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Federal Circuit Cases Involving the ITC

Federal Circuit Affirms In Tianrui Appeal (2010-1395)

By Eric Schweibenz
|
Nov
07
On October 11, 2011, the Federal Circuit issued a precedential opinion in Tianrui Group Co. Ltd. v. ITC (2010-1395).  This was an appeal from the ITC’s finding of a violation of Section 337 in Certain Cast Steel Railway Wheels, Certain Processes For Manufacturing Or Relating To Same And Certain Products Containing Same (Inv. No. 337-TA-655).  See our October 19, 2009 and December 4, 2009 posts for more details. Amsted Industries Inc.(“Amsted”) is an American-based company that developed two secret processes to make cast steel railway wheels.  Amsted uses one of the processes and licensed the other to companies overseas, including companies in China.  The basis of the ITC’s investigation was Amsted’s complaint, filed August 14, 2008, alleging a violation of Section 337 in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain cast steel railways and certain products containing the same by reason of misappropriation of its trade secrets (the “ABC trade secrets”).  The complaint named Tianrui Group Company Limited; Tianrui Group Foundry Company Limited; Standard Car Truck Company, Inc. and Barber Tianrui Railway Supply, LLC (collectively “Tianrui”) as respondents.  The ITC instituted an investigation and held a ten day evidentiary hearing, finding that Tianrui had misappropriated Amsted’s ABC trade secrets under Illinois trade secret law.  Specifically, after Tianrui was unsuccessful in obtaining a license, they hired away nine employees of another Chinese Amsted licensee to manufacture wheels using the confidential ABC process.  On October 16, 2009, ALJ Charneski issued the ID finding a violation of Section 337 by Tianrui with respect to the ABC trade secrets.   The Commission issued a notice determining not to review the ID, and soon after issued a notice of Issuance Of A Limited Exclusion Order and Cease and Desist Order; Termination of the Investigation.  See our December 18, 2009 and February 19, 2010 posts for more details.  As summarized in our March 8, 2011 post, Tianrui raised two primary issues on appeal at the Federal Circuit.  First, Tianrui asserted that the ITC exceeded its authority by applying Illinois trade secret law to find a violation of Section 337 based on acts of misappropriation that occurred entirely in China.  Specifically, Tianrui argued that Section 337 is only appropriately applied extraterritorially with respect to patents, as there is no express language authorizing the ITC to do the same with trade secrets.  Second, Tianrui argued that the ITC erred in finding that the domestic industry requirement was met because Amsted produces cast steel wheels by a different process.  In essence, Tianrui asserted that the ITC erroneously reinterpreted the statute to hold that a trade secret complainant seeking to enforce its intellectual property (“IP”) rights need not practice the asserted IP domestically to establish the existence of a domestic industry. The ITC’s primary counter-argument emphasized that it had not applied trade secret law extraterritorially because a key aspect of a Section 337 violation is the domestic element of importation.  Amsted supported this argument by maintaining that some of the misappropriation actually took place in the United States.  In addition, Amsted argued that it met the domestic industry requirement based on the statutory language.  Specifically, Amsted argued that Subparagraph (A) of §337(a)(1), as opposed to subparagraphs (B)-(D), is based on common law and not statutory IP rights.  Therefore, although §337(a)(2) expressly creates a requirement that the domestic industry practice or exploit the asserted IP, this requirement applies only to statutory-based IP investigations covered by subparagraphs (B)-(D) of Section 337(a)(1). In the opinion, the Federal Circuit affirmed the ITC’s application of domestic trade law to conduct occurring in a foreign country, although the Court rejected ALJ Charneski’s application of Illinois trade secret law.  The Court held that a single federal standard, rather than the law of a particular state, should determine whether or not misappropriation occurred sufficient to meet the requirements of an unfair method of competition under Section 337.  The Court emphasized that protecting domestic industries from unfair competition is a distinctly federal concern with a federal remedy, and thus the reason for applying a federal standard is particularly strong.  However, the Court noted that trade secret law differs little from state to state and the federal criminal statute governing theft of trade secrets is also based on the Uniform Trade Secrets Act, and since there is no dispute in this case pertaining to the substantive law of trade secrets, the outcome of the case was not affected by applying Illinois law. The Court determined that the Congressional presumption against extraterritorial application of legislation does not apply to this case for three reasons.  First, Section 337 is specifically directed to importation of articles into the United States, an inherently international transaction, and thus “it is reasonable to assume that Congress was aware, and intended, that the statute would apply to conduct…that may have occurred abroad.”  Second, the Court points out that the ITC “does not purport to regulate purely foreign conduct.”  Rather, the “unfair” activity is only prohibited to the extent that it results in importing goods into the United States and causing domestic injury.  Lastly, the Court determined that the legislative history of Section 337 supports interpreting the statute as permitting the ITC to evaluate conduct that occurs extraterritorially since “Congress intended a …broad and flexible meaning.” Tianrui’s arguments that applying domestic trade law would cause improper interference with Chinese law were dismissed for the reasons detailed above, with emphasis on the fact that the ITC would not be regulating purely extraterritorial conduct and would not affect Tianrui’s ability to sell its cast steel wheels in China or elsewhere.  The Court also noted that Tianrui was unable to identify a conflict between the principles of trade secret misappropriation applied by the ITC and as governed by Chinese trade secret law.  The second issue on appeal, whether or not Amsted had established injury of a domestic industry, was also affirmed by the Federal Circuit.  The Court noted that “Section 337 contains different requirements for statutory intellectual property (such as patents, copyrights, and registered trademarks) than for other, nonstatutory unfair practices in importation (such as trade secret misappropriation).”  For statutory IP, it is necessary that an industry relating to the protected IP exists or is being established.  In contrast, the Court held that non-statutory IP requires that the unfair practice threaten to destroy or substantially injure a domestic industry, without expressly requiring that the domestic industry be based on the IP in question.  Since the Court concluded that Tianrui’s wheels could directly compete with Amsted’s wheels, it held that the domestic industry injury requirement was met. Judge Moore dissented, arguing that the Court impermissibly expanded the reach of Section 337 and asserting that “there is no basis for the extraterritorial application of our laws to punish Tianrui’s bad acts in China,” emphasizing that the trade secret misappropriation occurred entirely in China.  The dissent argues that there is no clear indication of congressional intent in either the statute itself or the legislative history to extend the reach of Section 337 to wholly extraterritorial unfair acts, stating “unless there is the affirmative intention of Congress clearly expressed to give a statute extraterritorial effect, we must presume it is primarily concerned with domestic conditions.”  Judge Moore determined that Section 337 can only cover unfair acts in importation and thus can only cover trade secret misappropriation that occurs in the United States, in contrast to the majority’s assertion that “Congress clearly intended to create a remedy for the importation of goods resulting fromunfair methods of competition” (emphasis in original).  As such, the dissent concludes that Section 337 “does not reach the misappropriation and use of trade secrets in China, even if the product of the misappropriated process is ultimately imported into the United States.”

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Federal Circuit Affirms in Ninestar Appeal (2009-1549)

By Eric Schweibenz
|
Feb
10
On February 8, 2012, the Federal Circuit issued a precedential opinion in Ninestar Tech. Co., Ltd., v. ITC (2009-1549).  This was an appeal from the International Trade Commission’s (“Commission”) assessment of a civil penalty against Ninestar Technology Co. Ltd., Ninestar Technology Company Ltd., and Town Sky Inc. (collectively, “Ninestar”) for failure to comply with exclusion and cease and desist orders arising from violation of Section 337 in Certain Ink Cartridges and Components Thereof (337-TA-565).  See our July 16, 2009 and September 28, 2009 posts for more information. By way of background, the underlying investigation was requested by Complainants Seiko Epson Corporation, Epson America, Inc., and Epson Portland Inc. (“Epson”).  On October 17, 2007, the Commission ruled that certain ink printer cartridges infringed several U.S. patents owned by or exclusively licensed to Epson and issued a general exclusion order, limited exclusion orders, and cease and desist orders in Investigation No. 337-TA-565 prohibiting the unlicensed entry of ink cartridges covered by the patents at issue. According to the opinion, “after issuance of the Commission’s exclusion and cease and desist orders, Ninestar U.S. and Town Sky continued to import into the United States and to sell the ink cartridges that were the subject of the orders.”  An enforcement proceeding was brought, and the ALJ found that Ninestar violated the orders and levied a civil penalty in accordance with 19 U.S.C. § 1337(f)(2).  The Commission adopted the findings and conclusions of the ALJ, but reduced the penalty by approximately half.  Ninestar appealed the assessment of the penalty and its amount, and also objected to the inclusion of Ninestar Technology Co., Ltd. (“Ninestar China”) as jointly and severally liable for the penalty along with the U.S. subsidiaries.  Violation of the Commission’s Orders The opinion notes that Ninestar executives testified at the enforcement hearing that they “continued to import and sell the ink cartridges…with knowledge that the cartridges had been held by the Commission to infringe United States patents and were subject to the Commission’s exclusion and cease and desist orders” and “acknowledged that they filed false affidavits of compliance.”  Furthermore, on appeal Ninestar “does not deny its actions and its knowledge that it was not in Compliance, but argues that it was justified in non-compliance because the law applied by the Commission is wrong.”  As set forth in the opinion, Ninestar argued that “national patent rights are exhausted by the manufacture and sale in a foreign country of a product covered by a national patent, and thus the importation of that product cannot violate the national patent.”  In support of this position, Ninestar alleged that the lead case in this area, Jazz Photo Corp. v. ITC, 264 F.3d 1094 (Fed. Cir. 2001), were overruled by Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617, 632 n.6 (2008).  However, the Federal Circuit was not persuaded, and noted that it had previously specifically interpreted the Quanta Computer case as not eliminating the first sale rule’s territoriality requirement.  Fujifilm Corp. v. Benun, 605 F.3d 1366, 1371 (Fed. Cir. 2010).  The Federal Circuit concluded that “the evidence, including testimony of Ninestar executives…showed that Ninestar understood the law and the Commission’s orders” and thus affirmed the Commission’s ruling.    The Statutory Penalty Assessment of a civil penalty is reviewed on the standard of abuse of discretion.  The opinion notes that both the ALJ and full Commission found that the importation and sales were made in deliberate and knowing violation of the Commission’s orders.  Although the Commission agreed with the “egregious” bad faith of the violations, it reduced the ALJ’s determination of the maximum penalty by approximately half.  The Federal Circuit repeated the Commission’s remarks pointing out that the statutory penalty is designed to serve as a deterrent, and thus must be “substantial enough to deter future violations,” and noted that Ninestar has the ability to pay substantial penalties and “did not demonstrate any reason why the maximum penalties should not be imposed.”  Based on the record, the Federal Circuit held that the Commission’s penalty was within its authority and showed no abuse of discretion. Ninestar argued that Ninestar China should not be held jointly and severally liable with the two Ninestar U.S. subsidiaries, stating “it is elementary and well established law that a parent is not liable for the actions of its subsidiary” and that the Commission failed to meet its burden of proof that Ninestar China controlled the activities of the subsidiaries.  However, the Federal Circuit noted that the record contained substantial evidence to support the finding that “Ninestar China knew of the cease and desist orders and was in a position to ensure compliance…yet it continued to supply covered products to its subsidiaries rather than directing compliance.”  As such, the Federal Circuit affirmed the Commission’s assessment of joint and several liability of the three Ninestar entities. Ninestar argued “there should be no penalty in view of Ninestar’s good faith belief that …the Commission proceedings violate the Constitution in several respects.”  The opinion notes that Ninestar’s constitutional arguments were tardily raised, but exercised its discretion in considering them.  Ninestar’s constitutional arguments were based on three related positions:  1)  that a non-judicial body cannot be assigned authority to issue a punitive penalty for violation of an administrative order; 2) the statutory penalty is of such magnitude as to be criminal in nature and requires a jury trial with the associated safeguards before being imposed; and 3) that a procedure whereby an administrative agency levies a criminal penalty is an unconstitutional violation of separation of powers.  In comparison with related Securities and Exchange Commission and Federal Trade Commission civil penalty provisions, Ninestar called the ITC statute “an unconstitutional monstrosity.”  The Federal Circuit rejected the case law relied on by Ninestar, and dismissed Ninestar’s assertions that a jury trial is necessary, referencing a Supreme Court case that specifically states Congress may assign adjudication of public rights to an administrative agency “with which a jury trial would be incompatible, without violating the Seventh Amendment….even if the Seventh Amendment would have required a jury where the adjudication of those rights is assigned instead to a federal court of law instead of an administrative agency.”  Atlas Roofing Co. v. Occupational Safety & Health Review Commission, 430 U.S. 442. 455 (1977).  The Federal Circuit also noted it is “relevant that decisions of the Commission are subject to judicial review, as a safeguard against administrative excess” and affirmed the Commission’s rulings, discerning “no violation of constitutional structure in the Commission’s authority to levy a civil penalty, and no violation of constitutional protections in the procedures followed and the penalty assessed.”

