Spansion, Freescale Semiconductor, ATI Technologies, STMicroselectronics, and Qualcomm v. ITC and Tessera (CAFC 2009-1460, -1461, -1462, 1465) precedential

The CAFC factual standard of review boils down to cutting the ITC slack.

This court reviews the Commission's legal determinations de novo and the Commission's factual findings for substantial evidence. Alloc, Inc. v. Int'l Trade Comm'n, 342 F.3d 1361, 1368 (Fed. Cir. 2003). Under the substantial evidence standard, "[a] reviewing court must consider the record as a whole, including that which fairly detracts from its weight, to determine whether there exists such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Nippon Steel Corp. v. U.S., 458 F.3d 1345, 1351 (Fed. Cir. 2006) (internal quotation marks omitted). This court "must affirm a Commission determination if it is reasonable and supported by the record as a whole, even if some evidence detracts from the Commission's conclusion." Id. at 1352 (internal quotation marks omitted).

Indefiniteness

Both '326 and '419 had a "movable" layer in a semiconductor. A whiff of ambiguity, yes, but indefiniteness, no.

"Indefiniteness requires a determination whether those skilled in the art would understand what is claimed." Enzo Biochem, Inc. v. Applera Corp., 599 F.3d 1325, 1332 (Fed. Cir. 2010) (internal quotation marks omitted). To make that determination, general principles of claim construction apply. Id. at 1331 (internal quotation marks omitted). While claim construction primarily relies on intrinsic evidence, extrinsic evidence, such as expert testimony, may also be used when given the appropriate weight by the trial court. Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1348 (Fed. Cir. 2005). "Because a patent is presumed to be valid, the evidentiary burden to show facts supporting a conclusion of invalidity is one of clear and convincing evidence." Id. at 1345.

The above has a much softer tone than the "insolubly ambiguous" standard for indefiniteness that the CAFC has historically and histrionically stated.

The [ITC Administrative Law Judge] ALJ found that "the evidence shows that one skilled in the art would readily be able to understand the scope of the asserted claims of the '326 and '419 patents when read in light of the specifications." Id. at 105. Both the intrinsic and extrinsic evidence support this finding.

Although determining whether claimed movement was present in the accused packages required an expert using detailed computer simulations, this alone does not indicate that the claims are indefinite. The difficulty or complexity of the infringement analysis does not necessarily speak to whether a claim is definite or not. See Datamize, 417 F.3d at 1354 (stating that "indefiniteness does not depend on the difficulty experienced by a particular person in comparing the claims with the prior art or the claims with allegedly infringing products or acts"); SmithKline Beecham Corp. v. Apotex Corp., 403 F.3d 1331, 1340-41 (Fed. Cir. 2005) ("The test for indefiniteness does not depend on a potential infringer's ability to ascertain the nature of its own accused product to determine infringement, but instead on whether the claim delineates to a skilled artisan the bounds of the invention.").

The ITC construction for "bonding wires extending downwardly alongside" was also disputed, the objection going to "alongside." The infringers wanted a narrowing construction via prosecution disclaimer from the parent ('159).

First, the '159 patent claims disclose leads and flaps rather than bonding wires for electrically connecting one side of the semiconductor chip to the other. Therefore, any disclaimers specifically relating to the type of connection do not apply to the '326 patent. See Saunders Group, Inc. v. Comfortrac, Inc., 492 F.3d 1326, 1333 (Fed. Cir. 2007) ("When the purported disclaimers are directed to specific claim terms that have been omitted or materially altered in subsequent applications (rather than to the invention itself), those disclaimers do not apply."); see also Ventana Med. Sys. v. Biogenex Labs., 473 F.3d 1173, 1182 (Fed. Cir. 2006) ("[T]he doctrine of prosecution disclaimer generally does not apply when the claim term in the descendant patent uses different language."); Invitrogen Corp. v. Clontech Labs., Inc., 429 F.3d 1052, 1078 (Fed. Cir. 2005) ("[T]he prosecution of one claim term in a parent application will generally not limit different claim language in a continuation application.").

The CAFC was alongside the ITC on this construction as well.

