Goodwin Insights July 03, 2019

Most Impactful Commission Decisions

Commission Reverses ID’s Finding of Nonobviousness, Modifies Construction of Claim Term, and Overturns Recommendation of Denial of Remedial Orders


Before:  Commission Opinion (ID issued by ALJ Thomas Pender)

Practice Tips and Insights:

To rebut obviousness, Complainant should not adhere too strictly to the express teachings of the references without taking into consideration the more flexible approach of obviousness.  Additionally, claim constructions that naturally align with the ordinary meaning and are consistent with the specification may be considered by the Commission as the right construction.  Lastly, public interest concerns could be mooted by a Commission’s finding of invalidity.

Holding and Status:

The Commission found no violation of Section 337 as to the asserted patents.

Case Background:

The Complainant, Qualcomm Incorporated (“Qualcomm”), filed a complaint against Apple, Inc. (“Apple”), claiming Apple violated Section 337 by importing into the United States certain mobile electronic devices that allegedly infringe three Qualcomm patents: U.S. Patent Nos. 9,535,490 (“the ’490 patent”); 8,698,558 (“the ’558 patent”); and 8,633,936 (“the ’936 patent”).  The ID found infringement of claim 31 of the ’490 patent, but noninfringement of the ’558 and ’936 patents.  The ID additionally found that Qualcomm satisfied the technical prong of the domestic industry with respect to only the ’490 patent, and economic prong of the domestic industry with respect to all three patents.  The ID did not find any of the asserted claims invalid.  Thus, the ID concluded that Apple is violating Section 337.  Despite finding a violation of Section 337, the ID recommended that the Commission decline to issue any remedial orders due to public interest concerns, specifically competitive conditions in the United States and national security because exclusion would leave Qualcomm as the sole U.S. supplier for baseband processor chipsets. 

The Commission determined not to review the ID with respect to the ID’s finding of noninfringement of the ’558 patent and ’926 patent.  The Commission determined to modify ALJ Pender’s construction of the claim term “hold” in the ’490 patent, and reverse the ID’s finding that claim 31 of the ’490 patent is not invalid as obvious.  The Commission also solicited briefing from the parties, interested government agencies, and members of the public on remedy, the public interest, and bonding.

Notable Disputed Issues and Related Points of Law:

Obviousness is Not Limited to Express or Inherent Teachings of a Reference:  The ’490 patent is generally related to techniques for power saving in smart phones, tablets, and other mobile devices as well as larger networked systems.  Specifically, the ’490 patent teaches that power can be saved and battery life extended by aggregating transmissions of downlink and uplink data across a bus, which reduces the number of times the bus transitions between low and high power states.  To accomplish this, the ’490 patent teaches that a modem processor temporarily stores and accumulates downlink data on one side of the bus, while the application processor accumulates uplink data on the other side of the bus. 

The ID found that Apple failed to prove by clear and convincing evidence that claim 31 of the ’490 patent is invalid as obvious over a combination of two references: Heinrich in combination with Balasubramanian.  The ID reasoned that Heinrich in combination with Balasubramanian does not disclose certain limitations of claim 31, and a person skilled in the art would not have been motivated to combine these two references to produce the claimed invention. 

The Commission reversed the ID’s finding of obviousness and explained that Qualcomm, like the ID, erred by adhering too strictly to what Heinrich and Balasubramanian may expressly teach or disclose, and as a result, the ID and Qualcomm read these references too narrowly for obviousness purposes and missed the broader principles that a person of ordinary skill in the art would take from Heinrich and Balasubramanian.  The Commission highlighted Qualcomm’s and the ID’s shared error:

While it may be true that Heinrich and Balasubramanian do not expressly disclose a combined push/pull in the context of interprocessor communications, the Commission finds the ID erred once again in adhering too strictly to the express teachings of the references, without taking into consideration the more flexible approach of obviousness. (citations omitted)

Finding of Invalidity Can Render Moot Public Interest Concerns:  Because the Commission determined that claim 31 is invalid as obvious and adopted the ID’s finding of noninfringement of the ’558 patent and ’926 patent, the Commission concluded that Qualcomm had not shown a violation of Section 337.  The Commission overturned ALJ Pender’s recommendation that the Commission decline to issue any remedial orders due to public interest concerns.  The Commission concluded that no remedial orders are issued, rendering moot any issues of remedy, the public interest, or bonding. 

