Further to our May 2, 2011 post, on July 6, 2011, ALJ Luckern issued the public version of his Final Initial Determination (dated April 29, 2011) (“ID”) in Certain Electronic Devices with Multi-Touch Enabled Touchpads and Touchscreens (Inv. No. 337-TA-714).

By way of background, the Complainant in this investigation is Elan Microelectronics Corporation (“Elan”) and the Respondent is Apple Inc. (“Apple”).   Elan asserted that Apple violated Section 337 by importing into the U.S., selling for importation, or selling within the U.S. after importation certain electronic devices with multi-touch enabled touchpads and touchscreens that infringe U.S. Patent No. 5,825,352 (the ‘352 patent).

Infringement

Claim 1 of the ‘352 patent is the sole independent claim at issue and it is directed to a method for detecting the operative coupling of multiple fingers to a touch sensor.  According to the ID, several different Apple products incorporating a touch sensor were accused of infringement, but they all use software source code employing a particular algorithm.  ALJ Luckern therefore analyzed the algorithm to determine infringement of each of the accused products.

Claim 1 of the ‘352 requires a touch sensor to “(a) identify a first maxima in a signal corresponding to a first finger, (b) identify a minima following the first maxima, and (c) identify a second maxima in a signal corresponding to a second finger following said minima.”

ALJ Luckern found that the algorithm in Apple’s accused products did not meet the above limitation for at least the following reasons:  (1) construction of elements (a) and (b) of the above limitation require identifying the value in a finger profile taken on a straight line obtained from scanning the touch sensor, but the ALJ determined that Apple’s algorithm does not perform an analysis on pixels in a straight line; (2) the ALJ determined that the algorithm does not identify a minima; and (3) construction of elements (a), (b), and (c) requires these elements to be performed in sequential order (the “temporal requirement”), which was not shown, at least in part due to the determination that the accused products never identify a minima.

Based on the above, ALJ Luckern determined that independent claim 1 and the asserted dependent claims 2, 7, and 16 of the ‘352 patent were not infringed by Apple.

Validity

Apple argued that claims 1, 2, and 16 of the ‘352 patent were anticipated by Japanese Application Publication 6-161661 (the ‘661 application).  However, ALJ Luckern determined that the ‘661 application did not recognize any value to be a maxima or minima, as required by claim 1, and even if it did, it did not recognize the location of the minima until after the second maxima is identified, and therefore the temporal requirement of claim 1 is not met.  For at least these same reasons, ALJ Luckern determined that dependent claims 2 and 16 were not anticipated by the ‘661 application. 

Apple further alleged that dependent claim 7 of the ‘352 was rendered obvious by the ‘661 application in view of either of two additional prior art references, one which disclosed a contact sensor utilizing an array of capacitive cells for use in a robotic hand (hereafter, “Siegel”), and another disclosing a cylindrical tactile sensor with capacitive sensing elements, and a method for determining contact locations (hereafter “Fearing”).  However, ALJ Luckern determined that Apple relied upon Siegel and Fearing only for elements of claim 7 not described within claim 1, and so Apple’s obviousness arguments failed due to ALJ Luckern’s prior determination that the ‘661 application did not anticipate claim 1.  Even without such a prior finding, ALJ Luckern determined that Apple had not shown that one of ordinary skill would have been prompted to combine the elements of Siegel or Fearing in the way required by claim 7 (i.e., “for the capacitive coupling of a finger,”), and Apple did not sufficiently rebut Elan’s evidence that the sensor design in both Siegel and Fearing would prevent capacitive coupling of a finger. 

Domestic Industry

According to the ID, Elan argued that its efforts to maintain a licensing program in the U.S. with respect to the ‘352 patent, including its investing more than $4 million in licensing efforts and successful licensing of the ‘352, evidenced a domestic industry pursuant to 19 U.S.C. § 1337(a)(3)(C), i.e.,  “significant investment in [the ‘352 patent’s] exploitation,” through licensing.

According to the ID, much of Elan’s financial expense purportedly in support of licensing the ‘352 patent arose from litigation between Elan and Synaptics.   However, ALJ Luckern determined that the correspondence between Elan and Synaptics prior to their litigation did not support the existence of licensing negotiations related specifically to the ‘352 patent, but rather focused on discussions concerning infringement of the patent portfolio of Synaptics, and eventually, the possible cross-licensing of the entire patent portfolios of Elan and Synaptics, or merger or acquisition of Synaptics by Elan.

Elan alleged that it conducted its licensing activities in the U.S. through outside counsel, but ALJ Luckern found no evidence of how much time or money Elan’s outside counsel spent on licensing activities, or that Elan paid its legal bills for services limited to the ‘352 patent rendered by outside counsel.  Similarly, ALJ Luckern found that Elan’s expert relied upon attorney invoices without independently determining which fees pertained to efforts to license the ‘352 patent. 

The ID addressed correspondence between Elan and several third parties regarding the ‘352 patent that included cease and desist requests, and references that Elan is “open to a reasonable business arrangement,” and requests that the third parties “locate a source of touchpads that does not infringe [Elan’s] patents.”  ALJ Luckern determined that such correspondence makes no mention of actual or potential licensing discussions.

ALJ Luckern determined that Elan relied on a single license, had not established a pattern of licensing or significant licensing revenue, and failed to establish a nexus between the Synaptic litigation or its third party communications and any licensing of the ‘352 patent, thereby failing to establish that Elan made a “substantial investment” in the U.S. to exploit the ‘352 patent.

Remedy

ALJ Luckern recommended that if a violation were found, the Commission should issue a limited exclusion order prohibiting the importation of infringing articles, regardless of brand name, that are manufactured abroad or imported by or on behalf of Apple or any of its affiliated companies, parents, subsidiaries, or other related business entities, or their successors or assigns, and such order should not be limited to specifically-identified products, but rather extend to all infringing products.

Given that Apple did not dispute that it has commercially significant inventories in the U.S. of its accused products, ALJ Luckern recommended an appropriate cease and desist order directed at Apple should a violation be found.

As to the amount of any bond required during the Presidential review period, ALJ Luckern recommended that no bond would be necessary, given that Elan is not relying on any domestic industry products in the U.S.

Conclusion and Update

Based on the foregoing, ALJ Luckern determined Apple did not violate section 337, because Elan failed to show that Apple infringes asserted claims 1, 2, 7, and 16 of the ‘352 patent, and Elan failed to establish a domestic industry.

As a further update, the Commission ultimately reviewed in part ALJ Luckern’s ID, and the Commission terminated the investigation with a final determination that Apple had not violated Section 337.  See our July 6, 2011 post for more details.