALJ’s construction was supported by a similar definition of dynamic binding recited in a NeXTSTEP manual, a public document by NeXT, the assignee listed on the face of the patent.

As to infringement of the ‘721 patent, the Commission determined that Apple had waived its infringement claims, because it advanced new infringement theories for the first time on review.  The Commission determined that simply because the ID departed slightly from HTC’s proposed construction does not permit new infringement theories, and that “Apple bore the burden of demonstrating infringement and with it the risk that its theories would not result in infringement under all possible constructions of disputed claim terms.”

The ‘983 Patent

Apple asserted claims 1 and 7 from the ‘983 patent, which involves subject matter similar to the ‘721 patent.

The Commission first reviewed the construction of the term “loading,” which the ALJ had construed after adopting Apple’s contentions, to mean “loading is not limited to physical copying, but includes virtual copying as well.”  The opinion referred to the ID to define “virtual copying” of a method as “a process of putting into executable program memory a pointer to the method’s existence elsewhere.”  HTC argued for a construction that excluded such virtual copying, and on review pointed to the plain meaning of “load” and additionally argued that the ‘983 patent’s prosecution history disclaimed virtual copying.  Although the Commission rejected HTC’s plain meaning argument due to the specification’s use of “copying” to include virtual copying, the Commission agreed that Apple indeed disclaimed “virtual loading” by distinguishing the virtual copying of prior art.  The Commission acknowledged that this construction possibly excludes Apple’s preferred embodiment, but the preference to avoid doing so is not absolute.

The Commission also reviewed the term “selectively load required object-oriented methods.”  The ALJ had rejected Apple’s arguments to construe the term as requiring loading a “class” of methods rather than just the required methods themselves.  The Commission affirmed the ALJ’s construction as supported by the plain meaning of the claims, and the prosecution history of the ‘983 patent. 

As to invalidity, the Commission determined that HTC demonstrated the prior art loaded classes, but did not offer an invalidity analysis under the Commission’s construction of “selectively,” which excludes class loading.  The Commission determined that but for this particular requirement, the claims of the ‘983 patent would be invalid.

With respect to infringement, the Commission determined summarily that HTC’s accused products did not meet the “loading” and “selectively load” limitations construed above.  The Commission additionally determined that HTC’s products did not practice claim limitations calling for “executable program memory.”  Based on the Commission’s prior determination that Apple disclaimed pointing to a method already in executable program memory, the Commissioned determined that the issue is whether the accused products (i) “determine during runtime” if object oriented methods are already in executable program memory, and (ii) whether methods are loaded “into” the executable program memory at runtime as called for by claims 1 and 7.  The Commissione determined that the accused products do not infringe the executable program memory” limitations at least because as found by the ALJ, all methods in the accused devices are loaded into the task address space at startup and are therefore loaded prior to runtime.  The Commission took no position on whether Apple’s domestic industry product practices this claimed limitation.

Remedy

The Commission determined that the appropriate remedy is a limited exclusion order prohibiting the entry of HTC’s personal data and mobile communications devices and related software into the U.S. that infringe claims 1 or 8 of the ‘647 patent.  The Commission also determined that the public interest factors enumerated in Section 337 do not preclude the issuance of the limited exclusion order.  With respect to U.S. consumers, and public health and welfare effects, the Commission rejected many of HTC’s arguments as applying to Android phones generally, rather than just HTC’s Android phones.  The Commission determined that the relief to be granted by the Commission would be directed solely to HTC’s Android smartphones, and ample substitutes exist for these HTC phones.

Notwithstanding the foregoing, the Commission determined that in light of competitive conditions in the U.S. economy, and submissions by T-Mobile that it would have difficulty substituting HTC’s Android smartphones in the short term, the exclusion of HTC devices subject to the order would be delayed for approximately four months, and will commence on April 19, 2012, to provide a transition period for U.S. carriers.  Moreover, the Commission determined that HTC may import refurbished handsets to be provided to consumers as replacements under warranty or an insurance contract (whether the warranty or contract is offered by HTC, a carrier, or by a third party) until December 19, 2013.  The Commission further emphasized that “[t]his exemption does not permit HTC to call new devices ‘refurbished’ and to import them as replacements.”

The Commission agreed with the ALJ’s recommendation that no cease-and-desist order against HTC is needed, citing evidence that “HTC surrenders all title and interest to its commercial products when they arrive and are warehoused in the United States.”  The Commission further agreed that Apple failed to satisfy its burden that a bond is required during the Presidential review period, in view of evidence “that the HTC and Apple products are similarly priced (before carrier subsidies).”

Commissioner Pinkert concurred with his colleagues as to the appropriate remedy, but wrote separately to express his additional views.  In this respect, Commissioner Pinkert “emphasize[d] that the existence of substitutes for the infringing devices does not obviate consideration of the likely impact of exclusion on the range of choices available to consumers.”  Commissioner Pinkert added: “Such impact may warrant more searching inquiry in other investigations.”

