On January 21, 2015, Chief ALJ Charles E. Bullock issued the public version of Order No. 76 (dated January 13, 2015) in Certain Flash Memory Chips and Products Containing Same (Inv. No. 337-TA-893).  In the Order, ALJ Bullock imposed monetary sanctions against Respondents Macronix International Co., Ltd., Macronix America, Inc., Macronix Asia Ltd., and Macronix (Hong Kong) Co., Ltd. (collectively, "Macronix") after finding that Macronix had violated Commission Rule 210.27(g). 

By way of background, the investigation is based on a complaint filed by Spansion LLC ("Spansion") alleging violation of Section 337 by Macronix and others in the importation into the U.S. and sale of certain flash memory chips and downstream products containing the same that infringe one or more claims of U.S. Patent Nos. 6,369,416; 6,900,124; 7,018,922; 6,459,625; 7,151,027; and 6,731,536.  See our August 5, 2013 and September 9, 2013 posts for more details on the complaint and Notice of Investigation, respectively.  On September 29, 2014, Spansion filed an emergency motion to compel Macronix to produce documents responsive to Spansion's requests for production.  ALJ Bullock granted the motion in part and further ordered Macronix to show cause why it should not be sanctioned "for what appears to be a misleading and improper supplemental response to Request for Production No. 77."  See our December 17, 2014 post for more details.

According to the Order, on November 14, 2014, Macronix filed a response to ALJ Bullock's Show Cause Order, arguing that its course of conduct was reasonable.  In particular, Macronix argued, inter alia, that its response to Request for Production No. 77 stating that "no non-privileged, non-immune, relevant documents containing information responsive to this Request exist" was reasonable because, while it had separate documents showing two separate aspects of the accused XtraROM products named in the request, it did not have documents that showed both aspects, and the request for production had sought documents about the first aspect "and" the second aspect.  Macronix cited case law on statutory interpretation to support its alleged understanding of the word "and" as well as to justify not producing documents responsive to the request.  Macronix also argued that it was justified in not producing documents relating to circuitry because certain of the asserted patents are directed to contact holes (as opposed to circuitry).

Spansion filed its own response to ALJ Bullock's Show Cause Order, arguing that it had been prejudiced as a result of Macronix's withholding of responsive documents.  Spansion emphasized the quantity and scope of the improperly-withheld documents and requested both monetary and non-monetary sanctions.  The Commission Investigative Staff ("OUII") also filed a response in partial support of sanctions.

After considering the arguments, ALJ Bullock found that Macronix had violated Commission Rule 210.27(g) and imposed monetary sanctions.  The ALJ found that Macronix's argument that it did not need to produce documents responsive to the request because it understood the word "and" to be strictly conjunctive was "objectively unreasonable," particularly in light of a definition in Spansion's Requests for Production which stated that "[t]he terms 'and' and 'or' shall be construed conjunctively or disjunctively as necessary to make the request inclusive rather than exclusive."  ALJ Bullock also rejected Macronix's argument that documents relating to circuitry were only tangentially relevant because Macronix itself had argued that the preambles of certain asserted claims that included the language "flash memory" are limiting, thus putting the question of whether the accused XtraROM products qualify as flash memory into the case as a potential non-infringement issue.  The ALJ further found that, in any event, "whether or not the main thrust of certain asserted patents relates to another portion of the accused products, this does not obviate Macronix's obligations pursuant to the Commission's Rules to search for and produce responsive documents and information in response to Complainant's discovery requests."

In view of these findings, ALJ Bullock concluded that Macronix had violated Commission Rule 210.27(g) and should be monetarily sanctioned.  In particular, ALJ Bullock ordered that Macronix pay the reasonable costs and attorneys' fees incurred by Spansion in bringing the emergency motion to compel and the reasonable costs and fees incurred by Spansion in re-deposing certain of Macronix's witnesses.  The ALJ further ordered that Macronix pay the reasonable costs incurred by OUII in connection with the motion to compel and the subsequent depositions.  Lastly, the Order states that Spansion and OUII must file an accounting, including detailed statements and documentation, by February 18, 2015.