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Federal Circuit Reverses In General Electric Appeal (2010-1223)

By Eric Schweibenz
|
Mar
01
On February 29, 2012, the Federal Circuit issued a precedential opinion in General Electric Co.  v. ITC(2010-1223).  This was an appeal from the Commission’s final determination of no violation of Section 337 in Certain Variable Speed Wind Turbines and Components Thereof (Inv. No. 337-TA-641).  See our October 29, 2009 and March 5, 2010 posts for more details. By way of background, the Complainant in this investigation is General Electric Co. (“GE”) and the Respondents are Mitsubishi Heavy Industries, Ltd., Mitsubishi Heavy Industries America, Inc., and Mitsubishi Power Systems Americas, Inc. (collectively, “MHI”).  GE alleged a violation of Section 337 with respect to U.S. Patent Nos. 7,321,221 (the ‘221 patent), 5,083,039 (the ‘039 patent) and 6,921,985 (the ‘985 patent) with respect to MHI variable speed wind turbines and the specialized power circuits that allow them to safely adapt to modern power grids.  The patents-in-suit are generally directed to how the turbines are connected to the power grids. On August 7, 2009, former ALJ Carl C. Charneski issued the initial determination finding that a violation of Section 337 had occurred with respect to claim 121 of the asserted ‘039 patent, and claim 15 of the asserted ‘985 patent.  Additionally, ALJ Charneski determined that there was no violation of Section 337 by any party with respect to the ‘221 patent.  In its opinion, the Commission reversed the ALJ’s determination of violation of Section 337 with respect to the ‘039 and ‘985 patents, and affirmed the ALJ’s determination of no violation with respect to the ‘221 patent.  The Commission also found no infringement of the ‘039 and ‘221 patents, and that GE failed to satisfy the domestic industry requirement with respect to the ‘985 patent. GE appealed the Commission’s decision with respect to claim construction, infringement, and domestic industry, as discussed below.  Issues relating to the ‘039 patent were ruled moot by the Federal Circuit since the ‘039 patent expired on February 1, 2011. Claim Construction According to the opinion, infringement of the ‘221 patent was determined based on the construction of the crucial phrase “predetermined value” in claim 5 of the ‘221 patent in relation to when turbine operation can be resumed.  GE argued that the term “predetermined value” includes “not only a value of current, but also a predetermined period of time, for the ‘221 patent states that the turbine operation can be resumed under consideration of a predetermined time constant.”  The Commission did not agree with GE, and found that the portions of the specification relied on to show that the predetermined value also included time were in relation to an increase in plant safety, and that “the ‘221 specification’s only description of the operation of the invention shows recoupling upon measurement of a predetermined value of current, not upon passage of a pre-set period of time.”  The Federal Circuit agreed with the Commission that the ‘221 claims are directed only to resuming the turbines after a predetermined value of current or a proxy for current has been reached, as this “stays true to the claim language and most naturally aligns with the patent’s description of the invention.” Infringement As described above, the ‘221 patent claims were held to be directed to resuming action after a predetermined value in current, rather than time, was reached.  Since “it is not disputed that the [MHI] turbines do not measure current or voltage in determining when to resume the feed-in connection after decoupling has occurred,” but rather, after a pre-set period of time, the MHI turbines were held not to infringe the ‘221 claims either directly or under the doctrine of equivalents.  Thus, the ruling that MHI’s turbines do not violate Section 337 because they do not infringe was affirmed. Domestic Industry Since the Federal Circuit determined that there was no infringement of the ‘221 patent and no Section 337 violation, it declined to consider whether or not GE’s turbines met the domestic industry requirement in relation to the ‘221 patent. Regarding the ‘985 patent, the Commission found no domestic industry because it construed claim 15, the only claim at issue, in a manner that excluded the GE turbines from the scope of the claim.  The point of contention in claim 15 was that it included a converter controller “to shunt current from the inverter and generator rotor” in response to a control signal.  According to the opinion, the issue of claim construction with respect to that phrase was “whether claim 15 requires that the circuit that shunts current on signal from the converter controller is located entirely outside of the inverter.”  Although the Commission held that the shunt circuit must be separate from the inverter, the ALJ felt differently and held that “the claim does not contain the additional requirement that the shunt circuit is located entirely outside of the inverter.”  The Federal Circuit reversed the Commission’s construction and agreed with the ALJ, noting that although claim 15 “requires that the circuit is coupled with the input of the inverter and the converter controller, whereby the current is shunted from the inverter and the rotor; this requirement does not limit the placement of the shunting circuitry to a location entirely external to the inverter.”  The Federal Circuit pointed to other cases that similarly hold that a construction to adopt a specific structure is inappropriate when the claimed elements “must only perform their stated functions.”  Therefore, the Federal Circuit’s construction of claim 15 allows for GE’s turbines to be covered, meeting the domestic industry requirement.  Thus, the ruling that there is no domestic industry corresponding to the ‘985 patent was reversed. Other ‘985 Patent Issues Based on the Commission’s determination of the domestic industry question, it took no position on the ALJ’s initial determination that the MHI turbines infringe the ‘985 patent, that the patent is valid, and that no inequitable conduct had been shown.  According to the opinion, the Commission stated that these other issues decided by the ALJ “are not subject to judicial review because they are not a Commission determination.”  In other words, the Commission held “that when the full Commission does not review an issue that it noticed for review, that issue is removed from access to judicial review.”  Significantly, the Federal Circuit noted that “this interpretation conflicts with the statutory right of judicial review of Commission determinations” in 19 U.S.C. § 1337(c), which also specifies that issues of an initial determination that are “noticed” but not reviewed become the Commission’s determination unless the Commission orders review, and would thus be appealable.  As such, “issues not selected for review by the full Commission may be appealed to the Federal Circuit.” The Federal Circuit dismissed the case law and rules the Commission attempted to rely on to support its contrary position, pointing out that “the consequences of this practice are illustrated in this case, for all contested issues concerning the ’985 patent were investigated by the commission, tried to the ALJ, decided by initial determination, yet nearly all were held unavailable for judicial review…thus we are obliged to remand to the commission for undefined further proceedings, for which one may be confident only of further time and cost in the commission and upon reappeal to this court.”  In keeping with this statement, the case was remanded for further proceedings with respect to the ‘985 patent.