By way of background, the Complainant in this investigation is Cross Match Technologies, Inc. (“Cross Match”) and the Respondents are Suprema, Inc. (“Suprema”) and Mentalix, Inc. (“Mentalix”) (collectively, the “Respondents”).  Cross Match asserted that Suprema manufactures and imports hardware and software for scanning fingerprints.  Suprema’s accused scanners are provided with software development kits (SDKs) that allow customers to create their own scanner operating software, and Mentalix integrates its own proprietary FedSubmit software with Suprema’s scanners.  In the ID, ALJ Luckern determined that a violation of Section 337 had occurred by Suprema through its infringement of one or more of claims 10, 12, and 15 of U.S. Patent No. 5,900,993.  ALJ Luckern also found a violation of Section 337 by reason of infringement of claim 19 of U.S. Patent No. 7,203,344 (the ‘344 patent).  The ALJ found no violation of Section 337 with respect to U.S. Patent No. 7,277,562.  See our June 21, 2011 post for more details.  Cross Match, the Respondents, and the Commission Investigative Staff (“OUII”) each filed a petition for review of the ID.  On August 18, 2011, the Commission determined to review the ID with respect to it’s finding of a violation of Section 337 based on infringement of claim 19 of the ‘344 patent and requested briefing on (1) who infringes claim 19 of the ‘344 patent and what type of infringement occurred, and (2) whether there is a sufficient nexus between the infringer’s unfair acts and importation to find a violation of section 337.  See our August 24, 2011 post for more details.

Infringement of Claim 19 of the ‘344 Patent

ALJ Luckern’s ID found that several of Suprema’s RealScan products infringe claim 19 of the ‘344 Patent, but identified neither the infringer nor whether the infringement was direct or indirect.  Cross-Match and the OUII argued that Mentalix directly infringed claim 19 of the ‘344 patent, at least when Mentalix integrated its own FedSubmit software with the Suprema scanner units and tested the products in the U.S.  Respondents do not contest that Mentalix directly infringed claim 19 through such testing but contend there is an insufficient nexus between these acts and the importation of Suprema’s scanners to support finding a violation of section 337.  Cross Match further asserted that Suprema indirectly infringed claim 19 through inducement and contributory infringement, while OUII argued only for inducement.

The Commission first determined that Mentalix indeed directly infringed claim 19 when it integrated its FedSubmit software with the imported Suprema scanners and SDK software to produce a scanner system that practices claim 19.  The Commission further determined that the required nexus between this infringement and the importation of scanners was provided by the evidence discussed below regarding Suprema’s induced infringement of claim 19.

With respect to inducement, the Commission determined that Suprema aided and abetted Mentalix’s direct infringement by collaborating with Mentalix to import the scanners and helping to adapt Mentalix’s FedSubmit software to work with Suprema’s imported scanners and SDK to practice claim 19 of the ‘344 patent.  The Commission further found that Suprema “willfully” blinded itself to the infringing nature of Mentalix’s activities and deliberately avoided acquiring knowledge of the ‘344 patent by (1) not acting on the numerous references to the ‘344 patent within the ‘562 patent, including separate incorporations by reference on at least three occasions; (2) the fact that the ‘562 patent and ‘344 patent have the same assignee, Cross Match; (3) both patents have overlapping inventors; and (4) not obtaining an opinion of counsel that would have undoubtedly uncovered the ‘344 patent.

Regarding contributory infringement, the Commission determined that Cross Match failed to prove that the accused products had no substantially non-infringing uses.  In particular, the Commission found it inconsistent that Cross Match alleged that several third parties directly infringed certain claims of the ‘562 and/or ‘344 patents, but Suprema chose not to allege that any of these third parties specifically infringed claim 19 of the ‘344 parties.  The Commission further determined that the operation of Suprema’s scanners and SDK requires development of unique end-user software, and that these scanners and SDK are capable of substantial non-infringing uses with third-party customers other than Mentalix.

Based on the above, the Commission determined to modify-in-part the ID to find that (1)  Mentalix directly infringed claim 19 of the ‘344 patent; (2) Suprema induced infringement of claim 19; and (3) Suprema did not infringe claim 19 through contributory infringement. 

Remedy and Bonding

The Commission determined that the appropriate remedy for the violation was a limited exclusion order prohibiting the unlicensed entry of biometric scanning devices, components thereof, associated software and products containing the same that infringe one or more of claims 10, 12, and 15 of the ‘993 patent and claim 19 of the ‘344 patent.  The Commission also determined that based on Mentalix’s “commercially significant” inventory of accused scanner systems using the FedSubmit software, it is appropriate to issue a cease and desist order prohibiting Mentalix from importing, selling, marketing, advertising, distributing, offering for sale, transferring (except for exportation), and soliciting U.S. agents or distributors for such infringing devices, components, software, and products.  The Commission clarified, however, that a cease and desist order directed to Suprema, a foreign entity, was not warranted, based on long-standing precedent and the difficulty in enforcing such an order.  The Commission further determined there was no need for an order excluding electronic importation, since Suprema’s SDK software, by itself was not found to infringe directly or indirectly, and enforcing such provisions is impractical.  The Commission also agreed with the ALJ that Cross Match would be subject to a reporting requirement with respect to the ‘993 patent to ensure that it continues to exploit the patent while the remedy is in place.  Finally, the Commission determined that the public interest factors did not preclude this relief and that a 100% bond should be required during the period of Presidential review.

By way of background, Amgen, Inc. (“Amgen”) holds several U.S. patents relating to recombinant human erythropoietin and derivatives (“EPO”) and processes for making EPO.  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”) produced EPO in Europe and imported it into the U.S. for the purpose of obtaining FDA approval of Roche’s own EPO drug in the U.S.  Roche continued importing EPO after its FDA application was complete, although not for sale or contract to sell in the U.S. 