Infringement

On the issue of infringement, the ALJ, in the Initial Determination, and the Commission, in the Final Determination, came to contradictory conclusions on several factual issues and the ultimate conclusion. Each party in this appeal, not surprisingly, argues that the opinion supporting its position is correct. However, "we do not 'review' the correctness of the ALJ's initial decision or the correctness of the Commission's 'reversal.'" Fischer & Porter Co., Inc. v. Int'l Trade Comm'n, 831 F.2d 1574, 1577 (Fed. Cir. 1987). Instead, "19 U.S.C. § 1337(c), directs that on appeal to this court, this court must review the 'final determination of the Commission . . . in accordance with chapter 7 of title 5 [i.e., the Administrative Procedure Act (APA)].'" Id. While the ALJ's opinion may be probative, "this court may not substitute its judgment for the Commission's final determination on the ground that the court believes the ALJ's . . . view is 'more reasonable.'" Id. Under the APA, this court reviews the Commission's factual findings, such as its finding of infringement, for substantial evidence. See 5 U.S.C. § 706(2)(E); Finnigan Corp. v. Int'l Trade Comm'n, 180 F.3d 1354, 1361-62 (Fed. Cir. 1999).

To prove direct infringement, Tessera must establish by a preponderance of the evidence that "one or more claims of the patent read on the accused device literally or under the doctrine of equivalents." Cross Med. Prods., Inc. v. Medtronic Sofamore Danek, Inc., 424 F.3d 1293, 1310 (Fed. Cir. 2005); Enercon GmbH v. Int'l Trade Comm'n, 151 F.3d 1376 (Fed. Cir. 1998). The arguments on this issue are extremely complex and highly technical. However, the dispute narrows to a single question of fact: whether the accused products meet the moveable limitation found in all the asserted claims of both the '326 and '419 patents.

The CAFC affirmed, based upon the credibility of Tessera's technical expert, Dr. Qu.

The Commission was entitled to resolve the conflicting evidence in favor of a finding of infringement. See Bio Tech. Gen. Corp. v. Genentech, Inc., 267 F.3d 1325, 1330-31 (Fed. Cir. 2001) ("When scientific certainty is not available, and the scientific theories and evidence are within a reasonable range of difference of scientific opinion, resolution of such difference based on weight and credibility of evidence is the province of the trier of fact.").

'419 didn't directly infringe.

Tessera admits that Appellants' accused standalone packages cannot directly infringe the '419 patent because the standalone packages are not mounted on printed circuit boards, as required by the claims. Thus, those accused packages can only infringe indirectly.

The ITC found contributory infringement of '419. The CAFC let it stand.

"Under 35 U.S.C. § 271(c), a party who sells a component with knowledge that the component is especially designed for use in a patented invention, and is not a staple article of commerce suitable for substantial noninfringing use, is liable as a contributory infringer." Wordtech Sys., Inc. v. Integrated Networks Solutions, Inc., 609 F.3d 1308, 1316 (Fed. Cir. 2010). Thus, to prevail on contributory infringement in a Section 337 case, the complainant must show: (1) there is an act of direct infringement in violation of Section 337; (2) the accused device has no substantial non-infringing uses; and (3) the accused infringer imported, sold for importation, or sold after importation within the United States, the accused components that contributed to another's direct infringement. See 19 U.S.C. § 1337(a)(1)(B); DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1303 (Fed. Cir. 2006). The nature of the accused device at issue may be important to the analysis of whether a substantial non-infringing use exists. See Ricoh Co., Ltd. v. Quanta Computer Inc., 550 F.3d 1325, 1337 (Fed. Cir. 2008) (stating that an accused infringer "should not be permitted to escape liability as a contributory infringer merely by embedding [the infringing product] in a larger product with some additional, separable feature").

[B]ecause license negotiations indicated that Appellants were aware of the '419 patent, and Tessera successfully showed that the accused devices did not have any substantial noninfringing uses, the Commission presumed the requisite knowledge for contributory infringement. Id. This conclusion was not erroneous. See Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 932 (2005) ("One who makes and sells articles which are only adapted to be used in a patented combination will be presumed to intend the natural consequences of his acts; he will be presumed to intend that they shall be used in the combination of the patent." (internal quotation marks omitted)); Ricoh, 550 F.3d at 1343 ("Grokster recognized that providing instruction on how to engage in an infringing use 'show[s] an affirmative intent that the product be used to infringe.'" (quoting Grokster, 545 U.S. at 936)); DSU, 471 F.3d at 1303 ("even beyond the minimal intent requirement for contributory infringement, ITL acted with the knowledge of the [asserted] patent . . .").

Anticipation

This country's first-to-invent system gets a close call here: not prior art under 35 U.S.C. § 102(e) because of "effective filing date," which is the claimed invention date, not the actual patent filing date. If were first-to-file, Tessera might not have had its patents.