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Federal Circuit Withdraws Part of Opinion In General Electric Appeal (2010-1223)

By Eric Schweibenz
|
Jul
08
On July 6, 2012, the Federal Circuit issued an order in General Electric Co.  v. ITC, (2010-1223) granting the ITC’s petition for panel rehearing for the “limited purpose of withdrawing Part III of the opinion.”  This was originally an appeal from the Commission’s decision finding no violation under Section 337 in Certain Variable Speed Wind Turbines and Components Thereof (Inv. No. 337-TA-641).  See our October 29, 2009 and March 5, 2010 posts for more details. By way of background, the Complainant in this investigation is General Electric Co. (“GE”) and the Respondents are Mitsubishi Heavy Industries, Ltd., Mitsubishi Heavy Industries America, Inc., and Mitsubishi Power System, Inc. (collectively, “MHI”).  GE alleged a violation of Section 337 with respect to U.S. Patent Nos. 7,321,221 (the ‘221 patent), 5,083,039 (the ‘039 patent) and 6,921,985 (the ‘985 patent) and MHI’s variable speed wind turbines and the specialized power circuits that allow them to safely adapt to modern power grids. The Federal Circuit previously issued a precedential opinion in this case affirming the determination of no infringement in relation to the ’221 patent, but reversing the Commission’s finding that GE had not established a domestic industry with respect to the ‘985 patent.  The Federal Circuit remanded the case to the ITC for further proceedings with respect to the ‘985 patent.  The ‘039 patent issues were deemed moot due to its expiration.  See our March 1, 2012 post for more details. In its earlier opinion, the Federal Circuit discussed the Commission’s practice of noticing certain issues of an ALJ’s initial determination for review, but taking no position on these issues in its final determination (as it did in this case with respect to the ‘985 patent).  According to the earlier opinion, it was the Commission’s position that these other issues decided by the ALJ “are not subject to judicial review because they are not a Commission determination.”  The implication of the Commission’s position being “that when the full Commission does not review an issue that it noticed for review, that issue is removed from access to judicial review.” In the now withdrawn Part III of its earlier opinion, the Federal Circuit had dismissed the Commission’s argument as conflicting with statutory and regulatory provisions and as an improper reading of the law established by Beloit Corp. v. Valment Oy, 742 F.3d 1421, 1423 (Fed. Cir. 1984).  To summarize, the Court concluded that all items are subject to judicial review, even those noticed and not determined by the Commission.  See our April 23, 2012 post for a more detailed discussion of Beloit and the implications of the Court’s earlier opinion. In its July 6, 2012 order, the Federal Circuit has reissued its earlier opinion removing all discussion of judicial review of noticed but not determined issues.  Although the order states “the panel offers no decision on the questions raised in Part III” and that these issues “may arise in a future case,” the dissent by Judge Newman considers the opinion withdrawal as “ratif[ication] of the Commission’s authority to negate the finality of these final decisions” and removing any chance of judicial review.  According to Judge Newman, it is this approach that will substantially lengthen proceedings at the ITC and on appeal, rather than the Commission’s requirement to decide every issue noticed.  In her dissent, Judge Newman elaborates on the content of the now-withdrawn Part III of the Court’s earlier opinion, and concludes that by not addressing the issue “the disservice to the parties and the public looms large, and the benefit to the Commission is elusive.”  Judge Newman ends her dissent by urging the Court to take the case en banc to resolve the question of whether judicial review is available for issues noticed but not determined by the Commission.

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Federal Circuit Reverses And Remands In InterDigital Appeal (2010-1093)

By Eric Schweibenz
|
Aug
03
On August 1, 2012, the Federal Circuit issued its opinion in InterDigital Commc’ns, LLC v. Int’l Trade Comm’n (2010-1093).  This was an appeal by InterDigital Communications, LLC and InterDigital Technology Corporation (collectively, “InterDigital”) from the International Trade Commission’s (the “Commission”) final determination in Certain 3G Mobile Handsets and Components Thereof (Inv. No. 337-TA-613) that Nokia Inc. and Nokia Corp. (collectively, “Nokia”) had not violated Section 337 in connection with the importation into the U.S., sale for importation, or sale within the U.S. after importation of certain 3G mobile handsets and components thereof.  See our October 19, 2009 post for more details. In the opinion, the Federal Circuit reversed the Commission’s findings that Nokia did not infringe InterDigital’s U.S. Patent Nos. 7,190,966 (the ‘966 patent) and 7,286,847 (the ‘847 patent), and remanded for further proceedings.  In particular, the Federal Circuit found that the ITC had erred in its construction of the claim terms “code” and “increased power level,” which in turn had led to erroneous determinations of non-infringement.  The Federal Circuit also rejected an argument by Nokia that the Commission’s decision could be upheld because InterDigital’s licensing activities were allegedly insufficient to satisfy the domestic industry requirement. The ‘966 and ‘847 patents relate to wireless cellular telephone technology, and focus on an apparatus and methods for controlling transmission power during the “handshake” portion of a wireless cellular communication.  The ‘847 patent is a continuation of the ‘966 patent.  At the ITC, former Chief ALJ Paul J. Luckern construed the claim term “code” to mean “a spreading code or a portion of a spreading code.”  ALJ Luckern construed the claim term “increased power level” to mean that “the power level of a transmission is higher than that of a previous transmission” and “the power level of a code signal increases during transmission.”  See our September 23, 2009 post for more details.  The Commission determined not to review these claim constructions. With respect to the claim term “code,” the Federal Circuit found that the ALJ had erred in limiting the term to spreading codes.  Instead, the term should have been construed in accordance with its plain meaning, and thus have been found “broad enough to cover both a spreading code and a non-spreading code.”  The Federal Circuit relied on the doctrine of claim differentiation in making this determination, finding that since a dependent claim recited, in full, “The subscriber unit of claim 1 wherein the same code is a spreading code,” it was improper to limit the term “code” in claim 1 to a spreading code.  Accordingly, under the Federal Circuit’s broader construction, the ALJ’s determination that Nokia did not infringe the ‘966 and ‘847 patents needed to be reversed. With respect to the claim term “increased power level,” the Federal Circuit found that the ALJ had erred in limiting the term to mean that the power level of a code signal increases during transmission.  According to the Federal Circuit, the plain language of the claims “clearly covers both continuous and stepped power increases,” and the specification does not restrict the scope of the invention to a system in which the power increases continue in the course of each transmission.  Thus, the Federal Circuit found that the ALJ should have construed “increased power level” to include both intermittent and continuous increases in power.  Moreover, as with the construction of “code,” the Federal Circuit found that this claim construction error with respect to “increased power level” had led the ALJ to improperly conclude that Nokia had not infringed the ‘966 and ‘847 patents. Nevertheless, Nokia argued that the Commission’s final determination of no violation of Section 337 could be affirmed on alternative grounds.  In particular, Nokia argued that InterDigital’s patent licensing activities did not satisfy the domestic industry requirement because InterDigital had failed to establish that there was a U.S. industry “relating to the articles protected by the patent.”  However, the Federal Circuit rejected this argument based on the plain language of 19 U.S.C. § 1337(a)(3)(C), which allows the domestic industry requirement to be satisfied if there is a “substantial investment in [the patent’s] exploitation,” where the exploitation is achieved by various means, including “licensing.”  The Federal Circuit also noted that both the legislative history of the statute and numerous prior decisions by the Commission supported the idea that licensing alone could satisfy the domestic industry requirement.  Accordingly, the Federal Circuit declined to uphold the Commission’s final determination of no violation on this proposed alternative ground. The Federal Circuit also rejected an argument by Nokia that Nokia could not infringe the ‘966 and ‘847 patents because the scrambling codes in the Nokia system are not transmitted.  According to the opinion, neither the ALJ nor the Commission had addressed this argument, and it would  therefore have been improper for the Federal Circuit to uphold the Commission’s final determination on this basis.  However, the Federal Circuit noted that Nokia was free to raise the issue on remand. In view of the above, the Federal Circuit reversed the Commission’s final determination of no violation of Section 337 and remanded for further proceedings.

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Federal Circuit Reverses And Remands In Amkor Appeal (2010-1550)

By Eric Schweibenz
|
Aug
27
On August 22, 2012 the Federal Circuit issued its opinion in Amkor Tech., Inc. v. Int’l Trade Comm’n(2010-1550).  This was an appeal by Amkor Technology, Inc. (“Amkor”) from the International Trade Commission’s (the “Commission”) final determination in Certain Encapsulated Integrated Circuit Devices and Products Containing the Same (Inv. No. 337-TA-501), wherein the Commission determined that U.S. Patent No. 6,433,277 (the ‘277 patent) is invalid under 35 U.S.C. § 102(g)(2). The ‘277 patent relates to a smaller and more reliable integrated circuit package only marginally larger than a semiconductor chip by virtue of encapsulating only a top portion of the package in plastic.  The respondents in the investigation, Carsem (M) Sdn Bhd, Carsem Semiconductor Sdn Bhd, and Carsem, Inc. (collectively, “Carsem”), asserted that the ‘277 patent was anticipated by a leadless plastic chip carrier package invented by third parties ASAT, Inc., ASAT Holdings, and ASAT Limited (collectively, “ASAT”).  On November 18, 2004, before ASAT produced subpoenaed documents related to its invention, the ALJ issued a first Initial Determination finding no violation of Section 337 on the grounds that the asserted ‘277 patent claims were invalid as either anticipated or indefinite.  On review, the Commission modified the ALJ’s claim construction and remanded.  On November 9, 2005, the ALJ issued a second Initial Determination finding that, based on the Commission’s claim construction, some of the asserted claims were not invalid as anticipated or obvious, and that Carsem therefore violated Section 337.  On July 1, 2009, after finally obtaining the ASAT documents (following two enforcement petitions in district court), the Commission remanded the investigation to the ALJ again to determine whether the ASAT invention qualified as prior art under § 102(g)(2).  See our July 2, 2009 post for more details.  On October 30, 2009, the ALJ issued a first Supplemental Initial Determination finding that the co-inventor of the ASAT invention conceived of the ASAT invention in a foreign country sometime during April or May, and that Amkor’s ’277 patent technology was conceived sometime during May through August, or on December 10, of that same year.  Accordingly, the ALJ concluded that the ASAT invention is not prior art under § 102(g)(2) because Carsem failed to prove by clear and convincing evidence that ASAT’s April/May invention date is prior to the May-through-August date of invention accorded the asserted claims of the ‘277 patent.  See our November 27, 2009 post for more details.  On review, the Commission again reversed and remanded, holding that the ASAT invention is § 102(g)(2) prior art because, under Oka v. Youssefyeh, 849 F.2d 581, 584 (Fed. Cir. 1998), the earliest possible priority date of the ’227 patent must be the last date in the range of dates (i.e., December 10), which falls after the April/May invention date for the ASAT invention.  See our February 22, 2010 post for more details.  On remand, the ALJ issued a second Supplemental Initial Determination finding all disputed claims of the ’277 patent invalid under § 102(g)(2) in view of the ASAT invention.  See our April 9, 2010 post for more details.  Amkor appealed the Commission’s holding that the ASAT invention qualifies as § 102(g)(2) prior art. In its opinion, the Federal Circuit reversed the Commission’s priority date determination in connection with the ASAT invention and Amkor’s ‘277 patent.  In particular, the Federal Circuit held that the Oka rule – i.e., according the last possible conception date to a party who can only provide a range of dates – does not apply to patent owners like Amkor in validity disputes because the standards that apply to interferences such as in Oka do not necessarily apply to disputes over the validity of issued patents that are entitled to a presumption of validity under 35 U.S.C. § 282.  As the court explained, Carsem was required to submit not just a preponderance of evidence but clear and convincing evidence that the ASAT invention was conceived in the United States before Amkor’s invention date to invalidate the ‘277 patent under § 102(g)(2).  Because Carsem could only show a range of dates of possible domestic disclosure (the first 30 days of which predated Amkor’s possible conception date, and the last 31 days of which overlapped with Amkor’s possible conception dates), it could only establish that the ASAT inventor might have conceived of the invention first.  The Federal Circuit found such a showing insufficient to meet the clear and convincing standard, and thus held that the Commission committed legal error in reversing the ALJ’s first Supplemental Initial Determination based on an erroneous application of the Oka rule to the patent holder. The Federal Circuit also declined to affirm the Commission’s invalidity determination on alternative grounds raised by Carsem.  Specifically, the court rejected Carsem’s argument that the Commission erred in its claim construction, finding that Carsem “switche[d] positions on appeal, now arguing in support of the position it opposed below” with respect to the claim term “fully around” and therefore waived its new argument.  The court went on to state that even if Carsem had preserved the argument, the Commission properly construed the claims.  The Federal Circuit also was not persuaded by Carsem’s contention that certain asserted claims are obvious in view of the JP-456 reference alone or in combination with the JP-964 and/or JP-284 references, finding no evidence of a motivation or a reason to remove the fused lead that interrupts the lip on all four sides of the die pad in JP-456. Accordingly, the Federal Circuit reversed the Commission’s determination that the ’277 Patent is invalid under 35 U.S.C. § 102(g)(2), declined to affirm the Commission’s invalidity determination on the alternative grounds raised by Carsem, and remanded for further proceedings consistent with this opinion.