Amgen initiated a Section 337 action asserting that Roche’s imported EPO and the process by which it is produced in Europe are covered by one or more claims of Amgen’s U.S. patents.  The Commission instituted an investigation on May 12, 2006 based on the complaint.  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 to terminate the investigation with respect to certain claims and moved for summary determination that Roche violated Section 337 by importing and using an EPO product that infringed a different claim of its patents.  Amgen also requested a limited exclusion order that would preclude importation of Roche’s product regardless of the party seeking to import such product.  As reported in our April 8, 2010 post, the Commission granted Amgen’s motion to terminate the investigation with respect to particular claims but determined that further briefing was necessary to decide the motion for summary determination. 

However, on December 18, 2009 the parties executed a settlement agreement that allows Roche to begin selling the accused products in the United States in mid-2014, and on March 11, 2011 the ITC issued an order to show cause why the investigation should not be terminated in view of the parties’ settlement based on the ITC’s longstanding policy in such situations.  Amgen and Roche filed a joint response on April 21, 2011 seeking a termination of the investigation based on a consent order instead of an exclusion order, supporting their position with reference to Certain Digital Multimeters, Inv. No. 337-TA-588 (the “588 investigation”). 

In the opinion, the ITC terminated the investigation based on the settlement order, but declined to exercise its discretion to issue a consent order.  Specifically, the ITC pointed to three reasons why a consent order is not proper in this situation.  First, the settlement agreements and consent orders in the 588 investigation were “bound up together as part of a single negotiation between the parties, and the issuance of a consent order may have facilitated the settlement.”  The ITC further pointed out that there is no such nexus in the present case and the settlement agreement is silent as to a consent order.  Second, the ITC noteed that the settlement agreement in the 588 investigation specifically granted jurisdiction to the ITC to oversee disputes, and that this jurisdictional grant was not included in Amgen and Roche’s settlement agreement.  As such, “the Commission would appear to lack jurisdiction to enforce a consent order insofar as such enforcement would involve a dispute concerning the settlement agreement.”  Lastly, the ITC specifically stated in the Order to Show Cause that it expected that any proposed consent order “will not deviate in form, substance, or scope from consent orders ordinarily issued.”  Notwithstanding that direct language, Amgen and Roche chose to use atypical language, against the ITC’s express guidance.  For these reasons the ITC determined that there is no basis in law or policy to support issuance of a consent order and terminated the investigation merely on the basis of the settlement agreement between the parties.

By way of background, Complainant Crocs, Inc. (“Crocs”) filed a complaint with the ITC naming eleven respondents, alleging violations of Section 337 by infringement of U.S. Patent Nos. 6,993,858 (the ‘858 patent) and D517,789 (the ’789 patent) and the Crocs trade dress. All respondents except Double Diamond Distribution Ltd. and Effervescent, Inc. (collectively, the “Respondents”) were terminated from the investigation.  On April 11, 2008, ALJ Bullock issued an initial determination finding no violation of Section 337 by reason of invalidity of the ‘858 patent and non-infringement/non-satisfaction of the technical prong of the domestic industry requirement concerning the ‘789 patent. ALJ Bullock made no findings regarding the enforceability of the ‘858 and ‘789 patents.  On July 25, 2008, the ITC affirmed ALJ Bullock’s initial determination with certain modifications and clarifications.  Crocs appealed the ITC decision and on February 24, 2010, the Federal Circuit overturned the ITC’s findings regarding invalidity of the ‘858 patent and non-infringement/non-satisfaction of the technical prong of the domestic industry requirement concerning the ‘789 patent, remanding the investigation for a determination of infringement and any appropriate remedies.  See our February 24, 2010 post for more details.

On February 9, 2011, ALJ Charles E. Bullock issued a remand ID (“ID”) determining that Respondents had not shown by clear and convincing evidence that the ‘858 patent and the ’789 patent are unenforceable due to inequitable conduct.  See our April 1, 2011 post for more details.  On April 25, 2011, the ITC determined not to review the remand ID and found a violation of Section 337.  Specifically, the ITC found a violation of Section 337 by Double Diamond and Effervescent with respect to the ‘858 patent and a violation of section 337 by Holey Soles with respect to the ‘789 patent. The ITC requested written submissions on the issues of remedy, public interest, and bonding from the parties and interested non-parties.  See our April 27, 2011 post for more details.  In accordance with the ITC’s request Crocs, Double Diamond, Effervescent, and the Commission Investigative Attorney (“OUII”) submitted briefs regarding remedy, public interest, and bonding.  Holey Soles made no submissions.

As to remedy, the ITC agreed with ALJ Bullock’s recommendation that a general exclusion order should issue.  The ITC reasoned that there is a pattern of violation with regard to the foam footwear at issue and it is difficult to identify the source of the infringing goods.  Specifically, the ITC determined that Crocs had identified over 60 non-respondents practicing the ‘858 and ‘789 patents and that those non-respondents were using established chains for distribution.  In addition, the opinion explained that many of those sales were made over the Internet and that there is widespread copying of molds for the footwear.  The ITC also agreed with the ALJ that cease and desist orders were warranted as to the Respondents.  The opinion indicated that such an order was warranted because the Respondents maintain a significant number of infringing shoes in U.S. inventory and those inventories have a significant value.

With regard to public interest, the ITC agreed with OUII and Effervescent that any issued remedial order would not be contrary to the public interest since U.S. demand for foam footwear can be met by other entities, including Crocs, as well as by non-infringing alternatives.

As to bonding, because evidence of exact price differences between each of the Respondents’ products and Crocs’ products was available, the ITC determined that separate bonds should be set for each Respondent.  In proportion to those respective price differences, the ITC set bond at $0.00 per infringing pair of shoes for Double Diamond, $0.01 per infringing pair of shoes for Holey Soles, and $0.05 per pair of infringing shoes for Effervescent.  Because a large number of non-respondents import infringing footwear at unknown sales prices, some well below Crocs sales price, the ITC determined that a 100% bond should be entered for all infringing non-respondent products during the period of Presidential Review.

