[Federal Register Volume 76, Number 175 (Friday, September 9, 2011)]
[Notices]
[Pages 55944-55946]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-23058]


=======================================================================
-----------------------------------------------------------------------

 INTERNATIONAL TRADE COMMISSION

[Inv. No. 337-TA-724]


In the Matter of Certain Electronic Devices With Image Processing 
Systems, Components Thereof, and Associated Software; Notice of 
Commission Determination to Review a Final Initial Determination; 
Schedule for Filing Written Submission on the Issues Under Review and 
on Remedy, the Public Interest, and Bonding

AGENCY: U.S. International Trade Commission.

ACTION: Notice.

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

SUMMARY: Notice is hereby given that the U.S. International Trade 
Commission has determined to review the final initial determination 
(``ID'') issued by the presiding administrative law judge (``ALJ'') in 
the above captioned investigation on July 1, 2011, finding a violation 
of section 337 (19 U.S.C. 1337). The Commission requests briefing from 
the parties on the issues under review and from the parties and the 
public on remedy, the public interest, and bonding, as indicated in 
this notice.

FOR FURTHER INFORMATION CONTACT: Clark S. Cheney, Office of the General 
Counsel, U.S. International Trade Commission, 500 E Street, SW., 
Washington, DC 20436, telephone 202-205-2661. Copies of non-
confidential documents filed in connection with this 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. Hearing-impaired persons are advised 
that information on this matter can be obtained by contacting the 
Commission's TDD terminal on 202-205-1810. 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

[[Page 55945]]

viewed on the Commission's electronic docket (EDIS) at http://edis.usitc.gov.

