By Eric Schweibenz
On December 26, 2013, ALJ Dee Lord issued public versions of Order Nos. 32 (dated November 14, 2013) and 34 (dated December 6, 2013) in Certain Integrated Circuit Chips and Products Containing the Same (Inv. No. 337-TA-859).

According to Order No. 32, Respondents LSI Corporation and Seagate Technology (collectively, “Respondents”) filed a motion to strike certain opinions of Dr. Martin G. Walker regarding infringement and the technical prong of the domestic industry requirement for U.S. Patent No. 6,787,928 (the ‘928 patent).  Respondents argued that several of Dr. Walker’s assertions were not disclosed in Realtek Semiconductor Corporation’s (“Realtek”) responses to contention interrogatories.  Furthermore, Respondents asserted that Dr. Walker’s opinions should be stricken for failing to comply with Ground Rule 6 because they were conclusory and inadequately disclosed in his expert report.

In opposition, Realtek argued that its complaint and interrogatory response adequately disclosed the arguments used in Dr. Walker’s expert report.  Additionally, Realtek asserted that any insufficiency in its contention interrogatory responses was due to Respondents’ discovery delays.  Lastly, Realtek averred that Respondents’ arguments regarding the sufficiency of Dr. Walker’s report go to the weight, not the admissibility, of his opinions.  

ALJ Lord rejected Respondents’ arguments and determined that Realtek’s complaint and interrogatory responses adequately disclosed the arguments made in Dr. Walker’s expert report.  ALJ Lord further noted that delayed responses by Realtek were the result of Respondents’ inconsistent statements during discovery.  Additionally, ALJ Lord held that Respondents’ arguments regarding the sufficiency of Dr. Walker’s expert report go to the weight of his testimony.  Accordingly, ALJ Lord denied Respondents’ Motion to Strike.

According to Order No. 34, Respondents filed a motion for leave and reconsideration of their earlier motion for summary determination that Realtek lacks a domestic industry for the ‘928 patent.  Respondents argued that Realtek is precluded from relying on a comparison of its foreign and domestic activities and, therefore, cannot prove that it meets the economic prong of the domestic industry requirement.  In support of their argument, Respondents pointed to an earlier ruling by Chief ALJ Bullock, which struck parts of Realtek’s expert report based on a determination that Realtek had represented that it would not rely on a comparison between domestic and foreign expenditures to establish the substantiality of the domestic activities.

In opposition, Realtek argued that the functional contributions of its wholly owned U.S. subsidiary, Realcom, satisfy the domestic industry requirement.  Realtek asserted that contributions by the Realcom engineers were essential to the success of Realtek’s domestic industry products.  Specifically, Realtek argued that the Realcom engineers conducted highly specialized work involving analog engineering in the development of the domestic industry products.

In reply, Respondents argued that “the products covered by the patent are made in Taiwan and that the majority of research and development work is performed there, as well as all product testing and packaging related to the products.”  Furthermore, Respondents noted that Realcom does not manufacture any products or generate revenue.

ALJ Lord held that the record, as it stands, does not show that Respondents are entitled to summary determination on the issue of domestic industry.  As an initial matter, ALJ Lord determined, under a quantitative analysis, that Realtek’s domestic expenditures do not appear to be either “significant” or “substantial.”  ALJ Lord noted there a number of factors that may be considered in determining whether or not a domestic industry exists when most of the activities occur overseas.  ALJ Lord specifically analyzed the following four factors:  (1) “Value added to the domestic industry products by domestic activities,” (2) “Relationship of domestic to foreign activity,” (3) “Nature of the business enterprise,” (4) “Importance of the domestic activities to the domestic industry products and whether the Complainants' domestic industry undertakings have a direct bearing on the practice of the patent.”  ALJ Lord held that only the fourth factor raised a genuine issue of material fact.  Specifically, ALJ Lord determined that the importance of the Realcom engineers’ activities relating to the development and support of certain technologies (IPs) raised a genuine issue of material fact.  Accordingly, ALJ Lord denied Respondents’ Motion for Summary Determination.

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