By way of background, the Complainant in this investigation is Eastman Kodak Company (“Kodak”) and the Respondents are Research In Motion, Ltd., Research In Motion Corporation (collectively, “RIM”), and Apple Inc. (“Apple”) (RIM and Apple collectively, the “Respondents”).  In the ID, ALJ Luckern determined there was no violation of Section 337.  More specifically, ALJ Luckern determined, inter alia, that (i) none of Respondents’ accused products infringed the sole claim now at issue: claim 15 of U.S. Patent No. 6,292,218 (the ‘218 patent); (ii) claim 15 of the ‘218 patent is invalid for obviousness under 35 U.S.C. § 103; and (iii) the domestic industry requirement is satisfied with respect to the ‘218 patent.  See our March 18, 2011 post for more details.

On March 25, 2011, the Commission issued a notice determining to review ALJ Luckern’s ID in its entirety and requesting further briefing with respect to invalidity and claim construction.  See our March 29, 2011 post for more details.

Claim Construction and Infringement

With respect to claim construction, Kodak argued to the Commission that in the ID, ALJ Luckern’s claim constructions paid insufficient attention to the claim constructions of another ALJ regarding many of the same terms in Investigation 337-TA-663, wherein Kodak asserted the same patent claim against a different respondent, Samsung Electronics.  The Commission concluded it was not necessary to determine to what degree the prior constructions were binding, because the earlier investigation settled prior to any final agency action, and there could be no binding effect as a matter of issue preclusion on Apple and RIM because they were not respondents in the earlier action.  Although the Commission determined it is appropriate for subsequent determinations to distinguish earlier contrary findings, Kodak’s arguments were moot because as set forth in more detail below, with respect to the three constructions at issue in this Investigation, the Commission adopted two of Kodak’s constructions, and the third (“image capture”) was not at issue in the 663 investigation.

Whether “Motion Processor” and “Still Processor” Must Be Distinct in Circuitry

ALJ Luckern’s ID construed “motion processor” within claim 15 of the ‘218 patent such that the “still processor” and “motion processor” use circuitry that is not shared or overlapping.  The Commission, however, determined that although the ‘218 patent teaches the benefits of having separate circuits for motion and still processing, the specification did explain that “the same component could also be used to perform both of these functions.”   To the extent ALJ Luckern relied upon the prosecution history to support his interpretation, the Commission determined that nothing in Kodak’s amendments or explanatory remarks distinguished the prior art on the basis upon which ALJ Luckern relied, and there was no “clear disavowal” necessary for limiting the scope of claim language.  Accordingly, the Commission interpreted “motion processor” to mean “a processor that processes a series of motion images using digital image processing,” and “still processor” is “a processor that processes a captured still image.”

As both Apple and RIM contest whether their products infringe under these constructions, the Commission remanded this question to the ALJ.

Whether Color Information Stored as Luminance and Chrominance (YCC) Contain at Least Three Different Colors

In the ID, ALJ Luckern interpreted “at least three different colors” to “refer to three of more distinct colors, for example red, blue and green, where each color is a phenomenon of light or visual perception that enables one to differentiate otherwise identical objects.”  Under this interpretation, ALJ Luckern found that the claim term would not literally read on YCC image data, which saves color data as grayscale luminance values and color difference values.  In particular, ALJ Luckern further determined that YCC color information is not equivalent to three colors (such as red, green, and blue) due to prosecution history estoppel.  The Commission determined, however, that the ALJ, who essentially adopted Respondents’ arguments, “may have improperly conflated infringement analysis with claim construction.”  Instead, the Commission determined that the term “at least three different colors” should be given its plain and ordinary meaning, in view of the fact that the patentee did not act as his own lexicographer and the prosecution history did not evidence any limiting or unique meaning for the term.  Accordingly, the Commission turned to the IEEE Standard Dictionary of Electrical and Electronic Terms and interpreted “color” to be “that characteristic of visual sensation in the photopic range that depends on the spectral composition of light entering the eye.”  The Commission further determined that color may be specified by chromaticity and luminance.

The Commission proceeded to find that the accused products practiced part (b) of claim 15 under the plain meaning of color construed above.  The Commission found no dispute that YCC information is the result of a linear transformation of RBG values, such that YCC constitutes three values that together represent a red value, green value, and a blue value, and therefore, a YCC value “provides color data for three color pixels in a repeating pattern of red, green, and blue pixels, as required by part (b) of claim 15.”  The Commission further determined that transforming red, green, and blue values into luminance and chrominance difference values does not cause the underlying colors to disappear.  Instead, the colors remain, “even if the expression of the colors is different.”  The Commission also determined that the transformation does not lose the pixel patterns, since each set of luminance and two chrominance values corresponds precisely to a set of a red, green and blue values.

Initiating Capture of a Still Image While Previewing a Motion Image

ALJ Luckern interpreted the above term as “sending a signal from the capture button to the timing and controls section, said signal starting the still image capture process and being sent during the display of motion images.”  The Commission sided with Kodak and the Commission investigative attorney, determining that ALJ Luckern’s interpretation was unduly narrow, and that while the ALJ is permitted to choose his own construction not offered by any party, in this instance the ALJ improperly imported limitations from the specification.  More specifically, neither the claims, nor the prosecution history support imposing a requirement that a signal be sent to the timing and control sections.  However, the Commission adopted Apple’s argument that the claim and specification supported interpreting “capture” to require the step of “sensing,” and therefore the Commission interprets “initiation capture of a still image,” to mean “initiating the capture by an image sensor of a still image.”