SUPPLEMENTARY INFORMATION: The Commission instituted this investigation 
on May 19, 2010, based on a complaint filed by S3 Graphics Co. Ltd. and 
S3 Graphics Inc. (collectively, ``S3G''). 75 FR 38118 (July 1, 2010). 
The complaint alleged violations of section 337 of the Tariff Act of 
1930 (19 U.S.C. 1337) in the importation into the United States, the 
sale for importation, and the sale within the United States after 
importation of certain electronic devices with image processing 
systems, components thereof, and associated software by reason of 
infringement of various claims of United States Patent Nos. 7,043,087 
(``the '087 patent''); 6,775,417 (``the '417 patent''); 6,683,978 
(``the '978 patent''); and 6,658,146 (``the '146 patent''). Id. The 
complaint named Apple Inc. of Cupertino, California (``Apple'') as the 
only respondent. Id.
    On July 1, 2011, the ALJ issued his final initial determination 
(``ID'') in this investigation finding a violation of section 337 based 
on conclusions that certain Mac computers imported by Apple infringe 
claim 11 of the '978 patent and claims 4 and 16 of the '146 patent, 
that those patent claims are not invalid, that S3G has a domestic 
industry related to those patents, and that S3G satisfied the 
importation requirement. The ID found that a patent exhaustion defense 
relieved Apple of liability for some of its infringing products, but 
not others. The ID further found no violation with respect to the '087 
and '417 patents. The ID concluded that certain Apple products infringe 
the '087 and '417 patents, but that the asserted claims in those 
patents are invalid. Along with the ID, the ALJ issued a recommended 
determination on remedy and bonding (``RD''). Complainant S3G, 
respondent Apple, and the Commission investigative attorney (``IA'') 
filed petitions for review of the ID on July 18, 2011. S3G, Apple, and 
the IA each filed responses to the petitions for review on July 26, 
2011.
    Having examined the record of this investigation, including the 
ALJ's final ID, the petitions for review, and the responses thereto, 
the Commission has determined to review the final ID in its entirety.
    The parties are requested to brief their positions on the issues 
under review with reference to the applicable law and the evidentiary 
record. In connection with its review, the Commission is particularly 
interested in the following issues:
    (1) Please comment on the Commission's statutory authority to find 
a violation under 19 U.S.C. 1337(a)(1)(B)(i) where direct infringement 
is asserted and the accused article does not meet every limitation of 
the asserted patent claim at the time it is imported into the United 
States.
    (2) Please comment on the Commission's statutory authority to find 
a violation under 19 U.S.C. 1337(a)(1)(B)(i) where an imported article 
is used in the United States to directly infringe a method claim, but 
where there is no evidence of contributory infringement or inducement 
of infringement on the part of the importer.
    (3) Please comment on whether, in evaluating the scope of the 
Commission's authority, any significance should be attributed to the 
fact that 35 U.S.C. 271(a) defines patent infringement in terms of a 
person who ``makes, uses, offers to sell, or sells * * * or imports'' a 
patented invention, while 19 U.S.C. 1337(a)(1)(B) defines as unlawful 
only the actions of ``importation'' and ``sale.''
    (4) Some ALJ and Commission decisions have found the requirements 
of section 337 to be satisfied so long as there is some ``nexus'' 
between the products imported and the alleged infringement. Please 
comment on the history and application of this nexus requirement in 
patent and non-patent cases. Please also address the continuing 
relevance of the nexus requirement, if any, after the 1988 amendments 
to section 337 of the Tariff Act of 1930.
    (5) The ID found that Apple infringes claim 11 of the '978 patent 
when, inter alia, it ``sells applications containing compressed DXT 
texture.'' (ID at 69.) Please identify all evidence in the record, if 
any, supporting this finding.
    (6) Apple contends that the ALJ did not decide whether accused 
articles having graphics processing units (``GPUs'') supplied by NVIDIA 
Corporation (``NVIDIA'') infringe any asserted patent claims. (Apple 
Resp. Pet. at 62.) Please identify (a) The portions of the ID, if any, 
that show the ALJ addressed infringement relating to the NVIDIA GPUs; 
and (b) the evidence in the record, if any, that accused articles 
incorporating the NVIDIA GPUs infringe an asserted patent claim. Please 
also address whether review of this issue has been preserved.
    (7) Please identify all evidence in the record, if any, that a 
person of ordinary skill in the art at the time of the asserted 
inventions would have been motivated to use headers in the invention 
disclosed in U.S. Patent No. 5,046,119 to Hoffert (``Hoffert'').
    (8) Please identify all evidence in the record, if any, that a 
person of ordinary skill in the art at the time of the asserted 
inventions would have been motivated to combine teachings from the 1995 
article titled ``Hardware for Superior Texture Performance,'' by 
Knittel et al., with the invention disclosed in Hoffert.
    (9) The petitions raise the question of whether Apple's purchase of 
certain processing units from NVIDIA and Intel convey a right to 
practice the asserted patents. Please provide legal authority, if any, 
addressing the question of whether the authorized purchase of a 
patented component gives the purchaser the right to (a) Use its own 
independent implementation of the patented technology, and (b) the 
right to use the purchased component in conjunction with other 
components that together utilize the patented technology. In the 
context of this issue, please provide factual explanations, based on 
the record, as to how the Mac OS X devices use combinations of licensed 
and unlicensed components and/or software to implement the technology 
alleged to infringe the asserted patent claims.
    (10) The petitions raise the question of whether patent licenses to 
Intel and NVIDIA exhaust S3G's rights in the patents as to downstream 
purchasers from Intel and NVIDIA. Please address this argument in the 
context of this investigation in view of LG Elecs. Inc. v. Hitachi 
Ltd., 655 F. Supp. 2d 1036, 1047-48 (N.D. Cal. 2009) (``the license 
agreement represented a sale for exhaustion purposes''), Certain 
Semiconductor Chips with Minimized Chip Package Size and Products 
Containing Same, No. 337-TA-630, ID at 153 (U.S.I.T.C. Aug. 28, 2009) 
(complainant ``cannot enforce patent law remedies against Respondents 
as it relates to those [products] purchased from [complainant's] 
licensees thereafter''), and any other pertinent legal authorities. 
Please also comment on whether Apple has properly raised and preserved 
this argument.
    (11) Please identify the distinctions, if any, between Apple's 
defense under an implied license theory and Apple's defense under a 
patent exhaustion theory.
    (12) Please comment on the correct legal standard for determining 
whether an invention has been abandoned, suppressed, or concealed under 
35 U.S.C. 102(g).
    (13) Please comment on the bond that should be set in this case 
should the Commission determine that a remedy and bond are appropriate. 
Please specifically address each of the bond amount issues identified 
by the ALJ in the ID at 286-87.

