On August 26, 2011, ALJ Theodore R. Essex issued the public version of Order No. 14, an Initial Determination (“ID”) (dated August 3, 2011) granting Complainants Hewlett-Packard Company and Hewlett-Packard Development Company’s (collectively, “HP”) motion for summary determination that HP has satisfied the domestic industry requirement and that defaulting Respondents Shanghai Angel Printer Supplies Co., Ltd., Zhuhai National Resources & Jingjie Imaging Products Co., Ltd., Tatrix International, and Ourway Image Co. Ltd. (collectively, the “Defaulting Respondents”) have violated Section 337 in Certain Inkjet Ink Supplies and Components Thereof (Inv. No. 337-TA-730).  The ALJ also recommended that the Commission issue a general exclusion order and a cease and desist order and impose a bond of 100 percent on the Defaulting Respondents.

By way of background, the Commission instituted this investigation on July 26, 2010 based on HP’s complaint of June 25, 2010 and subsequent filings.  See our July 28, 2010 post for more details.  On March 7, 2011, HP filed a motion for summary determination that a domestic industry exists and that the Defaulting Respondents have violated Section 337 in connection with the importation, sale for importation, or sale within the U.S. after importation of certain inkjet ink supplies and components thereof that infringe certain claims of U.S. Patent Nos. 6,959,985 (the ‘985 patent) and 7,104,630 (the ‘630 patent) (collectively, the “asserted patents”).  HP also requested that the Commission issue a general exclusion order.

According to the ID, on March 17, 2011, the Commission Investigative Staff (“OUII”) filed a response opposing the motion to the extent that HP had failed to provide sufficient information on the economic prong of the domestic industry requirement.  OUII further stated, however, that to the extent that HP supplemented its motion and provided additional information, OUII would support granting the motion.

On March 24, 2011, HP filed an unopposed motion for leave to supplement its motion for summary determination.  ALJ Essex granted HP’s request on May 10, 2011.  On June 17, 2011, HP filed a supplemental submission in support of its motion for summary determination where it addressed OUII’s concerns regarding whether HP satisfied the domestic industry requirement.  On June 29, 2011, OUII filed a response to HP’s supplemental submission wherein OUII concluded that HP had provided sufficient evidence to satisfy the domestic industry requirement.  In particular, OUII asserted that HP’s investments related to its domestically-sourced components and packaging are significant.

In the ID, ALJ Essex first found that the asserted patents were valid and enforceable.  Since the patents are presumed valid and no party had challenged their validity or enforceability, the ALJ found that they were indeed valid and enforceable.

ALJ Essex next found that HP had established that the Defaulting Respondents have imported, sold for imporation, and/or sold after importation into the U.S. aftermarket inkjet supplies and components thereof that are accused of infringing the asserted patents.  Accordingly, the ALJ found that the Defaulting Respondents satisfied the importation requirement.

As to infringement, ALJ Essex began by construing certain terms in the asserted claims of the asserted patents.  With respect to the ‘985 patent, HP and OUII argued that the claim terms should be construed using their plain and ordinary meaning, with the exception of the claim term “interface package.”  HP argued that “interface package” means “an arrangement of one or more mechanical, fluidic, and electrical features, including, for example an alignment pocket, a keying pocket, a top fluidic interface in the form of an air-interface, a bottom fluidic interface in the form of an ink-interface, and an electrical interface” and that the specification supports such a construction.  OUII argued that “interface package” means “a collection of one or more mechanical, fluidic, and electrical interfaces adapted to enable and/or enhance ink delivery from an ink container.”  ALJ Essex examined the specification and ultimately construed the term as “a collection of mechanical, fluidic, and electrical interfaces adapted to enable and/or enhance ink delivery; the ink container, including, for example, an alignment pocket, a keying pocket, a top fluidic interface in the form of an air-interface, a bottom fluidic interface in the form of an ink-interface, and an electrical interface.”   The ALJ further found that the remaining terms of the ‘985 patent should be given their plain and ordinary meaning.

With respect to the ‘630 patent, HP argued that all of the claim terms should be given their plain and ordinary meaning.  OUII argued that one key limitation, “leading surface,” required construction and in particular should be construed to mean “outer face.”  ALJ Essex agreed with OUII that “leading surface” should be construed to mean “outer face.”  The ALJ further found that the remaining terms of the ‘630 patent should be given their plain and ordinary meaning.

With respect to the infringement determination itself, ALJ Essex found that the evidence showed that each of the accused products have the same functional features.  The ALJ further found that the evidence showed that the accused products contain each and every limitation of “claims 1-5, 6[sic:7], 22-25, 27 and 28 of the ‘985 patent,” i.e., that the accused products are “a printing-fluid container” that contain, inter alia, “a lid,” a “reservoir body,” a “shoulder portion,” a “rear portion,” a “rim portion,” an “interface package,” and a “latching portion.”  Accordingly, ALJ Essex found that HP had demonstrated by substantial, reliable, and probative evidence that the Defaulting Respondents’ accused products infringe claims “1-5, 6[sic:7], 22-25, 27 and 28” of the ‘985 patent.

ALJ Essex also found that the accused products contain each and every limitation of claims 1-7, 11-12, 14, 26-30, 32 and 35 of the ‘630 patent, i.e., that the accused products are “a printing-fluid container” that contain, inter alia, “a leading surface,” an “alignment pocket,” a “latching surface,” an “air-interface,” an “ink-interface,” and an “electrical interface.”  Accordingly, ALJ Essex found that HP had demonstrated by substantial, reliable, and probative evidence that the Defaulting Respondents’ accused products infringe claims 1-7, 11-12, 14, 26-30, 32, 34 and 35 of the ‘630 patent.

As to domestic industry, ALJ Essex first found that Complainants’ HP 02 Inkjet Ink Supplies practice at least one claim of each of the asserted patents and that HP had therefore satisfied the technical prong of the domestic industry requirement.  With respect to the economic prong, HP argued that it has made significant investments in the exploitation of the asserted patents including investments toward sourcing activities, manufacturing administration and control activities, and marketing and sales.  OUII initially argued that the HP had failed to provide sufficient evidence showing that its expenditures are either “substantial” or “significant.”  However, as noted above, HP later filed a supplement to its motion to provide further support for its assertion that it had satisfied the economic prong.  ALJ Essex ultimately found that HP had indeed satisfied the economic prong, although the details of the analysis have been redacted from the public version of the ID.

Accordingly, ALJ Essex granted HP’s motion for summary determination that HP has satisfied the domestic industry requirement and that there have been violations of Section 337 by the Defaulting Respondents.

With respect to remedy, ALJ Essex determined that a general exclusion order would be appropriate based on a widespread pattern of unauthorized use of the asserted patents.  The ALJ also found that certain business conditions exist, such as the established demand and high profitability, availability of marketing and distribution networks, and difficulty of identifying sources of infringing products – all of which warrant a general exclusion order.  ALJ Essex further found no evidence that a general exclusion order would place an undue burden on public health and welfare or competitive conditions in the U.S. or on U.S. customers.  Lastly, the ALJ determined that a bond of 100% of the entered value of the imported infringing products would be appropriate because there was insufficiently reliable price information to set a bond based on price differential.

Accordingly, ALJ Essex recommended that the Commission issue a general exclusion order and a cease and desist order and that a bond be set at 100% of the entered value of the imported infringing products.