By Eric Schweibenz
On June 23, 2010, ALJ Theodore R. Essex issued Order No. 65 (dated December 30, 2009), denying a motion filed by Complainant Tessera, Inc. (“Tessera”) on October 16, 2009, for forfeiture of Respondents' bonds, limited discovery and evidentiary hearing in Certain Semiconductor Chips with Minimized Chip Package Size and Products Containing Same (337-TA-605).

By way of background, this investigation was instituted in May 2007 based on Tessera’s complaint against Respondents Spansion, Inc., Spansion, LLC, Qualcomm, Inc., ATI Technologies, Motorola, Inc., STMicroelectronics N.V., and Freescale Semiconductor, Inc. (collectively “Respondents”) alleging violation of Section 337 by reason of infringement of U.S. Patent Nos. 5,852,326 and 6,433,419.  On May 20, 2009, the Commission issued its final disposition of the investigation, finding a violation of Section 337 and issuing a limited exclusion order against the Respondents and cease and desist orders against several domestic Respondents.  See our May 22, 2009 and June 11, 2009 and May 28, 2010 posts for more details.

According to Order No. 65, Tessera argued that under the terms of the Cease-and-Desist Orders in this investigation it is entitled to have the bonds forfeited because: (l) the United States Trade Representative did not disapprove the Final Determination within the review period; (2) the United States Court of Appeals for the Federal Circuit has not reversed the Final Determination or any of the remedial orders; and (3) Respondents who posted bonds have not indicated that the products subject to those bonds were exported or destroyed.  Tessera argued that the fact that the appeal of the Commission's Remedial Order is still pending before the Federal Circuit does not prevent the immediate forfeiture of the bonds, because the Commission's enabling statute and regulatory provisions provide for the possibility of forfeiture while an appeal is still pending.  Tessera also argued that immediate forfeiture was appropriate in this case because in denying the Respondents' emergency motion for stay of the Remedial Orders pending appeal, the Federal Circuit had already indicated that Respondents had not shown a likelihood of success on the merits.  Tessera also requested a “full accounting” of Respondents’ activities involving the products found infringing in this investigation during the Presidential Review Period, including the appropriate bond amount that each Respondent allegedly should have posted.  Tessera argued that discovery and an evidentiary hearing should be immediately ordered while the evidence of the quantity of infringing products is still “fresh.”

On November 2, 2009, Respondents and the Commission Investigative Staff filed responses opposing the motion for bond forfeiture.

ALJ Essex determined that Rule 210.50(d), which controls proceedings to determine potential forfeiture of Respondents’ bonds, uses permissive language that implies it is not appropriate in all circumstances to initiate proceedings upon a forfeiture motion by a complainant.  ALJ Essex further determined after consulting the legislative history behind Rule 210.50(d), that the Commission did not intend for a bond forfeiture proceeding to be immediately initiated if an appeal is filed with the Federal Circuit.  ALJ Essex also determined that the language of the Cease-and-Desist Order counseled against commencing forfeiture hearings if an appeal of the Commission’s Final Determination is filed with the Federal Circuit.  Based on the above, ALJ Essex denied Tessera’s motion as premature.

ALJ Essex further denied Tessera’s request for discovery and an evidentiary hearing, determining that there was no support for Tessera’s allegations that the requested evidence will “degrade” over time, and that ordering discovery during the appeal of the Commissions Final Determination would subject Respondents to potentially unnecessary hardship and expense.