Natural Alignment with Ordinary Meaning Can Support Modification of Claim Term Construction:  The Commission determined to modify the construction of the claim term “hold” to mean “prevent data from traveling across the bus or to store, buffer, or accumulate data.”  Qualcomm argued that construing “hold” to mean “prevent…or store…” would make the term ambiguous because it could be read to mean the data did not need to be stored on one side of the bus until the appropriate triggering event.  Apple argued that regardless of whether “hold” is construed to mean “prevent” and/or “store,” it should be interpreted to mean the data must be stored internally in the processor.  The Commission rejected both the private parties’ arguments and found that its modified construction naturally aligns with the ordinary meaning of “hold,” is consistent with the specification, and is not ambiguous given that claim 31 expressly states that the processor and application process are each configured to “hold” certain data “until expiration of the modem timer.”

Commission Vacates, Remands ID’s Findings of Invalidity Under 35 U.S.C. § 112


Before: Commission Opinion (ID issued by ALJ Dee Lord)

Practice Tips and Insights:

The Commission’s decision principally points out errors in law in application of 35 U.S.C. § 112 and related caselaw, framing appeals to the Commission in these terms is crucial. Further, respondents must be vigilant to ensure claim construction and determinations of validity are performed individually.

Holding and Status:

The Commission vacated the ID’s finding of invalidity as to certain claims pursuant to withdrawal of those claims by the complainant, and remanded as to remaining claims to determine whether the term “control module” in claims 1, 4, 10, 11, and 15 of the ‘899 patent is a means-plus-function limitation.

Case Background:

Syneron Medical Ltd., Candela Corporation, and Massachusetts General Hospital (the Complainants”), claimed respondents including EndyMed Medical, Inc. and EndyMed Medical Ltd. (together, “EndyMed”) challenged in relevant part one of the asserted patents, U.S. Patent No. 9,510,899 (“the ‘899 patent”). EndyMed moved for a summary determination that claims 1, 2, 4, 9-11, 15, ad 20-21 are invalid as indefinite under 35 U.S.C. § 112 ¶¶ 2, 6. The Complainants subsequently withdrew claims 2, 9, 20, and 21 of the ‘899 patent.

The ID granted EndyMed's motion for summary determination that claims 1, 2, 4, 9-11, 15, 20, and 21 of the '899 patent are invalid pursuant to 35 U.S.C. 112 ¶¶ 2, 6. The ID found that "[e]ven if a person of ordinary skill in the art would have understood 'control module' to refer to a 'sufficiently definite structure,' that structure necessarily would be a prior art 'control module"' that "would not be sufficient structure capable of performing all of the functions claimed in the '899 patent."

The Commission vacated the ID as to the withdrawn claims. As to the remaining challenged claims, the Commission remanded to determine whether the term “control module” in claims 1, 4, 10, 11, and 15 of the ‘899 patent is a means-plus-function limitation.

Notable Disputed Issues and Related Points of Law:

While the ID had discounted the Complainants’ expert for an admission that the claim did not sufficiently describe the structure, for failure to show that the specification sufficiently distinguishes claim structures, and for failure to show how a person of ordinary skill would know how to configure a control module to perform the claims functions, the Commission summarily held that expert testimony was disputed and raised a genuine issue of material fact.

The Commission also rejected the ID’s application of Pressure Prods. Medical Supplies, Inc. v. Greatbatch Ltd., 599 F.3d 1308, 1317 (Fed. Cir. 2010), which held that “[s]imply mentioning prior art references in a patent does not suffice as a specification description to give the patentee outright claim to all of the structures disclosed in those references.”  The Commission found that Complainants were allowed to argue that the prior art references teach how a person of ordinary skill at the time of the filing of the application would have understood the structure described by the term “control module.”

