According to the notice, ALJ Charneski held that there was no violation of Section 337 in this investigation.  Specifically, ALJ Charneski determined that none of the accused products practiced U.S. Patent Nos. 7,016,539 (the ‘539 patent) and 7,065,262 (the ‘262 patent).  ALJ Charneski also determined that certain claims of the ‘262 patent were invalid as anticipated and that all asserted claims of the ‘262 and ‘539 patents were invalid for failure to claim patent-eligible subject matter.  Lastly, ALJ Charneski determined that the “domestic industry requirement is satisfied with respect to the ‘539 patent and the ‘262 patent.”

The notice issued by ALJ Charneski released only the conclusions of law from the ID.  We will provide additional information once the public version of the ID issues in its entirety.

For background on the procedural history leading to the Markman hearing in this investigation, please see our April 28, 2010 post.

According to the portions of the ID released through the notice, ALJ Luckern construed the following terms of the sole patent at issue, U.S. Patent No. 6,292,218:

The claimed term “motion processor” was construed as a processor that processes a series of motion images using digital image processing that is different and distinct in circuitry from the digital image processing of the still processor and the claimed term “still processor” was construed as a processor that processes a captured still image using digital image processing that is different and distinct in circuitry from the digital image processing of the motion processor.

The claimed term “at least three different colors” was construed as referring to three or 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.

The claimed term “capture button” was construed as a user control physically located on the camera, though it need not be a mechanical element.

The claimed term “initiating capture of a still image while previewing the motion images” was construed 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 claimed phrase “each captured image having a first number of color pixel values provided in a first color pattern” was construed as each image of a scene received by the image sensor having a first number of color pixel values generated by the image sensor, provided in an arrangement of the color pixel values generated by the image sensor, where a color pixel value is a measurement of the intensity of one color of light.

The claimed phrase “captured image” was construed as an image of a scene received by the image sensor.

The claimed phrase “first number of color pixel values” was construed as the number of color pixel values generated by the image sensor, where a color pixel value is a measure of the intensity of one color.

The claimed phrase “first color pattern” was construed as the arrangement of the color pixel values generated by the image sensor.

While certifying the ID to the Commission, ALJ Luckern stated that pursuant to Order No. 5, which issued on March 31, 2010, an evidentiary hearing on violation is set to commence on September 1, 2010.   He therefore determined that “a final determination on claim construction on all claim language, or at least certain of the claim language, treated in said determination, before the commencement of the evidentiary hearing on violation on September 1, would lead to efficiencies at the violation hearing.”  ALJ Luckern accordingly requested an early decision by the Commission on this ID.

By way of background, the Complainants in this investigation are O2 Micro International Ltd. and O2 Micro Inc. (collectively, “O2 Micro”).  The Respondents are Monolithic Power Systems Inc. (“MPS”), ASUSTek Computer Inc. and ASUS Computer International America (“collectively, “ASUS”), and Microsemi Corporation (“Microsemi”) (collectively, the “Respondents”).

The ID found that no violation of Section 337 has occurred based on the Respondents’ importation into the United States, the sale for importation, or the sale within the United States after importation, of certain CCFL inverter circuits (including products containing such circuits, such as modules, boards, notebook computers and LCD products) by reason of infringement of the asserted claims of United States Patent No. 7,417,382 (the ‘382 patent). According to the ID, ALJ Gildea determined that:

(1)  None of the accused MPS or ASUS products literally infringe any of asserted claims 1, 2, 4, 7, 8, 9, 11, and 14 of the ‘382 patent;

(2)  Two groups of accused Microsemi inverter modules infringe certain of the claims of the ‘382 patent, and Microsemi directly infringes and induces infringement, but it has not engaged in contributory infringement;

(3)  None of the asserted claims of the ‘382 patent is invalid under 35 U.S.C. §§ 102, 103 or 112;

(4)  The ‘382 patent is not unenforceable for inequitable conduct or unclean hands; and

(5)  A domestic industry does not exist that practices the ‘382 patent.

A.  Infringement

     1.  MPS and ASUS

     Complainants accused certain MPS inverter controller product families of direct literal infringement of the ‘382 patent.  Complainants further accused a number of ASUS inverter modules, boards, notebook computers and LCD modules of infringement because they incorporate accused MPS inverter controllers.

     With respect to the accused MPS products, the main contested issue was whether those products meet the “timer circuit … for providing a time-out sequence of a predetermined duration” limitation as recited in independent claims 1 and 8.  ALJ Gildea concluded that none of the accused MPS products satisfy the timer circuit limitation.  Since all of the remaining asserted claims of the ‘382 patent depend from either claim 1 or claim 8, ALJ concluded that none of the accused MPS products infringe.  Furthermore, because all of the accused ASUS products incorporate the non-infringing MPS inverters, it was determined that the ASUS products likewise do not infringe any asserted claim of the ‘382 patent.

     2.  Microsemi

     O2 Micro accused Microsemi inverter circuits incorporating certain CCFL inverter modules, as well as a number of Microsemi inverter module families containing accused inverter controllers, of infringing the ‘382 patent.

     ALJ Gildea determined that the inverter modules in two of the accused groups of products contain inverter controllers that directly and literally infringe multiple claims of the ‘382 patent.  ALJ Gildea further concluded that Microsemi induced infringement of claims 1, 2, 4, 8, and 11 of the ‘382 patent, based largely on Microsemi’s demonstrated knowledge of the patent and the steps it took (via instructions and data sheets) to teach customers the infringing configuration of its products.  Finally, ALJ Gildea determined that Complainants failed to make a prima facie showing that Microsemi was liable for contributory infringement.

