[Federal Register Volume 59, Number 13 (Thursday, January 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-1355]


[[Page Unknown]]

[Federal Register: January 20, 1994]


-----------------------------------------------------------------------

INTERNATIONAL TRADE COMMISSION
[Investigation No. 337-TA-315]

 

Certain Plastic Encapsulated Integrated Circuits; Enforcement 
Proceeding

Complaint (Public Version)

    This complaint, which is filed by the Office of Unfair Import 
Investigations of the United States International Trade Commission 
under sections 333 and 337 of the Tariff Act of 1930, as amended, 19 
U.S.C. 1333, 1337, and Commission Interim Rule 211.56(c), 19 CFR 
Sec. 211.56(c), alleges violations of a Commission cease and desist 
order issued on February 18, 1992, in Certain Plastic Encapsulated 
Integrated Circuits, Investigation No. 337-TA-315, and of a modified 
cease and desist order issued July 2, 1993. The cease and desist orders 
were issued against Analog Devices, Inc. (``Analog'') of Norwood, 
Massachusetts. This complaint seeks institution of an enforcement 
proceeding as to Analog to establish violations of the cease and desist 
orders and appropriate sanctions for such violations, which may include 
civil penalties pursuant to 19 U.S.C. 1337(f)(2).
    The following is alleged:

I. Jurisdiction

    1. Jurisdiction over the subject matter of this complaint and over 
the proposed parties is derived from sections 337 and 333 of the Tariff 
Act of 1930 as amended, 19 U.S.C. 1337, 1333.

II. The Parties To Be Named

    2. Analog Devices, Inc., One Technology Way, Norwood, Massachusetts 
02062, is the enforcement proceeding respondent. Analog, a respondent 
in the underlying Commission investigation, Investigation No. 337-TA-
315, designs, manufactures, imports, and sells plastic encapsulated 
integrated circuits (``encapsulated circuits'').
    3. Texas Instruments Incorporated (``TI''), 13510 North Central 
Expressway, Dallas, Texas 75243, is also named a party to the 
enforcement proceeding. TI was the complainant in the underlying 
investigation.
    4. The Office of Unfair Import Investigations (OUII), U.S. 
International Trade Commission, 500 E Street, SW., Washington, DC 
20436, will appoint one or more Commission investigative attorneys as a 
party to the enforcement proceeding.

III. The Underlying Commission Investigation

    5. Pursuant to its Notice of Investigation, 55 FR 33388 (August 15, 
1990), the Commission instituted Investigation No. 337-TA-315 under 
section 337. The investigation was based upon a complaint filed by TI 
on July 19, 1990, alleging that Analog and four other Respondents1 
had imported and sold within the United States plastic encapsulated 
integrated circuits manufactured abroad by processes covered by certain 
claims of U.S. Letters Patent 4,043,027 (the ``'027 patent'').
---------------------------------------------------------------------------

    \1\The other four Respondents named in TI's complaint as having 
violated section 337 were LSI Logic Corporation, VLSI Technology, 
Inc., Cypress Semiconductor Corporation, and Integrated Device 
Technology, Inc. They are not expected to participate as parties in 
this enforcement proceeding.
---------------------------------------------------------------------------

    6. Following a hearing on the merits before a Commission 
Administrative Law Judge (``Judge''), in which Analog participated, the 
Judge issued an Initial Determination (``ID'') on October 15, 1991, 
finding that there was a violation of section 337 in connection with 
Analog's importation and sale in the United States of encapsulated 
circuits made by a process covered by claims 12 and 14 of the '027 
patent.
    7. The Commission reviewed certain issues addressed in the ID and 
ultimately concluded that there was a violation of section 337 in 
Analog's importation and sale in the United States of encapsulated 
circuits made by a process covered by claims 12, 14, and 17 of the '027 
patent. The Commission also determined that Analog held a limited 
license from TI under the '027 patent by virtue of Analog's acquisition 
of Precision Monolithics, Inc., a licensee of TI (the ``TI-PMI 
license'').
    8. On February 18, 1992, the Commission issued a limited exclusion 
order barring from entry into the United States encapsulated circuits 
manufactured abroad by or for Analog according to a process covered by 
claims 12, 14, or 17 of the '027 patent for the remaining term of the 
patent, except under license from the patent owner.
    9. In addition, on February 18, 1992, the Commission issued a cease 
and desist order against Analog prohibiting Analog from importing, 
selling for importation, assembling, testing, marketing, distributing, 
offering for sale, selling, or otherwise transferring in the United 
States encapsulated circuits manufactured abroad according to a process 
covered by claims 12, 14, or 17 of the '027 patent, for the remaining 
term of the patent, ``except to the extent that it is licensed to do 
so''.
    10. On March 10, 1993, the U.S. Court of Appeals for the Federal 
Circuit affirmed the Commission's determination in all respects.
    11. The February 18, 1992 cease and desist order against Analog 
contained a requirement that Analog submit quarterly reports within 21 
days of the close of each quarter as to Analog's importation in units 
of encapsulated circuits during that quarter.
    12. On July 2, 1993, the Commission entered a modified cease and 
desist order against Analog. The Commission modified the order's 
reporting requirement, but did not modify the prohibitory language of 
the order referred to in paragraph 9 above.
    13. The modified cease and desist order contains a requirement that 
Analog submit quarterly reports within 21 days of the close of each 
quarter. The order also required that Analog submit, within 60 days of 
the entry of the order, an amended report for the quarterly periods 
beginning on February 18, 1992, consistent with the modified reporting 
requirements. Specifically, the modified cease and desist order 
requires Analog to report as follows:

    Respondent shall report to the Commission its importation into 
the United States of covered products, including licensed products, 
measured in units, if any, during the reporting period in question.
    Respondent shall report to the Commission its sales in the 
United States, including licensed sales, measured in sales values, 
of all covered products, if any, during the reporting period in 
question.
    Respondent shall report to the Commission its sales of all 
licensed products in the United States, if any, measured in sales 
values up to the license ceiling.

