By Eric Schweibenz
On October 17, 2013, ALJ Thomas B. Pender issued the public version of Order Nos. 15 and 16 (dated September 10, 2013 and September 17, 2013, respectively) granting-in-part Complainant Speculative Product Design, LLC’s (“Speck”) motion for partial summary determination regarding domestic industry and granting Respondent Body Glove International, LLC’s (“Body Glove”) motion for summary determination that it has not violated Section 337 in Certain Cases For Portable Electronic Devices (Inv. No. 337-TA-861/867).

By way of background, Speck is the Complainant in this investigation and the Respondents are Body Glove, Anbess Electronics Co. Ltd., Fellowes, Inc. (“Fellowes”), ROCON Digital Technology Corp., SW-Box.com, Trait Technology (Shenzhen) Co., Ltd., Hongkong Wexun Ltd., En Jinn Industrial Co. Ltd., Shengda Huanqiu Shijie, Global Digital Star Industry, Ltd., JWIN Electronics Corp. d/b/a iLuv, Project Horizon, Inc. d/b/a InMotion Entertainment, Superior Communications, Inc. d/b/a PureGear (“Superior”), and Jie Sheng Technology.  The Commission Investigative Staff (“OUII”) is also a party to the investigation.  Speck has asserted U.S. Patent No. 8,204,561 (the ‘561 patent) against Respondents.  Speck alleges that its CandyShell line of phone cases, sold in the U.S., practices one or more claims of the ‘561 patent.  See our November 16, 2012, January 29, 2013, and July 9, 2013 posts for more background on this investigation. 

According to Order No. 15, Speck moved for partial summary determination that it has satisfied the economic and technical prongs of the domestic industry requirement.  Respondents did not oppose Speck’s motion and the OUII supported the motion in part.

As to the technical prong, which requires the complainant to establish that it practices or exploits the patent-in-suit, ALJ Pender found that Speck’s claim-by-claim, element-by-element analysis of how its CandyShell line of products practices the ‘561 patent was sufficiently detailed and accurate to warrant summary determination on this issue.

Regarding the economic prong, Speck set forth evidence regarding its investments in plant and equipment in the U.S., its investments in the employment of labor and capital in the U.S., and its investments in engineering and research and development in the U.S.  Speck argued that an analysis of any of these three factors independently satisfies the economic prong of the domestic industry requirement.  OUII agreed that Speck demonstrated substantial investment in the exploitation of the ‘561 patent through its engineering and research and development activities. 

However, as to Speck’s investment in plant and equipment and in the employment of labor and capital, OUII found Speck’s evidence to be deficient.  OUII argued that Speck inappropriately relied upon the magnitude of its expenditures in an absolute sense without providing a nexus to the patented products.  According to OUII, Speck did not provide sufficient detail linking each expenditure to its CandyShell products and how the expenditures added value to the same.  ALJ Pender agreed, finding that “Speck has not explained to me the nature and importance of the activities or the articles protected by the ‘561 Patent in the context of Speck’s operations, Speck’s marketplace, or the protective-case … industry, or even whether the activities had a direct bearing on Speck’s practice of the ‘561 patent.”

Accordingly, the ALJ granted-in-part Speck’s motion as to the economic prong of the domestic industry requirement (as it relates to Speck’s investment in engineering and research and development) and as to the technical prong, but otherwise denied Speck’s motion.

According to Order No. 16, Respondent Body Glove moved for summary determination that it has not violated Section 337 and that it should be terminated from this Investigation.  Specifically, Body Glove asserted that it does not import, make, sell for importation into the U.S., or sell after importation by another any of the accused products in the Investigation.  The focus of OUII’s response supporting Body Glove’s motion, and the ALJ’s Order, concerned whether Body Glove is “the owner, importer, or consignee” of the accused articles such that it may be found liable for a sale after importation.  The “owner, importer, or consignee” is the entity that may be found to violate Section 337 by selling an accused product after importation. 

Because Respondent Fellowes is the only entity that makes or imports any of the accused Body Glove products in the U.S., ALJ Pender found that Body Glove is not an “owner or importer.”  Further, the ALJ found that the licensing agreement between Body Glove and Fellowes did not establish Body Glove as a consignee, nor did Body Glove and Fellowes create an agency relationship in the agreement.  Thus, ALJ Pender concluded that “Speck has not identified any relevant facts to support its allegation that Body Glove has committed an act prohibited by Section 337” and that “Speck has not made a prima facie showing that the importation requirement is satisfied.” 

ALJ Pender also found that there were no genuine issues of material fact that would warrant a denial of Body Glove’s Motion for summary determination.  In particular, the ALJ found that Speck’s evidence showing that Body Glove has control over the design and marketing of the accused products was insufficient to raise a genuine issue of material fact as to whether Body Glove sold after importation the accused products in the U.S.  According to the ALJ, “Speck has not shown that Body Glove’s actions have sufficient nexus to the importation into the United States or the sale for importation of the accused products.”  The ALJ also dismissed Speck’s arguments regarding Body Glove’s liability as an induced infringer.

Accordingly, ALJ Pender granted Body Glove’s Motion and terminated them from the Investigation.