On November 19, 2012, the International Trade Commission (the “Commission”) issued the public version of its opinion with respect to U.S. Patent Nos. 6,328,766 (the ‘766 patent) and 6,353,581 (the ‘581 patent) in Certain Automated Media Library Devices (Inv. No. 337-TA-746).

By way of background, the complainant in this matter is Overland Storage, Inc. (“Overland”) and the remaining respondents are BDT AG, BDT-Solutions GmbH & Co. KG, BDT Products, Inc., BDT Automation Technology (Zhuhai FTZ) Co., Ltd., and BDT de México, S. de R.L. de C.V. (collectively, “BDT”).  The ‘766 patent and the ‘581 patent are directed to automated media library devices, also known as tape libraries.  In his Initial Determination (“ID”) of no violation, Chief ALJ Charles E. Bullock determined that (1) the ‘766 and ‘581 patents are not infringed by BDT; (2) the patents are not invalid except for claim 15 of the ‘581 patent; and (3) a domestic industry in the United States exists for the ‘766 patent, but not for the ‘581 patent.  See our July 27, 2012 post for more details.

As we reported earlier, the Commission determined to review the ID in part.  With respect to the ‘766 patent, the Commission determined to review the contributory infringement, validity and patent exhaustion issues.  Regarding the ‘581 patent, the Commission determined to review construction of the claim term “linear array,” as well as the infringement, validity, domestic industry and patent exhaustion issues.  See our September 21, 2012 post for more details. 

Our October 31, 2012 post provides a summary of the Commission’s determinations.  We now provide additional details.

The ‘766 Patent

Overland accused BDT of contributory infringement based on the activities of IBM and DELL, although the ALJ determined that Overland did not prove that BDT had the requisite knowledge to support a finding of contributory infringement.  On review, Overland argued that the ALJ used the wrong scienter requirement, and that “only induced infringement requires a showing that the infringer had the specific intent to induce infringement.”  BDT asserted that this argument should be waived as never presented to the ALJ, and the Commission agreed.  The Commission reviewed the evidence of record and affirmed the ALJ’s finding that Overland was unable to meet the requirements of contributory infringement.

In relation to validity, the Commission determined to review the ALJ’s finding that certain IBM documents related to various IBM tape libraries which do not qualify as printed publications and thus prior art because they were not proved to be publicly accessible.  The ALJ’s finding was based on the copyright dates of the documents, and Overland reiterated that this alone is not evidence of public availability.  BDT asserted that it provided substantial additional evidence of public availability including testimony from IBM employees and unalterable database records showing shipment of these documents.  The Commission agreed with BDT that there was clear and convincing evidence that all but one subset of these documents were publicly available as of the critical date, relying heavily on the testimony of the corroborating IBM witnesses.

Since most of these documents are now available as prior art, the Commission remanded the investigation to the ALJ to “resolve the issue of whether any of the IBM documents that qualify as prior art anticipate, or in combination with their associated IBM tape library and/or the ‘090 patent, render obvious the asserted claims.”

The ‘581 Patent

The Commission determined to review the ALJ’s claim construction of “linear array.”  The ALJ determined that “linear array” meant “one arrangement of media element storage locations [or cells] in one straight line in one dimension.”  The parties’ primary disagreement was as to whether the linear array was limited to one dimension or not.  Overland’s position was that other arrangements should be encompassed, even though the patent “shows only ‘a single line, or a one-dimensional, array of cells/storage locations.’”  BDT argued that the limitation “linear array” excludes circular arrangements as well as vertical arrangements.  The Commission modified the ALJ’s construction to remove reference to the “one dimension” based on the ordinary meaning of the words and review of the specification and prosecution history, where only the “continuous closed loop arrangement” was explicitly disclaimed.  Therefore, linear array is construed to mean “media element storage locations [or cells] arranged in one or more straight lines.”

In light of this modification, the Commission reconsidered the ALJ’s infringement determination and found that the accused products meet the limitation of “linear array.”  However, the Commission ultimately affirmed the ALJ’s finding of noninfringement because the accused products do not satisfy the limitation of a “manually movable towards said door” mail slot.

Furthermore, the Commission also reconsidered the ALJ’s validity determination in light of the modified interpretation of “linear array.”  Although the first prior art reference was found to “undisputedly” disclose a “linear array,” it failed to show any connection between the rack and moveable cartridge holder and thus does not teach that the cartridge holder is “coupled” to the rack.  The Commission determined that the remaining references also failed to show this “coupled” feature, and thus, the ‘581 patent is not invalid.

In relation to domestic industry, the ALJ found that Overland’s products did not meet the technical prong of the domestic industry requirement in relation to the ‘581 patent, and thus did not consider the economic prong.  However, the Commission reversed this determination based on Overland’s expert testimony and remanded the case to the ALJ for evaluation of the economic prong.

Patent Exhaustion

BDT set forth a defense of patent exhaustion for both patents, asserting that Overland’s license to IBM constituted a first sale.  The ALJ rejected this defense because, although the license constitutes a sale, it occurred after BDT’s allegedly infringing activities.  The Commission affirmed with modified reasoning, determining that the license was not a first sale in relation to BDT, because BDT were upstream suppliers of infringing goods and these sales would not be covered by the license.