The Commission further found the ALJ erred in considering the claimed functions for all nine claims simultaneously pursuant to 35 U.S.C. § 282(a); the claims must be construed and evaluated for invalidity separately.

Finally, the ALJ erred in applying Williamson v. Citrix Online, LLC, 792 F.3d 1339, 1349 (Fed. Cir. 2015); while the ID considered Williamson to mean that the prior art must disclose a control module capable of performing all the claimed function, that decision requires only that the words of the claim be understood by a person of ordinary skill to describe a structure.

Commission Refuses to Rescind a General Exclusion Order

In the Matter of CERTAIN SELF-ANCHORING BEVERAGE CONTAINERS, Inv. No. 337-TA-1092, Commission Determination (May 17, 2019)

Notable Disputed Issues and Related Points of Law:

On May 17, 2019, the Commission denied a petition to rescind a general exclusion order (“GEO”) entered with respect to a finding of infringement of claim 1 of U.S. Patent No. 8,028,850. The petition was brought by Mayborn USA, Inc. and Mayborn Group Limited (“Mayborn”), who were not parties to the underlying investigation. Mayborn argued that newly discovered anticipatory prior art constituted a changed circumstance that justified rescission of the GEO. Complainants and the Office of Unfair Import Investigations (“OUII”) opposed.

Under 19 U.S.C. 1337(k)(1), a GEO may be rescinded for “changed conditions of fact or law, or the public interest.” Citing the “conditions” that led to the Commission’s issuance of the GEO, and finding that none had changed by virtue of Mayborn’s petition, the request was denied. Specifically, the Commission found the following conditions unchanged by the submitted prior art: (1) that by substantial, reliable, and probative evidence, respondent violated section 337; (2) that a GEO was necessary to prevent circumvention of a limited exclusion order; and (3) that there is a pattern of violation and that it is difficult to identify the source of the infringing products.

Significantly, no party had previously challenged the validity of the asserted claim. In past matters, the Commission has rescinded remedial orders where the presumption of patent validity was overcome by the changed circumstance of a tribunal’s finding of invalidity of that patent. The Commission pointed out that it has never found, however, and declined to find in this matter, that the alleged new discovery of prior art after issuance of a GEO constitutes a changed circumstance that warrants GEO rescission.

Violation Confirmed for Two of Three Asserted Patents

In the Matter of CERTAIN MAGNETIC TAPE CARTRIDGES AND COMPONENTS THEREOF, Inv. No. 337-TA-1058, Commission Opinion (April 10, 2019)

Before: Commission Opinion (ID issued by Administrative Law Judge Cheney)

Practice Tips and Insights:

Respondents who are raising invalidity defenses, especially those needing explanation such as written description, enablement, and obviousness, should assure that they build a factual record that includes elaboration on the reasons supporting their defenses. Conclusory statements and proposals are consistently rejected. The ITC continues to juggle with how a remedial order is affected if there are final PTAB decisions conflicting with the remedial order.

Holding and Status:

The Commission affirmed a violation with respect to two of three patents, but provided some supplemental and amended reasoning.

Case Background:

Three patents—the ’774, ’596, and ’501 patents—were disputed at a hearing before Judge Cheney in May 2018. The Final ID determined that there was a violation with respect to the ’774 and ’569 patents, but not with respect to the ’501 patent (on the grounds that its asserted claims are invalid). Thus, a limited exclusion order was recommended, as was a cease and desist order. The Commission reviewed various issues with respect to each patent and determined, as discussed below, that a limited exclusion order and cease and desist order for both the ’774 and ’569 patents was proper because they were valid, infringed, and the subject of a domestic industry. The Commission also confirmed that there was no violation for the ’501 patent.

Notable Disputed Issues and Related Points of Law:

Patent Law for the ’774 Patent: There were four patent law issues considered for the merits of the ’774 patent:  claim construction, enablement, written description, and anticipation. Each of these legal issues turned on facts solicited at trial, particularly with respect to those provided by testifying experts. For example, the Commission found that enablement was satisfied because Fujifilm’s (the respondents’) expert “analysis consists only of conclusory and wholly unsupported statements.” The same rang true for written description—Fujifilm’s expert offered “nothing more than a conclusory assertion.” With respect to anticipation, there was differing expert testimony and the Commission agreed Fujifilm did not meet its clear and convincing evidence burden.

