The article, “Section 337 Investigations and Inducement: a Review of the Federal Circuit’s Decision in SEB S.A. v. Montgomery Ward & Co. and Recent Investigations Involving Inducement Claims,” published in the 337 Reporter, Vol. XXX, p. 7 (Nov. 2010), discusses the Court of Appeals for the Federal Circuit’s decision in the patent infringement case SEB S.A. v. Montgomery Ward & Co., Inc. (“SEB decision”) which addressed the “knowledge-of-the-patent” requirement of inducing infringement under 35 U.S.C. §271(b). The Federal Circuit held that deliberate indifference to a known risk of a patent’s existence may satisfy the knowledge-of-the-patent requirement of 35 U.S.C. §271(b) for a finding of inducement. Specifically, the Court explained that SEB’s inducement claim could be viable despite the lack of direct evidence of Pentalpha’s actual knowledge of SEB’s patent. Based on the circumstantial evidence at trial, the Court found that Pentalpha deliberately ignored the risk that SEB had a protective patent and that such deliberate indifference satisfied the knowledge-of-the-patent element of inducement. On March 25, 2010, the Federal Circuit denied Pentalpha’s petition en banc. The Supreme Court granted Pentalpha’s petition for certiorari on October 12, 2010.
The standard of “deliberate indifference” discussed in SEB decision will inform future Section 337 investigations where the knowledge-ofthe- patent requirement of inducing infringement under §271(b) is at issue. Below is a summary of three recent Section 337 investigations involving inducement claims that have followed the specific intent standard of §271(b) set forth in DSU Medical.
A. 337-TA-564: Certain Voltage Regulators, Components Thereof, & Products Containing Same (Enforcement Proceeding)
On September 24, 2007, the ITC issued a final determination, finding a violation of Section 337 with respect to Complainant Linear Technologies, Inc.’s (“Linear”) U.S. Patent No. 6,580,258 (“the ‘258 patent”). The ITC found claims 2, 3, and 34 of the ‘258 patent valid and infringed by a representative voltage regulator product of Respondent Advanced Analogic Technologies, Inc. (“AATI”) and issued a limited exclusion order (“LEO”) directed to AATI voltage regulators covered by the asserted claims of the ‘258 patent. On February 20, 2008, Linear filed a complaint requesting that the ITC institute a formal enforcement proceeding against AATI for violating the LEO by importing redesigned voltage regulators “as of the time of the evidentiary hearing” in the underlying violation proceeding. The ALJ’s initial determination in the enforcement proceeding issued on March 18, 2010.
ALJ Carl C. Charneski found “strong circumstantial evidence” in the record to support the finding that AATI actively induced infringement by “instructing its customers to use the imported accused products in ways that infringe the asserted claims.” The testimony of Kevin D’Angelo, a Vice President in Advanced Product Development at AATI who designed and developed the AATI representative voltage regulator, revealed that AATI created “datasheets for each accused product for the purpose of providing instructions for using the products in customer applications.” Specifically, AATI’s datasheets teach customers about the features of the accused products, how the accused products work, and how to configure them with external components that are required to use the accused products in an infringing manner.
Based on the evidence of record, ALJ Charneski also concluded that AATI possessed the requisite specific intent to induce infringement. AATI had been on notice of its infringing activities since at least February 2006, when Linear filed its complaint in the underlying violation investigation. Despite the findings of infringement by the ITC (and affirmed by the Federal Circuit), “AATI continued to provide datasheets and demo boards to customers in order to induce others to infringe.” The ALJ also noted AATI’s failure to produce a noninfringement opinion concerning its redesigned products, another factor indicating AATI’s affirmative intent to induce.
On May 14, 2010, the ITC determined not to review the ALJ’s initial determination in the enforcement proceeding, finding that the existing LEO covered AATI’s accused redesigned products, and that therefore, no modification of the existing LEO was required.
B. 337-TA-661: Certain Semiconductor Chips Having Synchronous Dynamic Random Access Memory Controllers & Products Containing Same
In this investigation, Complainant Rambus accused Respondent NVIDIA Corp. and others of inducing infringement of five patents directed at memory devices and their associated memory controllers as used, for instance, in personal computers, gaming consoles, and mobile devices. The products at issue were NVIDIA memory controllers designed to interface with JEDEC-compliant memory devices.
