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ITC Not Required to Apply Four-Factor Test for Injunctive Relief

December 21, 2010

Decision icon Decision

Last Month at the Federal Circuit - January 2011

Judges: Lourie, Friedman, Lynn (author)

[Appealed from: ITC]

In Spansion, Inc. v. International Trade Commission, Nos. 09-1460, -1461, -1462, -1465 (Fed. Cir. Dec. 21, 2010), the Federal Circuit found substantial evidence to support the ITC’s Final Determination that the claims of U.S. Patent Nos. 6,433,419 (“the ’419 patent”) and 5,852,326 (“the ’326 patent”) were valid and infringed.  The Court further found that the ITC properly granted injunctive relief in the form of a limited exclusion order.  Accordingly, the Court affirmed the ITC’s Final Determination of infringement, validity, and prospective injunctive relief. 

Tessera, Inc. (“Tessera”), a nonpracticing entity, owns the ’326 and ’419 patents, which share a common specification and are directed to a semiconductor package with the ability to accommodate relative movement between the package components caused by differential thermal expansion.  A semiconductor package includes a casing that protects the chip and terminals that allow the chip to be attached to a printed circuit board.  The relevant claims of both patents claim terminals movable with respect to the chip to accommodate differing rates of thermal expansion for different components.  The ’326 patent also claims bonding wires extending downwardly alongside the edges of the chip. 

Tessera filed a complaint in the ITC against Spansion, Inc. (“Spansion”) and several other respondents (“Respondents”).  The Respondents filed a motion to stay the ITC proceedings in light of an ex parte reexamination granted at the PTO before Tessera’s filing at the ITC.  The ALJ granted the motion, but it was denied by the ITC and the Federal Circuit because the reexamination might not reach completion before the patents’ expiration, and the ITC proceedings were at an advanced stage compared with the stage of the reexamination.  After a hearing, the ALJ found the patents valid but not infringed.  The ITC overturned the ALJ’s infringement conclusions, finding direct and contributory infringement, and issued a limited exclusion and a cease-and-desist order. 

On appeal, the Federal Circuit found that evidence supported a construction of the term movable to require appreciable relief of mechanical stresses.  The Court rejected Respondents’ contention that the ITC’s construction left a person of ordinary skill unable to determine how much movement constitutes infringement.  The Court noted that intrinsic evidence from the specification provided guidance on the stresses that cause the problem and the kind of movement that relieves the stresses.  The Court also explained that two of Respondents’ experts and Tessera’s expert were able to discern the boundaries of the claims, providing supporting extrinsic evidence that the claims were definite.  The Federal Circuit also indicated that interpreting the term movable in terms of appreciable relief of mechanical stress was as precise as need be, given the number of materials intended to be covered by the claims. 

The Federal Circuit also found that the difficulty or complexity of the infringement analysis does not necessarily speak to whether a claim is indefinite or not, rejecting an argument that the patents provided no method for distinguishing claimed movement caused by external loads from unclaimed movement caused by internal loads.  The Court noted that the prosecution history clearly differentiated claimed from unclaimed movement and that an expert using detailed computer simulations could determine whether the claimed movement was present.

The Court further found the ITC’s construction of downwardly alongside supported by the specification.  The Court explained that the specification disclosed only conventional wires connected between elements using a conventional bonding process, and, therefore, a proper claim construction includes features of conventional bonding wires.  Finally, the Court rejected an argument that the inventors disclaimed bonding wires not in close proximity to the semiconductor chip during prosecution of the parent application to the ’326 patent because the inventors distinguished the parent with a statement that “these wiring films extend outwardly from the various chips rather than upwardly alongside of the chips.”  The Court pointed out that the claims of the parent disclosed leads and flaps rather than bonding wires, and, therefore, any disclaimers regarding the type of connection made in the parent did not apply to the ’326 patent.  Furthermore, the Court noted that the inventors’ statement was not sufficiently clear to establish that a disclaimer occurred.