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Federal Circuit Affirms in Norgren Appeal (2011-1349)

By Eric Schweibenz
|
Nov
14
On November 14, 2012, the Federal Circuit issued a precedential opinion in Norgren Inc., v. ITC(2011-1349).  This was an appeal from the International Trade Commission’s (“Commission”) determination of no violation of Section 337 in Certain Connecting Devices (“Quick-Clamps”) for Use with Modular Compressed Air Conditioning Units, Including Filters, Regulators, and Lubricators (“FRL’s”) That Are Part of Larger Pneumatic Systems and the FRL Units They Connect (Inv. No. 337-TA-587), where the Commission concluded that the asserted claims were invalid as obvious. Please note that Oblon Spivak represents Respondents SMC Corporation and SMC Corporation of America (collectively, “SMC”) in this matter. By way of background, Norgren Inc. (“Norgren”) filed a complaint with the Commission asserting that the importation or sale of devices by SMC infringe U.S. Patent no. 5,372,392 (the ‘392 patent).  The ALJ originally found no violation of Section 337 based on his findings of no infringement and that the patent was valid under his claim construction of “flange” to require four projecting rims.  On appeal, the Federal Circuit reversed the noninfringement determination and vacated the validity determination, remanding the case for reconsideration of obviousness in light of the Federal Circuit’s new claim construction.  Specifically, the Federal Circuit’s remand order contained instructions “to evaluate obviousness in the first instance based upon the correct construction of the claim term ‘generally rectangular ported flange’ — i.e., a construction that does not require a flange having projections on all four sides.”  See our May 28, 2009 post for details of the original Federal Circuit opinion (“Norgren I”). On remand, ALJ Carl C. Charneski focused on the obviousness of the clamp itself, and determined that none of the asserted claims of the ‘392 patent were invalid as obvious.  The Commission determined to review the remand initial determination on the issue of obviousness, and reversed the ALJ’s determination with respect to obviousness, and issued a final determination that there was no violation of Section 337.  Specifically, the Commission found that a prior art SMC clamp is both four-sided and generally rectangular, and that the addition of a hinge to a prior art rectangular clamp would have been obvious to one skilled in the art.  The Commission also found that Norgren was unable to show secondary considerations sufficient to support a determination of nonobviousness.  See our June 10, 2011 post for more information on the Commission’s decision. Majority Opinion by Judge Linn (joined by Judge Lourie) According to the opinion, after Norgren I, the correct claim construction is not only that the overall shape of the flange is “generally rectangular,” but furthermore, “the clamp as a whole, and not merely portions of it, must be four-sided and generally rectangular.”  The primary dispute on appeal was whether the Commission’s determination that the old-style SMC clamp is four-sided and generally rectangular was correct. The Court approved of the Commission basing its conclusion on an examination of the physical exhibit of an old-style SMC clamp and expert testimony.  Based on the physical examination, the Commission concluded that the four outer “sides” of the clamp render the overall shape “generally rectangular.”  Furthermore, “these four sides are a substantial part of the outer portion of the old-style SMC clamp, and hence are decisive when defining its shape.”  This position was supported by testimony from the experts of both sides.  Norgren’s expert “admitted in a deposition that the only difference between the invention … and the old-style SMC connector was the hinge.”  Similarly, SMC’s expert testified that the four sides of the old-style SMC clamp are required for its function, and that the shape formed by those sides is generally rectangular. Although Norgren tried to argue that SMC’s expert was “overly qualified” and his testimony should be discounted, the Court disagreed.  The opinion stated that “[b]ecause the person having ordinary skill in the art is a theoretical construct and is not descriptive of some particular individual, a person of exceptional skill in the art should not be disqualified because he or she is not ordinary enough.” (Internal quotations omitted). In light of its approval of the Commission’s determination that the old-style SMC clamp was generally rectangular and four-sided, the Court also agreed that one skilled in the art would have been motivated to modify the old-style clamp to add a hinge.  The motivation for this modification would have been “to avoid loose parts and for ease of use,” as documented in prior art of record, and as a recognized common sense solution readily known to those skilled in the art.  Therefore, the Court concluded that the Commission’s determination that the invention of the ‘392 patent would have been obvious was supported by substantial evidence, and was not arbitrary, capricious, or legally erroneous.  Norgren was unable to provide persuasive evidence of secondary considerations to alter this conclusion. Dissent by Judge Moore Judge Moore disagreed with the Commission’s determination that the old-style SMC claim was four-sided and generally rectangular based on a strict interpretation that each edge of the old-style clamp should be counted.  In that case, Judge Moore noted that sixteen “sides” can be observed.  Therefore, she did not consider the Commission’s opinion to be sufficiently supported by substantial evidence and would have reversed the determination of obviousness.

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Federal Circuit Denies Petition For Rehearing In InterDigital Appeal (2010-1093)

By Eric Schweibenz
|
Jan
14
On January 10, 2013, the Federal Circuit issued its opinion denying a petition for panel rehearing and for rehearing en banc by Nokia Inc. and Nokia Corp. (collectively, “Nokia”) in InterDigital Commc’ns, LLC v. Int’l Trade Comm’n (2010-1093). InterDigital Communications, LLC and InterDigital Technology Corporation (collectively, “InterDigital”) had appealed the International Trade Commission’s (the “Commission”) final determination in Certain 3G Mobile Handsets and Components Thereof (Inv. No. 337-TA-613) that Nokia had not violated Section 337 in connection with the importation and/or sale of certain 3G mobile handsets and components thereof.  On August 1, 2012, the Federal Circuit reversed the Commission’s findings that Nokia did not infringe InterDigital’s U.S. Patent Nos. 7,190,966 and 7,286,847, and remanded for further proceedings.  In particular, the Federal Circuit found that the ITC had erred in its construction of the claim terms “code” and “increased power level,” which in turn had led to erroneous determinations of non-infringement.  The Federal Circuit also rejected Nokia’s argument that the Commission’s decision could be upheld because InterDigital’s licensing activities were allegedly insufficient to satisfy the domestic industry requirement.  See our August 3, 2012 post for more details. Nokia petitioned for rehearing on the issue of whether InterDigital’s licensing activities satisfied the domestic industry requirement of Section 337, arguing that the Commission and the Federal Circuit panel misconstrued the statutory language “relating to the articles protected by the patent” in Section 337(a)(2) and “with respect to the articles protected by the patent” in Section 337(a)(3).  Specifically, Nokia contended that this statutory language regarding domestic industry meant that there must be “articles protected by the patent,” that the only licensing activity that matters is activity “with respect to the articles protected by the patent,” that the licensing activity must be tethered to a tangible good, and that the technology covered by the patent must be put into practical use.  The Federal Circuit panel in its January 10, 2013 opinion ruled 2-1 against Nokia, explaining that the 1988 amendment to Section 337 which allowed patent holders to meet the domestic industry requirement by showing they made a “substantial investment in engineering, research and development, or licensing” allowed InterDigital’s domestic licensing activities -- including 24 revenue-producing licenses to its U.S. patents with major manufacturers such as Samsung, LG, Matsushita, Apple and RIM -- to give the company standing to file a complaint with the Commission.  Judge Bryson’s majority opinion stated:
Under the clear intent of Congress and the most natural reading of the 1988 amendment, Section 337 makes relief available to a party that has a substantial investment in exploitation of a patent through either engineering, research and development, or licensing.  It is not necessary that the party manufacture the product that is protected by the patent, and it is not necessary that any other domestic party manufacture the protected article.  As long as the patent covers the article that is the subject of the exclusion proceeding, and as long as the party seeking relief can show that it has a sufficiently substantial investment in the exploitation of the intellectual property to satisfy the domestic industry requirement of the statute, that party is entitled to seek relief under section 337.
In her dissent, Judge Newman agreed with Nokia that proof of a licensing industry under Section 337(a)(3)(C) requires proof that the licensed products are manufactured domestically, and opined that the majority opinion actually contradicted Congress’ intent in adopting the 1988 amendment.  Quoting the legislative record at length in her dissent, Judge Newman found that the purpose of the 1988 amendment was not to remove the requirement that “articles protected by the patent” be produced in the U.S., but to “enlarge the incentive for domestic production” by permitting patentees “such as universities and others that perform research or engineering” that do not themselves manufacture their patented products to have access to the Section 337 remedy:
The panel majority insists that Congress intended to make the ITC remedy of exclusion available to exclude foreign manufactures in the absence of domestic production, although the patentee in this case does not want to exclude the foreign product, but only to obtain a fee for its importation.  My colleagues hold that it is irrelevant that no domestic industry is producing, or planning to produce, the patented articles, directly or under license, stating that Congress ‘clearly’ intended to abandon the purpose of Section 337 to serve domestic production.  However, that is the purpose of Section 337.  The legislative record is clear that the 'licensing' amendment to Section 337 was enacted to encourage and support domestic production of patented products.

