|January 17, 2014|
Previously published on January 15, 2014
On January 9, 2014, the International Trade Commission (the “Commission”) issued the public version of its opinion in Certain Computers and Computer Peripheral Devices, and Components Thereof, and Products Containing the Same (Inv. No. 337-TA-841).
By way of background, this investigation was instituted on May 2, 2012 based on a complaint filed by Technology Properties Limited, LLC (“TPL”) alleging violation of Section 337 by a number of Respondents by reason of infringement of certain claims in U.S. patent Nos. 6,976,623 (the ‘623 patent), 7,162,549 (the ‘549 patent), 7,295,443 (the ‘443 patent), 7,522,424 (the ‘424 patent), 6,438,638 (the ‘638 patent), and 7,719,847 (the ‘847 patent). On August 2, 2013, ALJ Theodore R. Essex issued the Initial Determination (“ID”) finding a violation of Section 337 with respect to the ‘623 patent, but not with respect to the ‘549, 424, 623, or ‘847 patents.
The Commission determined to review the ID in its entirety. In its October 24, 2013 Notice, the Commission solicited briefing from the parties on remedy, the public interest, and bonding, as well as on five specific questions.
The ‘623 Patent
The ‘623 patent is directed to a device into which several different types of memory cards can be plugged in at the same time, where the memory cards are “accessible in parallel to transfer data from the” first card to the second card. ALJ Essex found a violation of Section 337 as to the ‘623 patent. The main issue addressed by the Commission is whether the patentee’s amendments to the claims, and explanations of those amendments, constitute disavowal as to the patent scope with regard to what is meant by “accessible in parallel.”
In earlier briefings, the Respondents proposed a construction of “accessible in parallel” as “each transmitting or receiving data simultaneously at a given point in time,” arguing that due to an extensive file history, TPL had disavowed switching between two memory cards from the scope of “accessible in parallel.” TPL argued for the plain and ordinary meaning of the term, or as an alternative, for “capable of concurrent read/write access.” ALJ Essex found that the prosecution history did not disavow claim scope, finding that the language meant only that it be possible for the cards to be in their respective slots simultaneously.
In its opinion, the Commission reversed ALJ Essex and adopted the Respondents’ proposed claim construction, finding that ALJ Essex’s construction failed to take into account TPL’s statements in the prosecution history distinguishing the ‘623 patent from prior art. Based upon the Commission’s claim construction, the Commission found that there was no dispute that the accused products use the “disclaimed prior art switching circuitry.” Accordingly, the Commission found that the accused products do not infringe the asserted claims of the ‘623 patent.
The ‘443, ‘424, and ‘847 Patents
The ‘443, ‘424, and ‘847 patents (“the mapping patents”) share a common specification and are directed to “universal” memory card readers or adapters. The asserted claims of the mapping patents are also substantially similar, and the only dispute before the Commission was with respect to the “mapping” limitations in each claim. No party challenged ALJ Essex’s claim construction of “to map,” and the Commission only reviewed whether, based on the claim construction, the accused products and domestic industry products met the claim limitation.
The accused products are memory card readers designed to accommodate only SD and MMC cards. The Respondents had argued, and ALJ Essex had found, that the claimed mapping does not occur because MMC and SD cards operate in substantially the same way. Additionally, in their petitions for review, the parties contended that ALJ Essex’s comparison of four-bit data-bus SD versus MMC was inconsistent.
The Commission reversed ALJ Essex’s determination that TPL failed to show that the accused products can transfer data to or from SD cards with a four-bit-bus, finding that TPL demonstrated, by a preponderance of the evidence, operation of the accused products in a four-bit-bus mode, which is all that is ordinarily required for apparatus claims. Accordingly, TPL did not have to demonstrate actual use of the accused products in four-bit-bus mode. As such, the Commission vacated a paragraph of the ID stating that TPL had only shown one-bit-bus operation of the SD card. The Commission, however, affirmed the remainder of ALJ Essex’s analysis of the accused products, affirming ALJ Essex’s determination that a “card reader does not need to perform the claims ‘mapping’ to accommodate SD and MMC card types in the same slot.”
Invalidity Based On The ‘928 Publication
The Commission also reviewed ALJ Essex’s determination that the asserted memory patent claims were not invalid as anticipated. ALJ Essex found that while the’928 Publication is prior art, the Respondents’ arguments in support of invalidity were too cursory to be preserved. The Commission sustained the ALJ’s application of his ground rules that the Respondents’ briefing was too cursory to clearly and convincingly demonstrate invalidity in view of the ‘928 Publication.
The Commission also affirmed the ALJ’s determination that the respondents failed to demonstrate that the mapping patents were invalid in view of an additional European Patent and its U.S. counterpart. The dispute regarding these additional patents was whether a SIM card is a “memory card” or “memory media card” within the scope of the patent claims. ALJ Essex concluded that a SIM card is not a memory card. The Commission found that Respondents failed to meet their burden to demonstrate that a person of skill in the art would have understood the claimed “memory media card” to encompass a SIM card.
The ‘549 Patent
The ’549 patent is directed towards systems and methods in which a “controller chip” determines whether the memory card itself has a controller, and if it does not, the “flash adapter” uses “firmware” to “manage error correction” in the memory card. The accused products were memory card readers that can read “xD” cards in addition to other types of carsd. The principal question was whether detecting the presence of an xD card is sufficient to detect whether a memory card contains a controller.