B.  Invalidity

     1.  Anticipation

     Respondents MPS and ASUS asserted that the ‘382 patent was anticipated by a prior art commercial product made and sold by MPS (the MP1010), which they say was created no later than October 2, 1998.  Respondents further asserted that the earliest date of invention of the ‘382 patent was July 22, 1999, and thus, that the MP1010 invalidated the ‘382 patent under 35 U.S.C. §102(g)(2).  Although Complainants presented evidence that the inventor of the ‘382 patent had conceived of the claimed invention by February 18, 1998, ALJ Gildea determined that the evidence was insufficient to justify the conclusion that the inventor had fully conceived of the invention of the ‘382 patent prior to July 22, 1999.  ALJ Gildea also determined that even though the MP1010 product qualifies as prior art, it does not anticipate any claim of the ‘382 patent because it lacks the timer circuit element recited in every asserted claim.

     2.  Obviousness

     Respondents MPS and ASUS asserted that the asserted claims of the ‘382 patent are invalid as obvious based on the combination of U.S. Patent No. 5,384,516 (Kawabata) and various other secondary references.  ALJ Gildea disagreed.  He determined that a number of the elements of the independent claims of the ‘382 patent were not found in Kawabata or any of the other references, individually or in combination.  Furthermore, because the independent claims were not obvious, none of the dependent claims was determined to be obvious based on the applied references.

     3.  Written Description

     Respondents also asserted that the ‘382 patent fails to meet the written description requirement of 35 U.S.C. §112 because the specification fails to adequately describe the “timer circuit” element of independent claims 1 and 8.  ALJ Gildea disagreed and determined that, when reasonably considered in context, the timer circuit element is more than adequately described in the specification.  He also disagreed with Respondent Microsemi’s assertion that there is insufficient disclosure to support the “signal conditioning” element of the claims and concluded that Microsemi had waived this argument by failing to raise it in its prehearing brief.   Accordingly, ALJ Gildea determined that the ‘382 patent was not invalid for failure to comply with the written description requirement.

     4.  Indefiniteness

     MPS and ASUS attempted to assert that the ‘382 patent also is invalid for indefiniteness.  Those respondents failed, however, to assert indefiniteness as an issue in their Post-Hearing Brief.  Accordingly, ALJ Gildea determined that this issue was waived.

C.  Inequitable Conduct

MPS and ASUS asserted that the inventor of the ‘382 patent, Dr. Lin, committed inequitable conduct by submitting what was asserted to be a false declaration to the PTO, by withholding material prior art, and by “hiding” material references that were “buried” in voluminous submissions of prior art (over 500 references), and that his conduct was done with deceptive intent.  ALJ Gildea rejected each of these contentions.

ALJ Gildea thus determined that with respect to each of the Respondents’ assertions, they had failed to show that the asserted wrongful act was either material to patentability, or that the conduct was carried out with the requisite intent to deceive or mislead the PTO.  Accordingly, ALJ Gildea rejected Respondents’ inequitable conduct affirmative defenses.

D.  Unclean Hands

MPS and ASUS also asserted, based on the same core of operative facts relating to their inequitable conduct defense, that O2 Micro’s infringement claims should be dismissed under the doctrine of “unclean hands.”  ALJ Gildea rejected this argument for a number of reasons.

First, the legal basis for the unclean hands defense was a Federal Circuit decision that upheld a trial court’s inherent power to sanction a party’s bad faith conduct, including unclean hands, arising in front of the trial court.  See Aptix Corp. v. Quickturn Design Sys., Inc., 269 F.3d 1369 (Fed. Cir. 2001).  ALJ Gildea distinguished Aptix on the basis that the ITC is not a trial court and it does not share the same inherent contempt powers as a district court.  Furthermore, MPS and ASUS failed to provide any precedent showing that such an “unclean hands” type defense had ever successfully been alleged in a Section 337 action.

Second, ALJ concluded that for the same reasons that Respondents’ inequitable conduct defense had failed, there was not clear and convincing evidence that O2 Micro acted with unclean hands in the prosecution of its claims involving the ‘382 patent.  Accordingly, the unclean hands defense was rejected.

E.  Domestic Industry

ALJ Gildea determined that Complainants failed to satisfy the technical prong of the domestic industry analysis.  In particular, he found that O2 Micro’s products failed to meet the timer circuit limitations of independent claims 1 and 8 of the ‘382 patent.  Thus, ALJ Gildea concluded that Complainants’ products do not practice claims 1 and 8 of the ‘382 patent.  Although ALJ Gildea previously had determined that O2 Micro had satisfied the economic domestic industry prong, since O2 Micro had failed to satisfy the technical prong of the domestic industry requirement, he reversed his previous determination with respect to the economic domestic industry requirement.

F.  Conclusion and Remedy

Even though certain of Respondent Microsemi’s accused products were found to infringe the ‘382 patent, ALJ Gildea concluded that since O2 Micro had failed to prove that a domestic industry exists, none of the Respondents was found to have violated Section 337 for any of the asserted claims of the ‘382 patent.  Thus, it was determined that no remedy was warranted.

ALJ Gildea further stated that if the ITC were to find a violation of the ‘382 patent, then a limited exclusion order would be proper.  ALJ Gildea further stated that should the Commission find that Section 337 has been violated with respect to Respondents ASUS or Microsemi, then he would recommend that the Commission issue a cease and desist order directed to those respondents but not with respect to MPS.

Complainant Rambus, Inc. (“Rambus”) accused Respondents NVIDIA Corporation, Asustek Computer, Inc., ASUS Computer International, Inc., BFG Technologies, Inc., Biostar Microtech (USA) Corp., Biostar Microtech International Corp., Diablotek Inc., EVGA Corp., G.B.T. Inc., Giga-byte Technology Co., Ltd., Hewlett-Packard Co., MSI Computer Corp., Micro-star International Co., Ltd., Palit Multimedia Inc., Palit Microsystems Ltd., Pine Technology Holdings, Ltd., and Sparkle Computer Co. (collectively, “Respondents”) of infringing five patents directed towards memory devices and associated memory controllers used, for example, in personal computers, game systems and mobile phones.