[[Page 55946]]

    In connection with the final disposition of this investigation, the 
Commission may (1) Issue an order that could result in the exclusion of 
the subject articles from entry into the United States, and/or (2) 
issue one or more cease and desist orders that could result in the 
respondent(s) being required to cease and desist from engaging in 
unfair acts in the importation and sale of such articles. Accordingly, 
the Commission is interested in receiving written submissions that 
address the form of remedy, if any, that should be ordered. If a party 
seeks exclusion of an article from entry into the United States for 
purposes other than entry for consumption, the party should so indicate 
and provide information establishing that activities involving other 
types of entry either are adversely affecting it or likely to do so. 
For background, see In the Matter of Certain Devices for Connecting 
Computers via Telephone Lines, Inv. No. 337-TA-360, USITC Pub. L. No. 
2843 (December 1994) (Commission Opinion).
    If the Commission contemplates some form of remedy, it must 
consider the effects of that remedy upon the public interest. The 
factors the Commission will consider include the effect that an 
exclusion order and/or cease and desist orders would have on (1) The 
public health and welfare, (2) competitive conditions in the U.S. 
economy, (3) U.S. production of articles that are like or directly 
competitive with those that are subject to investigation, and (4) U.S. 
consumers. The Commission is therefore interested in receiving written 
submissions that address the aforementioned public interest factors in 
the context of this investigation.
    If the Commission orders some form of remedy, the U.S. Trade 
Representative, as delegated by the President, has 60 days to approve 
or disapprove the Commission's action. See Presidential Memorandum of 
July 21, 2005, 70 FR 43251 (July 26, 2005). During this period, the 
subject articles would be entitled to enter the United States under 
bond, in an amount determined by the Commission and prescribed by the 
Secretary of the Treasury. The Commission is therefore interested in 
receiving submissions concerning the amount of the bond that should be 
imposed if a remedy is ordered.
    Written Submissions: The parties to the investigation are requested 
to file written submissions on the issues identified in this notice. 
Parties to the investigation, interested government agencies, and any 
other interested parties are encouraged to file written submissions on 
the issues of remedy, the public interest, and bonding. Such 
submissions should address the ALJ's recommendation on remedy and 
bonding set forth in the RD. Complainants and the IA are also requested 
to submit proposed remedial orders for the Commission's consideration. 
Complainants are also requested to state the dates that each of the 
asserted patents are set to expire and the HTSUS numbers under which 
the accused products are imported. The written submissions and proposed 
remedial orders must be filed no later than close of business on 
Friday, September 16, 2011. Reply submissions must be filed no later 
than the close of business on Friday, September 23, 2011. No further 
submissions on these issues will be permitted unless otherwise ordered 
by the Commission.
    Persons filing written submissions must file the original document 
and 12 true copies thereof on or before the deadlines stated above with 
the Office of the Secretary. Any person desiring to submit a document 
to the Commission in confidence must request confidential treatment 
unless the information has already been granted such treatment during 
the proceedings. All such requests should be directed to the Secretary 
of the Commission and must include a full statement of the reasons why 
the Commission should grant such treatment. See 19 CFR 210.6. Documents 
for which confidential treatment by the Commission is sought will be 
treated accordingly. All nonconfidential written submissions will be 
available for public inspection at the Office of the Secretary.
    The authority for the Commission's determination is contained in 
section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and 
in sections 210.42-46 and 210.50 of the Commission's Rules of Practice 
and Procedure (19 CFR 210.42-46 and 210.50).

    By order of the Commission.

    Issued: September 2, 2011.
James R. Holbein,
Secretary to the Commission.
[FR Doc. 2011-23058 Filed 9-8-11; 8:45 am]
BILLING CODE 7020-02-P