On December 10, 2015, ALJ David P. Shaw issued the public version of Order No. 45 (dated November 19, 2015) in Certain Electronic Devices, Including Wireless Communication Devices, Computers, Tablet Computers, Digital Media Players, and Cameras (Inv. No. 337-TA-952).
By way of background, this investigation is based on a February 26, 2015 complaint filed by Ericsson Inc. and Telefonaktiebolaget LM Ericsson (collectively, “Ericsson”) alleging violation by Apple Inc. a/k/a Apple Computer Inc. of Section 337 in the importation into the U.S. and sale of certain electronic devices, including wireless communication devices, computers, tablet computers, and digital media players that infringe one or more claims of U.S. Patent Nos. 6,633,550, 6,157,620, 6,029,052, 8,812,059, 6,291,966, and 6,122,263 (collectively, “the Asserted Patents”). See our March 2, 2015 and April 2, 2015 posts for more details on the complaint and Notice of Investigation, respectively.
According to the Order, Apple filed a “motion for leave to file Apple Inc.’s Motion for Summary Determination That Ericsson’s Licensing Activities Cannot Satisfy the Economic Prong of the Domestic Industry Requirement (‘Motion for Summary Determination’) out of time” and, with that motion, filed a motion for summary determination on the merits.
While large parts of Order 45 are redacted, in its motion for summary determination on the merits, Apple argued that Ericsson’s licensing activities were insufficient for multiple reasons, including that Ericsson’s expert analyzed Ericsson’s licensing activities on a portfolio-basis and not an individual patent basis, and that Ericsson’s expert did not break down his analysis by asserted patent, or by the asserted patent’s family.
In response, Ericsson asserted that Apple incorrectly argued that Ericsson could not establish a nexus because Ericsson’s activities and investments were portfolio-based. Ericsson specifically noted that it had featured certain of the Asserted Patents in licensing negotiations and had highlighted the technologies applicable to the Asserted Patents in negotiations, which was sufficient for a showing of nexus. Additionally, Ericsson argued that there was no basis for Apple’s claim that Ericsson’s allocation methods were flawed or unreliable because Ericsson’s allocation approach reflected methods endorsed in previous investigations and because Apple ignored clear testimony from Ericsson’s expert in an attempt to discredit his allocation of expenses incurred in prior litigation. Finally, Ericsson argued that Apple’s substantiality analysis was misguided because Apple approached it from an entirely quantitative perspective, claiming that no contextual data existed to assess Ericsson’s investment and ignored that the magnitude of Ericsson’s investment can be determined by comparing the investment allocated to Ericsson’s implementation portfolio including the Asserted Patents to Ericsson’s overall investment in its U.S.-based licensing program. Ericsson also noted that its investment is substantial for other qualitative reasons, such as the fact that the licensing program is headquartered in the U.S., reflecting the importance of the U.S. market to Ericsson’s licensing program.
The Commission Investigative Staff (“OUII”) argued that there were genuine issues of material fact as to at least (i) whether Ericsson's investment in the implementation portfolio represented a sufficient nexus to the patents-in-suit, and (ii) whether Ericsson's litigation-related expenses should be included in this investigation as an investment in the exploitation of the patents-in-suit.
Based on the evidence and the parties’ arguments, ALJ Shaw agreed with the OUII and found that the were genuine issues of material fact as to whether Ericsson's investment in the implementation portfolio represented a sufficient nexus to the patents-in-suit and whether Ericsson's litigation-related expenses should be included in this investigation as an investment in the exploitation of the patents-in-suit. Accordingly, ALJ Shaw denied Apple’s motion.