The asserted patents fall into two categories (1) the Barth I patents consisting of U.S. Patent Nos. 6,470,405 (claiming a system and method for performing data transfers within a computer system.), 6,591,353 (claiming a method and apparatus for controlling data transfers to and from a dynamic random access memory), and 7,287,109 (claiming a method and apparatus for controlling data transfers to and from a dynamic random access memory); and (2) the Ware patents consisting of U.S. Patent Nos. 7,177,998 and 7,120,016 ((both claiming information storage and retrieval and, more specifically, to coordinating memory components).  The accused products incorporate NVIDIA memory controllers.

The Barth I Patents

Respondents argued that they did not infringe the Barth I patents because the accused products do not have a timing signal that initiates sampling and/or indicates when the device is to begin an operation such as reading, writing or transferring.  According to Respondents, Rambus failed to prove whether the signal actually initiates data.  ALJ Essex rejected this argument, holding that the memory data sheets for the accused products showed that they wait for a signal to begin sampling and will not sample absent the signal.

Respondents also argued that certain products do not infringe because they write data to the memory array during the precharge operation, rather than the write operation as required by the claims.  ALJ Essex rejected this argument as well, holding that the claims do not require the write operation to conclude before precharge operation so the precharge and write operations could overlap.  ALJ Essex concluded that the evidence showed the devices write data occurred during write operations.  According to the ID, since Respondents import the products, they directly infringe the Barth I patents and also indirectly infringe by instructing users how to use the devices.

Respondents’ allegations that the Barth I patents were anticipated, obvious and/or invalid for double patenting were rejected by ALJ Essex.

The Ware Patents

Turning his focus to the Ware patents, ALJ Essex also found the accused products infringed directly and indirectly, but found that both Ware patents were invalid as anticipated and obvious.  Respondents argued that the Ware patents were anticipated by U.S. Patent No. 6,292,903 (”Coteus”) and U.S. Patent No. 6,226,757 (”Intel Ware Patent”).  The Commission Investigative Staff (“OUII”) agreed with Respondents that the Coteus patent anticipated the claims of the Ware patents, but sided with Rambus in arguing the Intel Ware Patent did not anticipate.  ALJ Essex agreed with OUII in both instances, holding that the Ware patents were anticipated by Coteus but not by the Intel Ware Patent.

Respondents also argued that the Ware patents were obvious in light Coteus and the Intel Ware Patent.  While ALJ Essex agreed regarding Coteus, he held that Respondents had waived the right to move for obviousness in light of the Intel Ware Patent because they had failed to present obviousness arguments in their post-hearing briefs.

ALJ Essex rejected Respondents allegation of inequitable conduct based on Rambus’s failure to provide the Intel Ware Patent and a reference called the Hotrail paper.  In both instances, ALJ Essex found Respondents failed to prove either materiality or intent.

Unclean Hands

Respondents raised an unclean hands defense, based on Rambus’s conduct as part of a standard-setting organization and for spoliation of evidence.  According to Respondents, Rambus attended a Joint Electron Devices Engineering Council (JEDEC) meeting, related to standard-setting for random access memory.  Rambus then violated its JEDEC disclosure requirements and filed patent applications that would cover the standard.  ALJ Essex rejected this argument, following a prior Federal Circuit holding that Rambus had no disclosure duty at the time it filed the applications.

As for spoliation, Rambus organized “shred days” prior to enforcing its patents.  According to Respondents, Rambus deliberately destroyed evidence.  ALJ Essex discussed prior court findings on this issue and concluded that the evidence “puts Rambus and its business ethics in an unfavorable light each and every time.”  ALJ Essex held that Rambus violated its duty to preserve evidence, its destruction was done with a culpable state of mind, and that the destroyed evidence was relevant to the issues in the case.  Respondents were not able to show, however, that they were prejudiced by the destruction and their failure to prove this essential element defeated their defense.

Remedy

Having already found in October 2009 that Rambus had established domestic industry, ALJ Essex turned to the proposed remedies.  He recommended a Limited Exclusion Order and Cease and Desist Order for the accused products found to have infringed the Barth I patents.  ALJ Essex rejected Rambus’s request for 100% bond during the Presidential Review Period, but recommended the Commission set a bond at a reasonable royalty rate of the entered value of the accused products.

The Complainants in this investigation are O2 Micro International Ltd. and O2 Micro Inc.  The Respondents are Monolithic Power Systems Inc., Microsemi Corporation, ASUSTek Computer Inc. and ASUS Computer International America (collectively, the “Respondents”).

According to the notice, ALJ Gildea determined that no violation of Section 337 had occurred by the Respondents in the importation into the United States, the sale for importation, or the sale within the United States after importation, of certain CCFL inverter circuits by reason of infringement of the asserted claims of United States Patent No. 7,417,382 (the ‘382 patent).

ALJ Gildea further determined that a domestic industry does not exist that practices the ‘382 patent.

The notice issued by ALJ Gildea released only the title and first three pages of the ID.  We will provide additional information after the public version of the ID issues in its entirety.

By way of background, the Complainants in this investigation are Red Bull GmbH and Red Bull North America, Inc. (collectively, “Red Bull”). The Respondents are Avalon International General Trading, LLC (“Avalon”); Posh Nosh Imports (USA), Inc. (“Posh Nosh”); Greenwich, Inc. (“Greenwich”); Advantage Food Distributers (“Advantage Food”); Central Supply, Inc. (“Central Supply”), Chicago Import Inc. (“Chicago Import”), and Lamont Dist., Inc. (“Lamont”) (collectively, “Defaulting Respondents”).  On December 2, 2009, Red Bull moved for summary determination on the issues of domestic industry, importation and violation of Section 337.

