Tessera v. ITC et al (CAFC 2010-1176) precedential; Judges Lourie, Linn (author), and Dyk

A. Standard of Review

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). 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." Nippon Steel Corp. v. United States, 458 F.3d 1345, 1352 (Fed. Cir. 2006) (internal quotation marks omitted).

B. Claim Construction

Tessera had a pathetic joke argument about claim construction.

Tessera argues that the Commission initially adopted a correct claim construction, but "halfway through its infringement analysis, the ITC inexplicably switched to an incorrect claim construction." Appellant's Br. 25. According to Tessera, this court should therefore review the Commission's finding of non-infringement de novo, as an error in claim construction. Intervenors and the Commission respond that Tessera "attempts to transform the Commission's factual infringement finding into a claim construction issue in order to receive de novo review." Appellee's Br. 20.

"Patent infringement is a two step inquiry. First, the court must construe the asserted claim . . . . Second, the court must determine whether the accused product or process contains each limitation of the properly construed claims." Freedman Seating Co. v. Am. Seating Co., 420 F.3d 1350, 1356-57 (Fed. Cir. 2005). Claim construction is an issue of law this court reviews de novo. Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456 (Fed. Cir. 1998) (en banc). Because the second step, applying a proper construction to the accused products in reaching a determination as to infringement, is a question of fact, this court reviews for substantial evidence. Freedman, 420 F.3d at 1357.

The punch line to the joke -

Tessera does not, nor could it, argue that the Commission adopted an incorrect claim construction. This is because the Commission adopted Tessera's proposed claim construction. See Final Determination at 16-24. Tessera's contention at best is a disagreement over the Commission's application of Tessera's construction to the accused wBGA devices. This court therefore agrees with Intervenors and the Commission that Tessera is challenging the Commission's infringement determination, which this court reviews for substantial evidence.

C. Infringement

Tessera argues that the Commission erred when it found that the "top layer" of claim 1 cannot include the solder mask layer of the accused wBGA products.

Under the adopted construction, the "top layer" is the layer that "carries the terminals." Intervenors' expert testified that the copper wiring layer overlays the substrate core layer. The "terminals" are simply the exposed areas of the copper wiring layer. Only after the copper wiring layer is applied on top of the laminate substrate layer is the solder mask layer applied to the assembly. Thus, according to Intervenors and the Commission, the solder mask layer does not "carry the terminals" and cannot be the "top layer." Under Tessera's own construction, the "top layer" must "carry the terminals."

Tessera fails to cite any record evidence supporting its contention that the solder mask layer "carries the terminals."

D. Anticipation

Anticipation is a question of fact that must be established by clear and convincing evidence. SanofiSynthelabo v. Apotex, Inc., 550 F.3d 1075, 1082 (Fed. Cir. 2008).

To invalidate the asserted claims of the '106 patent on the grounds of anticipation, the Intervenors must prove by clear and convincing evidence that a single prior art reference discloses each and every limitation of the '106 patent. The ALJ's detailed and well reasoned analysis of the asserted prior art and his determination that the '106 patent is not anticipated is supported by substantial record evidence.

This court agrees with Tessera that substantial evidence supports the Commission's determination that the asserted claims of the '106 patent are not anticipated by Worp, Juskey, or Chia.

E. Patent Exhaustion

The ITC argued that the CAFC didn't have jurisdiction over the patent exhaustion issue because Tessera hadn't timely filed its appeal.

Under the Commission's own regulations, the Initial Determination did not become final because the Notice to Review ordered review of certain issues therein pertaining to the '106 patent. 19 C.F.R. § 210.42(h)(2). Until the Commission had rendered a final determination or appealable order, this court lacked jurisdiction. The Commission's Final Determination issued on December 29, 2009. Tessera filed a timely notice of appeal on January 28, 2010, within sixty days from that date.

Which is the say that the ITC doesn't understand its own rules.

To the issue. First a recap of the relatively recent Supreme Court patent exhaustion case, Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617, 636 (2008).

"The longstanding doctrine of patent exhaustion provides that the initial authorized sale of a patented item terminates all patent rights to that item." Quanta, 553 U.S. at 625. At issue here, as in Quanta, is whether the patentee has authorized certain sales of products embodying the asserted patent. Id. at 636. In Quanta, patent holder LG licensed a portfolio of patents to Intel. Id. at 623. Under the License Agreement, Intel could sell its own products practicing the LG patents. Id. The License Agreement did not, however, grant Intel the right to practice the patents in conjunction with non-Intel products. Id. Quanta purchased, from Intel, products substantially embodying the LG patents and combined them with non-Intel products to practice the licensed patents. Id.

The Supreme Court held that LG's patent rights were exhausted upon Intel's authorized sale to Quanta. Although Intel was not licensed to practice the patents using non-Intel parts, "[n]othing in the License Agreement restricts Intel's right to sell its microprocessors and chipsets to purchasers who intend to combine them with non-Intel parts." Id. at 636 (emphasis added). Rather, the agreement "broadly permit[ted]" Intel to make, use, or sell products free of LG's patent claims. Id. Indeed, the agreement "authorized Intel to sell products that practiced the [asserted patents]. No conditions limited Intel's authority to sell products substantially embodying the patents." Id. at 637 (emphasis added). Because Intel was authorized to sell its products to Quanta, the doctrine of patent exhaustion prevented LG from further asserting its patent rights against those products purchased from Intel. Id.

Here, as in Quanta, Tessera's licensees were authorized to sell the accused products. Nothing in the TCC Licenses limited the licensee's ability to sell the accused products.

Everything as it was, with one meaningless alteration.

Because the '977 and '627 patents have now expired, this court vacates that portion of the Final Determination and remands with instructions to dismiss as moot the portion of the complaint relating to those patents.