On March 20, 2015, the U.S. Court of Appeals for the Federal Circuit issued a nonprecedential decision affirming the International Trade Commission's ("the Commission") final determination of no violation of Section 337 in LSI Corp. et al. v. Int'l Trade Comm'n (2014-1410).  This was an appeal by Complainants LSI Corporation and Agere Systems LLC (collectively, "LSI") in connection with Certain Audiovisual Components and Products Containing the Same (Inv. No. 337-TA-837).

By way of background, this investigation is based on a March 2, 2012 complaint filed by LSI alleging violation of Section 337 with regard to certain audiovisual components and products containing the same including certain digital televisions, Blu-ray disc players, home theater systems, DVD players and/or recorders that infringe one or more claims of U.S. Patent Nos. 5,870,087 (the '087 patent), 6,982,663 (the '663 patent), 6,452,958 (the '958 patent), and 6,707,867 (the '867 patent).  See our April 15, 2014 post for more details on the investigation. 

On March 26, 2014, the Commission determined to affirm, with modifications, the ALJ's finding of no violation of Section 337.  Specifically, the Commission affirmed the ALJ's finding of no infringement of the asserted '958 patent claims, but unlike the ALJ, held those claims were invalid for obviousness.  The Commission also reversed the ALJ's conclusion that LSI had established the existence of a domestic industry.  As the '867 patent expired after the ALJ determination but before the Commission reviewed the determination, LSI filed a motion to terminate the investigation as to the '867 patent and to vacate the ALJ's finding of non-infringement as to the '867 patent.  The Commission granted the motion to terminate but denied vacatur.  On appeal, LSI challenged the aforementioned findings by the Commission.

In its decision, the Federal Circuit affirmed the Commission's finding of no domestic industry for the '958 patent.  The Court rejected LSI's arguments that the Commission acted arbitrarily and capriciously by retroactively applying a "brand new legal standard" announced by the Commission in its January 2014 Certain Computersdecision to an evidentiary record produced in early 2013.  First, the Court found that it was anything but clear that a "retroactivity" problem could arise in this context.  The Court stated that the most that the Commission had done was to limit the circumstances under which it will issue a prospective exclusionary remedy, leaving LSI with its full set of Title 35 patent-enforcement rights.  While the Court noted that it was unclear if the situation presented a retroactivity issue even if the Commission applied a new rule of law, the Court found it did not need to resolve that issue because it was clear that LSI did not experience the type of unfair surprise as to the governing legal standard that was needed to sustain a retroactivity challenge.  The Court found that the Commission did not "attach[] new legal consequences to events completed" before the consequences were announced and before LSI could take action to avoid those consequences.

The Court further stated that its decision in Interdigital II came before discovery closed and evidence was submitted in this case and stated the patent-covered-article requirement for Section 1337(a)(3)(C) that the Commission determined LSI failed to satisfy.  LSI did not argue that the Commission's conclusion was wrong if Interdigital IIgoverned.  Nor did LSI argue that Interdigital II's formulation for proving domestic industry under Section 1337(a)(3)(C) differs from the Commission's articulation inCertain Computers in any way that affects this case.  LSI also did not challenge the decision in Interdigital II.  Instead, LSI's argument rested on the assertion thatInterdigital II had no effect on the Commission's prior precedent until the Commission adopted Interdigital II's interpretation in its Certain Computers opinion.

The Court, however, found LSI's argument to be wide of the mark as LSI offered no reason why the Court's interpretation of the statute's requirements should not have applied prospectively to all parties seeking access to the Commission's exclusionary remedy.  Accordingly, the Court found that LSI had ample notice of Section 1337(a)(3)(C)'s domestic industry requirement at a time when it was able to present evidence to meet that requirement.  The Court found that these reasons were sufficient to dispose of LSI's appeal related to the '958 patent.  Accordingly, the Court did not review the Commission's claim construction or infringement findings.

With respect to the '867 patent, the Court concluded that the Commission did not abuse its discretion in declining to vacate the ALJ's finding of non-infringement.  LSI argued that the established practice in the federal judicial system was to vacate a court judgment when the case becomes moot by happenstance when on appeal.  The Court found, however, that those practices reflect judgments of remedial discretion and not constitutional necessity.  Accordingly, it was a matter of the Commission's discretion to decide whether to set aside ALJ determinations that it cannot review because of the intervening expiration of a patent.  The Court found that the Commission did not act unreasonably, because the ALJ decision has no preclusive effect and it will be up to other tribunals in which the decision may be invoked to decide what effect to give the decision.