Patent Law for the ’596 Patent: Issues specific to the ’596 patent included: claim construction, infringement, the technical prong of the domestic industry and invalidity. The commission confirmed there was induced infringement because Fujifilm had the requisite intent to cause infringement, particularly because Fujifilm has prior knowledge of other claims that it acknowledged were “very similar” to those asserted in the Investigation. On obviousness, the Commission analyzed whether a prior art reference outside the field of use for the asserted patent was analogous art. The Commission determined that although the art was afield, it was still analogous art because it was concerned with addressing the same problem. Nevertheless, the Commission held the claims were not obvious because there was not motivation to combine the references nor was there an expectation of success even if a combination was made.

Economic Prong Based on Licensee: The economic prong was based on Sony’s licensing agreement with IBM. The primary argument was whether IBM had authorization to practice the asserted patents such that its products could fall within the umbrella of the domestic industry requirement. The Commission analyzed an oral agreement between IBM and Sony, as well as a written agreement. The Commission determined that the agreements brought IBM’s products within the purview of the domestic industry requirement. Notably, the Commission extended the domestic industry analysis to products that did not alone practice the patents because the components that were protected “cannot be ‘exploited’ absent their use in conjunction with [those products].”

Remedy: There were four primary issues addressed related to remedial orders. The first three related to Fujifilm’s request for express exclusions in the remedial orders. All three were rejected by the Commission because they were found to be unnecessary. The fourth request was for a stay of the LEO with respect to two asserted claims subject to final written decisions of invalidity at the PTAB. The Commission found the facts analogous to Three Dimensional Cinema (Inv. No. 337-TA-927) and, therefore, suspended the remedial relief as it applied to one asserted claim. The remainder of the remedial order was left in place.

Commission Finds Evidence of Infringement Insufficient and Complainant Bound by Patent’s Description of the Prior Art


Before: Commission Opinion

Practice Tips and Insights:

To prove infringement at the Commission, Complainant cannot rely on conclusory testimony of its expert based on the expert’s “knowledge and experience.” Further, if the Commission requests briefing on how the accused “methods” meet certain claim limitations, be sure to brief all of the accused methods or the Commission could find any method that is not addressed to have been abandoned. Finally, the Commission may find a patentee bound by statements in a patent’s disclosure, including characterizations of the prior art unless the patentee can rely on non-enablement as a potential basis for collateral attack on the admission.

Holding and Status:

The Commission issued a general exclusion order as to all respondents, a cease and desist order as to respondent Fractioni (Hongkong) Ltd., and set bond of 100 percent of the entered value of infringing articles imported during the period of Presidential review.

Case Background:

The Complainant, Rockwell Automation, filed a complaint against fifteen respondents, claiming violations Section 337 by importing certain industrial automation systems and components, products that allegedly infringed Rockwell’s registered trademarks and copyrights. Rockwell also asserted an unfair competition claim related to tortious interference with contract. The domestic industry products are industrial automation systems, all of which bear the asserted trademarks. The accused products are gray market Rockwell products not authorized for sale in the United States that differ materially from the domestic products (i.e., lack of warranty, recall notices, safety notices, quality control, etc.).

Nine of the respondents defaulted, five were terminated for failure of service, and one was terminated on the basis of a consent order. On October 23, 2018, the ALJ issued a FID finding a violation of Section 337 by the defaulted respondents as to the trademark claim, but no violation as to the copyright and tortious interference claims. The ALJ recommended that the Commission issue a GEO against all respondents, issue a CDO against respondent Fractioni, and set bond at 100 percent of the entered value of infringing products.

The Commission determined not to review the FID. The Commission solicited written submissions on remedy, the public interest, and bonding. The Commission received written submissions from Complainant and the Office of Unfair Import Investigations.

