On October 26, 2018, the International Trade Commission (the "Commission") issued the public version of its opinion ( part 1 and part 2) in Certain Non-Volatile Memory Devices and Products Containing the Same (Inv. No. 337-TA-1046). In the opinion, the Commission reversed in-part and affirmed in-part ALJ Dee Lord's Initial Determination (ID), and found a violation of Section 337.
By way of background, this investigation is based on a March 7, 2017 complaint filed by Macronix International Co., Ltd. and Macronix America, Inc. (collectively, "Macronix") alleging violation of Section 337 by way of unlawful importation into the U.S., selling for importation, and/or selling within the U.S. after importation certain non-volatile memory devices and products containing the same that infringe one or more claims of U.S. Patent Nos. 6,552,360 ("the '360 patent"); 6,788,602 ("the '602 patent"); and 8,035,417 ("the '417 patent"). See our April 6, 2017 post for more details on the Notice of Investigation.
On October 9, 2018, the Commission issued a notice reversing in-part and affirming in-part ALJ Lord's ID, and issued a limited exclusion order and cease and desist orders. In particular, after examining the record of investigation, the Commission determined to review the finding that Macronix had failed to satisfy the domestic industry requirement, the findings of infringement and invalidity as to the '602 patent, as well as issues concerning remedy, public interest, and bonding. As a result of the Commission's review, the Commission determined to (1) reverse the ID's finding that the accused products do not directly infringe the asserted claims of the '602 patent; (2) affirm the ID's indirect infringement and invalidity findings as to the '602 patent; and (3) reverse the ID's finding that Macronix failed to establish a domestic industry in the process of being established.
The Commission determined to reverse the ID's finding that the accused products directly infringe the asserted claims of the '602 patent. As part of its analysis, the Commission reviewed and affirmed the ID's claim construction. However, the Commission determined to reverse the ID's finding that the accused products do not satisfy the "coupled to" limitation. The Commission reasoned, "the ID erroneously transforms apparatus claims into method claims via claim construction." The Commission deliberated that "[w]hen legal error is corrected, the undisputed record evidence shows that the claim term 'coupled to' only requires a structure that provides an electrical path, which is satisfied by the structure of the accused products." Further, in disagreeing with the ID's findings regarding the "coupled to" limitation, the Commission expressed that it found no basis to find that the "coupled to" limitation is limited to devices that are shipped performing the functionality of actively conducting, and that the specification failed to limit the claim in this way. Accordingly, once the "coupled to" limitation was deemed satisfied by the Respondents' accused products, in turn, this established that the Respondents' accused products infringe at least one claim of the '602 patent.
In addition to ruling on infringement, the Commission also determined to reverse the ID's finding that Macronix failed to establish a domestic industry in the process of being established. In particular, the Commission found that "the ID's misinterpretation of the statute to require 'an article of commerce, i.e., a product for sale in the market place' led to the erroneous conclusion" that Macronix failed to show a domestic industry in the process of being established. The Commission determined there was no authority that requires "articles" to be limited to "commercial goods." Instead, the Commission deliberated that section 337(a)(2) only requires that there is an industry in the United States "relating to articles protected by the patent" that is "in the process of being established." Further, the Commission concluded, "emergent industry must prove that it has significant or substantial investments or employment in the United States 'with respect to articles protected by the patent' as recited in the statute." The Commission stated "the statutory language of section 337(a)(2) on its face does not require commercial production for a domestic industry in the process of being established. The term 'article' on its own is sufficiently capacious to embrace pre-commercial or non-commercial items. And the fact that section 337 allows a complainant to establish a domestic industry based on an industry 'in the process of being established' strongly suggests that Congress did not envision commercialization as a prerequisite." Accordingly, the Commission reversed the ID's conclusion that Macronix had failed to show a domestic industry in the process of being established. However, the Commission still affirmed the ID's finding that Macronix had failed to establish a domestic industry based on investments in "customer facing" engineering, citing the reasons provided in the ID.
Having found a violation of section 337, the Commission issued a limited exclusion order ("LEO") and cease and desist orders ("CDOs") directed to Respondents' infringing products.
Finally, in considering the public interest factors, the Commission determined that none of the public interest factors weighs against issuance of remedial orders in the investigation. With respect for the first factor, the public health and welfare, the Commission determined that the infringing products are "not unique components of medical products, pharmaceuticals, or other products integral to the delivery of healthcare or the maintenance of public safety." The Commission reasoned that there was evidence that shows that there are alternative devices and alternative suppliers. Regarding the second factor, competitive conditions in the United States economy, the Commission concluded that any effect on the competitive conditions in the United States economy is insufficient to bar entry of an exclusion order in this investigation because there are alternative suppliers. The Commission reasoned that Respondent's market share on the accused products was insignificant. Concerning the third factor, the production of like or directly competitive article in the United States, the Commission determined that third parties could replace the excluded devices. Lastly, as to the fourth factor, United States consumers, the Commission found that any market void that will be created by excluding Respondents' products can be adequately filled by Respondents' competitors.
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