ITC Section 337 Update – March 2014

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Jury Sets FRAND Rate For And ITC Ends Investigation Into LSI/Agere Wi-Fi Patents – On February 26, 2014, a Northern District of California federal jury reached a Verdict in Realtek Semiconductor v. LSI and Agere, Case No. C-12-03451 before District Court Judge Ronald M. Whyte determining a FRAND royalty rate for LSI/Agere’s asserted ’958 and ’867 patents.  This is the first time a jury has made a FRAND royalty rate determination.  A week after this Verdict was reached, the ITC decided on March 4, 2013 to terminate Certain Audio Visual Components And Products Containing The Same, Inv. No. 337-TA-837, for no violation, affirming an ALJ’s finding that the accused products were not proven to infringe LSI/Agere’s ’958 patent and reversing the ALJ’s determination that the asserted patent claims were not proven invalid and that a domestic industry exists based on the finding that a licensee’s products were not shown to practice the claims of the asserted ’958 patent.  Notably, Judge Whyte had previously issued a preliminary injunction barring LSI/Agere from enforcing, or seeking to enforce, any exclusion order with respect to the asserted patents issued in the 837 investigation pending a determination of the FRAND issues in the District Court action, an issue that never materialized in view of the foregoing.

Highlights Of The DOJ Deputy Assistant Attorney General Antitrust Division’s Keynote Address Applying The Joint DOJ/PTO Policy Statement At The ITC – On February 26, 2014, Renata B. Hesse, Deputy Assistant Attorney General Antitrust Division of the U.S. Department of Justice (DOJ), gave a keynote address at the 6th Expert Forum on ITC Litigation & Enforcement in Washington, D.C. sponsored by American Conference Institute.  The keynote address was on the subject “Competition and the Public Interest:  Applying the Joint DOJ/PTO Policy Statement at the ITC.”  Ms. Hesse made it clear that the President’s disapproval of the ITC’s exclusionary remedy issued by the Commission with respect to Samsung’s declared standard essential ’348 patent in the 794 Investigation does not mean an exclusionary remedy cannot be obtained for a declared standard essential patent.  Ms. Hesse advised that the DOJ believes there are situations where an exclusionary remedy can be obtained.  She noted the DOJ/PTO Policy Statement’s reference to a “constructive refusal to negotiate, such as by insisting on terms clearly outside the bounds of what could reasonably be considered to be F/RAND terms.”  She also noted that there can be other circumstances where an exclusionary remedy may be warranted, such as, for example, where a putative licensee forces a licensor to sue the licensee in multiple fora.  In response to an audience question, Ms. Hesse advised that DOJ would potentially be open to considering the fairness of a Panduit kicker if a putative licensee’s constructive refusal increases the cost of litigation.

Nokia Files Amicus Brief In Support Of Panel Rehearing And Rehearing En Banc In Suprema – On March 7, 2014, Nokia filed a Brief Of Amici Curiae in support of the Commission’s Combined Petitions For Panel Rehearing and Rehearing En Banc in Suprema v. ITC, Appeal No. 2012-1170, where a Federal Circuit majority panel vacated the exclusionary remedy in Certain Biometric Scanning Devices, Inv. No. 337-TA-720, and held that "an exclusion order based on a violation of 19 U.S.C. §1337(a)(1)(B)(i) may not be predicated on a theory of induced infringement under 35 U.S.C. §271(b) where direct infringement does not occur until after importation of the articles the exclusion order would bar."  Nokia asserts that the majority panel’s decision is:  (i) contrary to the statutory text and legislative history of 19 U.S.C. §1337, and long-standing Commission precedent; and (ii) casts doubt on the Commission’s authority to prevent certain unfair trade practices.  Nokia further advocates that if the Federal Circuit maintains the majority’s central holding, rehearing is necessary to clarify the scope of that holding, because certain commentators and other parties have seized on certain language in the opinion in an attempt to argue that contributory infringement is no longer a valid basis for violations of Section 337.  Nokia contends that “extending the majority’s holding to contributory infringement has dangerous ramifications for the reach of Section 337.”

Unanimous Third Party Support For Finding Electronic Transmissions To Be “Articles” Under Section 337 In 833 Investigation – On January 24, 2014, the Commission issued a Notice extending the target date to March 21, 2014 in Certain Digital Model, and Treatment Plans for Use in Making Incremental Dental Positioning Adjustment Appliances, Inv. No. 337-TA-833, so that the Commission can consider briefing and public comments on whether electronic transmissions are "articles" within the meaning of Section 337 and potential relevant judicial precedent, such as Bayer v. Housey Pharmaceuticals, 340 F.3d 1367, 1373-74 (Fed. Cir. 2003), Suprema v. ITC, 2013 WL 6510929 (Fed. Cir. December 13, 2013) and Certain Hardware Logic Emulation Systems, Inv. No. 337-TA-383.  The Commission received unanimous third party support that electronic transmissions are "articles" within the meaning of Section 337, including from Nokia, Google, Motion Picture Association of America, Association of American Publishers and Belles Katz LLC.

Topics:  FRAND, Investigations, ITC, Patent Litigation, Patents, Section 337

Published In: Antitrust & Trade Regulation Updates, Civil Procedure Updates, Intellectual Property Updates, International Trade Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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