ALJ Essex concluded that sensing an xD card was not detecting a controller and that TPL failed to demonstrate infringement. TPL did not petition for review of ALJ Essex’s finding of non-infringement as to the ‘549 patent and the Commission affirmed this finding of non-infringement.
The Domestic Industry Requirement
The Commission also reviewed the domestic industry question of whether a showing of articles, protected by the asserted patents, is necessary in order for TPL to demonstrate the existence of a domestic industry under 337(a)(3)(C). Based substantially on the legislative history of the 1988 Act adding subparagraph 337(a)(3)(C), the Commission’s practice had previously been not to require a complainant to demonstrate the existence of articles practicing the asserted patents in the case of a licensing-based domestic industry.
In the opinion, the Commission looked to the Federal Circuit’s decisions in InterDigital I, InterDigital II, and Microsoft to determine whether there was an articles requirement for subparagraph 337(a)(3)(C). Based on InterDigital II, the Commission found that the Federal Circuit held that there is an articles requirement for subparagraph 337(a)(3)(C). The Commission also stated that, while InterDigital II requires the existence of an article practicing the patent, the article does not need to be made in the United States. Additionally, the Commission found that in Microsoft the Federal Circuit also held that there is an articles requirement for subparagraph 337(a)(3)(C), at least with regard to domestic industries based upon engineering and research and development.
According to the opinion, TPL argued that there is no articles requirement for licensing industries, but did not explain what the “articles” would be in the present investigation, and if they are not present, why they should be excused. The Respondents argued that there should be a distinction between patent-holders who license their patents to enable the production of protected articles, and patent-holders who license to others that already manufacture articles practicing the patent. The Respondents based their argument on the position that an “article protected by” the patent must be a product that either came to market or is expected to come to market “under the umbrella of the asserted patent that the product commercializes.”
After reviewing the parties’ arguments, the Commission found that TPL’s arguments were not persuasive, and rejected the Respondents’ invitation to impose a production-driven requirement on licensing-based domestic industries. As to the Respondents’ arguments, the Commission found that the plain meaning of “protected by” did not support the Respondents’ position. Additionally, the Commission found that the Respondents’ position was untenable because it singled out subparagraph 337(a)(3)(C) for special treatment, and invited an inquiry in every investigation as to the motivations of the complainant-licensor, and its licensees, which would be needlessly burdensome and costly to the complainant, its licensees, and the Commission, as well as unreasonably subjective and unwarranted in view of the statutory language and legislative history. The Commission also found that the Respondents confused the domestic industry test with the test for a complainant in the process of establishing domestic industry, and that there was no reason, or legislative intent, to apply this higher burden to showing that a domestic industry exists.
Based on the Commission’s determination that a complainant alleging the existence of a domestic industry under subparagraph 337(a)(3)(C) must show the existence of articles, the Commission addressed whether TPL demonstrated the existence of articles. The Commission found that TPL failed to demonstrate the existence of articles practicing the asserted patents.
With respect to the ‘623 patent, TPL relied on its’ licensees memory card readers as articles, but the Commission found that TPL failed to demonstrate that these products met the “accessible in parallel” limitation of the ‘623 patent. Accordingly, the Commission found that TPL failed to demonstrate the existence of protected articles practicing the ‘623 patent.
For the mapping patents, TPL relied on certain OnSpec products. OnSpec, however, ceased to exist in 2008, and even though TPL sells a small number of OnSpec products, the Commission affirmed ALJ Essex’s determination, and adopted his reasoning, that TPL cannot avail itself of OnSpec’s investments. The Commission stated that, nonetheless, that TPL could have demonstrated the existence of a domestic industry by identifying protected articles that practice the mapping patents and by relying in TPL’s own investments in the mapping patents. The Commission, however, affirmed ALJ Essex’s conclusion that TPL’s arguments were too minimal to meet TPL’s burden of establishing the existence of articles practicing the mapping patents. Therefore, the Commission found that TPL could not demonstrate the existence of a domestic industry.
Dissenting Views of Commissioner Aranoff
Commissioner Shara L. Aranoff dissented from the Commission’s finding that TPL was required to establish the “technical prong” of the domestic industry requirement in order to show a domestic industry based on licensing activities. Commissioner Aranoff specifically stated that, under subparagraph 337(a)(3)(C), the complainant is not required to prove the existence of articles protected by the relevant patent or other intellectual property right. Commissioner Aranoff based her dissent on the legislative history and congressional intent in the adoption of subparagraph 337(a)(3)(C), previous Commission findings, and the Federal Circuit’s holdings in InterDigital I, InterDigital II, and Microsoft.
Commissioner Aranoff found that the Commission’s long-standing interpretation of subparagraph 337(a)(3)(C) has always been in contrast with its practice under 337(a)(3)(A) and 337(a)(3)(B), where a complainant is required to prove that it produces articles that practice at least one claim of each asserted patent. Commissioner Aranoff further argued that the Federal Circuit’s language in InterDigital II was ambiguous on the issue of an articles requirement. Additionally, Commissioner Aranoff argued that the articles requirement established in Microsoft does not address a technical prong requirement for licensing-based industries. Commissioner Aranoff also stated that there should be different proof requirements for industries based on licensing and those based on investment in research and development. Overall, Commissioner Aranoff noted that implementing an articles requirement for a complainant establishing domestic industry under subparagraph 337(a)(3)(C) will end up being advantageous to speedy infringers and well-financed patent assertion entities while harming inventors, small businesses, and start-ups.