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Federal Circuit Affirms ITC’s Final Determination In Flashpoint Appeal (2012-1149)

By Eric Schweibenz
|
Feb
21
On February 14, 2013, a Federal Circuit panel consisting of Judges Moore, Mayer, and Wallach issued a per curiam judgment, pursuant to Federal Circuit Rule 36, affirming the ITC’s final determination in Flashpoint Technology, Inc. v. ITC (2012-1149). By way of background, the underlying investigation in connection with this appeal was Certain Electronic Imaging Devices(Inv. No. 337-TA-726).  The Complainant in this investigation was Flashpoint Technology, Inc. and the remaining Respondents were HTC Corp. and HTC America, Inc.  As explained in our April 3, 2012 post, the Commission determined that there was no violation of Section 337.

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Federal Circuit Affirms ITC’s Final Determination In Bourdeau Bros. Appeal (2012-1262)

By Eric Schweibenz
|
Feb
27
On February 20, 2013, a Federal Circuit panel consisting of Judges Newman and Lourie as well as Chief Judge Leonard Davis of the U.S. District Court for the Eastern District of Texas issued a per curiam judgment, pursuant to Federal Circuit Rule 36, affirming the ITC’s final determination in Bourdeau Bros., Inc. v.  ITC (2012-1262). By way of background, the underlying investigation in connection with this appeal was Certain Agricultural Vehicles and Components Thereof (Inv. No. 337-TA-487).  The Complainant in this investigation was Deere & Co. (“Deere”) and the Respondents were Bourdeau Bros., Inc., OK Enterprises, and Sunova Implement Co. (collectively, the “Bourdeau Respondents”).  As explained in our April 30, 2012 post, the Commission determined that the Bourdeau Respondents violated Section 337 through gray market sales of self-propelled forage harvesters that infringe Deere’s trademarks.  The Commission also reinstated a general exclusion order against the subject harvesters and cease and desist orders that had issued in the original investigation.

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Federal Circuit Affirms In Motiva Appeal (2012-1252)

By Eric Schweibenz
|
May
21
On May 13, 2013, the Federal Circuit issued its opinion in Motiva, LLC v. Int’l Trade Comm’n (2012-1252).  This was an appeal by Motiva, LLC (“Motiva”) from the International Trade Commission’s (the “Commission”) final determination in Certain Video Game Systems and Controllers (Inv. No. 337-TA-743) that Nintendo Co., Ltd. and Nintendo of America, Inc. (collectively, “Nintendo”) had not violated Section 337 in connection with the importation into the U.S., sale for importation, or sale within the U.S. after importation of certain video game systems and controllers.  See our January 24, 2012 post for more details on the Commission's final determination. In the opinion, the Federal Circuit affirmed the Commission’s determination that Motiva had failed to satisfy the economic prong of the domestic industry requirement with respect to U.S. Patent Nos. 7,292,151 (the ‘151 patent) and 7,492,268 (the ‘268 patent).  In particular, the Federal Circuit found that substantial evidence supported the Commission’s finding that Motiva’s litigation against Nintendo was not an investment in commercializing Motiva’s patented technology that would develop a licensing program to encourage adoption and development of articles that incorporated Motiva’s patented technology.  The Court cited its decision in John Mezzalingua Assocs. v. Int’l Trade Comm’n, 660 F.3d 1322, 1327 (Fed. Cir. 2011) for the proposition that litigation expenses should not automatically be considered a substantial investment in licensing.  See our October 6, 2011 post for more details. According to the Opinion, the Commission found—and Motiva did not dispute—that Motiva’s investments in developing a domestic industry for the ‘151 and ‘268 patents were limited after 2007 to litigation against Nintendo.  Thus, since the domestic industry requirement needed to be satisfied at the time the complaint was filed (in this case, September 2010), this meant that expenses associated with the litigation were the only relevant investments that could be used to try to satisfy the economic prong of the domestic industry requirement. The Federal Circuit found that Motiva’s investment in litigation against Nintendo could satisfy the economic prong of the domestic industry requirement if it was substantial and directed toward a licensing program that would encourage adoption and development of articles that incorporated Motiva’s patented technology.  However, in this case, the ALJ had found that Motiva’s litigation against Nintendo was not directed at developing such a licensing program, and thus did not satisfy the domestic industry requirement.  The Commission adopted this finding, and the Federal Circuit affirmed because the finding was supported by substantial evidence.  The Federal Circuit also specifically affirmed the Commission’s use of the date that Motiva had filed its ITC complaint as the relevant date at which to determine if the domestic industry requirement was satisfied. In view of the above, the Federal Circuit affirmed the Commission’s final determination of no violation of Section 337.

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Federal Circuit Reverses In InterDigital Communications Appeal (2012-1628)

By Eric Schweibenz
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Jun
11
On June 7, 2013, the Federal Circuit issued its opinion in InterDigital Communications, LLC v. ITC (2012-1628).  This was an appeal by InterDigital Communications, Inc., InterDigital Technology Corp., and IPR Licensing, Inc. (collectively, “InterDigital”) from an order of the International Trade Commission (“the Commission”) terminating Investigation No. 337-TA-800 with respect to LG Electronics, Inc., LG Electronics USA, Inc., and LG Electronics Mobilecomm USA, Inc. (collectively, “LG”). As summarized in the opinion, InterDigital and LG had entered into a multi-patent license agreement for devices designed to operate in accordance with second-generation and third-generation wireless standards.  According to its terms, the agreement terminated on December 31, 2010, although there were some survival clauses extending beyond the agreement throughout the life of the second-generation products.  The agreement also specifies that disputes are to be resolved by arbitration. On July 26, 2011, InterDigital filed a complaint with the Commission asserting that several companies (not including LG) were infringing its patents relating to third-generation wireless technology.  See our July 28, 2011 post for more details on InterDigital's original complaint.  Three months later, InterDigital successfully moved to amend the complaint to add LG as a respondent. On January 20, 2012, LG moved to terminate the investigation, arguing that the accused third-generation products were still covered by its license with InterDigital, and that any infringement claim was subject to arbitration because it arose under the license agreement between InterDigital and LG.  The Administrative Law Judge (“ALJ”) assigned to the investigation granted the motion to terminate, and the Commission declined to review the decision, making it the final determination of the Commission.  InterDigital appealed the order terminating the investigation.   According to the opinion, the first issue considered by the Federal Circuit was whether or not the court had jurisdiction over InterDigital’s appeal.  LG and the Commission both argued that the Federal Circuit did not have jurisdiction because 18 U.S.C. § 1337(c) provides a right to appeal “a final determination of the Commission under subsection (d), (e), (f), or (g),” and the investigation was terminated under subsection (c), not listed in the statute.  The Federal Circuit explained that its predecessor court, the Court of Customs and Patent Appeals, emphasized that an order should be appealable if “its effect upon appellants is the equivalent of a final determination” and that “substance, not form, must control.”  As such, the Federal Circuit concluded that LG and the Commission’s position was too restrictive, and that since the Commission’s decision was the equivalent of a final determination, it had jurisdiction to hear the appeal. Regarding the merits of the case, the Federal Circuit agreed with the ALJ that the proper analysis was whether or not LG’s motion to terminate based on the assertion of arbitrability was “wholly groundless.”  However, the Federal Circuit held that the ALJ erred by “failing to assess the text of the parties’ Agreement to determine whether LG’s assertion of arbitrability was ‘wholly groundless.’”  The Federal Circuit supported this holding with case law stating that the inquiry necessarily requires the courts to examine and construe the underlying agreement.  Dream Theater, Inc. v. Dream Theater, 21 Cal. Rptr. 3d 322, 326 (2004).  When the agreement was considered, the Federal Circuit held that LG’s license defense and subsequent assertion of arbitration is simply “not plausible.”  Specifically, a “cursory review of the relevant provisions” illustrates that the survival clause only related to second-generation products, and there is “no plausible argument that LG’s license for [third-generation] products survived the termination of the Agreement.”  As such, LG’s assertion of arbitrabilty was deemed “wholly groundless” and the Commission’s order terminating the investigation was reversed and remanded. Although agreeing that there was no plausible argument that LG could prevail under its license agreement, Judge Lourie wrote a dissenting opinion based on his belief that the Federal Circuit did not have jurisdiction to hear the appeal.  Specifically, Judge Lourie supports a strict reading of the jurisdiction statute limiting appeals to those arising from “a final determination of the Commission under subsection (d), (e), (f), or (g).”  Since the investigation was terminated under subsection (c), Judge Lourie would dismiss the case.

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Federal Circuit Affirms In Thomson Appeal (2012-1536)

By Eric Schweibenz
|
Jun
22
On June 19, 2013, the Federal Circuit issued its opinion in Thomson Licensing SAS v. Int’l Trade Comm’n (2012-1536).  This was an appeal by Thomson Licensing SAS and Thomson Licensing, LLC (collectively, “Thomson”) from the International Trade Commission’s (the “Commission”) final determination in Certain Liquid Crystal Display Devices, Including Monitors, Televisions, Modules, and Components Thereof (Inv. Nos. 337-TA-741/749).  In the opinion, the Federal Circuit affirmed the Commission’s final determination of no violation of Section 337 by Qisda Corp., Qisda America Corp., Qisda Ltd., BenQ Corp., BenQ America Corp., and BenQ Latin America Corp. (collectively, “Qisda”); AU Optronics Corp. and AU Optronics Corp. of America (collectively, “AUO”); and ChiMei Innolux Corp., Innolux Corp., and Chi Mei Optoelectronics USA, Inc. (collectively, “CMI”) with respect to U.S. Patent Nos. 5,978,063 (the ‘063 patent) and 5,648,674 (the ‘674 patent).  In particular, the Federal Circuit affirmed the Commission’s determination that the asserted claims of the ‘063 patent are invalid as obvious over U.S. Patent No. 4,568,149 (“Sugata”) in view of U.S. Patent No. 4,775,225 (“Tsuboyama”).  The Federal Circuit also affirmed the Commission’s determination that the asserted claims of the ‘674 patent are invalid as anticipated by or obvious over Japanese Patent Application No. JP 06-130415A (“Fujitsu”). According to the opinion, the Commission found that AUO and Qisda infringe certain claims of the ‘063 patent, but CMI does not infringe any claims of the ‘063 patent.  However, the Commission further found that all of the asserted ‘063 claims are invalid.  In particular, the Commission found that Sugata discloses every limitation of the asserted claims, including anisotropic spacers and mechanical rubbing during the LCD manufacturing process, but concluded that Sugata did not specify when the mechanical rubbing occurred.  The Commission further found that Tsuboyama discloses anisotropic spacers that are mechanically rubbed along their long axis after formation.  The Commission then found that one of ordinary skill in the art would have been motivated to combine the references to arrive at the claimed invention, based on the references’ common goal of providing spacing elements in a liquid crystal display.  Regarding the ‘674 patent, the Commission found that CMI and Qisda infringe certain asserted claims, but that these claims are all either anticipated by Fujitsu or obvious over Fujitsu in view of the demonstrated knowledge of those skilled in the art.  See our July 13, 2012 post for more details on the Commission’s final determination. On review, the Federal Circuit found no error in the Commission’s obviousness determination with respect to the ‘063 patent.  In particular, the Federal Circuit rejected an argument by Thomson that the Commission had impermissibly shifted the burden of proof during its obviousness analysis.  In view of this invalidity finding, the Federal Circuit declined to reach Thomson’s further argument that the Commission had erred in finding that CMI’s LCD modules do not infringe the ‘063 patent.  As to the ‘674 patent, the Federal Circuit agreed with the Commission that substantial evidence supports the finding that Fujitsu discloses all of the asserted claim limitations. In view of the above, the Federal Circuit affirmed the Commission’s final determination of no violation of Section 337.

