On April 21, 2014, the International Trade Commission (the “Commission”) issued the public version of its opinion finding no violation of Section 337 in Certain Electronic Imaging Devices (Inv. No. 337-TA-850).
By way of background, the investigation is based on a complaint filed by Flashpoint Technology, Inc. (“Flashpoint”) alleging a violation of Section 337 in the importation and sale of certain electronic imaging devices that infringe one or more claims of U.S. Patent Nos. 6,504,575 (the ‘575 patent), 6,222,538 (the ‘538 patent), 6,400,471 (the ‘471 patent), and 6,223,190 (the ‘190 patent). See our May 25, 2012 post for more details on the complaint and our June 27, 2012 post for more information about the Notice of Investigation. The ‘575 patent was later terminated from the investigation. The remaining Respondents at the time of the ID were HTC Corp. and HTC America, Inc. (collectively, “HTC”), Huawei Technologies Co., Ltd. and FutureWei Technologies, Inc. d/b/a Huawei Technologies (USA) (collectively, “Huawei”), and ZTE Corp. and ZTE (USA) Inc. (collectively, “ZTE”).
In the ID, ALJ Essex determined that a violation of Section 337 had occurred with respect to the ‘538 patent. See our October 18, 2013 post for more details. Specifically, the ALJ concluded that two of the accused HTC smartphones (the HTC Vivid and HTC Droid Incredible 4G LTE (“HTC Incredible”)) infringed the asserted claims, but that none of the other accused devices infringed the asserted patents. The ALJ also determined that Flashpoint met the economic prong of the domestic industry requirement as to all asserted patents, and that the smartphones of Flashpoint’s licensees met the technical prong of the domestic industry requirement as to the ‘538 patent, but not as to the ‘471 or ‘190 patents. Finally, the ALJ determined that the asserted patents were not invalid in view of the prior art or the on-sale bar and that the ‘190 and ‘538 patents were not unenforceable for failure to name an inventor.
On December 16, 2013, the Commission determined to review certain findings in the ID and issued a notice requesting briefing from the parties on fourteen specific questions. See our December 23, 2013 post for more details. According to a Notice issued on March 14, 2014, the Commission determined to reverse ALJ Essex’s finding of a violation of Section 337 and to find no violation of Section 337 with respect to the asserted patents. See our March 19, 2014 post for more information about the Notice. We now provide additional details of the opinion.
The ‘538 Patent
The Commission reversed the ALJ’s finding of induced infringement, determining that Flashpoint did not present sufficient evidence to show that HTC possessed specific intent to induce infringement. Specifically, the Commission determined that information in instruction manuals that could lead to direct infringement was insufficient without additional evidence showing that HTC intended the devices to be used in an infringing manner.
The Commission agreed with the ALJ that the accused HTC devices do not directly infringe any of the asserted patents, reviewing the ALJ’s findings with respect to each of the accused devices in view of particular claim limitations. In particular, the Commission affirmed the ALJ’s determination that the HTC Vivid practices claims 1 and 19 of the ‘538 patent and that the HTC Incredible infringed claim 19 of the ‘538 patent. However, the Commission held that the HTC Incredible does not infringe claim 1 of the ‘538 patent, determining that the ALJ’s analysis of the claim limitation “overlay bar” was incorrect. Specifically, the “overlay bar” of claim 1 requires interactive instructions, and the HTC Incredible includes an overlay bar, but not an overlay bar with interactive instructions.
HTC’s obviousness argument was based primarily on prior art that was considered by the U.S. Patent & Trademark Office during reexamination of the ‘538 patent, with three additional references cited to allegedly show the “overlay bar” limitation. The Commission determined that none of the secondary references show an “overlay bar” as recited by the claims of the asserted patents, and therefore the Commission affirmed the ALJ’s finding of non-obviousness. The Commission also affirmed the ALJ’s finding that there was no “on-sale” bar, as the product at issue was not “ready for patenting,” as required by case law.
The Commission also affirmed the ALJ’s findings that Flashpoint proved the technical prong of the domestic industry requirement with respect to the ‘538 patent, based on its licensed Apple and Motorola smart phones.
Lastly, the Commission affirmed the ALJ’s findings that Respondents failed to show by clear and convincing evidence that the ‘538 patent was unenforceable for failure to name an inventor.
The ‘471 Patent
The parties’ dispute as to infringement was centered on the construction of the term “operating system.” According to Flashpoint, “operating system” does not include the kernel or device drivers, although HTC argued that it included at least the kernel. The Commission noted that “Flashpoint’s own witnesses confirmed that the kernel is understood to be the core of the operating system,” and agreed with the ALJ’s determination that the term “operating system” had its plain and ordinary meaning. The plain and ordinary meaning included the kernel, while device drivers may or may not be included, depending on whether or not they manage hardware resources of the digital device.
With that claim construction, the Commission affirmed the ALJ’s finding that the accused products do not infringe the ‘471 patent. Specifically, “the operating system in the accused devices is not independent of the image processing mode, as required by the asserted claims of the ‘471 patent.” For the same reason, the Commission agreed with the ALJ’s finding that Flashpoint has not shown that the licensed Apple and Motorola products practice the ‘471 patent, and the technical prong of the domestic industry requirement was not met.
The Commission affirmed the ALJ’s finding that the ‘471 patent was not anticipated, as Respondents “acknowledged that [the reference] does not anticipate the asserted claims.” The Commission also affirmed the ALJ’s finding that there was no “on-sale” bar, as the product at issue was not “ready for patenting.”
The ‘190 Patent
The Commission affirmed the ALJ’s finding that the accused products did not infringe the ‘190 patent. Specifically, the Commission held that Flashpoint did not show that the accused products met the limitation “wherein the formatted document is formatted in accordance with a predefined model,” as there is no predefined model in the accused products. Rather, Respondents “presented compelling evidence that a user of the accused products—not any predefined model—determines the desired formatting.” Based on a similar analysis, the Commission affirmed (with slightly modified reasoning) the ALJ’s determination that the licensed Apple and Motorola products did not meet the technical prong of the domestic industry requirement.
In the ID, the ALJ determined that the Saito reference did not anticipate or render obvious the asserted claim of the ‘190 patent because it did not disclose the limitation “in response to the user performing the specific operations, automatically updating the interactive instructions, such that a user is guided through a sequence of interactive instructions adapted to capture information from the user.” Upon review, the Commission agreed with the ALJ with slightly modified reasoning, holding that Saito does not describe all aspects of the interactive instructions as described by the claims. The Commission also affirmed the ALJ’s finding that there was no “on-sale” bar, as the product at issue was not “ready for patenting.”
Economic Prong of the Domestic Industry Requirement
The economic prong of the domestic industry requirement was considered together for all patents. The Commission reviewed the investments Flashpoint detailed for its licensees, Motorola and Apple, and determined that both have made significant employment of labor and substantial investment through research and development with respect to all three asserted patents. As such, the economic prong of the domestic industry requirement was met.