Complainants argued that a domestic industry exists; that Defaulting Respondents unlawfully sold for importation in the US, imported into the US, and/or sold within the US after importation Gray Market Unauthorized Red Bull Energy Drink (“Gray Market Energy Drink”); and that Defaulting Respondents infringed Red Bull’s asserted registered marks and copyright.  Thus, Red Bull argued that they were entitled to summary determination on the issues of domestic industry, importation, and violation and that because of the likelihood of circumvention, pattern of violation, difficulty in identifying the source, and the lack of harm to the public interest, they are also entitled to a general exclusion order.  Red Bull further argued that its energy drink has been successful and that brand image and quality control have been central to such success.

With regard to the Gray Market Energy Drink, Red Bull noted material differences including omitting the nutrition requirements, volumetric information, and state deposit information, and identifying foreign distributors as contacts.  Red Bull further noted that since the Gray Market Energy Drink is not subject to Red Bull’s quality control and safety procedures, the sales of such drinks damage the reputation and goodwill of Red Bull and pose a risk to public safety.

In the ID, ALJ Luckern found that no genuine issue of material fact existed as to whether Red Bull’s asserted registered marks and copyright were valid and enforceable, as to the establishment of domestic industry, and as to importation of Gray Market goods.  Thus, ALJ Luckern determined a violation of Section 337 had occurred.

Domestic Industry

Both Red Bull and OUII argued that a domestic industry exists with respect to the U.S. Red Bull Energy Drink and Red Bull Energy and Sugarfree Shot products intended for sale in the US.

ALJ Luckern determined that Red Bull’s asserted registered marks and copyright and/or derivative works are featured on Red Bull Domestic Industry Products sold in the US.  The ALJ also determined that Red Bull’s sales of the Red Bull Domestic Industry Products are significant. Thus, ALJ Luckern determined the technical prong of the domestic industry requirement was satisfied.

The ALJ also found the economic prong of the domestic industry requirement satisfied, noting that Red Bull had invested significantly in plants and equipment in connection with the Red Bull Domestic Industry Products in the US; had made a significant employment of labor and capital relating to the Red Bull Domestic Industry Products in the US; had made significant investment in the exploitation of Red Bull’s asserted registered marks and copyright, including research, development, and licensing; had used Red Bull’s asserted registered marks and copyright in connection with numerous promotional and other items related to the US Red Bull Energy Drink; and had expended significant resources in conducting market research and advertising and marketing with respect to the US Red Bull Energy Drink.

Gray Market Trademark Infringement

Both Red Bull and OUII argued that gray market infringement had been established.

ALJ Luckern found that the Gray Market Energy Drink cans bore the same trademarks as are registered in the US by Red Bull. ALJ Luckern found that importation of these drinks had occurred in violation of Section 337 by Respondents Avalon, Posh Nosh, Greenwich, Advantage Food, Central Supply, and Chicago Import.  Specifically, the ALJ found that these Gray Market Energy Drinks were necessarily imported into the US because the products were only manufactured outside of the US, and authorized for sale outside of the US as evidenced by various markings on the cans.  With regard to Respondent Lamont, the ALJ found no evidence of actual sale by Lamont in the US, merely an offer for sale.

The ALJ also found material differences with respect to the Gray Market products including the lack of UPC codes, nutritional information, volumetric information, deposit information, batch codes, expiration dates, toll-free number and website information, and notice statements. ALJ Luckern also noted that phraseology and spellings that differ from standard American English were used.  A recycling symbol not known to American consumers was also used.

Thus, ALJ Luckern determined that there had been trademark infringement of the Red Bull Registered Marks and thus, a violation of Section 337.

Copyright Infringement

ALJ Luckern determined that the asserted Red Bull Copyright was valid and enforceable, that the infringing energy drink cans featured the Red Bull Copyright or derivative works, and that Defaulting Respondents were not authorized to use the Red Bull Copyright.  Thus, ALJ Luckern determined that there had been infringement of the Red Bull Copyright and thus, a violation of Section 337.

Remedy

Regarding remedy, ALJ Luckern recommended the entry of a general exclusion order. The ALJ determined there had been widespread unauthorized use due to the importation of Gray Market Energy Drinks.  ALJ Luckern also determined that business conditions, namely the supply and demand for Gray Market Energy Drinks in the US and the few barriers for selling such a product, support the entry of a general exclusion order.  In addition, the ALJ noted that it was difficult to identify the source of the infringing products.  ALJ Luckern also determined that public interest favored the entry of a general exclusion order and that issuance of such an order would not have any effect on competitive conditions in the US.

With regard to bond, the ALJ found that each of Defaulting Respondents set its price for infringing products differently, thus a price comparison would be difficult to calculate. Therefore, ALJ Luckern determined 100% bond was appropriate.

By way of background, the Complainant in this investigation is Knowles Electronics LLC (“Knowles”), and the Respondent is Analog Devices, Inc. (“ADI”).  On November 12, 2009, Knowles filed a complaint requesting that the ITC commence an investigation pursuant to Section 337 concerning certain ADI silicon microphone packages and products containing the same that allegedly infringe U.S. Patent No. 6,781,231 (the ‘231 patent) and U.S. Patent No. 7,242,089 (the ‘089 patent).  On the same day, Knowles also filed a motion for temporary relief seeking a temporary exclusion order and a temporary cease and desist order against ADI.  See our November 17, 2009 post for more details.  The investigation was formally instituted on December 17, 2009, and an evidentiary hearing regarding Knowles’s motion for temporary relief was held from February 17-19, 2010.

