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The ITC’s Invalidity or Noninfringement Determination Is Final and Appealable, Unlike an Exclusion Order That Is Appealable Only After the Sixty-Day Presidential Review Period

September 19, 2008

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Last Month at the Federal Circuit - October 2008

Judges: Rader, Bryson (author), Linn

[Appealed from: ITC]

In Broadcom Corp. v. International Trade Commission, No. 07-1164 (Fed. Cir. Sept. 19, 2008), the Federal Circuit affirmed the ITC’s determination that Qualcomm Incorporated (“Qualcomm”) did not infringe U.S. Patent No. 6,374,311 (“the ’311 patent”), but vacated-in-part and remanded the ITC’s noninfringement determination as to U.S. Patent No. 6,583,675 (“the ’675 patent”).

Broadcom Corporation (“Broadcom”) filed a petition with the ITC, alleging that Qualcomm violated section 337 of the Tariff Act of 1930 by importing chipsets that infringed five of Broadcom’s patents and by inducing others to infringe its patents. Following an investigation, the ALJ dismissed the claims that were based on two of the five patents, found that Qualcomm had induced infringement of a third patent, U.S. Patent No. 6,714,983 (“the ’983 patent”), and concluded that Qualcomm neither infringed nor induced infringement of the ’311 and ’675 patents. The ITC subsequently issued an exclusion order barring the importation of Qualcomm’s products that infringed the ’983 patent and adopted the ALJ’s noninfringement determinations regarding the ’311 and ’675 patents. In response, Qualcomm and a number of handset device manufacturers appealed the exclusion order to the Federal Circuit. Similarly, Broadcom appealed the ITC’s findings regarding the ’311 and ’675 patents. This opinion deals with Broadcom’s appeal.

As a threshold matter, the Federal Circuit addressed whether it had jurisdiction to hear Broadcom’s appeal. Qualcomm asserted two grounds for defeating jurisdiction. First, Qualcomm argued that Broadcom’s petition for review was untimely because Broadcom filed its petition before the sixty-day period for presidential review had lapsed and, thus, the Commission’s order had not yet become final and appealable. The Federal Circuit found that, while exclusion orders are subject to a sixty-day period during which the President can veto the ITC’s determination, noninfringement determinations enjoy no such review. The Court noted that, “once the Commission adopted the administrative law judge’s noninfringement determination, there was no further opportunity for review of that decision other than by way of review in this court.” Slip op. at 3. Accordingly, the Court found that Broadcom did not prematurely file its petition for review once the ITC issued its order.

Second, Qualcomm argued that, even if Broadcom were to succeed in its appeal with respect to the ’311 patent, the Court lacked jurisdiction, as the ITC would not have statutory authority to provide any relief. Qualcomm asserted that the Federal Circuit’s decision would merely be advisory because the ’311 patent claims a telecommunication network, whereas Qualcomm imported only a component of that network. The Federal Circuit rejected this argument, noting that this argument was better viewed as an alternative argument in support of the Commission’s determination that Qualcomm did not violate section 337 and that it had “jurisdiction to review decisions of the Commission as to whether particular conduct violates section 337.” Id. at 4.

The Federal Circuit next turned to Broadcom’s appeal with respect to the ’311 patent. The ’311 patent covers a communication network including a handset device that can operate in a power-saving state or a “sleepstate.” Broadcom asserted that Qualcomm manufactured chipsets that are used in wireless handsets on third-generation wireless networks that use a communication standard developed and promoted by Qualcomm (“the EV-DO standard”). Broadcom argued that EV-DO compliant networks necessarily infringe the claims of the ’311 patent because the standard requires networks to implement power-saving features. Broadcom therefore asserted that Qualcomm directly infringed based on Qualcomm’s use of its chipsets in handsets on its own test network in the United States and that it induced infringement based on Qualcomm’s promotion of the EV-DO standard. The ITC, however, found that Qualcomm did not directly infringe because Broadcom failed to show that Qualcomm’s handsets operated in a power-saving state at any point during the testing process. The ITC further determined that although third-party EV-DO networks directly infringed the ’311 patent, Qualcomm lacked the requisite intent to induce infringement because the EV-DO standard did not require handsets to operate in a power-saving state.

The Federal Circuit agreed with the ITC, noting that the EV-DO standard provided that the handsets “may shut down processing resources to reduce power consumption” and that “may,” as defined by the standard, simply meant that a particular “course of action [is] permissible within the limits of the standard.” Id. at 8. The Court also agreed with Qualcomm that the EV-DO standard did not require handsets to implement a sleep state. Accordingly, the Court affirmed the ITC’s determination of noninfringement with respect to the ’311 patent. In so doing, the Court rejected a number of other arguments raised by Broadcom, finding that Broadcom had not raised them before and thus could not raise them on appeal.

The Federal Circuit then turned to the ITC’s finding of noninfringement with respect to the ’675 patent. The ’675 patent relates to circuits for transmitting and receiving radio frequency (“RF”) signals. RF transmitters commonly use a phase lock loop (“PLL”). The ’675 patent discloses a “gain compensator circuit” for a PLL. Broadcom asserted that eight of Qualcomm’s chips infringed the ’675 patent. The ITC, however, found that none of Qualcomm’s chips infringed the ’675 patent. Specifically, the ITC found no infringement with respect to seven chips because they did not satisfy the “weighted current sources” claim limitation of the ’675 patent. As for the remaining chip (“the RFT6150 chip”), the ITC found no infringement because the RFT6150 chip did not satisfy the “PLL control signal” claim limitation.

The Federal Circuit affirmed the ITC’s findings with respect to the “weighted current sources” limitation, finding that the ITC’s determination was supported by substantial evidence. The Court, however, vacated and remanded the ITC’s determination with respect to the “PLL control signal” limitation. The Court reasoned that, despite construing the term “PLL control signal” to mean “a control signal representative of some characteristic of the PLL,” the ITC determined that the control signal must also be “changeable” in light of testimony by one of Broadcom’s experts. The ITC found that the corresponding value in the RFT6150 chip was hard coded and could not be changed. Thus, the ITC determined the control signal was not “changeable,” as required by the claimed PLL control signal. Observing that “[t]he administrative law judge’s construction of ‘PLL control signal’ contained no requirement that a customer be able to change the value of the control signal,” the Federal Circuit rejected the ITC’s findings. Id. at 20. The Court went on to note that Broadcom’s expert testified that the control signal in Qualcomm’s chips was changeable because it could be changed by Qualcomm. Even the ’675 patent, according to the Federal Circuit, indicated that it would be useful to have a hard coded value for a PLL control signal. Consequently, the Federal Circuit vacated the ITC’s determination of noninfringement with respect to the RFT6150 chip and remanded for further consideration as to whether this chip satisfies the “PLL control signal” limitation as construed by the ITC, i.e., whether it is “representative of some characteristic of the PLL,” and whether this chip satisfies the other claim limitations of the ’675 patent.