Further to our March 24, 2014 post, on April 21, 2014 ALJ Dee Lord issued the public version of the Initial Determination (“ID”) in Certain Integrated Circuit Chips and Products Containing the Same (Inv. No. 337-TA-859).  Due to the large size of the ID, we have split the document into part 1, part 2, part 3, and part 4.

By way of background, the investigation is based on a complaint filed by Realtek Semiconductor Corporation (“Realtek”) alleging violation of Section 337 in the importation into the U.S., sale for importation, or sale within the U.S. after importation of certain integrated circuit chips and products containing the same that infringe one or more of claims 1-22 of U.S. Patent No. 6,787,928 (the ‘928 patent) and claims 1-22 of U.S. Patent No. 6,963,226 (the ‘226 patent).  See our September 20, 2012 and October 22, 2012 posts for more details on Realtek’s complaint and the Notice of Investigation, respectively.  The respondents in the investigation are LSI Corporation and Seagate Technology (collectively, “Respondents”).  On January 30, 2013, former ALJ Robert K. Rogers, Jr. partially terminated the investigation with respect to the ‘226 patent.  See our February 1, 2013 post for more details. 

Claim Construction

As an initial matter, ALJ Lord construed four claim terms in the ‘928 patent.  ALJ Lord determined that a person of ordinary skill in the art would have a bachelor of science degree in electrical engineering or equivalent, and five years of industry experience with processing engineering development for integrated circuits, including at least two years in the art of multilevel interconnect.  Of the four disputed claim terms, ALJ Lord held that the term “spaced apart” required no construction and should take on its plain and ordinary meaning.  ALJ Lord determined that a “second pad layer” should be construed to mean “one or more coplanar surfaces that provide a bonding zone to an external power source or potential.”  Additionally, ALJ Lord held that the term “lower electric-conduction layer” should be construed to mean “planar region of conductive material extending between the first pad layer and the substrate, the planar region being lower than the first pad layer and the compound layer structure.”  Further, ALJ Lord determined that the term “wherein a noise from the substrate is kept away from the first pad layer by the lower electric-conduction layer” was definite and should be given its plain and ordinary meaning.  ALJ Lord also noted that Realtek had addressed constructions for a number of additional claim terms but that none of those terms need to be addressed because they had no impact on the questions of infringement, invalidity, and the technical prong of the domestic industry requirement.

Invalidity

Regarding invalidity, ALJ Lord first determined whether the ‘928 patent was anticipated.  ALJ Lord held that claims 1-3 and 6-10 of the ‘928 patent were anticipated by the MS410B and MS410B2 devices.  ALJ Lord found that there was clear and convincing evidence that the chips manufactured using the MS410B and MS410B2 dies were sold before February 26, 2002 and that they practiced each element of claims 1-4 and 6-10 of the ‘928 patent.  ALJ Lord also found that the Ker Application and patent anticipated claims 1-10 of the ‘928 patent because it disclosed each and every limitation of those claims.  With respect to claim 1, ALJ Lord found that while the Ker Application and patent did not explicitly depict a second pad layer, a second pad layer was necessarily present. 

ALJ Lord also determined that if not anticipated, claims 1-3 and 61-0 would be obvious over the MS410B and MS410B2 devices and that claims 1-10 would be obvious over the Ker Application and patent.  ALJ Lord, however, found that there was not clear and convincing evidence that a person of ordinary skill in the art would have combined the MS410B and MS410B2 devices with the teachings of the Ker Application and patent, and that claims 4 and 5 were not obvious over the combination of the MS410B and MS410B2 devices with the Ker Application and patent.

Infringement

Regarding infringement, ALJ Lord determined that some of the accused products literally infringed claims 1-3 and 6-9 of the ‘928 patent and that other accused products literally infringed claims 1-10 of the ‘928 patent.  ALJ Lord conducted an element-by-element analysis of the claims to determine which of the accused products satisfied the claim features.

Domestic Industry

With respect to the economic prong of the domestic industry requirement, ALJ Lord found that Realtek had failed to prove the existence of a domestic industry.  ALJ Lord determined that Realcom, Realtek’s wholly-owned U.S. subsidiary, had not performed any significant work during the relevant time period on the ‘928 patent itself, instead performing work on products that are incorporated in Realtek’s DI chips, which also include the technology protected by the ‘928 patent.  ALJ Lord also found that Realtek’s investment in DI Chips-related research and development at its California facility was minimal when compared with its overall R&D investment for those products.  ALJ Lord noted that this disproportionality undercut Realtek’s argument that Realtek’s alleged domestic industry is central to its Wi-Fi business.  ALJ Lord also found that the value added by Realcom’s efforts, such as funding universities, did not represent an effort by Realtek to exploit the ‘928 patent in the U.S., as required by Section 337(a)(3)(C).  ALJ Lord further found that the low amount spent on DI Chips-related research at Realcom and the nature of the U.S. research operation to Realcom’s parent in Taiwan indicated a lack of a domestic injury.  Additionally, ALJ Lord found that the connection between Realcom’s research on the IPs and the DI Chips did not add significant weight to the argument for finding a domestic industry. 

As to the technical prong of domestic industry, ALJ Lord determined that Realtek had failed to prove that the DI Chips practice a valid claim of the ‘928 patent.  ALJ Lord noted that as claims 1-3 and 6-10 were anticipated by prior art and therefore invalid, Realtek had failed to show that its DI chips practice a valid claim of the ‘928 patent.  ALJ Lord did note, however, that if claims 1-3 and 6-10 of the ‘928 patent were later found to be valid, Realtek had demonstrated that its DI Chips practice claims 1-3 and 6-10 of the ‘928 patent. 

Remedy and Bond

ALJ Lord found no violation of Section 337.  ALJ Lord recommended, however, that if the Commission should find a violation of Section 337, a limited exclusion order that applies to Respondents as well as their affiliated companies, parents, subsidiaries, or other related business entities, or their successors and assigns should be issued.  ALJ Lord also recommended that any limited exclusion order include a six month waiting period to permit Respondent Seagate to replace the accused chips with non-infringing chips, and that Realtek be required to submit to the Commission a quarterly report in which Realtek will certify that it continues to maintain a domestic industry with respect to the DI chips.  ALJ Lord also found that Realtek had failed to demonstrate that a cease and desist order should issue and that if the Commission were to find a violation of Section 337, ALJ Lord does not recommend issuing a cease and desist order.  ALJ Lord further recommended that if the Commission finds a violation of Section 337, the Commission should not impose a bond requirement.