The ‘231 patent is entitled “Microelectromechanical System Package With Environmental and Interface Shield” and the ‘089 patent is entitled “Miniature Silicon Condenser Microphone.”  The ‘231 and ‘089 patents were asserted against MEMS Technology Berhad (“MemsTech”) in Inv. No. 337-TA-629, where ALJ Rogers found a violation of Section 337 that was affirmed with some modifications by the Commission.  See our February 19, 2009, June 15, 2009, and August 21, 2009 posts for more details.

In the 695 investigation, ALJ Rogers issued the ID on Knowles’s motion for temporary relief on March 24, 2010, finding that Knowles was not entitled to temporary relief.  According to the ID, ALJ Rogers held that Knowles had failed to carry its burden under the four-factor test used for determining entitlement to temporary relief at the ITC:  (1) the likelihood of the complainant’s success on the merits; (2) irreparable harm if the temporary relief is not granted; (3) the balance of hardships between the parties; and (4) the public interest.

According to the ID, ALJ Rogers found that Knowles had failed to demonstrate a likelihood of success on the merits because ADI had raised substantial questions of invalidity as to all of the asserted claims of the ‘231 and ‘089 patents except claim 15 of the ‘089 patent, and as to that claim, Knowles had failed to show a likelihood of success on the issue of infringement by ADI’s accused products.  Additionally, ALJ Rogers found that Knowles had not demonstrated that it would suffer irreparable harm if the requested temporary relief were not granted.  ALJ Rogers did find that the balance of hardships weighed in favor of granting temporary relief and that the public interest did not preclude temporary relief, but that these factors could not overcome Knowles’s failure to demonstrate a likelihood of success on the merits or irreparable harm.

Claim Construction

In order to perform his infringement and invalidity analyses for purposes of determining Knowles’s likelihood of success on the merits, ALJ Rogers construed several critical terms in the claims of the ‘231 and ‘089 patents.

The construction of the claim term “package” in claim 1 of the ‘231 patent was heavily disputed by the parties.  Both parties agreed that a “package” is a product that includes (1) protection from the environment, (2) a first-level connection between a device located inside the package and the package itself, and (3) a second-level connection between the package and another circuit outside the package.  However, Knowles argued that limitation (3) should be further limited to a connection between the package and a printed circuit board.  Knowles relied on the testimony of its expert witness, Dr. Gilleo, to support its proposed construction.  However, ALJ Rogers found that Dr. Gilleo’s opinion on the issue lacked credibility, in part because his narrow proposed construction for “package” was inconsistent with the broader construction for the same term that he had proposed in the 629 investigation.  Accordingly, ALJ Rogers dismissed Dr. Gilleo’s opinion and agreed with ADI that the claim term “package” did not require a connection specifically to a printed circuit board.

Another disputed claim term was “acoustic port” in claim 1 of the ‘231 patent.  ADI argued that an “acoustic port” must allow acoustic energy to enter the chamber of the package.  However, ALJ Rogers found that allowing acoustic energy to enter the chamber was not required in all cases, and was only described in one section of the ‘231 specification.  Accordingly, he construed the term to mean “a port that allows the passage of an acoustic signal.”

In the ‘089 patent, the claim term “surface mountable package” was at issue.  The “package” part of the term was construed as described above for the ‘231 patent’s term – it was found not to require a connection specifically to a printed circuit board.  As to “surface mountable,” Knowles and Dr. Gilleo again argued that the “surface mountable package” had to be compatible with “pick and place robots” commonly used to install packages onto printed circuit boards.  ALJ Rogers again found Dr. Gilleo’s credibility lacking and construed “surface mountable” only to require that the package be “capable of being physically directly bonded to a separate substrate.”

The claim term “volume” in the ‘089 patent was also disputed.  ADI argued that the volume must be “closed.”  ALJ Rogers rejected this proposed limitation on the grounds that is was inconsistent with certain embodiments disclosed in the specification and with the doctrine of claim differentiation.  Accordingly, he construed the term as “a space defined by the transducer and one of the first member or the second member.”

Invalidity

With respect to invalidity, ADI focused heavily on the fact that the ‘231 and ‘089 patents are currently involved in inter partes reexamination proceedings at the U.S. Patent and Trademark Office (“PTO”).  ADI argued that since in granting the requests for reexamination the PTO had necessarily already found a “substantial new question of patentability” as to the ‘231 and ‘089 patents, Knowles could not possibly show a likelihood of success on the merits on the invalidity issue.  However, ALJ Rogers did not accept this argument and cited Federal Circuit precedent that distinguished the “substantial new question of patentability” standard that the PTO uses in determining whether to grant a request for reexamination from the “substantial question of invalidity” standard that is used by district courts to determine whether there is a likelihood of success on the merits on invalidity at the preliminary injunction stage.  Thus, ALJ Rogers decided to analyze ADI’s invalidity contentions for himself.

ADI asserted that claim 1 of the ‘231 patent is anticipated by U.S. Patent No. 6,324,907 to Halteren (“Halteren”).  Halteren discloses what is referred to as a “flexible substrate transducer assembly.”  Knowles’s only basis for distinguishing Halteren from claim 1 of the ‘231 patent was an argument that Halteren does not disclose a “package” because its second-level electrical connection comes in the form of four electrical conducting elements, rather than in a direct connection to a printed circuit board.  However, based on ALJ Rogers’s construction of “package” (discussed above), this was not sufficient to patentably distinguish Halteren.  Accordingly, ALJ Rogers found that Analog had raised a substantial question of invalidity regarding claim 1 of the ‘231 patent based on anticipation by Halteren.

