By Eric Schweibenz
On August 14, 2013, ALJ David P. Shaw issued public versions of his Initial Determination (“ID”) and Recommended Determination (“RD”) on remedy and bond in Certain Audiovisual Components and Products Containing the Same (Inv. No. 337-TA-837).  Due to its large size, we have separated the ID into eight parts:  part 1, part 2, part 3, part 4, part 5, part 6, part 7, and part 8

By way of background, the investigation is based on a March 2, 2012 complaint filed by LSI Corporation and its subsidiary Agere Systems Inc. (collectively, “Complainants”) alleging violation of Section 337 with regard to certain audiovisual components and products containing the same including, certain digital televisions, Blu-ray disc players, home theater systems, DVD players and/or recorders that infringe one or more claims of U.S. Patent Nos. 5,870,087 (the ‘087 patent), 6,982,663 (the ‘663 patent),  6,452,958 (the ‘958 patent), and 6,707,867 (the ‘867 patent).  See our April 13, 2012 post for more details on the investigation.  On March 7, 2013, the ALJ granted a motion to terminate the investigation as to certain claims of those patents.  As of the date of the ID and RD, the remaining respondents in the investigation were Funai Electric Company, Ltd., Funai Corporation, Inc., P&F USA, Inc., and Funai Service Corporation (collectively, “Funai”) and Realtek Semiconductor Corporation (“Realtek”).

In the ID, ALJ Shaw found a violation of Section 337 had occurred with respect to claims 1, 5, 7-11, and 16 of the ‘087 Patent but that no violation had occurred with respect to the remaining asserted claims of the ‘663, ‘958, and ‘867 Patents.

‘087 Patent

Complainants asserted claims 1, 5, 7-11, and 16 of the ‘087 Patent against Funai.  No such assertions were made against Realtek. 
In the ID, the ALJ construed five terms present in the asserted claims.  According to these constructions, ALJ Shaw determined that Funai’s accused produced directly infringed claims 1, 5, 7-9, and 16 of the ‘087 Patent.  Further, the ALJ determined that Funai actively induces the direct infringement of asserted method claims 10 and 11 of the ‘087 patent by encouraging users to use the MPEG decoder systems incorporated in its devices.  In coming to this determination, the ALJ reviewed marketing documents and product manuals providing technical support, website and US Customer Support Line assistance, as well as warranty support.  The ALJ determined that, based on how the devices were constructed, it was not possible to use the video decoder system of the accused products without infringing claims 10 and 11 of the ‘087 Patent. 
With regard to validity, ALJ Shaw also determined that none of the asserted claims of the ‘087 Patent were invalid as anticipated, obvious, or indefinite.

‘663 Patent

According to the ID, Complainants asserted claims 1-9 and 11 of the ‘663 Patent against Funai.  In doing so, Complainants argued infringement by use of the H.264 Reference Software.  Specifically, with regard to Funai, Complainants stated that “it is far more likely than not” that a company manufacturing decoders that decode bit streams compliant with the H.264 Standard would use the methodologies described in the H.264 Reference Software.  No such assertions were made against Realtek. 

In the ID, ALJ Shaw construed six claim terms of the ‘663 Patent, ultimately determining that Funai’s accused products did not infringe the asserted claims.  Specifically, the ALJ stated that Complainants’ “far more likely than not” contentions were not enough to prove infringement by a preponderance of the evidence.  ALJ Shaw also noted that Complainants had only provided infringement analyses for Funai products that use MediaTek decoders, however, the ALJ determined that these products did not satisfy every element of the asserted claims. 

As to validity, none of the asserted claims of the ‘663 patent were determined to be invalid as anticipated, obvious, indefinite, or lacking in written description.  Further, ALJ Shaw determined these claims satisfied both prongs of the Federal Circuit’s machine-and-transformation test and were patent eligible under Section 101 because they represented narrow functional applications in the field of computer technology.

‘958 Patent

Complainants asserted claims 22-26, 29, 32, and 35 of the ‘958 Patent against both Funai and Realtek.  These assertions centered around products that were compliant or compatible with the IEEE 802.11 standards for CCK modulation.  In the ID, the ALJ construed four terms present in these claims. As with the ‘663 Patent, ALJ Shaw determined that, using these constructions, Funai’s accused products did not infringe the asserted claims.  In addition, Complainants had alleged that certain products “more likely than not” and “highly likely” infringed the asserted claims.  The ALJ determined that such statements were not enough to prove that these products practiced all elements of the asserted claims.

With respect to validity, ALJ Shaw determined that none of the asserted claims of the ‘958 patent were invalid as anticipated, obvious, indefinite, or lacking in written description.

‘867 Patent

Complainants asserted claims 20, 23-24, 26-35, 37-40, 47, 49-56, and 58-61 of the ‘867 Patent  against both Funai and Realtek based on their compliance with the IEEE 802.11 standard.  ALJ Shaw construed eight terms of the ‘867 Patent and, acccording to these constructions, determined that neither Funai’s nor Realtek’s accused products infringed the asserted claims.  As with the above patents, Complainants alleged that certain Funai products “more likely than not” or “highly likely” infringed the asserted claims. The ALJ reiterated that such statements were not enough to prove infringement.  

As to validity, the ALJ determined that none of the asserted claims of the ‘867 patent were invalid as anticipated, obvious, or indefinite.

Domestic Industry

With regard to the domestic industry, ALJ Shaw determined that the requirements had been satisfied as to all asserted patents.  Specifically, the ID noted that Complainants had developed each asserted patent in-house at their facilities or their predecessors, that major companies had taken licenses to the asserted patents which had generated revenue and were expected to generate additional revenue, that Complainants maintained a licensing practice in the U.S. (employing individuals in facilities across the U.S.), that Complainants own and lease office space including business units and reverse engineering laboratories in the U.S., and that (as of the end of fiscal year 2010) Complainants held approximately $205 million in assets in North America, primarily in the U.S.  The ALJ also determined that Complainants had met the nexus requirements since certain licensing negotiations specifically identified the asserted patents.  Lastly, the ALJ determined that Complainants investments in the domestic exploitation of the asserted patents were “of a large magnitude” and are, therefore, substantial.


Funai and Realtek set forth several defenses with regard to the ‘663, ‘958, and ‘867 Patents.  Such defenses included RAND defenses, contractual and equitable estoppel defenses, and an alleged breach of duty to disclose SEPs to the IEEE.  After reviewing these allegations, ALJ Shaw determined that these defenses were not adequately supported, and thus Complainants were not prevented from enforcing the ’663, ‘958, or ‘867 Patents due to such defenses.

Remedy and Bond

In the RD regarding remedy and bond, even though a violation of Section 337 was only found with respect to Funai and no violation was found as to Realtek, ALJ Shaw explained that he was required to issue a recommended determination concerning the appropriate remedy for either respondent in the event that the Commission, on appeal, finds a violation as to all respondents.  ALJ Shaw recommended that, unless the public interest required otherwise, if a violation of Section 337 was found, the Commission should (1) issue a limited exclusion order, which includes Funai downstream products if a violation is found as to Funai, and (2) require an unspecified amount of bond during the Presidential review period.  A cease and desist order was not recommended for either respondent.