29
Feb
By Eric Schweibenz
On February 17, 2012, ALJ E. James Gildea issued the public version of the Initial Determination (“ID”) (dated February 1, 2012) in Certain Reduced Ignition Proclivity Cigarette Paper Wrappers and Products Containing Same (Inv. No. 337-TA-756).  Due to the size of the ID, we have split the file into part 1 and part 2.   

By way of background, the investigation is based on a December 17, 2010 complaint and supplemental filings by Schweitzer-Mauduit International, Inc. (“Schweitzer”) alleging violation of Section 337 after importation of certain reduced ignition proclivity cigarette paper wrappers and products containing same by reason of infringement of U.S. Patent Nos. 6,725,867 (the ‘867 patent) and 5,878,753 (the ‘753 patent).  See our December 20, 2010 post for more details.  The respondents remaining in this investigation are Julius Glatz GmbH, LIPtec GmbH, and KneX Worldwide LLC (collectively, “Glatz”).

The ‘867 and ‘753 patents are both directed to lower ignition proclivity (“LIP”) cigarettes and related products that are designed to reduce the likelihood of accidental fire if a cigarette is left or dropped on a surface such as upholstery or bedding.  The ‘753 patent had 15 asserted claims, and the ‘867 patent had three asserted claims.  Ten different Glatz LIP paper products were accused of infringing the patents. 

Claim Construction

Construction of the phrase “film forming composition” proved relevant in determining infringement and validity of the patents (discussed below).  Although the parties provided in-depth, competing constructions, the ALJ adopted the Commission Staff’s (“OUII”) construction of “any composition that, when dried, forms a film on the surface to which it is applied,” stating that this construction “fully captures the substance of the term as it appears in the context of the claim.”  The key term “gradually” was determined to mean “incrementally” by the ALJ, adopting a construction different from any of the parties’ or the OUII’s proposals.  The ALJ adopted the construction of “Burn Mode Index” put forth by both parties as “the ratio of the intrinsic resistivity of the electrolyte solution (in ohm-cm) to the product of the electrical resistance of the paper (in ohms) and the area of paper in contact with both electrodes (cm2).”  Glatz did not submit a proposed construction of the phrase “a relatively high permeability, the permeability of the paper web being from about 60 Coresta to about 110 Coresta,” so the ALJ adopted Schweitzer’s construction where Coresta was defined as ml/min/ cm2.  Last, the terms “discrete areas,” “reduced permeability areas,” and “applying” were simply given their plain and ordinary meaning.

Infringement

According to the ID, Schweitzer only tested two of Glatz’s ten accused products.  Two of the remaining products were identical to the two that were tested, but six were completely untested.  As such, the ALJ concluded that the evidence was insufficient to demonstrate that any of the untested products infringe either patent because Schweitzer’s allegation that the two tested products were representative of all ten was not supported by the evidence.  ALJ Gildea pointed out that “the fact that these products are separately identified as Accused Products coupled with the lack of evidence showing they are identical to either of the two tested produces leaves a gap in the evidence that does not permit a reasonable inference that they have the same [profile] or include all the other limitations set forth in each of the asserted patents.”

The ALJ determined that, although Glatz’s products included a “film forming composition” as construed and as required by the claims, none of the tested products satisfied the element of gradual changes in permeability.  ALJ Gildea pointed out the insufficiency of Schweitzer’s evidence in this regard, noting that Schweitzer’s expert acknowledged “that the vertical lines representing the boundaries of the bands shown in his chart were not scientifically constructed and instead were subjectively determined.”  As such, ALJ Gildea concluded by noting that “the burden of proof lies with the complainant, but [Schweitzer’s] evidence is compromised, and thereby undermined, by the subjectivity and conjecture upon which it is based” and therefore none of the claims in the ‘753 patent were infringed.  The ALJ came to a different conclusion with regard to the ‘867 patent, determining that each of the asserted claims was infringed by the accused products.  

Validity

As an initial point, the ALJ determined that the ‘867 was not entitled to the priority date of its provisional application for failure to disclose the “Burn Mode Index” in a manner sufficient to meet the written description requirement of 35 U.S.C. § 112.  As such, the ‘867 patent was only entitled to its nonprovisional application filing date.

Glatz argued that the asserted claims of the ‘867 patent were invalid for anticipation based on prior sales of the LIP cigarette papers that fall within the scope of the claims.  ALJ Gildea agreed with Glatz and held that sale of PaperSelect wrappers by Schweitzer to Phillip Morris for use in Merit Light and Ultra Light cigarettes preceded the invention of the ‘867 patent.  As such, the asserted claims in the ‘867 patent were held to be invalid for anticipation and obviousness over these prior sales. 

Glatz made additional anticipation arguments against the ‘867 patent based on the disclosure of any of four references.  ALJ Gildea determined that none of the references cited by Glatz met the required standard of clear and convincing evidence of anticipation of the claims of the ‘867 patent, primarily based on the contradictory evidence offered by the parties on the elements of permeability and Burn Mode Index as disclosed in the references.

Glatz argued that both the ‘867 and the ‘753 patent were invalid for obviousness over various  references, either alone or in combination.  ALJ Gildea determined that Glatz’s evidence “is not clear and convincing that Allen, Baldwin, and Baker, in light of Houck or “common sense” render the ‘753 patent invalid for obvious.”  The ALJ noted that none of the references disclose a gradually changing permeability profile, and that the teaching in Houck, relied on for many of the shortcomings of the other references, attempted to reduce ignition proclivity in a different manner altogether, and thus Houck’s method “is neither revelatory nor suggestive of the ramped-shaped profile disclosed in the ‘753 patent.”  Similarly, ALJ Gildea determined that none of Glatz’s evidence established clearly and convincingly that any combination of the cited references rendered the ‘867 patent invalid.

Last, Glatz also argued that the ‘753 patent was invalid for lack of utility under 35 U.S.C. § 101 or as indefinite under 35 U.S.C. § 112.  ALJ Gildea was not persuaded that either of these contentions were supported by clear and convincing evidence.  Similarly, Glatz’s assertions that the ‘867 patent was invalid for failing to meet the written description and enablement requirements under 35 U.S.C. § 112 were dismissed by the ALJ.

Domestic Industry

Section 337 requires that Schweitzer show that it satisfies both the technical and economic prongs of the domestic industry requirement with respect to each the ‘753 and the ‘867 patents.  Although the economic prong was met for both patents and the technical prong was met for the ‘867 patent, ALJ Gildea determined that Schweitzer failed to establish that a domestic industry exists with respect to the ‘753 patent.  Specifically, the ALJ held that the products Schweitzer alleged to practice claim 12 of the ‘753 patent were not shown to have the required gradually changing permeability profiles.

Remedy and Bond

In the event that the ITC finds a violation of Section 337, ALJ Gildea recommended that the ITC issue a limited exclusion order that would cover “all reduced ignition proclivity cigarette paper wrappers and products containing reduced ignition proclivity cigarette paper wrappers that infringe the claims of the asserted patents for which a Section 337 violation is found.”  ALJ Gildea further recommended that if the ITC determines a violation of Section 337 has occurred, a cease and desist order against KneX Worldwide LLC should issue based on the amount of inventory KneX Worldwide LLC was determined to maintain.  Lastly, the ALJ recommended that a bond not be required during the Presidential review period.