Notable Disputed Issues and Related Points of Law:

Standard for Entry of a General Exclusion Order: Entry of a GEO requires a finding that either: (1) a GEO is necessary to prevent circumvention of a limited exclusion order; or (2) there is a pattern of violation and it is difficult to identify the source of infringing products. The Commission found that a GEO was warranted in this case because of the ease with which a limited order could be circumvented. The Respondents were purchasing Rockwell products abroad and selling them in the United States, sometimes under different names. Because the Respondents did not manufacture any products, the barriers to entry were low. Furthermore, the Respondents were already using multiple entities with different names to sell products, further demonstrating the ease of circumvention of a limited order. The Commission also found a pattern of violation and difficulty identifying the source of the infringing products. Searches on eBay and Alibaba revealed tens of thousands of infringing product listings for products in “new” condition. The Commission also noted the difficulty in serving Respondents.

Standard for Issuing a Cease and Desist Order: A CDO may be issued in addition to an exclusion order. A CDO is typically ordered if the evidence establishes that the Respondent has substantial infringing inventory or operations in the U.S. that would make an exclusion order insufficient to remedy the infringement. The Commission issued a CDO against only one respondent, Fractioni, because this is the only Respondent for whom Rockwell had provided evidence of substantial domestic operations. For the other Respondents, Rockwell identified substantial domestic sales, but no evidence of domestic operations or inventories.

Public Interest Factors: The Commission found the public interest factors all weighed in favor of issuing the GEO and CDO. The Commission found no likely adverse effect on public health and welfare, as preventing unauthorized purchases would promote public safety; there was no evidence of any anticompetitive concerns; there was no evidence Rockwell could not meet market demand if an exclusion order issued; and the only adverse effect on U.S. consumers would be increased prices for authorized Rockwell products (as opposed to lower prices for unauthorized products).

Issuance of Bond: Bond should be sufficient to protect Complainant from injury and is typically either (1) the difference between the imported infringing product and the domestic product, or (2) a reasonable royalty. If pricing or royalty information cannot be ascertained, bond may be set at 100% of the value of the imported infringing product. Here, the Commission found it impracticable to determine the price differences as the prices of the products varied significantly, and there was no evidence of an appropriate comparable royalty and set bond at 100%.

The Commission Finds Sony in Violation of Section 337

In the Matter of CERTAIN magnetic data storage tapes and cartridges containing the same (II), Inv. No. 337-TA-1076, Commission Opinion (June 20, 2019)

Practice Tips and Insights:

Even confidential sales can create an on-sale bar in certain circumstances. But respondents must show the product sold was covered by the asserted patent.

Case Background:

The Commission had instituted this investigation based on a complaint filed by Fujifilm, alleging that Sony violated Section 337 by importing and selling certain magnetic data storage tapes and cartridges that allegedly infringed a number of asserted patent.  After the evidentiary hearing, the ALJ found that Sony violated Section 337 by way of infringing one or more valid claims of two of the asserted patents. But regarding the other two patents remaining in the investigation, the ALJ found that Sony did not infringe any valid asserted claims.

Of particular note, the ALJ had determined that one of the asserted patent claims was invalid as anticipated by Fujifilm’s sales of a prototype cartridge more than one year before the priority date of the patent.  The Commission reversed that finding as further detailed below.

Notable Disputed Issues and Related Points of Law:

As the ALJ had noted in the ID, an on-sale bar requires clear and convincing evidence that, before the asserted patent’s critical date, the claimed invention must have been: (1) the subject of a commercial sale; and (2) ready for patenting. The ALJ determined that prototype cartridges that Fujifilm had sold to IBM and Seagate, under a confidentiality agreement, constituted “commercial sales.”  Because the ALJ concluded that the prototypes sold to IBM and Seagate satisfied all the limitations of the claim at issue, the ALJ concluded that the sale invalidated the patent.