With respect to infringement, the Commission found that at least all accused products other than the Apple iPhone 3GS and iPhone 4 practice the “initiating capture” limitation, since the Commission’s construction of this term was broader that the ALJ’s, and so all products that infringed under the ALJ’s interpretation continue to do so for the same reasons as provided in the ID.  Although Kodak advanced alternative arguments for infringement of the iPhone 3GS and iPhone 4 based on their flash photography mode, the Commission found no reason to overturn ALJ Luckern’s ID that Kodak waived such arguments.  With respect to whether the iPhone 3GS and iPhone 4 infringed in their non-flash modes of operation, the Commission determined that these products did not literally infringe, but did not take a position on whether Kodak waived its opportunity to argue that the non-flash modes of such products infringed under the doctrine of equivalents.  Accordingly, the Commission determined that Kodak demonstrated infringement of the RIM and Apple iPhone 3G products, but not the iPhone 3GS and iPhone 4, and that the ALJ should conduct any further warranted proceedings to determine whether the non-flash mode of the iPhone 3GS and iPhone 4 infringe under the doctrine of equivalents, if such arguments were not waived.

Validity

Before addressing validity issues, the Commission addressed Kodak’s argument, raised for the first time in its petition to the Commission, that the Parulski ‘335 patent was not prior art under 35 U.S.C. § 102(e).   The Commission rejected Kodak’s argument, in view of Kodak’s admission in response to Apple’s Proposed Findings of Fact, that the Parulski ‘335 patent was prior art.  It found unavailing Kodak’s argument that it had admitted merely to the “possibility” that Parulski qualified as prior art, subject to a determination of the invention date.   The Commission further determined that Kodak’s argument is made far too late, and it may not now contest the chronological relationship of the two patents.

Although the parties prior to the final hearing before ALJ Luckern may have indicated that their positions would not change in response to modified claim interpretations and ALJ Luckern had found that prior art invalidated claim 15, the Commission remanded for the ALJ’s determination how respondents’ invalidity theories would be affected by the Commission’s claim interpretations.  The Commission specifically requested that the ALJ on remand address the following:

1. The effect, if any, of ex parte reexaminations of the ‘218 patent, which closed shortly before the issuance of the final ID, and therefore were not fully considered;
2. The ALJ’s decision and authority to rely upon combinations of prior art not expressly presented by the respondents; and
3. Kodak’s secondary considerations, in particular, their obtaining large settlements in proceedings where it asserted the ‘218 patent.

By way of background, the Complainants in this investigation are Pioneer Corporation and Pioneer Electronics (USA) Inc. (collectively, “Pioneer”) and the Respondents are Garmin International, Inc. and Garmin Corporation (collectively, “Garmin”).  In the ID, ALJ Charneski determined that (i) Garmin’s accused products do not infringe the asserted claims of U.S. Patent Nos. 5,424,951 (the ‘951 patent), and 6,122,592 (the ‘592 patent), (ii) Garmin did not show by clear and convincing evidence that any claim of the ‘592 patent is invalid due to obviousness or lack of written description, and (iii) Pioneer satisfied the domestic industry requirement with respect to the asserted patents.  See our February 11, 2011 post for more details.

On February 23, 2011, the Commission determined to review the ID in part and to request that the parties prepare written submissions responding to various questions concerning the issues under review.  The Commission also requested briefing on remedy, the public interest, and bonding.  See our February 28, 2011 post for more details. 

Domestic Industry

The Commission determined that Complainants seeking to satisfy the domestic industry requirements by their investments in patent licensing must show under section 337(a)(3)(C) that (i) the investment exploits the asserted patent, (ii) the investment relates to “licensing,” and (iii) any alleged investment is domestic, i.e., it must occur in the United States.

Since Pioneer’s asserted licensing activities relate to its patent portfolio that includes patents other than those asserted in this Investigation, the Commission also determined it must examine the “strength of the nexus between the activity and licensing the asserted patent in the United States.”  In assessing such a nexus, the Commission determined that a complainant should provide “evidence showing that its licensing activities are particularly focused on the asserted patent among the group of patents in the portfolio or through other evidence that demonstrates the relative importance or value of the asserted patent within the portfolio.”  The Commission further determined that an important consideration is whether an asserted patent covers the product or service of a potential licensee.  The Commission also identified the following considerations: (1) the number of patents in the portfolio, (2) the relative value contributed by the asserted patent to the portfolio, (3) the prominence of the asserted patent in licensing discussions, negotiations and any resulting license agreement, and (4) the scope of technology covered by the portfolio compared to the scope of the asserted patent.  The Commission also determined that an asserted patent within a portfolio might stand out and help strengthen the required nexus if the asserted patent (1) was discussed during the licensing negotiation process, (2) has been successfully litigated before by complainant, (3) relates to a technology industry standard, (4) is a base patent or a pioneering patent, (5) is infringed or practiced in the United States, or (6) the market recognizes its value in some other way.  The Commission further determined that the nexus could be strengthened if the portfolio patents and the asserted patents therein “fit together congruently” covering a specific technology, as opposed to being patents that “cover a wide variety of technologies bearing only a limited relationship to one another.” 