Having found the claims valid, the Federal Circuit then turned to infringement, finding that one of three tests performed by Tessera’s expert provided substantial evidence of infringement.  Although Respondents argued that the fifty-two chosen models tested were not representative of all the accused products, the Court disagreed, stating that Tessera’s expert provided detailed evidence describing his selection process, which was based on criteria that would most directly affect relative terminal displacement, and explained why the chosen packages were fairly representative of the entire pool of products.  The Court concluded that Tessera offered specific and substantial evidence as to why accused products not selected could reasonably be expected to behave like the representative accused products, and Respondents failed to rebut the substantial evidence set forth by Tessera.

The Federal Circuit also found that the ITC reasonably concluded, based on witness testimony, that the test performed by Tessera’s expert properly simulated the external load being applied to the semiconductor packages and showed the claimed movement.  The Court indicated that the ITC properly found that the test, based on industry-accepted modeling, was reliable evidence of infringement and found unpersuasive Respondents’ remaining arguments that the test was technically flawed.  Rejecting Respondents’ argument that the ITC improperly went beyond the expert testimony and added its own interpretation to the raw data from the test, the Federal Circuit concluded that the ITC was entitled to resolve the conflicting expert testimony in favor of a finding of infringement.  The Court also found that the ITC properly relied on the test as independent evidence of infringement because Tessera’s expert testified that he believed the results of the testing method showed that the accused packages met the claimed movement limitation.  Finally, the Court concluded that the test had been properly validated. 

Having found direct infringement, the Federal Circuit found that Tessera had made a prima facie case of contributory infringement of the ’419 patent because Respondents instructed their customers to connect the accused packages to a printed circuit board in an infringing manner.  The Court held the evidence that the accused packages could be mounted in a noninfringing manner insufficient to overcome the prima facie case because most of the evidence took the form of general assertions that such noninfringing mounts were commonly used in the 1990s, with only a small amount of evidence of current actual use.  Quoting Golden Blount, Inc. v. Robert H. Peterson Co., 438 F.3d 1354, 1363-64 (Fed. Cir. 2006), the Court stated that “it matters not that the assembled device can be manipulated into a non-infringing configuration, because the instructions packaged with each device teach the infringing configuration,” and thus “[t]he burden of production then shifted to [the accused infringer] to introduce some evidence that end-users actually assembled the [accused devices] in a non-infringing way.”  Slip op. at 38 (alterations in original).

As for the knowledge required to support contributory infringement, the Federal Circuit held that the evidence supports a presumption of the requisite knowledge because Respondents were aware of the ’419 patent through license negotiations and Tessera successfully showed that the accused devices did not have any substantial noninfringing uses.

Turning to anticipation, the Court concluded that the evidence supported a conclusion that the ’326 and the ’419 patents were conceived before the filing date of two purported § 102(e) references.  The Court indicated that the ITC properly considered the testimony of the inventors and the corroborating evidence of noninventors and engineering notebook entries, concluding that the ITC did not misconstrue the evidence before it.

Although Respondents argued that the award of prospective injunctive relief should be vacated because the ITC failed to properly consider public interest consequences similar to the traditional test for injunctive relief under eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), the Federal Circuit held that eBay does not apply to ITC remedy determinations under 19 U.S.C. § 1337 (“Section 337”).  The Court concurred with the ITC that no public health and safety concerns exist because Tessera had chosen not to seek exclusion of radios imported for use by first responders and that no evidence exists that Tessera’s licensees would be unable to adequately supply the U.S. market if Respondents’ products were excluded.  The Court considered the legislative history of Section 337 and the Section itself, concluding that such evidence requires the ITC to issue an exclusion order upon finding a violation and Congress intended this by removing the monetary remedy and the requirement of proof of injury to the domestic industry.  Thus, the Federal Circuit concluded, the basis of an exclusion order at the ITC exists with the criteria set forth in Section 337 and not the traditional equitable principles reflected in the eBay standard, noting that the ITC provided sufficient basis for issuance of the exclusion order in this case.  The Federal Circuit also concluded that the ITC could properly omit discussion of ongoing PTO reexamination proceedings in its analysis of public interest factors because such proceedings are not explicitly listed as a public interest factor in Section 337.