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Federal Circuit Issues Precedential Opinion In Apple Appeal (2012-1338)

By Eric Schweibenz
|
Aug
09
On August 7, 2013, the Federal Circuit issued a precedential opinion in Apple Inc. v. ITC (2012-1338).  This was an appeal from the International Trade Commission’s (“the Commission”) affirmance of ALJ Theodore R. Essex’s initial determination (“ID”) finding no violation of Section 337 in Certain Mobile Devices, and Related Software Thereof (Inv. No. 337-TA-750).  See our January 17, 2012 and April 12, 2012 posts for more details on this investigation. By way of background, Complainant Apple, Inc. (“Apple”) accused Respondent Motorola Mobility, Inc. (“Motorola”) of infringing certain claims of U.S. Patent Nos. 7,812,828 (the ‘828 patent), 7,663,607 (the ‘607 patent), and 5,379,430 (the ‘430 patent).  Only the findings in relation to the ‘607 and ‘828 patents were subject to appeal. In his January 13, 2012 ID, ALJ Essex found no violation of Section 337.  In short, the ALJ determined that the accused products do not infringe the asserted claims of the ‘828 patent, but that the ‘828 patent was valid.  With respect to the ‘607 patent, ALJ Essex found that Motorola’s products literally infringed the claims, but that the claims were invalid for anticipation and obviousness.  These conclusions were either affirmed or not reviewed by the Commission, and Apple appealed the Commission’s claim construction and its determinations of anticipation, obviousness, and noninfringement. Anticipation By Perski ‘455 ALJ Essex found that Perski ‘455 anticipates the ‘607 patent.  According to the opinion, on appeal, Apple argued that Perski ‘455 did not qualify as prior art because Apple’s conception date pre-dated the filing date of the nonprovisional Perski ‘455 application, and the priority application failed to provide written support for the relevant disclosures in Perski ‘455.  Even if found to be prior art, Apple contended that the key feature of “detect[ing] multiple touches or near touches that occur at a same time and at distinct locations” is not taught by Perski ‘455.  The Commission and Motorola argued that Perski ‘455 does constitute prior art, and that the reference discloses all features of the claims of the ‘607 patent. The Federal Circuit agreed with the Commission and Motorola that the disclosure in the provisional application was sufficient to provide written description for Perski ‘455 and therefore, Perski ‘455 constituted prior art.  As such, Claims 1-7 of the ‘607 patent were affirmed as anticipated.  However, the Court noted that Perski ‘455 failed to correctly incorporate by reference the teaching of a document required to anticipate Claim 10.  Specifically, simply referring to the other reference as teaching a similar method was insufficient to identify with “detailed particularity” as required to incorporate material by reference, and therefore, Claim 10 was found not to be anticipated by the Perski ‘455 reference. Anticipation/Obviousness over SmartSkin According to the opinion, Motorola argued that if Claim 10 was found valid over Perski ‘455, it should conversely be found invalid over SmartSkin.  ALJ Essex found that SmartSkin did not disclose the use of transparent conductive lines, and the Commission declined to review this determination.  The Court agreed with Apple’s arguments that SmartSkin does not anticipate Claim 10, as it discloses an opaque surface, rather than a clear touch-screen, and the authors point out that they “had not achieved a touchscreen employing transparent electrodes.”  Although SmartSkin was found not to anticipate Claim 10 of the ‘607 patent, the ALJ found Claim 10 to be obvious over this reference.  The Commission reviewed this determination and upheld it.  However, Apple argued on appeal that the Commission “improperly employed a hindsight analysis” and failed to evaluate the secondary considerations of nonobviousness presented by Apple.  The Court agreed, stating it was “troubled by the ITC’s obviousness analysis” and that the Commission “never even mentioned, much less weighed as part of the obviousness analysis, the secondary consideration evidence.”  Since this is “not adequate,” the case was vacated and remanded for the Commission to consider Apple’s evidence of industry praise, copying, and commercial success. Noninfringement of the ‘828 Patent According to the opinion, ALJ Essex construed “mathematically fitting an ellipse” to require the method to perform “a mathematical process” whereby “an ellipse is actually fitted to the data” and “various parameters can be calculated.”  Based on this construction, Motorola did not infringe because, while they measure data from the touchscreen, they do not actually fit an ellipse/calculate parameters.  This determination was not reviewed by the Commission.  Apple argued on appeal that requiring calculation of the ellipse parameters after the ellipse has been fitted unnecessarily limits the claim, while the ITC and Motorola contend the ALJ correctly interpreted this term.  The Federal Circuit agreed with Apple, concluding that the plain language of the claim simply requires the software to “mathematically fit” the ellipse without implying a separate step of calculating the ellipse parameters.  The Court explained how this interpretation is supported by the intrinsic record, particularly in light of the dependent claims.  With this new interpretation in mind, the Court vacated the Commission’s finding of no infringement and remanded the case for additional consideration of infringement of the ‘828 patent. Judge Reyna’s Dissent Judge Reyna dissented-in-part for two reasons.  First, the Judge considered that Perski ‘455 should not be entitled to the priority date of the provisional application and thus did not constitute prior art.   Specifically, the differences between the provisional and nonprovisional applications indicate that, as of the filing date of the provisional application, it was not clear that the inventors knew how to detect multiple touches.  Second, the Judge would simply reverse the finding of obviousness in relation to the ‘607 patent in view of SmartSkin.  In Judge Reyna’s view, the focus on opaque touchscreens in SmartSkin prevents any finding of obviousness over that reference.  Judge Reyna also agreed with the majority that the secondary considerations in this case are particularly important, noting they can be “the most probative evidence of nonobviousness.”

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Federal Circuit Affirms-In-Part, Reverses-In-Part, and Remands ITC’s Determination Of No Section 337 Violation In Microsoft Appeal (2012-1445, -1535)

By Eric Schweibenz
|
Oct
10
On October 3, 2013, the U.S. Court of Appeals for the Federal Circuit issued a precedential opinion in Microsoft Corp. v. ITC (2012-1445, -1535).  This was an appeal from the International Trade Commission’s (“the Commission”) final determination finding no violation of Section 337 of some of the asserted patents in Certain Mobile Devices, and Related Software Thereof (Inv. No. 337-TA-744).  See our June 18, 2012 and December 21, 2011 posts for more details. By way of background, the Complainant in this case is Microsoft Corporation (“Microsoft”) and the Respondent is Motorola Mobility, Inc. (“Motorola”).  The technology at issue spans several patents, including a number of functionalities and features that are implemented on desktop computers and mobile devices.  On December 20, 2011, ALJ Theodore R. Essex issued the initial determination (“ID”) in this investigation finding a violation of Section 337 with respect to certain claims of U.S. Patent No. 6,370,566 (the ‘566 patent) and finding no violation with respect to certain claims of U.S. Patent Nos. 5,758,352 (the ‘352 patent), 6,826,762 (the ‘762 patent), 6,909,910 (the ‘910 patent), 7,644,376 (the ‘376 patent), 5,664,133 (the ‘133 patent), and 6,578,054 (the ‘054 patent) (collectively, “the asserted patents”).  Upon review, the Commission in part found no infringement of the ‘762, ‘054, ‘376, and ‘133 patents, and further, found that Microsoft failed to prove that there was a domestic industry related to articles protected by the ‘054, ‘762, and ‘376 patents.  Microsoft appealed this decision. The ‘054 Patent According to the opinion, the ‘054 patent discloses a system and method for synchronizing copies of a data resource (for example, a document) in a client-server environment where multiple clients can make changes to their copy of the resource.  The infringement dispute was based on the claim’s requirement of “resource state information.”  Although the parties asserted that this term needed no construction, ALJ Essex independently construed it to mean “information that is associated with a resource that allows the server, client computer, or both to determine the version of the resource stored on the server at a particular moment…and to take appropriate action to synchronize the documents if there has been a change.”   Based on that construction, the ALJ found that the accused products do not infringe the ‘054 patent because they do not use “resource state information” for synchronization. On appeal, Microsoft did not challenge the finding of infringement (reviewed under the substantial-evidence standard), but instead challenged the ALJ’s claim construction, which is reviewed without deference.  Although Microsoft argued that the ALJ imported additional limitations into the claim via this construction, the Federal Circuit agreed with the ALJ.  According to the Court, the specification “makes clear, consistent with the invention’s function of synchronizing, that ‘resource state information’ must provide information about the comparative recentness of a particular version,” and thus the Federal Circuit found no error in the ALJ’s construction requiring some information allowing determination of the most recent version.  As such, the Commission’s determination that the accused products do not infringe the ‘054 patent was affirmed, and thus there was no violation of Section 337 in relation to the ‘054 patent. The ‘376 Patent According to the opinion, the ‘376 patent is directed to a mechanism for notifying application programs about changes to the state of mobile-device components relevant to the application.  The asserted claims include the term “notification broker” which was given its plain and ordinary meaning by the ALJ.  The “notification broker” is coupled to the “client applications.”  The ALJ found that the requirement of “direct” access meant that the accused products did not infringe.  Furthermore, the ALJ concluded that the accused products did not meet the “client applications” limitation, as the “coupled” aspect of the claims meant that these are separate components. The ALJ also determined that Microsoft had failed to show that the technical prong of the domestic industry requirement was met in relation to the ‘376 patent by failing to “offer sufficient proof of articles that were actually protected by the patent.”  The Commission agreed, noting that Microsoft’s expert was unable to identify “client applications” in any device.  The Court agreed, noting “there is substantial evidence to support the Commission’s determination that Microsoft failed to meet that requirement.”  As such, there was no Section 337 violation in relation to the ‘376 patent, with the Court noting that it did not reach Microsoft’s challenge to the non-infringement determination. The ‘762 Patent According to the opinion, the ‘762 patent describes a radio interface layer between radio hardware and software applications in a cell phone, allowing applications to issue commands without knowledge of the underlying radio structure of the phone.  The claims include a “hardware-independent” proxy layer.  The parties agreed that “hardware-independent” meant “without regard to a specific hardware implementation.”  However, this was modified by the ALJ such that a complete lack of knowledge was not required, only that the proxy layer be independent of the network characteristics of the hardware.  Based on that construction, the ALJ found that Motorola’s products did not infringe, as they did not contain a “hardware-independent” proxy layer.  The ALJ also found that Microsoft was unable to prove that the technical prong of the domestic industry requirement was met in relation to actual products, and this finding was affirmed by the Commission. The Court held that there was substantial evidence to support the Commission’s determination with regard to the domestic industry requirement.  According to the opinion, a witness testifying in the investigation “could not identify a single third-party mobile-device manufacturer that implemented Microsoft’s example driver-layer code.”  Therefore, since the Commission could find sufficient proof that the domestic industry requirement was not met, it could properly find no Section 337 violation, and again the Court affirmed the finding without reaching the issue of infringement. The ‘133 Patent According to the opinion, the ‘133 patent is directed to a graphical user interface that represents actual computer resources in relation to location and the class of the resource.  The ALJ construed phrases including “a menu selection…” as “a choice or option in a menu ….”  In light of that construction, the accused products were found not to infringe because each application acts upon only a single class of object, rather than selecting a class from a plurality and then acting upon the class.  The ALJ also found that the accused products do not meet the requirement for display of the menu in proximity of a graphical representation of a particular object.  Although the menu may on occasion be positioned in proximity to the representation of the selected object, it is not “deliberately” positioned near the on-screen representation.  The Federal Circuit reversed the finding of no infringement, holding that the notion of “deliberate” positioning was not present in the claim construction.  The Court also found that Motorola’s alternative design also infringed the ‘133 patent.  Furthermore, since the ALJ and Commission only addressed direct infringement, the Court remanded the case so that the issue of indirect infringement can be addressed.