The Commission determined that since activities must be shown to relate to licensing, certain activities that might serve multiple purposes should be specifically shown to relate to licensing.  As an example, the Commission explained that analyzing a company’s product for infringement might relate to licensing, but it might also relate to litigation and seeking injunctive relief.

After considering the three above-mentioned variables for investment in (i) the asserted patent, (ii) “licensing,” and (iii) the United States, the Commission determined that it further considers whether such investment is substantial.  The Commission held that it adopts a “flexible approach,” whereby a relatively weak showing in the above three variables might still show that investment is substantial by “demonstrating that its activities and/or expenses are of a large magnitude,” which in turn may depend on the size of the industry and the size of the complainant.  The Commission determined that other factors relevant to determining a “substantial investment” include (1) the existence of other types of “exploitation” of the asserted patent such as research, development, or engineering, (2) the existence of license-related ancillary activities such as ensuring compliance with license agreements and providing training or technical support to its licensees, (3) whether complainant’s licensing activities are continuing, and (4) whether complainant’s licensing activities are those that are referenced favorably in the legislative history of section 337(a)(3)(C).

In applying the above standards to Pioneer’s activities, the Commission determined that with respect to its in-house activities, Pioneer properly relied upon the licensing activities of its related entity Discovision Associates, which conducted patent analysis, reverse engineering, testing, and similar activities, and which in Pioneer’s circumstance constituted licensing activities.  However, the Commission determined that Pioneer’s in-house activities were directed toward its entire navigation portfolio, and not the asserted ‘951 and ‘592 patents, which were merely covered, but not expressly identified in certain licenses it had negotiated.  In view of the large number of patents in Pioneer’s portfolio, the broad technical scope of the portfolio, the absence of evidence showing how the asserted patents fit together with the other patents in the portfolio, and at least one of the licenses concerning only a small percentage of portfolio patents that are U.S. patents, the Commission determined this demonstrated a weak connection between Pioneer’s in-house activities and the asserted patents.

With respect to the activities of Pioneer’s outside counsel, the Commission first determined there is no presumption that outside counsel activities are less related to licensing than their in-house counterparts.  Given that outside counsel’s redacted invoices related to the analysis of certain products and the ‘951 and ‘592 patents, the Commission found a “relatively strong” nexus between the activities of outside counsel and the asserted patents.  However, even though there was evidence to support that outside counsel’s activities were generally related to licensing (because Pioneer approached various entities about licensing patents prior to engaging in litigation), certain redacted entries suggested these activities were not solely related to licensing, and therefore the amount of outside attorneys fees could not be relied upon in their entirety.

As to whether Pioneer’s licensing activities constituted “substantial investment,” the Commission determined that Pioneer was a large international company with significant resources, and the relevant market includes many participants encompassing vehicle-based navigation devices, handheld portable navigation devices, and smartphones with navigation capabilities.  Although Pioneer provided evidence of royalty payments, the Commission determined this can be circumstantial evidence of substantial investment, but does not constitute investment itself.  Additionally, the Commissioned determined that Pioneer’s activities, “on the whole, reflect a revenue-driven licensing model targeting existing production rather than the industry-creating, production-driven licensing activity that Congress meant to encourage,” and although the statute requires all licensing activities to be considered, the Commission gave “Pioneer’s revenue-driven licensing activities less weight.”  The Commission concluded that “Pioneer’s activities relate only minimally to licensing the asserted patents in the United States,” and Pioneer’s activities were “too limited in light of its resources and the relevant market to be a ‘substantial’ investment under section 337(a)(3)(C).” Therefore, the Commission reversed ALJ Charneski’s finding that a domestic industry exists.

‘951 Patent – Infringement

According to the Opinion, ALJ Charneski interpreted the following term from claim 1 of the ‘951 patent, “second memory means for storing the read display pattern data and position coordinate data corresponding to all of said display pattern data and said position coordinate data from said first memory means,” as requiring “read display pattern data” stored on the second memory that cannot be different information than the “read display pattern data” read from the first memory.  Based on this construction, ALJ Charneski found that Garmin’s products did not infringe claims 1 and 2 of the ‘951 patent because they lacked “second memory means.” 

The Commission determined that ALJ Charneski misconstrued the above “memory means” limitation, because the plain meaning of the term “corresponding” within this limitation does not require the first and second memories to be the same.  Instead, the Commission determined “corresponding” means “relating to,” as suggested by Pioneer.  Based on this revised construction, the Commission found that Garmin’s products literally met the “second memory means” limitation, and therefore infringed claims 1 and 2 of the ‘951 patent.

‘592 Patent – Written Description

According to the Opinion, ALJ Charneski found the ‘592 patent not invalid for lack of written support regarding claims directed to displaying one or more categories, in view of the specification “disclosing display locations in one, two, or all of the available categories.”   However, the Commission determined that as of the invention date claimed by Pioneer, the ‘592 inventor had not invented the “map display system” of claim 1 because this subject matter is not disclosed in the original specification filed on February 11, 1993, or the detailed description of the issued ‘592 patent.  More specifically, the Commission determined that the ‘592 patent nowhere disclosed a single category for display, and the improvement of the ‘592 patent was to easily display locations from different categories nearest to a point-of-interest.  Additionally, the Commission determined the ‘592 patent offered no written support for a “selector device” that allows any type of category selection, and that the entire invention disclosure contradicts the “selector device” language of claim 1 because the disclosure “focuses on displaying all locations regardless of category.”

For at least the above reasons, the Commission affirmed, on modified grounds, ALJ Charneski’s determination that Pioneer failed to prove that Garmin violated Section 337.