    14. Concurrently with the issuance of the modified cease and desist 
order, the Commission issued an Order and Opinion. In its Order and 
Opinion, the Commission stated that the amount of the limited license 
held by Analog from TI by virtue of Analog's acquisition of PMI is $94 
million in annual sales of licensed products.

IV. Analog's Violations of the Commission's Cease and Desist Orders

    15. [                     ]
    16. [                     ]
    17. [                     ]
    18. Instead, the cease and desist orders, read in conjunction with 
the Commission's opinions, clearly require Analog to cease and desist 
from importing or selling covered encapsulated circuits once $94 
million in licensed products have been sold by Analog in an annual 
period.
    19. Analog has not sought an advisory opinion from the Commission 
regarding whether Analog is permitted under either the original or the 
modified cease and desist order to [                     ].
    20. Public information regarding Analog's product lines and 
Analog's sales levels appears in Analog's technical reference manuals, 
annual reports, and 10-Q and 10-K reports filed with the Securities and 
Exchange Commission.
    21. [                     ]
    22. [                     ]
    23. Analog's worldwide sales of all products [                     
] for the period November 1991 through July 1993, based upon publicly 
available information, are set forth below:

------------------------------------------------------------------------
                                Last date                               
         Fiscal Qtr.            of period          Worldwide sales      
------------------------------------------------------------------------
1st 1992.....................     02/01/92  $131 million.               
2nd 1992.....................     05/02/92  143 million.                
3rd 1992.....................     08/01/92  144 million.                
4th 1992.....................     10/31/92  149 million.                
1st 1993.....................     01/30/93  151 million.                
2nd 1993.....................     05/01/93  163 million.                
3rd 1993.....................     07/31/93  173 million.                
4th 1993.....................     10/31/93  No information.             
------------------------------------------------------------------------

    24. [                     ]
    25. [                     ]
    26. Therefore, Analog has imported covered encapsulated circuits 
after having exceeded the $94 million annual license limit. Those 
imports are not licensed under the TI-PMI license. Consequently, those 
imports violate the Commission's original and modified cease and desist 
orders, which permit Analog to import covered encapsulated circuits 
only ``to the extent that it is licensed to do so''.
    27. At this time, OUII does not possess sufficient information to 
determine exactly the date in each annual period on which Analog 
exhausted the $94 million license ceiling, and thus does not know 
exactly the volume of Analog's imports that have been in violation of 
the Commission's cease and desist orders. Moreover, OUII has not yet 
reviewed Analog's importation or sales records and thus does not have 
information at this time as to how many violation days there have been 
on which Analog imported encapsulated circuits in violation of the 
Commission's cease and desist orders. OUII expects to obtain 
information on these matters in the enforcement proceeding.
    28. Given the facts alleged above regarding Analog's reporting to 
the Commission and the facts indicating that Analog has imported 
encapsulated circuits in violation of the Commission's original and 
modified cease and desist orders, a formal enforcement proceeding 
initiated by the Commission is necessary to establish that Analog has 
and is violating the Commission's cease and desist orders and, if so, 
what enforcement measures, including civil penalties or other 
sanctions, would be appropriate.

V. Appropriate Relief

    29. In view of the foregoing, the Office of Unfair Import 
Investigations requests that the Commission institute a formal 
enforcement proceeding pursuant to 19 CFR 211.56(c) to determine 
whether the original cease and desist order of February 18, 1992, or 
the modified cease and desist order of July 2, 1993, has been violated 
by Analog Devices, Inc. and, if so, what enforcement measures would be 
appropriate.
    30. In the event that the Commission, after a formal enforcement 
proceeding, determines that there has been a violation of the 
Commission's cease and desist orders, the Commission may issue the 
following remedies:
    (A) modify the Commission's exclusion and cease and desist orders 
pursuant to 19 CFR 211.56(c)(3) in any manner that would assist in the 
prevention of the unfair practices which were originally the basis for 
issuing such orders or assist in the detection of violations of such 
orders, including any desirable modification of the reporting 
provision;
    (B) impose civil penalties pursuant to 19 U.S.C. 1337(f) in an 
amount not greater than $100,000 for each day on which an importation 
or sale occurred in violation of the cease and desist orders, or twice 
the domestic value of the articles entered or sold in violation of the 
orders, and if necessary, bring a civil action in an appropriate United 
States District Court pursuant to 19 CFR 211.56(b) and 19 U.S.C. 
1337(f) to recover such civil penalties and seek the issuance of a 
mandatory injunction incorporating any other relief ordered by the 
Commission; and
    (C) impose such other remedies and sanctions as are appropriate and 
within the Commission's authority.

    Dated: January 10, 1994.
Lynn I. Levine,
Director.
T. Spence Chubb,
Supervisory Attorney.
Office of Unfair Import Investigations, U.S. International Trade 
Commission, 500 E Street, SW., suite 401, Washington, DC 20436, 
(202) 205-2575.

[FR Doc. 94-1355 Filed 1-19-94; 8:45 am]
BILLING CODE 7020-02-P