On the issue of inducement, Rambus asserted that: (i) Respondents directly infringed the asserted claims by testing the accused products; and (ii) end users directly infringed through their use of the accused products. Rambus argued that Respondents induced infringement by end users by providing instructions in user manuals, online and telephone technical support, as well as software device drivers. Rambus also asserted that Respondents continued selling the accused products and failed to offer any design around to avoid infringement. Respondents made no direct argument against induced infringement in their post-hearing briefs.
Applying DSU, the ALJ Theodore R. Essex found that Rambus showed direct infringement by the Respondents themselves and by end users of the accused products. The ALJ noted evidence demonstrating that Respondents tested the accused products in the United States. The ALJ also found that Respondents sold the accused products extensively within the United States to end users, who directly infringed the claimed method when operating the accused products with JEDEC-compliant memory devices.
With respect to the knowledge prong of §271(b), the ALJ found that Respondents were on notice of the asserted patents as early as the filing of the district court lawsuit and the institution of the Section 337 investigation. The ALJ concluded that, despite this knowledge, “Respondents knowingly helped and encouraged end users to operate the Accused Products in an infringing manner by providing product user manuals, technical support via the telephone and the Internet and by providing device drivers.” The ALJ found no evidence that Respondents took any steps to avoid infringement after they became aware of the asserted patents. Thus, the ALJ found that Rambus showed by a preponderance of the evidence that Respondents induced infringement of the asserted patents. The ALJ’s initial determination was adopted by the ITC.
C. 337-TA-636: Certain Laser Imageable Lithographic Printing Plates
On July 24, 2009, an initial determination was issued in this matter finding a violation of Section 337 in the importation, or sale within the United States after importation, of certain laser imageable lithographic printing plates by reason of infringement of the asserted claims of U.S. Patent Nos. 5,339,737 (“the ‘737 patent”) and 5,487,338 (“the ‘338 patent”) by Respondents Hanita Coatings RCA, Ltd. (“Hanita”) and VIM Technologies, Ltd. (“VIM”), among others. The ITC affirmed the ALJ’s determination of a violation of Section 337.
Complainant Presstek, Inc. (“Presstek”) owns the ‘737 and ‘338 patents, both of which are directed to lithographic printing plates suitable for imaging with low-to-moderate power levels of near-infrared laser radiation. The ‘737 and ‘338 patents also disclose plate layers that facilitate efficient absorption of the laser radiation. The products at issue are VIM waterless processless thermal plate rolls.
Presstek argued that Hanita induced infringement by manufacturing the middle metal-oxide layer of the accused VIM plates, which it then provided to VIM for completion. Presstek asserted that VIM and Hanita were made aware of the asserted patents by 2004. Specifically, Presstek indicated that third parties, whom VIM approached to help market the accused plates, advised VIM of the existence of the ‘737 and ‘338 patents, and VIM, in turn, not only advised Hanita of the patents but that its plates might infringe Presstek’s patents. Despite this knowledge, Presstek argued, Hanita continued to manufacture and sell the middle metal-oxide layer of the accused plates to VIM and did not take remedial steps to avoid infringement of the asserted patents. Respondents did not address the issue of inducement in their post-hearing brief, nor did they argue against Presstek’s allegations of inducement in their posthearing reply brief.
ALJ E. James Gildea found that Hanita induced direct infringement by manufacturing and providing VIM with a portion of the accused plates, which, in their manufactured finished form as completed by VIM, directly infringed the ‘737 and ‘338 patents. The ALJ found that Hanita was aware of the ‘737 and ‘338 patents and was aware that the VIM plates might directly infringe the asserted patents. According to the ALJ, “Hanita knew or should have known that its actions in manufacturing a portion of the Accused Plates and supplying them to VIM for completion would induce actual direct infringement by VIM.” Moreover, Hanita’s failure to investigate after learning of possible patent infringement constituted circumstantial evidence of its intent to induce infringement.