By way of background, the Complainant in this investigation is Norgren Inc. (“Norgren”).  ALJ Charneski issued an initial determination on February 13, 2008 in which he found no violation of Section 337.  Norgren petitioned for review, and the Commission rendered a final decision on April 14, 2008 adopting the ALJ’s initial determination.  Norgren appealed the Commission’s decision to the U.S. Court of Appeals for the Federal Circuit.

On May 26, 2009, the Federal Circuit issued a decision that modified the Commission’s claim construction, reversed the Commission’s determination of non-infringement, vacated the Commission’s determination of nonobviousness, and remanded the case.  The Federal Circuit’s remand order contained instructions with respect to asserted claims of U.S. Patent No. 5,372,392 (the ‘392 patent) “to evaluate obviousness in the first instance based upon the correct construction of the claim term ‘generally rectangular ported flange’ — i.e., a construction that does not require a flange having projections on all four sides.”  See our May 28, 2009 post for more details.  ALJ Charneski conducted a one-day evidentiary hearing on April 21, 2010.  On August 5, 2010, ALJ Charneski issued the RID determining that none of the asserted claims of the ‘392 patent were invalid as obvious.  See our August 13, 2010 and September 13, 2010  posts for more details.  On October 7, 2010, the Commission determined to review the RID on the issue of obviousness and requested further briefing.  See our October 11, 2010 post for more details.

The Commission’s June 3, 2011 Opinion (the “Opinion”) focused on two aspects of the RID, namely whether SMC’s prior art old-style connector is “generally rectangular,” as claimed by the ‘392 patent and whether it would have been obvious in 1993 to combine a hinge with a generally rectangular clamp.

Whether SMC’s Prior Art Old-Style Connector is Generally Rectangular

According to the Opinion, the RID determined that modifying the SMC old-style connector to add a pivotally mounted side would not result in a device that contains all limitations of the asserted claims of the ‘392 patent, because SMC’s prior art old-style connector would not to be “generally rectangular.”  SMC and the Investigative Attorney (“OUII”) contended that Norgren’s expert in the original proceeding admitted that the only difference between the connector of the ‘392 patent and SMC’s old style connector is that the ‘392 patent’s connector includes a hinge so one side pivots.  They further argued that ALJ Charneski’s original initial determination found SMC’s old style connector to be generally rectangular, and to hold otherwise would be inconsistent with the Federal Circuit’s decision that both SMC’s and Norgren’s FRLs have “generally rectangular flanges.”  SMC and OUII argued that SMC’s old style connectors have the same generally rectangular structure as SMC’s newer connectors found by the Federal Circuit to infringe, and the asserted claims should have the same meaning for purposes of infringement and validity.

Norgren argued that under 19 C.F.R. §210.43(b)(1), the Commission should show deference when reviewing the RID, and at any rate, the RID was correct because SMC and OUII relied on a photograph of the old-style connector, rather than an exhibit, and SMC and OUII did not show the ALJ what part of the old SMC connector comprised the clamp.  Norgren also argued that only the striders of the SMC old-style connector should be considered, and that these two structures are not four sided or rectangular.

The Commission determined, contrary to Norgren’s allegations, that its review of an initial determination is de novo, and it need not accept any of the ALJ’s findings, holding instead that its review is pursuant to 19 C.F.R. §210.45, rather than 19 C.F.R. §210.43(b)(1) as asserted by Norgren.  The Commission then rejected the RID’s conclusion that the prior art clamp is not generally rectangular.  The Commission held that the RID was inconsistent with the Federal Circuit’s specific findings that the intervening sloped sides of the SMC and Norgren FRLs were generally rectangular, and also found the RID inconsistent with the original ID, which cited Norgren’s expert witness admitting that the only difference between the prior art SMC connector and the connector claimed in the ‘392 patent is that one side of the clamp pivots.  The Commission found no evidence in the record supported deviating from the original ID on this point, and on the contrary, found evidence in the remand proceeding strongly supported finding a generally rectangular configuration in SMC’s old-style connector.  Specifically, SMC’s expert identified four sides of SMC’s old-style connector that correspond to the same features engaging the flange in SMC’s new-style connector, which the Federal Circuit found to be a “four-sided, generally rectangular clamp.”  After examining the physical exhibits, the Commission determined as factually wrong Norgren’s argument that SMC’s old-style clamp is neither four sided nor generally rectangular.  Moreover, the Commission determined Norgren’s contention that SMC’s old-style clamp consists only of two striders to be inconsistent with the Federal Circuit’s decision that SMC’s new style is infringing, since both the new and old styles perform tightening of the two retaining clips in the same manner. The Commission further determined that SMC’s new and old style connectors use “the front and back striders as well as the alignment details on the top and bottom of the connector to sealingly connect the FRL units to one another,” and cited to SMC’s expert testimony that the shape formed by the four parts of the “front and back striders and the alignment details on the top and bottom” is generally rectangular.  The Commission additionally determined that all four sides of the old-style connector are needed for it to function properly, and Norgren’s arguments were inconsistent with its arguments that SMC’s new-style connector is both four-sided and generally rectangular.

Obviousness of Combining a Hinge with a Generally Rectangular Clamp

According to the Order, SMC and OUII argued that the RID is erroneous because it would have been obvious in 1993 to hinge the removable side of a connector to address the problem with prior art connectors, namely loose parts and ease of use.  They pointed to, among other things, design needs, finite number of ways for solving the loose parts problem, and a prior art patent – the Palatchy patent – that specifically showed hinging a clamp for pipes to make it easier to manipulate.  Norgren countered that SMC’s expert was not involved in the FRL industry in 1993, and that Norgren’s expert was so involved, and Norgren’s expert testified on the absence of any teaching, suggestion or motivation to achieve the subject matter of the ‘392 patent.  Norgren also argued that a person of ordinary skill in the art would not have reasonably expected that a hinged side on a rectangular claim would provide a fluid-tight seal.

