uPI Semiconductor Corp. v. U.S. International Trade Commission and Richtek Technology Corp. v. U.S. International Trade Commission

The U.S. Court of Appeals for the Federal Circuit affirmed in part and reversed in part a decision of the International Trade Commission (ITC, the Commission) finding a violation of a consent order agreed.  uPI Semiconductor Corp. v. U.S. International Trade Commissionand Richtek Technology Corp. v. U.S. International Trade Commission, Case Nos. 13-1157, 13-1159 (Fed. Cir., Sept. 25, 2014) (Newman, J.).

The appeal arose from an enforcement proceeding before the ITC, based on a consent order issued in Inv. No. 33-TA-698, Certain DC-DC Controllers and Products Containing Same. Prior to the hearing in the original investigation, uPI moved to terminate based on its unilateral offer to enter into a consent order requiring it to cease importation, or aiding and abetting importation, of products that infringed Richtek’s patents or contained its trade secrets.  The ALJ granted uPI’s motion over Richtek’s objection.  Sometime later, Richtek filed an enforcement proceeding alleging violations of the consent order.  The ALJ’s enforcement initial determination separated the products at issue into those that were accused in the original investigation and those that were developed after entry of the consent order.  With respect to the products in the original investigation, the ALJ found a violation of the consent order based largely on their entry as components of third-party products.  With respect to the post-consent order products, the ALJ found the products infringed the asserted patents, but did not use Richtek’s trade secrets.  The Commission upheld the ALJ’s findings with respect to the products in the original investigation, but reversed the ALJ’s finding that the post-consent order infringed one of the asserted patents, finding no violation with respect to these products, and assessed a $620,000 penalty.

uPI appealed the Commission’s ruling of liability for importation of third-party products, and Richtek appealed the Commission’s ruling that the post-consent order products did not employ its trade secrets.

On uPI’s appeal, the Federal Circuit affirmed, rejecting uPI’s argument that Kyocera Wireless v. USITC (IP Update, Vol. 11, No. 11) did not permit the ITC, absent a general exclusion order, to find liability based on the products of a party not before the Commission.  The panel found that uPI has agreed not to knowingly aid or abet the importation of DC-DC controllers or “products containing same” that used Richtek’s patents or trade secrets, and nothing in Kyocera prevented the ITC from enforcing a consent order freely agreed to by uPI.

On Richtek’s appeal, the Federal Circuit reversed, finding that substantial evidence did not support the Commission’s finding that the post-consent order products did not employ Richtek’s trade secrets.  The Court found that the testimony of uPI’s expert that was relied on by the Commission “strained credulity” and that there was extensive evidence that extraneous markings, notations and design errors contained in Richtek’s trade secrets were also contained in uPI’s schematics.