ADI also asserted that claim 1 of the ‘231 patent is anticipated by U.S. Patent No. 4,533,795 to Baumhauer (“Baumhauer”).  Baumhauer discloses an “integrated electroacoustic transducer.”  Again, the dispute between the parties was over whether Baumhauer discloses a “package.”  Here, ALJ Rogers determined that there was no second-level connection between the package and another circuit outside the package.  Accordingly, even given his construction of “package” in claim 1 of the ‘231 patent, the claim did not read on Baumhauer, and ALJ Rogers found that ADI had not raised a substantial question of invalidity based on anticipation by Baumhauer.

ADI further asserted that claims 1, 2, 7, 15, 16, 17, 18, and 20 of the ‘089 patent are anticipated by Halteren.  Here, the dispute was over whether Halteren discloses a “surface mountable package.”  Dr. Gilleo first testified that Halteren did not disclose a package that was “surface mountable,” but later agreed that one could laminate the invention in Halteren to a surface.  Accordingly, the only real dispute was over whether Halteren discloses the required second-level electrical connection.  As with his analysis of Halteren vis-à-vis claim 1 of the ‘231 patent, ALJ Rogers found that Halteren did in fact disclose the second-level connection, and, accordingly, that ADI had raised a substantial question of invalidity as to claims 1, 2, 7, 16, 17, 18, and 20 of the ‘089 patent based on anticipation by Halteren.

However, ALJ Rogers found that ADI had not demonstrated a substantial question of invalidity as to claim 15 of the ‘089 patent.  According to the ID, given ALJ Rogers’s construction of “volume,” claim 15 includes the additional requirement that the transducer reside within the chamber and the volume at the same time.  ADI argued that the claim is indefinite under this construction because it is physically impossible for the transducer to be in both the chamber and the volume.  However, ALJ Rogers rejected this argument and pointed out that the fact that the claim might describe a physical impossibility does not make it incapable of understanding, and thus does not make it indefinite.

In addition to anticipation by Halteren, ADI also argued that claims 1, 2, 15, 16 and 17 of the ‘089 patent are anticipated by U.S. Patent No. 6,594,369 to Une (“Une”).  According to the ID, the dispute here centered on whether Une discloses “that the transducer is attached to a surface formed on one of the first member or the second member, said surface being formed with at least one patterned conductive layer.”  Based on wavering testimony from Dr. Gilleo on this issue, ALJ Rogers found that ADI had raised a substantial question of invalidity as to claims 1, 2, 16 and 17 of the ‘089 patent based on anticipation by Une.  However, ALJ Rogers found that claim 15 is not anticipated under his claim construction.

Lastly ADI argued that U.S. Patent No. 7,080,442 to Kawamura anticipates claims 1, 2, and 16 of the ‘089 patent.  Here again, the dispute centered on whether Kawamura discloses “that the transducer is attached to a surface formed on one of the first member or the second member, said surface being formed with at least one patterned conductive layer.”  After considering the evidence, ALJ Rogers could not find any references to a patterned conductive layer in Kawamura, and, accordingly, determined that ADI had failed to demonstrate a substantial question of invalidity of claims 1, 2, and 16 of the ’089 patent based on anticipation by Kawamura.

Thus, in sum, ALJ Rogers determined that ADI had raised a substantial question of invalidity as to all of the asserted claims of the ‘231 and ‘089 patents except for claim 15 of the ‘089 patent.

Infringement

As to infringement, ALJ Rogers found that Knowles had demonstrated a likelihood of success on the issue of whether ADI’s products infringe claim 1 of the ‘231 patent.  The only dispute here was whether or not the housing of the accused products includes an acoustic port.  Based on ALJ Rogers’s construction of “acoustic port” as simply “a port that allows the passage of an acoustic signal” (described above), he found that the housing of ADI’s accused products does in fact include an acoustic port, and thus that Knowles had a likelihood of success on the issue of infringement of claim 1 of the ‘231 patent.

With respect to the asserted claims of the ‘089 patent, the issue was whether ADI’s accused products included a “volume.”  Based on ALJ Rogers’s holding that a “volume” did not need to be closed but is instead properly construed as “a space defined by the transducer and one of the first member or the second member,” he found that ADI could not refute Knowles’s showing of a likelihood of success on the issue of infringement of the asserted claims of the ‘089 patent other than claim 15.  However, with respect to claim 15, ALJ Rogers determined that Knowles had failed to show a likelihood of success on infringement because it failed to show that the transducer was “within the volume” as required by claim 15.

Thus, in sum, ALJ Rogers determined that Knowles had demonstrated a likelihood of success as to infringement of all of its asserted claims except claim 15.

Domestic Industry

As to domestic industry, Knowles and ADI agreed for purposes of Knowles’s motion for temporary relief to jointly stipulate that Knowles has satisfied the economic and technical prongs of the domestic industry requirement.

Likelihood of Success on the Merits

In view of the above, ALJ Rogers found that Knowles had failed to demonstrate a likelihood of success on the merits because ADI had raised substantial questions of invalidity as to all of the asserted claims of the ‘231 and ‘089 patents except claim 15 of the ‘089 patent, and as to that claim, Knowles had failed to show a likelihood of success on the issue of infringement by ADI’s accused products.

Irreparable Harm

ALJ Rogers next considered whether Knowles would suffer irreparable harm if its motion for temporary relief were denied.  Knowles first argued that irreparable harm should be presumed based on Knowles’s alleged likelihood of success on the merits, and then cited six different ways in which it has allegedly been irreparably harmed:  (1) lost sales; (2) damage to building relationships; (3) unwarranted reputation for ADI; (4) lost funding for research and development; (5) need for Knowles to censure its existing or potential customers; and (6) likely price erosion.

ALJ Rogers rejected Knowles’s argument that irreparable harm should be presumed based on an alleged likelihood of success on the merits.  He held that under the Supreme Court’s eBay decision, each of the four factors in the test for a preliminary injunction (or for temporary relief at the ITC) must be evaluated independently.