The Commission determined that SMC established, clearly and convincingly, the obviousness in 1993 of hingedly or pivotally mounting one side of a generally rectangular connector.  The Commission also determined that the Palatchy patent demonstrated that at the time of the invention, it was known to one of skill in the art to use a pivotally mounted side to make the clamp easier to use and eliminate loose parts.  Applying the flexible standard dictated by KSR, the Commission concluded there was no reason to limit the teaching of the Palatchy patent to water pipes.  More fundamentally, it determined that the use of a hinge to solve the known loose parts problem in the FRL industry in 1993 was a common sense solution, apart from the disclosure of the Palatchy patent.  The Commission further determined that the testimony of Norgren’s expert supported the common sense nature of the claimed solution, and that hinges were common components that one of ordinary skill would have understood to solve the loose parts problem.  The Commission held as lacking merit Norgren’s contention that one of ordinary skill would not have expected the hinge to work on devices operating up to 300 PSI, and to pass tests six times the expected air pressure.  The Commission determined that “the hinge does not affect the sealing or clamping mechanism; it merely connects the strider to the connector,” and that it cited to Norgren’s expert’s admission that if the prior art were modified to include a pivoting side and the clamp functioned the same way, there would be no need to test it to see if it sealed properly.

The Commission also concluded that secondary considerations do not support a finding of non-obviousness.  The Commission rejected Norgren’s argument that all experts opined that there was a long-felt need for a clamp that allowed for ease of replacement and had no loose parts, determining instead that long felt need is created by inadequacies in technical knowledge, which was not the case here.  The Commission further determined there was no persuasive showing of commercial success, particularly due to Norgren’s failure to demonstrate a nexus between any success and the improvements claimed in the ‘392 patent.

The Commission further determined that in addition to proving the obviousness of claim 1 of the ‘392 patent, SMC and OUII also proved the obviousness of asserted dependent claims 2-5, 7, and 9 of the ‘392 patent.  The Commission determined that each of the elements of the dependent claims were shown in SMC’s old-style clamp, either alone or in view of the Palatchy patent and/or the general knowledge and common sense of one of skill in the art relating to hinges and hinged connections.

Accordingly, the Commission reversed the ALJ’s RID, and therefore found no violation of Section 337 and terminated the investigation.

By way of background, the Complainants in this investigation are Murata Manufacturing Co., Ltd. and Murata Electronics North America, Inc. (collectively, “Murata”).  The Respondents are Samsung Electro-Mechanics Co., Ltd. and Samsung Electro-Mechanics America, Inc. (collectively, “Samsung”).  On December 22, 2010, ALJ E. James Gildea issued the Initial Determination (“ID”) finding that Samsung had not violated Section 337 in connection with the importation into the United States, sale for importation, or sale within the United States after importation of certain multi-layer ceramic capacitors by reason of infringement of certain claims of U.S. Patent Nos. 6,243,254 (the ‘254 patent), 6,014,309 (the ‘309 patent), and 6,266,229 (the ‘229 patent).  ALJ Gildea also determined that a domestic industry exists that practices the ‘254 patent and the ‘229 patent, but not the ‘309 patent.  See our December 22, 2010 post for more details.  On February 23, 2011, the Commission issued a notice determining to review the ID in part.  In particular, the Commission determined to review the ID’s findings with respect to the ‘229 patent and specifically the finding that so-called Applicant Admitted Prior Art (the “AAPA”) does not invalidate the asserted claims of the ‘229 patent.  The Commission determined not to review any issues related to the ‘309 and ‘254 patents and terminated those patents from the investigation.  See our February 24, 2011 post for more details.

In the Opinion, the Commission determined that there has been no violation of Section 337.  The Commission first determined to reverse ALJ Gildea’s finding to the extent that it suggested that the AAPA cannot constitute prior art.  Specifically, the Commission determined that Federal Circuit precedent establishes that “the characterizations of the prior art in the asserted patent itself can constitute prior art.”  The Commission cited, among others, the Federal Circuit’s decisions in Riverwood Int’l Corp. v. R.A. Jones & Co., Inc., 324 F.3d 1346, 1354 (Fed. Cir. 2003) and In re Nomiya, 509 F.2d 566, 567 (CCPA 1975) in support of this proposition.  Accordingly, the Commission determined that “the applicants’ characterization of figures 15 through 17 as capacitors well known in the art can be considered ‘prior art’” and reversed the ALJ’s finding to the extent it suggested that the AAPA cannot constitute prior art.

Next, the Commission determined that the asserted claims of the ‘229 patent are obvious in light of a combination of (i) the AAPA and the knowledge in the art at the time of filing the patent’s priority document, (ii) the AAPA and Nagakari (Japanese unexamined patent application H11-21429), or (iii) the AAPA and the deNeuf product (product samples sold by Murata and provided by Mr. deNeuf).

The Commission also determined to vacate ALJ Gildea’s finding that the AAPA does not anticipate the asserted claims of the ‘229 patent; however, given the Commission’s finding that the asserted claims of the ‘229 patent are invalid for obviousness, the Commission did not reach the issue of anticipation.  The Commission determined to adopt the ALJ’s findings regarding the ‘229 patent in all other respects.