Further to our March 14, 2014 post, on March 19, 2014, ALJ Dee Lord issued the public version of the Enforcement Initial Determination (“EID”) (dated March 7, 2014) in Certain Two-Way Global Satellite Communication Devices, System and Components Thereof (Inv. No. 337-TA-854).

By way of background, the Commission instituted the underlying investigation on September 18, 2012 based on BriarTek IP, Inc.’s (“BriarTek”) complaint of August 17, 2012.  See our September 19, 2012 post for more details.  On March 15, 2013, former ALJ Robert K. Rogers, Jr. granted a motion by DeLorme Publishing Co., Inc. and DeLorme InReach, LLC (collectively, “DeLorme”) to terminate the investigation and for entry of a proposed consent order (“the consent order”).  See our March 19, 2013 post for more details.  In the consent order, DeLorme agreed that it would not import or sell two-way global satellite communication devices, systems, or components thereof that infringe BriarTek’s U.S. Patent No. 7,991,380 (the ‘380 patent) after April 1, 2013.  On April 10, 2013, BriarTek filed an enforcement complaint alleging that DeLorme violated the consent order.  See our April 11, 2013 post for more details.

In the EID, ALJ Lord found that DeLorme had violated the consent order with respect to its sale after importation of accused components of the InReach 1.5 device.  However, the ALJ found no violation of the consent order with respect to the InReach SE device.  ALJ Lord also found no violation with respect to activation of InReach devices after the effective date of the consent order, where those devices had been sold prior to the effective date of the consent order.  ALJ Lord further found that enforcement measures are appropriate for DeLorme’s violation of the consent order, and recommended a civil penalty of $637,500.

Impact of the Federal Circuit’s Suprema Decision

As a threshold matter, ALJ Lord considered whether the U.S. Court of Appeals for the Federal Circuit’s recent decision in Suprema Inc. v. Int’l Trade Comm’n, — F.3d –, 2013 WL 6510929, No. 2012-1170 (Fed. Cir. Dec. 12, 2013) should prevent DeLorme from being potentially liable for a violation of the consent order based on induced infringement.  See our December 19, 2013 post for more details on the Suprema decision.

After considering the issue, ALJ Lord determined that the Supremadecision was not relevant to the question before her, i.e., whether DeLorme had violated the consent order.  In particular, the ALJ found that the consent order was effectively a contract between DeLorme and the U.S. government, and that this contract did not require a violation of Section 337 in order to be breached.  Rather, the question before the ALJ was simply whether DeLorme had in fact imported into the U.S., sold for importation, or sold or offered for sale with the U.S. after importation, any two-way global satellite communication devices, system, and components thereof, that infringe (as broadly defined in 35 U.S.C. § 271) the asserted claims of the ‘380 patent.  Thus, the Federal Circuit’s Suprema decision—which dealt with the Commission’s authority to find a violation of Section 337 based on induced infringement—was not applicable.

Claim Construction

The parties disputed two issues of claim construction that were critical to the ultimate determination of whether the DeLorme products at issue infringed the ‘380 patent. 

With respect to the claim term “a user unit,” BriarTek and the Commission Investigative Staff (“OUII”) both argued that the term should be construed to mean “a device or equipment used by a user.”  DeLorme argued that the term should be construed to mean “a single device used by a user.”  After considering the arguments, ALJ Lord construed the term to mean “equipment for a user.”  According to the EID, this was based on the plain language of the claims, the lack of evidence of an intent to limit the meaning of a “user unit” in the specification, and the presence of embodiments that included user units with physically separate input devices.

With respect to the claim term “a monitoring system,” BriarTek and OUII argued that the term should be construed to mean “a communications system to check on the progress of a user and to receive information from the user.”  DeLorme argued that the term should be construed to mean “a single device, not the user unit, located in a fixed position remote from the user unit, and operated by an observer, capable of sending and receiving information.”  After considering the arguments, ALJ Lord construed the term to mean “equipment for observing, and communicating with, a user.”  The ALJ explained that the addition of further limitations (as proposed by the parties) was not warranted because those further limitations were either duplicative of the remaining language of the claim or unsupported by the record.

Direct Infringement

BriarTek argued that DeLorme’s InReach 1.5 and SE devices, when combined with Earthmate software running on a smartphone or tablet, the Iridium satellite system, DeLorme’s servers in Chicago, and recipients of messages, including GEOS, a monitoring company, and DeLorme, directly infringe claims 1, 2, and 10 of the ‘380 patent.  In other words, BriarTek’s position was that it was the use of the entire system that resulted in direct infringement of the asserted claims.

Based on her constructions of the claim terms “a user unit” and “a monitoring system,” ALJ Lord found that BriarTek had proven by a preponderance of the evidence that all of the elements of claims 1 and 2 of the ‘380 patent are present in the accused system.  However, she found that BriarTek had not shown that the accused system was covered by claim 10.  Specifically, claim 10 required that “the user processor” format a message for transmission, but in the accused system, the smartphone—not the user processor—formatted the message.

