[Federal Register Volume 69, Number 52 (Wednesday, March 17, 2004)]
[Notices]
[Pages 12711-12712]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-610]


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INTERNATIONAL TRADE COMMISSION

[Inv. No. 337-TA-474]


In the Matter of Certain Recordable Compact Discs and Rewritable 
Compact Discs; Notice of Commission Determination of No Violation of 
Section 337

AGENCY: International Trade Commission.

ACTION: Notice.

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SUMMARY: Notice is hereby given that the U.S. International Trade 
Commission has determined that the U.S. patents asserted by complainant 
U.S. Philips Corporation are unenforceable for patent misuse, and has 
therefore found that there is no violation of section 337 of the Tariff 
Act of 1930 in the above-captioned investigation.

FOR FURTHER INFORMATION CONTACT: Clara Kuehn, Esq., Office of the 
General Counsel, U.S. International Trade Commission, 500 E Street, 
SW., Washington, DC 20436, telephone (202) 205-3012. Copies of the 
Commission's order, the public version of its opinion, the public 
version of the presiding administrative law judge's (``ALJ's'') final 
initial determination (``ID''), and all other nonconfidential documents 
filed in connection with this

[[Page 12712]]

investigation are or will be available for inspection during official 
business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, 
U.S. International Trade Commission, 500 E Street, SW., Washington, DC 
20436, telephone 202-205-2000. General information concerning the 
Commission may also be obtained by accessing its Internet server 
(http://www.usitc.gov). The public record for this investigation may be 
viewed on the Commission's electronic docket (EDIS) at http://edis.usitc.gov. Hearing-impaired persons are advised that information 
on this matter can be obtained by contacting the Commission's TDD 
terminal on 202-205-1810.

SUPPLEMENTARY INFORMATION: The Commission instituted this investigation 
on July 26, 2002, based on a complaint filed by U.S. Philips 
Corporation of Tarrytown, NY (``Philips'' or ``complainant''). 67 FR 
48948 (2002). The complaint, as supplemented, alleged violations of 
section 337 of the Tariff Act of 1930 in the importation into the 
United States, the sale for importation, and the sale within the United 
States after importation of certain recordable compact discs and 
rewritable compact discs by reason of infringement of certain claims of 
six U.S. patents: claims 1, 5, and 6 of U.S. Patent No. 4,807,209; 
claim 11 of U.S. Patent No. 4,962,493; claims 1, 2, and 3 of U.S. 
Patent No. 4,972,401; claims 1, 3, and 4 of U.S. Patent No. 5,023,856; 
claims 1-5, and 6 of U.S. Patent No. 4,999,825; and claims 20, 23-33, 
and 34 of U.S. Patent No. 5,418,764. 67 FR 48948 (2002).
    The notice of investigation named 19 respondents, including 
GigaStorage Corporation Taiwan of Hsinchu, Taiwan; GigaStorage 
Corporation USA of Livermore, California (collectively, 
``GigaStorage''); and Linberg Enterprise Inc. (``Linberg'') of West 
Orange, New Jersey. 67 FR 48,948 (2002). On August 14, 2002, the ALJ 
issued an ID (Order No. 2) granting a motion to intervene as 
respondents by Princo Corporation of Hsinchu, Taiwan, and Princo 
America Corporation of Fremont, California (collectively, ``Princo''). 
That ID was not reviewed by the Commission. GigaStorage, Linberg, and 
Princo (``respondents'') are the only remaining active respondents in 
this investigation. See ALJ Order No. 6 (an unreviewed ID terminating 
eight respondents on the basis of a consent order); ALJ Order No. 17 
(an unreviewed ID terminating each of three respondents on the basis of 
a consent order and settlement agreement); ALJ Order No. 18 (an 
unreviewed ID terminating one respondent on the basis of a consent 
order and settlement agreement); and ALJ Order No. 21 (an unreviewed ID 
finding four respondents in default).
    On April 7, 2003, the ALJ issued an ID (ALJ Order No. 20) granting 
complainant's unopposed motion for summary determination that Linberg, 
GigaStorage, and Princo have each sold for importation, imported, and/
or sold after importation products accused of infringing one or more of 
the asserted patent claims. That ID was not reviewed by the Commission.
    A tutorial session was held on June 3, 2003, and an evidentiary 
hearing was held from June 10, 2003, through June 20, 2003.
    On June 30, 2003, the ALJ issued an order (ALJ Order No. 32) 
granting a motion in limine filed by respondents to preclude 
complainant from asserting the doctrine of unclean hands with respect 
to respondents' affirmative defense of patent misuse.
    The ALJ issued his final ID on October 24, 2003. Although he found 
that none of the asserted claims are invalid, that the accused products 
infringe the asserted claims, and that the domestic industry 
requirement of section 337 has been satisfied, he found no violation of 
section 337 because he concluded that all of the asserted patents are 
unenforceable by reason of patent misuse.
    On November 5, 2003, complainant Philips petitioned for review of 
the portion of the final ID that found the asserted patents 
unenforceable due to patent misuse, and also appealed ALJ Order No. 32. 
On the same day, respondents filed a paper entitled ``Statement of 
Respondents Princo Corp., Princo America Corp., Gigastorage Corp. 
Taiwan, Gigastorage Corp. USA, and Linberg Enterprises, Inc. Regarding 
the Initial Determination,'' in which respondents urged the Commission 
to adopt the ID in its entirety. Respondents and the IA filed responses 
to complainant's petition for review.
    On December 8, 2003, the ALJ issued his recommended determination 
on remedy and bonding.
    On December 10, 2003, the Commission determined to affirm ALJ Order 
No. 32, and to review all of the ID's findings of fact and conclusions 
of law concerning patent misuse. The Commission determined not to 
review the remainder of the ID.
    In its review notice, the Commission invited the parties to file 
written submissions on the issues under review, and invited interested 
persons to file written submissions on the issues of remedy, the public 
interest, and bonding. The Commission also requested briefing from the 
parties on four questions. Initial submissions were filed on January 9, 
2004, and replies were filed on January 16, 2004, and on January 20, 
2004.
    Having reviewed the record in this investigation, including the 
parties' written submissions, the Commission determined to affirm the 
ALJ's conclusion that the asserted patents are unenforceable for patent 
misuse per se, but on the ground that complainant's practice of 
mandatory package licensing constitutes a tying arrangement between 
licenses to patents that are essential to manufacture CD-Rs or CD-RWs 
according to Orange Book standards and licenses to other patents that 
are not essential to that activity.\1\ The Commission determined to 
adopt the ALJ's conclusion that the asserted patents are unenforceable 
for patent misuse under a rule of reason standard based on the ALJ's 
analysis of and findings as to the tying arrangement.\2\ We affirm the 
ALJ's conclusion that the patent misuse has not been shown to have been 
purged.
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    \1\ We take no position on the ALJ's conclusion that the 
asserted patents are unenforceable for patent misuse per se based on 
theories of price fixing and price discrimination.
    \2\ We take no position on the ALJ's conclusion that the royalty 
rate structure of the CD-R/RW patent pools is an unreasonable 
restraint of trade.
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    This action is taken under the authority of section 337 of the 
Tariff Act of 1930, as amended (19 U.S.C. 1337), and in section 210.45 
of the Commission's rules of practice and procedure (19 CFR 210.45).

    By order of the Commission.
    Issued: March 11, 2004.
Marilyn R. Abbott,
Secretary to the Commission.
[FR Doc. E4-610 Filed 3-16-04; 8:45 am]
BILLING CODE 7020-02-P