Several Appellants appeal the Commission's finding that two prior patents, U.S. Patent No. 5,241,133 (the "Mullen patent") and the Lin patent, did not anticipate Tessera's asserted claims. A patent may be found invalid as anticipated under 35 U.S.C. § 102(e) if "the invention was described in . . . a patent granted on an application for patent by another filed in the United States before the invention thereof by the applicant for patent." A claim is anticipated when "the four corners of a single, prior art document describe every element of the claimed invention, either expressly or inherently, such that a person of ordinary skill in the art could practice the invention without undue experimentation." Advanced Display Sys., Inc. v. Kent State Univ., 212 F.3d 1272, 1282 (Fed. Cir. 2000). A reference patent anticipates an invention under § 102(e) only if the reference patent's effective filing date is before the date of the invention. See In re Matthews, 408 F.2d 1393 (CCPA 1969).

Appellants argue that the Commission erroneously found that the inventions of the '326 and '419 patents were conceived in June 1990, several months before the Lin and Mullen patents were filed. "Conception is the formation in the mind of the inventor of a definite and permanent idea of the complete and operative invention, as it is therefore to be applied in practice." Singh v. Brake, 317 F.3d 1334, 1340 (Fed. Cir. 2003) (internal quotation marks omitted). An idea is sufficiently definite for conception "when the inventor has a specific, settled idea, a particular solution to the problem at hand, not just a general goal or research plan he hopes to pursue." Burroughs Wellcome Co. v. Barr Labs., Inc., 40 F.3d 1223, 1228 (Fed. Cir. 1994). However, a finding of conception does not require perfection: conception is complete when "the idea is so clearly defined in the inventor's mind that only ordinary skill would be necessary to reduce the invention to practice, without extensive research or experimentation." Id. Because it is a mental act, an inventor's oral testimony regarding conception must be corroborated by "evidence which shows that the inventor disclosed to others his completed thought expressed in such clear terms as to enable those skilled in the art to make the invention." Coleman v. Dines, 754 F.2d 353, 359 (Fed. Cir. 1985) (internal quotation marks omitted). Conception may be corroborated even if no single piece of evidence shows complete conception. Price v. Symsek, 988 F.2d 1187, 1196 (Fed. Cir. 1993). Instead, all of the evidence of record must be collectively evaluated in determining when the invention was conceived. Id. The issue of conception is a question of law based on underlying factual findings. Singh, 317 F.3d at 1340. Accordingly, this court reviews de novo the Commission's legal conclusions with respect to conception, and reviews the underlying factual findings by the Commission for substantial evidence. Id.

The CAFC affirmed the ITC's finding of conception and subsequent due diligence.

Injunctive Relief

Spansion argues that even if Appellants were liable for infringement, the Commission's award of prospective injunctive relief should be vacated because the Commission failed to give meaningful consideration to the public interest consequences of the injunction. In particular, Spansion argues that the public interest inquiry in this context is similar to the traditional test for injunctive relief that district courts apply under eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). According to Spansion, the Commission, in keeping with eBay, should have considered the following equitable factors: (1) the PTO rejected some of the asserted claims as unpatentable in the reexamination; and (2) Tessera could be made whole by damages because Tessera is simply a licensor and does not actually practice the invention. The ITC responds that the Commission properly considered the public interest factors prior to issuing the exclusion order and that eBay does not apply to Commission remedy determinations.

By statute, the Commission is required to issue an exclusion order upon the finding of a Section 337 violation absent a finding that the effects of one of the statutorilyenumerated public interest factors counsel otherwise. 19 U.S.C. § 1337(d)(1) ("If the Commission determines, as a result of an investigation under this section, that there is a violation of this section, it shall direct that the articles concerned, imported by any person violating the provision of this section, be excluded from entry into the United States, unless, after considering the effect of such exclusion upon the public health and welfare, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, and United States consumers, it finds that such articles should not be excluded from entry.") (emphases added). The enumerated public interest factors include: (1) the public health and welfare; (2) competitive conditions in the United States economy; (3) the production of like or directly competitive articles in the United States; and (4) United States consumers. Id.

