Further to our April 14 post, on April 23, 2009, the Commission issued the public version of its confidential April 10 Opinion affirming ALJ Charneski’s finding that Respondents Vizio, Inc., AmTran Technology Co., Ltd., Syntax-Brillian Corp., Taiwan Kolin Co., Ltd., Proview International Holdings, Ltd., Proview Technology (Shenzhen) Co., Ltd., Proview Technology, Ltd., TPV Technology, Ltd., TPV International, Top Victory Electronics Co., Ltd., and Envision Peripherals, Inc. (“Respondents”) violated section 337 as a result of inducing infringement of U.S. Patent No. 6,115,074 held by Funai Electric Co., Ltd. of Japan and Funai Corp. of Rutherford, NJ (“Funai”).  The Commission reversed ALJ Charneski’s finding, however, that certain respondents directly infringed the ‘074 patent.

The ‘074 patent is directed to a method and apparatus for decoding a datastream of MPEG compatible packetized information to provided decoded program data for use in changing the channel on digital televisions (“DTVs”).  According to the Opinion, the Commission found that substantial evidence does not support the ALJ’s inference that the TPV and Proview respondents directly infringe claim 23 of the ‘074 patent by testing their DTVs in the United States.  With respect to inducement, the Commission rejected Respondents’ argument that they did not possess the requisite intent since they did not make the semiconductor chipsets that perform the infringing method.  Instead, the Commission determined that there was inducement since Respondents select and combine the chipsets with other components in designing their DTVs, which they market for the specific purpose of receiving ATSC-compliant broadcast signals.  The Commission also rejected Respondents’ argument that their introduction of “work-around” products demonstrated a good faith effort to avoid infringement because Respondents relied on a claim construction of “suitable for use” that is contrary to the well-known and ordinary meaning of the disputed language.  The Commission then made additional findings supporting the ALJ’s conclusion that Respondents knew or should have known that their acts would cause their customers to infringe, including:  (1) Prior to filing its complaint with the Commission, Funai contacted each of the Respondents to offer licenses; (2) Respondents were aware that the ‘074 patent had been designated as essential to practice the ATSC standard since before the investigation; and (3) Respondents continued to sell the older “legacy” DTVs after the investigation began.

On the remedy issue, the Commission agreed with the ALJ that a limited exclusion order with a certification provision directed to the infringing products is appropriate given the difficulty that U.S. Customs and Border Protection would otherwise have in determining whether the imported DTVs of Respondents contain infringing chipsets, and because Respondents were not required to prove that they import non-infringing models to support the inclusion of a certification provision.  The Commission also adopted the ALJ’s recommendation to issue cease and desist orders against the domestic respondents because they have commercially significant inventories of accused DTVs in the United States.

The Commission found that the statutory public interest factors do not preclude issuance of the remedial orders because (1) the concerns raised by Respondents regarding the government-mandated switch from analog to digital television broadcasts and the current economic environment for domestic businesses and consumers do not implicate the public health and welfare; (2) Respondents’ argument that an exclusion order will cause DTV prices to rise is speculative, and any adverse effects on consumers resulting from issuing relief to Funai would be minimal given the range of DTVs manufactured by Funai and its licensees; and (3) any adverse effect on either consumers or businesses is outweighed by the benefit to Funai and to competitive conditions generally in the United States in protecting and enforcing valid intellectual property rights.

Finally, the Commission declined to adopt the ALJ’s recommendation to set a bond of 100% of entered value, instead finding a bond of $2.50 per infringing product appropriate based on Funai’s own license agreements.