Specifically, the ID noted that Sony produced sufficient evidence that Fujifilm's prototype cartridges satisfied all of the limitations of the claim at issue. Sony had argued that Fujifilm manufactured the cartridges according to draft specifications in existence at that time, and then relied on its expert to identify where the elements of the claim could be found in those draft specifications. But there was one limitation absent from the product specification: whether the diameter of the engagement gear was relatively larger than that of the braking gear. For this limitation, Sony relied on a manufacturing drawing produced by Fujifilm and testimony by a Fujifilm engineer about the diameters of gears in products Fujifilm sent to its customers in 1999. The ID pointed to the same evidence to find that the claimed invention had been reduced to practice, and thus was ready for patenting.

Before the Commission, Fujifilm argued that the ID should be reversed because the alleged on-sale bar rests on two unproven assumptions about the “ready for patenting” prong triggering a bae: (1) that the confidential prototype cartridges that Fujifilm sold to IBM and Seagate conformed to the draft product specifications; and (2) that the prototypes met all the limitations of the asserted claim regardless of whether they conformed to the draft specifications.  Fujifilm further argued that the prototypes did not constitute "commercial sales" under Federal Circuit precedent, because: (i) they were not publicly offered for sale; (ii) neither IBM nor Seagate could resell them to third parties; (iii) Fujifilm provided the prototypes solely for "evaluation and testing" and "research and development"; (iv) their mechanical design was far from complete at the time of the exchange; and (v) they had "all the hallmarks of developmental, confidential, non-commercial transactions."

The Commission sided with Fujifilm and reversed based upon the “ready for patenting” requirement. “An on-sale bar” the Commission noted, “requires that the prior art must expressly or necessarily include every limitation of the contested claim…. If the evidence is insufficient to establish by clear and convincing evidence that even one of the claim limitations is present, then the claim is not invalid under this theory.”

By the time of the Investigation, the prototype cartridges no longer existed and therefore not part of the evidentiary record. As a result, the Commission found that Sony's argument was premised on an assumption that the prototype cartridges that Fujifilm sent to IBM and Seagate complied with the then-available draft specifications because that was allegedly the general practice in the industry at that time. But Sony's expert had not actually see the prototype cartridges, and admitted that he could not offer an opinion on the actual cartridges. In the end, the Commission concluded that the record evidence did not clearly and convincingly show that the samples Fujifilm sent to IBM or Seagate included all the limitations in the relevant patent claim. Specifically, “some of the prototypes that Fujifilm provided to IBM and Seagate were incomplete at the time they were transferred; their design was subject to change; some of the prototypes were based on specifications or drawings supplied by Seagate, not Fujifilm; and their specific attributes remain unclear.” Thus, the Commission reversed the invalidity finding based on the on-sale bar because Sony’s failure to prove, by clear and convincing evidence, that the prototypes sold to IBM and Seagate were ready for patenting at the time.

Commission Issues General Exclusion Order After All Ten Respondents Default


Before: Commission Opinion (Remand ID issued by Chief Judge Bullock)

Practice Tips and Insights:

The Commission can be a powerful tool for remedying instances where infringing imports are making their way to consumers in unmarked packaging via wide-spanning internet sales and by way of companies whose corporate names seem to continually change.

Holding and Status:

In the underlying Investigation, the ALJ found all ten respondents in default. However, the ALJ made an initial ruling of no direct infringement that was overturned by the Commission on March 18, 2019 and certain issues were remanded back to the ALJ. On remand, the ALJ found a violation with respect to all respondents and recommended a General Exclusion Order. The Commission requested written submissions on remedy, public interest, and bonding and has now issued the recommended General Exclusion Order.

Notable Disputed Issues and Related Points of Law:

General Exclusion Order (Circumvention and Pattern of Violation): In finding that a General Exclusion Order (GEO) was warranted, the Commission stepped through its two prong analysis under Section 337(d)(2): (1) is a GEO necessary to prevent the circumvention of a Limited Exclusion Order and (2) is there a widespread pattern of violation. The Commission Opinion found that the Remand ID appropriately considered the complainant’s evidence on these points and therefore a GEO was warranted. The Commission listed a number of its own opinions that supported this conclusion.

The Commission also found that the public interest would not be adversely affected by a GEO because the complainant had capacity to meet market demands. Additionally, bond was set at 100% due to the lack of reliable pricing information, given the lack of discovery from the defaulting respondents.