The legislative history of the amendments to Section 337 indicates that Congress intended injunctive relief to be the normal remedy for a Section 337 violation and that a showing of irreparable harm is not required to receive such injunctive relief. This is shown by two distinct actions of Congress. First, in passing the Tariff Act of 1930, Pub. L. No. 71-361, 46 Stat. 590, Congress eliminated the monetary remedy for intellectual property import violations, representing a legislative determination that an injunction is the only available remedy for violations of Section 337. Second, in 1988, Congress amended Section 337 by passing the Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-418, 102 Stat. 1107, explicitly removing the requirement of proof of injury to the domestic industry and making it unnecessary to show irreparable harm to the patentee in the case of infringement by importation. See H.R. Rep. No. 100- 576, at 633 (1988) (Conf. Rep.) (stating that the bill "removes the requirement to prove injury . . . with regard to certain intellectual property rights cases involving patents"); S. Rep. No. 100-71, at 128 (1987) ("The fundamental purpose of the amendments made by section 401 is to strengthen the effectiveness of section 337 in addressing the growing problems being faced by U.S. companies from the importation of articles which infringe U.S. intellectual property rights."); id. at 129 ("The Committee does not intend that the ITC, in considering the public health and welfare, or the President, in reviewing the ITC's determination on policy grounds, will reintroduce these requirements."); accord H.R. Rep. 100-40 at 156 (1987).

Distinguish between the ITC, where the only relief is halting importation, and district courts, where money talks.

As contrasted with the remedial scheme established by Congress for proceedings before the Commission, the statutory remedies available in proceedings before the district courts are quite different. In addition to the remedy of damages under 35 U.S.C. § 284, Congress gave district courts the discretion to grant injunctive relief and in doing so made explicit that such discretion is to be exercised "in accordance with the principles of equity . . . on such terms as the court deems reasonable." 35 U.S.C. § 283. In eBay, the Supreme Court explained that Section 283 did not endorse or establish a categorical grant of injunctive relief following a determination of infringement. Rather, the decision whether to grant or deny injunctive relief under Section 283 depends on traditional principles of equity, applying the four-part test for permanent injunctive relief in patent disputes no less than in other cases governed by such standards. See eBay, 547 U.S. at 391 (discussing the four-factor test for injunctive relief).

In other words, eBay doesn't apply to the ITC.

Given the different statutory underpinnings for relief before the Commission in Section 337 actions and before the district courts in suits for patent infringement, this court holds that eBay does not apply to Commission remedy determinations under Section 337. The Commission is not required to apply the traditional four-factor test for injunctive relief used by district courts when deciding whether to issue the equitable remedy of a permanent injunction. Unlike the equitable concerns at issue in eBay, the Commission's issuance of an exclusion order is based on the statutory criteria set forth in Section 337.

The difference between exclusion orders granted under Section 337 and injunctions granted under the Patent Act, 35 U.S.C. § 283, follows "the long-standing principle that importation is treated differently than domestic activity." In the Matter of Certain Baseband Processor Chips and Chipsets, Transmitter and Receiver (Radio) Chips, Power Control Chips, and Products Containing Same, Including Cellular Telephone Handsets, Inv. No. 337-TA-543, 2007 ITC Lexis 621, *102 n.230 (U.S.I.T.C. June 19, 2007) (citing United States v. 12 200-ft. Reels of Film, 413 U.S. 123, 125 (1973)). This is reflected in the fact that the Commission has found public interest considerations to outweigh the need for injunctive relief in protecting intellectual property rights found to have been violated under Section 337 in only three investigations, all of which were decided prior to the 1988 legislative amendment discussed above, which removed the requirement that a patentee show irreparable harm. See id., 2007 ITC Lexis 621 at *220. Moreover, in those three cases, the exclusion order was denied because inadequate supply within the United States-by both the patentee and domestic licensees-meant that an exclusion order would deprive the public of products necessary for some important health or welfare need: energy efficient automobiles, basic scientific research, or hospital equipment.

The pending reexam was small potatoes. After all, it's not like the patent office knows what it's doing. If there is a focal concentration of incompetence about patents in this nation's institutions, that distinction ironically belongs to the USPTO, the issuer of patents. Patent examiners make district court judges look good by comparison.

With respect to the ongoing PTO reexamination, such proceeding is not explicitly listed as a public interest factor in Section 337. The Commission nevertheless discussed the ongoing reexamination of the patents at issue in its Final Determination and again in response to Appellants motion for a stay. The Commission found that it would be premature to give dispositive weight to the PTO reexamination proceedings until all appeals had been exhausted. In re Certain Semiconductor Chips with Minimized Chip Package Size and Products Containing Same, No. 337-TA-605, slip op. at 11-12 (Int'l Trade Comm'n May 27, 2008). Thus, while it is not accurate to say that "the Commission gave the reexaminations no weight at all," Spansion's Reply Br. at 23, it was not erroneous for the Commission to omit any discussion of such issues from its analysis of the public interest factors when fashioning a remedy to Appellants' violation of Section 337.

Affirmed.