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Supreme Court Declines To Hear Nokia Appeal (2012-1352)

By Eric Schweibenz
|
Oct
17
On October 15, 2013, the Supreme Court issued an order denying a petition for a writ of certiorari by Nokia Inc. and Nokia Corp. (collectively, “Nokia”) in Nokia Inc., et al. v. Int’l Trade Comm’n (2012-1352). Nokia had appealed the Federal Circuit’s reversal of the International Trade Commission’s (the “Commission”) findings that Nokia did not infringe U.S. Patent Nos. 7,190,966 and 7,286,847 in Certain 3G Mobile Handsets and Components Thereof (Inv. No. 337-TA-613).  Specifically, the Federal Circuit had rejected Nokia's argument that the Commission’s decision finding no violation of Section 337 by Nokia could be upheld because Complainants InterDigital Communications, LLC and InterDigital Technology Corporation's (collectively, “InterDigital”) licensing activities were allegedly insufficient to satisfy the domestic industry requirement.  The Federal Circuit also held that the Commission erred in its construction of the claim terms “code” and “increased power level” which in turn led to erroneous determinations of non-infringement.  See our August 3, 2012 and January 14, 2013 posts for more details on the Federal Circuit’s rulings. Nokia had petitioned for a writ of certiorari on the issues of (1) whether the domestic industry requirement is satisfied by “licensing alone” despite the absence of proof of “articles protected by the patent,” and (2) whether underlying factual determinations in a claim construction ruling should be subject to deferential review by the Federal Circuit.  Notably, the Supreme Court declined to take up Nokia’s argument that allowing patentees to satisfy the domestic industry requirement by showing substantial investment in licensing alone – thereby giving non-practicing entities standing to file complaints with the Commission – has made the Commission “a particularly attractive forum for those with the least plausible need for the distinct protection of a specialized international trade tribunal.” Chief Justice Roberts and Justice Breyer took no part in the denial of the petition.  The case will be remanded to the Commission for further proceedings.

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Federal Circuit Affirms-In-Part, Vacates-In-Part, And Remands in Suprema and Mentalix Appeal and Cross Match Technologies Cross-Appeal (2012-1170, 2012-1026, -1124)

By Eric Schweibenz
|
Dec
19
On December 13, 2013, the U.S. Court of Appeals for the Federal Circuit issued its opinion in Suprema v. ITC (2012-1170) and Cross Match Tech., Inc. v. ITC (2012-1026, -1024).  This was an appeal by Suprema, Inc. (“Suprema”) and Mentalix, Inc. (“Mentalix”) and a cross-appeal by Cross Match Technologies, Inc. (“Cross Match”) from a final determination in Certain Biometric Scanning Devices, Components Thereof, Associated Software, and Products Containing the Same (Inv. No. 337-TA-720). In the opinion, the Federal Circuit affirmed the Commission’s final determination of no violation of Section 337 by Suprema and Mentalix with respect to certain claims of U.S. Patent No. 7,277,562 (the ‘562 patent) and the Commission’s final determination that Suprema violated Section 337 with respect to certain claims of U.S. Patent No. 5,900,933 (the ‘933 patent).  The Federal Circuit also vacated and remanded the Commission’s final determination that Suprema and Mentalix violated Section 337 with respect to certain claims of U.S. Patent No. 7,203,344 (the ‘344 patent). The ‘562 Patent According to the opinion, the Commission fully adopted the ALJ’s initial determination regarding the ‘562 patent.  The ALJ found that Cross Match failed to prove that any accused Suprema products infringed the asserted claims of the ‘562 patent.  On appeal, Cross Match challenged the ALJ’s interpretation of the term “capture” as it appears in the asserted claims of the ‘562 patent.  At the ITC, Cross Match proposed to the ALJ that “capture” meant “acquiring, by the scanner, for processing or storage.”  The ALJ adopted this construction and relied on it when reaching his initial determination.  On appeal, however, Cross Match suggested that the ALJ’s construction of “capture” was wrong and that “acquiring, by the scanner, for processing or storage” does not require the scanner to perform all of the steps of the claimed “capturing” process, and that, instead, the scanner only needs to be involved in the process. In reviewing the claim construction, the Federal Circuit concluded that the ALJ’s construction of the term “capture” was correct and that the ALJ’s finding of infringement was supported by substantial evidence.  The Federal Circuit found that there was no real dispute over the construction because the ALJ adopted Cross Match’s proposed construction, and that both the claim language and the specification plainly supported the construction.  As such, the Federal Circuit affirmed the Commission’s determination that the ‘562 patent was not infringed and that there was no violation of Section 337.  The ‘933 Patent According to the opinion, the Commission adopted the ALJ’s initial determination and found that certain products that Suprema imports infringed certain claims of the ‘993 patent.  On appeal, Suprema challenged the ALJ’s claim construction, the infringement finding based on that construction, and the holding that the ‘993 patent was valid and would not have been obvious to a person skilled in the art.  The claim construction dispute related to the phrase “said second lens unit being on the image side of the first lens unit.”  Suprema argued that the claimed lens system excluded “non-lens elements” and “off-axis optics,” and that therefore, there cannot be “non-lens elements” between the “lens units.”  After analysis, the ALJ held that the “optical system” “could include non-lens elements, distortion correction prisms, holographic optical elements, and off-axis optics.”  The ALJ relied on the patent’s written description as well as Suprema’s concession that the “optical system” could include the supposedly excluded items and that it was only the lens system that could not include those items.  On review, the Federal Circuit looked to the specification of the ‘993 patent and found that the written description only seemed to disclaim prisms, holographic optical elements, and off-axis optics when used as the means to correct distortion.  Suprema’s only non-infringement argument based on the disputed claim term was that its mirrors located between the lens elements in its products precluded a finding of infringement.  The Court found, however, that Suprema never contended that the mirrors corrected distortion.  Therefore, the Federal Circuit concluded that the ALJ’s finding of infringement was supported by substantial evidence. Additionally, the Federal Circuit reviewed the ALJ’s finding that the ‘993 patent was not obvious in light of prior art.  The Federal Circuit affirmed the Commission’s holding that Suprema failed to adduce clear and convincing evidence of a motivation to combine the two prior art patents, and that the asserted claims of the ‘993 patent would not have been obvious to a person skilled in the art.  Therefore, the Federal Circuit affirmed the Commission’s holding that Suprema directly infringed the ‘993 patent, and left intact the exclusion order regarding the two optical systems that infringed the ‘993 patent.  The ‘344 Patent According to the opinion, the Commission found that Suprema was (1) wilfully blind to the ‘344 patent, (2) studied and emulated Cross Match’s products before willfully blinding itself to the infringing nature of Mentalix’s activities, and (3) actively encouraged Mentalix’s infringing activities.  Therefore, the Commission found that Suprema had induced infringement under 35 U.S.C. § 271(b) and that inducement formed a basis for a finding of a Section 337 violation. On appeal, Suprema contended that it does not import infringing articles because the articles do not directly infringe the method of claim 19 of the ‘344 patent at the time of importation, as the alleged infringement only occurs when the scanners are combined with Mentalix’s domestically developed software.  Suprema, therefore, argued that the allegations of induced infringement did not adequately connect the fact of importation to the ultimate infringement.  On review, the Federal Circuit conducted a statutory analysis to determine the scope of the Commission’s authority to issue exclusion orders.  The Federal Circuit found that under Section 337, the focus of the Commission’s authority is on the infringing nature of articles at the time of importation, not on the intent of the parties with respect to the imported goods.  Additionally, the Court found that while an inducing act must precede the infringement act it induces, it is not a completed inducement under 35 U.S.C. § 271(b) until there has been a direct infringement.  Therefore the Federal Circuit held that the statutory grant of authority under Section 337 does not extend to the conduct proscribed in § 271(b) where the acts of the underlying direct infringement occur post-importation.  The Court further held that, for inducement, the only pertinent articles are those that directly infringe at the time of importation.  Because the Federal Circuit found that the Commission had no authority to premise an exclusion order on inducement when the direct infringement occurred after importation the court vacated the finding of infringement of the ‘344 patent.  The Court also vacated both the cease and desist order and limited exclusion order in part, and remanded the case so that the orders could be revised. Judge Reyna Dissenting Opinion Although agreeing with the majority opinion in most respects, Judge Reyna wrote a dissenting opinion based on his belief that the Commission does have the authority to stop induced infringement at the U.S. border.  Specifically, Judge Reyna stated that the majority ignored the fact that Section 337 is a trade statute designed to provide relief from specific acts of unfair trade, including those acts that lead to the importation of articles that will result in harm to a domestic industry by infringing a valid and enforceable patent.  Therefore, Judge Reyna believed that the majority erred in using § 271 to introduce a temporal limitation on the moment that infringement liability must be complete for the purposes of the Commission’s authority to remedy violations of Section 337.