Although ALJ Lord found that the accused system as a whole was covered by claims 1 and 2 of the ‘380 patent, this did not settle the issue of DeLorme’s alleged direct infringement.  As the ALJ explained, “the question of infringement is one that must be answered by analyzing the two-way global satellite communication devices, system, and components thereof that are actually imported—not the system into which those imported components are added.”  (Emphasis in original.)

According to the EID, BriarTek had identified a number of components of the accused system that were imported or incorporated into InReach devices that were sold after the effective date of the consent order.  Specifically, BriarTek argued that Iridium 9602 modems for use in InReach 1.5 devices, Iridium 9603 modems for use in InReach SE devices, AVNET authentication chips, and plastics for InReach 1.0, 1.5. and SE devices are “infringing” components.  BriarTek also asserted that activation (after the effective date of the consent order) of InReach devices that had been sold before the effective date of the consent order directly infringed the ‘380 patent. 

Based on her analysis, ALJ Lord determined that none of the individual accused components that were imported, alone or in combination, met each and every limitation of claims 1 and 2 of the ‘380 patent.  Rather, the accused InReach 1.5 and SE devices must be activated and combined with a smartphone or tablet running Earthmate software in conjunction with DeLorme’s “back-end” servers to create the accused system.  And, because the accused system is not created until these additional components are added to the imported components, the imported components could not be said to directly infringe claims 1 and 2 on their own.  Thus, ALJ Lord found that DeLorme did not directly infringe the ‘380 patent.

Induced Infringement

As noted above, ALJ Lord had found that the Federal Circuit’sSuprema decision did not prevent her from considering whether DeLorme’s alleged induced infringement could be a violation of the consent order.  The ALJ therefore proceeded to consider the inducement issue at length.

According to the EID, BriarTek argued that the activation (after the effective date of the consent order) of InReach devices that had been sold before the effective date of the consent order induced infringement of the ‘380 patent.  However, ALJ Lord rejected this argument because those devices had already been sold before the consent order had gone into effect, and BriarTek had not identified anything additional that was provided at the time of activation, such that the activation could be considered a further “sale,” in violation of the consent order.

BriarTek also argued that DeLorme’s sale of components of InReach 1.5 devices after the consent order had gone into effect induced infringement of the ‘380 patent.  ALJ Lord agreed with this argument based on her prior finding that the accused system as a whole met every limitation of claims 1 and 2.  The ALJ also cited evidence that end-users had actually used the accused system in an infringing manner. 

Moreover, the ALJ found that DeLorme had the requisite intent to induce infringement based on its sale of components of InReach 1.5 devices.  The ALJ found that these components were actually components that had been taken from other devices that had been “quarantined” in response to the issuance of the consent order in the underlying investigation, and re-used.  Thus, the ALJ found that DeLorme had known that these components could not be sold under the terms of the consent order, but chose to sell them anyway, thereby inducing infringement of the ‘380 patent by end-users.  ALJ Lord also found that the fact that the infringement was carried out by multiple independent entities could not save DeLorme from a finding of induced infringement in view of the Federal Circuit’s decision inAkamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012) (en banc).

Lastly, BriarTek argued that DeLorme’s sale of components of InReach SE devices after the consent order had gone into effect induced infringement of the ‘380 patent.  However, ALJ Lord came to a different conclusion on this argument than she had with respect to the sales of components of InReach 1.5 devices.  The ALJ noted that, in contrast to the situation with the InReach 1.5 devices, the InReach SE components were not being re-used from previously “quarantined” stock, but instead were individual parts that were being used to assemble, for the first time, InReach SE devices within the U.S.  ALJ Lord found that under these circumstances, the sales of the components, considered in relation to the claimed system as a whole, was insufficient to support a finding of induced infringement.

Violation of the Consent Order

As explained above, ALJ Lord found that DeLorme had induced infringement of claims 1 and 2 of the ‘380 patent by selling imported components of InReach 1.5 devices.  According to the EID, DeLorme admitted that it had sold 1,632 InReach 1.5 devices on 51 different days between the effective date of the consent order and November 14, 2013.  While there may have been approximately 36 InReach 1.5 devices that had not re-used the “quarantined” components discussed above, the ALJ found that the vast majority (1,596) of the devices did use such components, and that, in any event, DeLorme had not disputed the 51 different days figure.  Accordingly, ALJ Lord found that BriarTek had shown by a preponderance of the evidence that DeLorme’s actions had resulted in 51 separate days of violation of the consent order.

Remedy

In view of the above, ALJ Lord recommended a penalty approximating twice the sales price of the accused InReach 1.5 devices sold in violation of the consent order.  This resulted in a daily recommended penalty of $12,500, and a total recommended penalty of $637,500.  In arriving at this figure, the ALJ noted that there was clear evidence that DeLorme had acted in bad faith based on its re-use of components that it knew were within the scope of the consent order.  ALJ Lord also noted that a penalty of twice the sales price of the InReach 1.5 devices was necessary because a small penalty, or even a penalty that was merely equal to the loss avoided by DeLorme, could embolden parties to violate ITC consent orders in the future.