ALJ Rogers then found that none of Knowles’s six alleged instances of irreparable harm constitute the sort of irreparable harm that would justify temporary relief.  This section of the ID is heavily redacted, but in any event, ALJ Rogers determined that Knowles had failed to demonstrate irreparable harm under any of its theories.

Balance of Hardships

As to the balance of hardships between the parties, ALJ Rogers first stated that “[b]ecause Knowles has not demonstrated both of the first two preliminary injunction factors, I find that the balancing of the hardships analysis will not affect the outcome of Knowles’ motion.”  Nevertheless, ALJ Rogers went on to say that if the Commission were to reverse his findings on the first two factors, he would find that the balance of hardships analysis weighs in favor of issuing Knowles’s requested temporary relief.  This was based on ALJ Rogers’s findings that MEMS microphones are a very small part of ADI’s overall business, but a relatively large part of Knowles’s overall business.

Public Interest

With respect to the public interest factor, ALJ Rogers stated that “[b]ecause Knowles has not demonstrated both of the first two preliminary injunction factors, I find that the public interest analysis will not affect the outcome of Knowles’ motion.”  Nevertheless, as with the balance of hardships analysis, ALJ Rogers went on to analyze the public interest factor and state that if the Commission were to reverse his findings on the first two factors, he would find that the fourth factor does not preclude the issuance of temporary relief.  ALJ Rogers determined that there is no “critical public interest” that would be injured if Knowles were awarded temporary relief.

Bonding

With regard to bonding, ALJ Rogers held that if the Commission were to find that Knowles is entitled to temporary relief, then no bond should be imposed during the period of relief.  ALJ Rogers held that it was ADI’s burden – as the party seeking the bond – to provide a rational basis for the amount of the proposed bond.  However, in this instance, ADI’s expert merely stated that the amount of the bond should be related to ADI’s lost sales, without providing any actual analysis of the amount of those sales.  Accordingly, ALJ Rogers found that ADI had not met its burden to provide a rational basis for the amount of the proposed bond, and determined that no bond should be required if the Commission determines that Knowles is entitled to temporary relief.

By way of background, the ITC issued a notice and order on February 18, 2010 reversing ALJ Bullock’s October 30, 2009 Supplemental Initial Determination finding that non-party ASAT Inc.’s LPCC invention is not prior art to the patents-in-suit and remanding the investigation to the ALJ to make “necessary findings on anticipation and obviousness in view of the Commission’s determination that the ASAT LPCC invention is prior art to Amkor’s asserted patents.”  See our February 22, 2010 post for more details.

Anticipation

On remand, Respondents Carsem (M) Sdn Bhd, Carsem Semiconductor Sdn Bhd, and Carsem, Inc. (collectively “Carsem”) argued that the ASAT invention anticipates U.S. Patent Nos. 6,433,277 (the ‘277 patent), 6,630,728 (the ‘728 patent) and 6,455,356 (the ‘356 patent) under 35 U.S.C. § 102(g).  Complainant Amkor Technology, Inc. (“Amkor”) argued that Carsem improperly combined teachings from multiple references to prove that the ASAT invention anticipates.  ALJ Bullock found that Amkor mistakenly treated each of the documents produced by ASAT as a separate piece of prior art, when in fact Carsem asserted them merely as evidence of what constitutes the single prior art ASAT invention.

With respect to the ‘277 patent, ALJ Bullock found that the ASAT invention does not anticipate claims 1-4 and 7 in part because the ASAT ‘200 patent discloses a lip on the tip of the contacts of the integrated circuit chip package, but not on the sides of the contacts as required by independent claim 1.  The ALJ also found that the ASAT invention does not anticipate claims 17, 18 and 20.  However, ALJ Bullock found that Carsem had demonstrated by clear and convincing evidence that the ASAT invention discloses all of the limitations of claims 21-23 in part because Amkor’s expert acknowledged on cross-examination that the ASAT invention disclosed all the elements of independent claim 21, and because the ASAT ‘200 patent explicitly discloses “plastic encapsulation which exposes the bottom sides of the die attach pads and the leads,” and Figures 4a and 4b thereof illustrate that the leads are exposed at the bottom of the package.

ALJ Bullock found that the ASAT invention does not anticipate claims 1-4, 7 and 8 of the ‘728 patent in part because it does not teach all four structures disclosed in the ‘728 patent for performing the “means for vertically locking” in independent claims 1 and 3 – the “central peak,” the “central depression,” the “rounded lip” and the “rectangular lip.”

Regarding the ‘356 patent, ALJ Bullock observed that Carsem no longer appeared to argue that the ASAT invention anticipates the asserted claims, as evidenced by the concession by Carsem’s expert that there was no anticipation.

Obviousness

ALJ Bullock rejected Amkor’s argument that the opinions of Carsem’s expert are unreliable because he failed to analyze and consider objective indicia of non-obviousness, finding that “to the extent [Carsem’s expert] failed to consider the secondary considerations of non-obviousness, it could only impact his ultimate opinion on obviousness – it would not affect his opinions regarding the other three Graham factors.”  ALJ Bullock also referred to the detailed discussion and findings in his 2004 Initial Determination regarding Amkor’s evidence of secondary considerations, which are still applicable.  Amkor asserted “new evidence” of secondary considerations which touched on the failure of others, commercial success and praise of the invention, but the ALJ found that the new evidence added nothing of import.