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Federal Circuit Affirms in Cognex Appeal (2011-1098)

By Eric Schweibenz
|
Dec
23
On December 16, 2013, the Federal Circuit issued its non-precedential opinion in Cognex Corp. v. ITC (2011-1098).  This was an appeal by Cognex Corporation and Cognex Technology & Investment Corporation (collectively, “Cognex”) from the International Trade Commission’s (the “Commission”) final determination in Certain Machine Vision Software, Machine Vision Systems, And Products Containing Same (Inv. No. 337-TA-680). In the opinion, the Federal Circuit affirmed the Commission’s final determination of no violation of Section 337 by MVTec Software GmbH and MVTec, LLC (collectively, “MVTec”) with respect to U.S. Patent Nos. 7,016,539 (the ‘539 patent) and 7,065,262 (the ‘262 patent).  In particular, the Federal Circuit affirmed the Commission’s determination of non-infringement of the asserted claims of the ‘539 patent.  The asserted claims included one independent claim (claim 1), from which the remaining claims were all directly or indirectly dependent. According to the opinion, the Commission found that the accused products did not satisfy five of the seven limitations of claim 1 of the ‘539 patent.  Additionally, the Commission found that all of the asserted claims of the ‘539 patent were invalid under 35 U.S.C. § 101 for failing to claim patent eligible subject matter.  On review, the Federal Circuit affirmed the Commission’s non-infringement findings with respect to claim limitations 1 and 6 of claim 1, and therefore did not reach the other claim limitations on appeal.  Specifically, the Federal Circuit found that Cognex had waived any argument with respect to the Commission’s construction of the term “accept threshold” contained in claim limitation 1.  The Federal Circuit reached this conclusion because Cognex had failed to dispute the construction in its opening brief, and, in its reply brief, failed to point out where it had presented the issue in its opening brief.  The Federal Circuit also affirmed the Commission’s claim construction with respect to the term “probe” contained in claim limitation 6.  In view of the above, the Federal Circuit affirmed the Commission’s non-infringement decision because it was supported by substantial evidence.  Additionally, because the Commission’s finding of non-infringement of the ‘539 patent was enough to support its termination of the Section 337 investigation, the Federal Circuit did not address the validity of the ‘539 patent.

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Federal Circuit Affirms In Motorola Mobility, Inc. Appeal (2012-1535)

By Eric Schweibenz
|
Dec
24
On December 16, 2013, the U.S. Court of Appeals for the Federal Circuit issued its opinion in Motorola Mobility, LLC v. ITC (2012-1535).  This was an appeal from the International Trade Commission’s (“the Commission”) final determination finding a violation of Section 337 of one of the asserted patents in Certain Mobile Devices, and Related Software Thereof (Inv. No. 337-TA-744).  See our June 18, 2012 and December 21, 2011 posts for more details on this investigation. By way of background, the Complainant in this case is Microsoft Corporation (“Microsoft”) and the Respondent is Motorola Mobility, Inc. (“Motorola”).  The technology at issue spans several patents, including a number of functionalities and features that are implemented on desktop computers and mobile devices.  On December 20, 2011, ALJ Theodore R. Essex issued the initial determination in this investigation finding a violation of Section 337 with respect to certain claims of U.S. Patent No. 6,370,566 (the ‘566 patent) and finding no violation with respect to certain claims of U.S. Patent Nos. 5,758,352; 6,826,762; 6,909,910; 7,644,376; 5,664,133; and 6,578,054.  Upon review, the Commission affirmed ALJ Essex’s finding that Motorola violated Section 337 with respect to the ‘566 patent.  Motorola appealed the ITC’s final determination.  According to the opinion, two issues were central to the appeal: (1) Motorola’s anticipation and obviousness arguments, and (2) Motorola’s argument that Microsoft failed to meet the economic prong of the domestic industry requirement.  Regarding anticipation, Motorola asserted that the synchronization component must necessarily be present in the cited prior art in order to accomplish synchronization.  Motorola argued that the “synchronization component” limitation refers to software that facilitates communication and synchronization.  The Court noted that the first part of Motorola’s arguments is a claim construction dispute regarding the synchronization component limitation.  The Court further noted that neither the ALJ nor the Commission construed this limitation and, therefore, the Court must give the claim term its ordinary meaning.  The Court rejected Motorola’s argument that the synchronization component is inherently included in the cited prior art.  The Court held that none of Motorola’s prior art necessarily included the synchronization component.  The Court found that the prior art may contain a synchronization component but did not necessarily contain a synchronization component.  The Court also rejected Motorola’s argument that the synchronization component was inherently included in the prior art based on admissions made by experts for Motorola and Microsoft.  The Court held that these admissions were merely conclusory statements and did not rise to the level of clear and convincing evidence. With respect to obviousness, the Court held that Motorola failed to identify the scope and content of the prior art and the differences between the prior art and the asserted claims.  The Court held that Motorola’s evidence, alleged admissions by Microsoft’s expert, was insufficient to prove obviousness by clear and convincing evidence.  Accordingly, the Court affirmed the Commission’s determination that Motorola failed to prove by clear and convincing evidence that the ‘566 patent was invalid as anticipated or obvious. Lastly, the Court rejected Motorola’s argument that Microsoft failed to meet the economic prong of the domestic industry requirement.  Motorola argued that Microsoft was relying on separate products to meet the technical and economic prongs of the domestic industry requirement.  Specifically, Motorola asserted that the operating system of a mobile device and the mobile device itself were separate products.  The Court affirmed the Commission’s finding that the operating system of a mobile device is a significant component of the mobile device that is specifically tailored to meet the specifications and demands of the mobile device.  The Court held that “[a]n investment directed to a specifically tailored, significant aspect of the article is still directed to the article.”  Accordingly, the Court affirmed the Commission’s determination that Microsoft satisfied the economic prong of the domestic industry requirement. Therefore, the Court affirmed the Commission’s final determination that Motorola violated Section 337 with respect to the ‘566 patent.

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Federal Circuit Denies Motorola’s Motion To Dismiss In Microsoft Appeal (2012-1445)

By Eric Schweibenz
|
Jan
08
On January 3, 2014, the U.S. Court of Appeals for the Federal Circuit issued a nonprecedential order in Microsoft, Corp. v. ITC (2012-1445).  This was directed to a motion requesting dismissal of Microsoft, Corp.’s appeal from the International Trade Commission’s (“the Commission”) final determination finding no violation of Section 337 of one of the asserted patents (U.S. Patent No. 5,664,133, “the ‘133 patent”) in Certain Mobile Devices, and Related Software Thereof (Inv. No. 337-TA-744).  See our June 18, 2012 and December 21, 2011 posts for more details on this investigation. By way of background, the Complainant in this case is Microsoft Corporation (“Microsoft”) and the Respondent is Motorola Mobility, Inc. (“Motorola”).  The technology at issue spans several patents, including a number of functionalities and features that are implemented on desktop computers and mobile devices.  On December 20, 2011, ALJ Theodore R. Essex issued the initial determination in this investigation finding a violation of Section 337 with respect to certain claims of U.S. Patent No. 6,370,566 and finding no violation with respect to certain claims of U.S. Patent Nos. 5,758,352; 6,826,762; 6,909,910; 7,644,376; 5,664,133; and 6,578,054.  Upon review, the Commission affirmed ALJ Essex’s finding that Motorola violated Section 337 with respect to the ‘566 patent.  Both Motorola and Microsoft appealed the ITC’s final determination.  See our October 10, 2013 and December 24, 2013 posts for summaries of the Federal Circuit’s opinions in the Microsoft and Motorola appeals, respectively.  In relevant portion, the Federal Circuit reversed the finding of no infringement of the ‘133 patent, also holding that Motorola’s alternative design infringed the ‘133 patent and remanding the case so that indirect infringement of the ‘133 patent could be determined. According to the opinion, Motorola filed a motion requesting that the Federal Circuit dismiss Microsoft’s appeal with respect to the ‘133 patent and vacate the portion of their October 1, 2013 opinion addressing that patent.  Motorola argued that the dispute over the ‘133 patent is now moot as the patent expired on December 13, 2013. The Federal Circuit denied Motorola’s motion, noting that the controversy between the parties is not moot in light of a still-pending district court litigation (Microsoft Corp. v. Motorola, Inc., Case No. 2:10-CV-01577-RSM (W.D. Wash. filed Oct. 1, 2010)).  Specifically, the Federal Circuit held that its rulings on the ‘133 patent will be relevant to the determinations of damages (if infringement is proved) and invalidity at the district court.  The Federal Circuit supported its determination with citations to case law stating that concrete forms of coercive relief are not required for constitutional determination of an actual controversy.  The parties’ failure to inform the Court of the imminent expiration of the patent was also noted.  Although the case was not found moot, the Federal Circuit explained that, even if it was moot, vacatur is not required, as vacatur is a discretionary matter. Circuit Judge Prost wrote a separate concurring opinion, explaining that she does believe that the appeal is moot, but would still deny the motion as a matter of discretion.  

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The opinions, commentary and characterizations provided to this online forum by the authors and moderators are provided for encouraging discussion, thought and debate on important ITC issues. These postings are in no way representative of the opinions of the Oblon firm, or its clients, but rather the personal views of the individual authors.