• ALJ Gildea Grants Motion For Summary Determination On Economic Prong Of Domestic Industry In Certain Set-Top Boxes (337-TA-761)
  • April 10, 2012 | Author: Alexander E. Gasser
  • Law Firm: Oblon, Spivak, McClelland, Maier & Neustadt, L.L.P. - Alexandria Office
  • On March 28, 2012, ALJ E. James Gildea issued the public version of Order No. 42 (dated March 15, 2012) in Certain Set-Top Boxes, and Hardware and Software Components Thereof (Inv. No. 337-TA-761), granting Complainant Microsoft Corporation’s (“Microsoft”) motion for summary determination that the economic prong of the domestic industry requirement has been met.

    According to the Order, Microsoft argued that it met all three statutory subsections of the statute, any one of which would suffice to establish the economic prong of the domestic industry requirement.  Specifically, Microsoft argued that with respect to the articles it alleges are protected by the asserted patents, it has proven: “(A) significant investment in plant and equipment; (B) significant employment of labor or capital; or (C) substantial investment in its exploitation, including engineering, research and development, or licensing.” 19 U.S.C. § 1337(a)(3).  The two patents remaining in this investigation are U.S. Patent Nos. 5,758,258 (the ‘258 patent) and 5,585,838 (the ‘838 patent).  Microsoft alleges that one version of its Mediaroom software practices the ‘258 patent while another version of the software practices the ‘838 patent, and both versions run on AT&T U-verse set-top boxes.  Microsoft relied on facility, infrastructure, and equipment investments tied to Mediaroom software from 2009 - 2011.  Microsoft further relied on employment compensation and capital investments apparently tied to Mediaroom, as well as research and development investments since 2009.

    Respondent Tivo, Inc. (“Tivo”) opposed Microsoft’s motion only as to the ‘838 patent.  Tivo additionally moved to strike two declarations that accompanied Microsoft’s motion.  ALJ Gildea determined that he had already considered and denied Tivo’s previous motion to strike these same declarations when Microsoft relied upon these declarations to oppose Tivo’s motion for summary determination regarding the technical prong of the domestic industry requirement.  Accordingly, ALJ Gildea denied Tivo’s motion to strike as moot.    Tivo argued that Microsoft improperly relied upon expenditures after the January 24, 2011 filing date of Microsoft’s complaint.  Although ALJ Gildea acknowledged that certain Commission precedent had assessed domestic industry as of the discovery cutoff date of an investigation, more recent Commission rulings have clarified that domestic industry should be assessed as of the date the complaint is filed.  ALJ Gildea therefore determined that since Microsoft partially relied upon investments during its fiscal year 2011, and Microsoft did not indicate when its fiscal year started, it would be inappropriate to consider Microsoft’s listed investments that occurred during its fiscal year 2011.  Tivo further argued that Microsoft had not provided sufficient specificity regarding the timeframe during which certain functionalities relating to the research and development of a Mediaroom version occurred, and also argued that this version of the software was deployed after the complaint was filed.  ALJ Gildea determined that under these circumstances, Tivo’s arguments were irrelevant, because (1) it was clear Microsoft was working on the Mediaroom software that is at issue; (2) for domestic industry purposes, “investments related to the product as a whole, or investments related to particular aspects of the product not covered by the asserted patent are relevant to domestic industry and may be considered,” and therefore Microsoft need not show how its investments specifically relate to any particular functionality of the Mediaroom software; and (3) Microsoft need not show that its Mediaroom software was completed or deployed at the time the complaint was filed, because Section 337 can be satisfied if at the time the complaint is filed, a domestic industry “is in the process of being established.”

    Based on Microsoft’s undisputed facts from fiscal years 2009 and 2010, ALJ Gildea determined Microsoft demonstrated by a preponderance of the evidence that it had made (i) significant investments in plant and equipment through building space devoted to Mediaroom research and development; (ii) significant domestic employment of and investment in labor and capital with respect to Mediaroom software’s research and development; and (iii) substantial investment in engineering, research and development with respect to Mediaroom software, and accordingly, satisfied all three subsections (A) - (C) of the economic domestic industry requirement under 19 U.S.C. § 1337(a)(3).  ALJ Gildea therefore granted Microsoft’s motion for summary determination.