With respect to the ‘277 patent, ALJ Bullock found that each of the JP951, JP964, JP456, JP948, JP854, JP248 and ‘214 references in combination with the ASAT invention disclose all the features of claims 1 and 7.  The ALJ also noted that the ASAT invention and all the references are directed to the field of small plastic semiconductor packaging, and that all the references disclose top-molded, bottom exposed packages in which the leadframes are encapsulated only on top to cover the top of the leadframe and a semiconductor die mounted on the leadframe.  ALJ Bullock further determined that a common problem with these types of packages – recognized in each of the prior art references – is delamination between the plastic encapsulant material and the metal leadframe components, which can cause moisture intrusion or sheering stress that can damage or destroy a chip package.  The ALJ therefore determined that it only makes sense that one of ordinary skill seeking to create a more reliable package would look to references that teach how to prevent delamination, and that the aforementioned references all employ a lip or undercut of varying shapes on the edges of the leadframe components to help interlock the plastic material with the metal contacts and die pad to prevent delamination.  The evidence showed that one of ordinary skill in the art would know there are only a few variations as to where such undercut or lip can be placed on a metal leadframe to help interlock the leadframe to the chip package, and would have expected an undercut locking structure located on one edge or portion of an edge of a leadframe component to work the same and to provide the same benefit when applied to another edge or portion of an edge.  Thus, ALJ Bullock concluded that it would have at least been “obvious to try” using the locking structures disclosed in the prior art references and the ASAT invention to try and improve reliability, and that claims 1 and 7 for therefore invalid under 35 U.S.C. § 103(a).  For the same reasons, the ALJ found that claims 2-4 are obvious in view of the ASAT invention in combination with the JP951, JP964, JP456, JP854 and JP948 references, and that claims 17, 18 and 20 are obvious in view of the ASAT invention in combination with the JP951, JP964, JP456, JP854, JP948, JP248 and ‘214 references.  The ALJ did not address the obviousness of claims 21-23 since it was not asserted by Carsem with respect to these claims, which were found to be anticipated by the ASAT invention in any event.

ALJ Bullock found that claims 1-4, 7 and 8 of the ‘728 patent are obvious in view of the ASAT invention in combination with the JP951, JP964, JP456, JP854, JP948, JP248 and ‘214 references for the same reasons espoused with regard to claim 17 of the ‘277 patent.

ALJ Bullock further found that what support Carsem provided for the obviousness of the asserted claims of the ‘356 patent is “too generalized to be of any import and insufficient to meet Carsem’s burden of proving obviousness by clear and convincing evidence.”  Thus, the ALJ found that Carsem failed to prove that the asserted claims of the ‘356 patent are obvious in light of the ASAT invention in view of the general knowledge and skill in the art at the time of the invention, or in combination with the other prior art references.

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

The Patents

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

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

Claim Construction

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

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

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

Infringement

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

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

Invalidity

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

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

Licensing

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

Unenforceability

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

Domestic Industry

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

Remedy and Bond

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

By way of background, Complainants Safe Skies, LLC and David Tropp (collectively, “Safe Skies”) alleged violations of Section 337 against several respondents regarding certain dual access locks, which allegedly infringe U.S. Patent Nos. 7,021,537 (the ‘537 patent) and 7,036,728 (the ‘728 patent).  See our September 17, 2009 and October 19, 2009 posts for more details.  According to the Order, on February 23, 2010, the Respondents filed a motion for summary determination of non-infringement of all asserted claims of the ‘537 and ‘728 patents.  On February 24, 2010, the Commission Investigative Staff filed a motion for summary determination that the accused products do not infringe the asserted claims of the ‘537 and ‘728 patents.

In the Order, ALJ Luckern determined that the asserted patents claim “a method of making airline luggage inspection secure using a dual access lock that can be used by travelers to secure their luggage and accessed by a luggage screening entity using a master key.”  ALJ Luckern included the following undisputed facts in the Order:  (1) In the United States, the United States Department of Homeland Security’s Transportation Security Administration (TSA) is the entity that inspects and screens airline luggage; (2) all respondents are licensees of Travel Sentry and Travel Sentry is not a party in this investigation; and (3) there is a memorandum of understanding (MOU) between the non-respondent TSA and non-respondent Travel Sentry, to which none of the respondents are a party.

ALJ Luckern determined that, “where the actions of multiple parties combine to perform every step of a claimed method, the claim is directly infringed only if one party exercises ‘control or direction’ over the entire process such that every step is attributable to the controlling party, i.e., the ‘mastermind.’” ALJ Luckern further noted that Complainants alleged joint infringement by (i) the respondents, (ii) non-respondent Travel Sentry (which provides the master key to the luggage screening entity), and (iii) non-respondent TSA (the luggage screening entity), and that the MOU is allegedly the agreement pursuant to which the TSA acts.   ALJ Luckern therefore found that “the only possible ‘mastermind’ alleged by complainants is non-respondent Travel Sentry.”  ALJ Luckern further held that even if non-respondent Travel Sentry did control non-respondent TSA and all respondents, and “the combined efforts” of these three sets of entities “infringed the asserted method claims of the patents in issue, complainants’ allegation of direct infringement by joint infringers would fail, as a matter of law, because the ‘mastermind,’ i.e., Travel Sentry, is not a party in this investigation (See 74 Fed. Reg. 54065-66).”

ALJ Luckern also found that, “under the terms of the MOU, non-respondent Travel Sentry cannot require that the non-respondent TSA use the passkeys, and non-respondent Travel Sentry has no right to limit or stop use of said passkeys, even upon termination of the MOU.”  ALJ Luckern therefore held that, “complainants’ allegations of direct infringement, which require, inter alia, that the non-respondent TSA practice certain elements of the asserted claims under the control or direction of non-respondent Travel Sentry, would fail as a matter of law, even if non-respondent Travel Sentry were a respondent in this investigation.”  Since the named respondents do not perform all elements of the asserted claims, and the respondents do not control or direct any non-respondents to perform the remaining elements of the claims, the respondents “cannot be held liable for direct infringement” as “a matter of law.”

The Order then concluded that “since there can be no violation of Section 337 in this investigation absent direct infringement, the investigation is terminated in toto.”