Further to our May 22, 2012 post, on June 5, 2012, the International Trade Commission (“the Commission”) issued the public version of its opinion finding a violation of Section 337 and issuing a limited exclusion order in Certain Mobile Devices, Associated Software, and Components Thereof (Inv. No. 337-TA-744).

By way of background, the Complainant in this investigation is Microsoft Corporation (“Microsoft”) and the Respondent is Motorola Mobility, Inc. (“Motorola”).  The technology at issue spans several patents, including a number of functionalities and features that are implemented on desktop computers and mobile devices.  On December 20, 2011, ALJ Theodore R. Essex issued the initial determination (“ID”) in this investigation finding a violation of Section 337 with respect to certain claims of U.S. Patent No. 6,370,566 (the ‘566 patent) and finding no violation with respect to certain claims of U.S. Patent Nos. 5,758,352 (the ‘352 patent), 6,826,762 (the ‘762 patent), 6,909,910 (the ‘910 patent), 7,644,376 (the ‘376 patent), 5,664,133 (the ‘133 patent), and 6,578,054 (the ‘054 patent) (collectively, “the asserted patents”).  See our December 21, 2011 post for more details.

On March 2, 2012, the Commission determined to review the ID in part. Specifically, the Commission determined to review 5 separate issues.

The Commission first reviewed the ALJ’s determination that Microsoft met the economic prong of the domestic industry requirement as to all of the asserted patents. The Commission affirmed this determination, on review, with certain modifications, including a modification identifying which particular subsections of Section 337(a)(3) had been satisfied.

In its second item for review, the Commission evaluated ALJ Essex’s determinations regarding the technical prong of the domestic industry requirement.  Specifically, in the ID, ALJ Essex determined that Microsoft met the technical prong of the domestic industry requirement as to the ‘566, ‘133, and ‘910 patents, but had failed to meet this requirement with respect to the ‘054, ‘352, ‘762, and ‘376 patents.  In the opinion, the Commission affirmed the ALJ’s determinations as to the ‘566, ‘133, ‘910, ‘762, and ‘376 patents and affirmed the ALJ’s determinations as to the ‘054 patent.  As to the portion of the ID regarding the ‘054 patent, however, the Commission determined to modify a particular phrase, describing the relationship between Microsoft’s domestic industry products and Motorola’s products as functioning in the “same way,” rather than “in nearly the exact same way” as was written in the ID.  With regard to the remaining patent, the ‘352 patent, the Commission reversed the ALJ’s determination.  In the ID, the ALJ determined that Microsoft had failed to meet the technical prong due to a violation of the ALJ’s Ground Rules, providing only an abbreviated discussion of the technical prong issue with respect to the ‘352 patent in its post-hearing brief.  The Commission reversed this determination, finding that, because the evidence and analysis at issue were not contested before the ALJ, Microsoft successfully met the technical prong of the domestic industry requirement as to the ‘352 patent.

Third, the Commission reviewed ALJ Essex’s determination that the ‘566 patent was not invalid by reason of anticipation or obviousness.  The Commission affirmed the ALJ’s determination as to both obviousness and anticipation.  The Commission modified the ID with regard to one footnote, clarifying that Motorola had not waived its arguments as to claim 5 of the ‘566 patent, as the footnote indicated.  Rather, claim 5 was not anticipated because the prior art of record did not anticipate claim 1 and claim 5 was dependent upon claim 1.

The fourth item the Commission reviewed was the ALJ’s determination that the accused products did not directly infringe the ‘352 patent.  The Commission reversed this determination, finding that Motorola’s accused products did directly infringe the ‘352 patent.  The Commission determined that, like the evidence related to the technical prong of the domestic industry requirement, the evidence of direct infringement with regard to  the ‘352 patent was uncontested and that Microsoft’s post-hearing brief provided “ample citations” to the record evidence to support a finding of direct infringement.

Lastly, the Commission reviewed ALJ Essex’s determination that Microsoft failed to prove that Motorola induced infringement of the asserted claims of the asserted patents.  The Commission affirmed the ALJ’s determination as to all of the patents.  With regard to the section of the ID relating to induced infringement of the claims of the ‘566 and ‘352 patents, however, the Commission determined not to adopt the portion of the ID discussing the concept of willful blindness.  This section, it found, was unnecessary to support the conclusion that Microsoft had failed to sufficiently prove induced infringement.

Regarding remedy, the Commission determined to issue a limited exclusion order directed to Motorola’s products found to infringe the asserted claims of the ‘566 patent.  The Commission found that because the alleged infringement was based upon the inclusion of ActiveSync protocol in the accused devices, U.S. Customs and Border Protection (CBP) would be unable to easily determine whether or not Motorola’s mobile devices infringed by inspection.  Thus, the Order provided for a certification provision permitting Motorola to certify to CBP that its product do not infringe the ‘566 patent.  The Order also provided an exception to the exclusion order for the importation of parts and components used in the maintenance, service, repair, or replacement of Motorola mobile devices previously sold in the United States.  According to the opinion, however, a transition period was unwarranted as there was no evidence that consumer demand could not be satisfied by the competing Android devices available on the market or by devices equipped with software from Apple, RIM, or Microsoft.  The Commission also declined to issue a cease and desist order.

As to public interest, the Commission considered third party submissions from the Association for Competitive Technology, Inc. (“ACT”) and Google, Inc.  ACT argued that the public interest factors would not preclude the issuance of a limited exclusion order.  Google argued that Motorola’s infringing devices should not be excluded on public interest grounds.  After considering these submissions and the submissions of Microsoft and Motorola, the Commission found that the exclusion order would not have a significant negative impact on competitive conditions in the US economy or on US consumers.

As to bond, Microsoft asserted that the Commission should base the proper bond on licensing agreements which covered its patents for smartphones.  The Commission disagreed, however, determining that the appropriate royalty should be based on licensing agreements which specifically relate to Microsoft’s ActiveSync technology.  Thus, the Commission determined that a bond of $0.33 per device would be required for temporary import of the articles in question during the Presidential review period.