[Federal Register Volume 83, Number 50 (Wednesday, March 14, 2018)]
[Notices]
[Pages 11245-11247]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-05093]



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INTERNATIONAL TRADE COMMISSION

[Investigation No. 337-TA-1012]


Certain Magnetic Data Storage Tapes and Cartridges Containing the 
Same; Notice of Commission Final Determination of Violation of Section 
337; Termination of Investigation; Issuance of Limited Exclusion Order 
and Cease and Desist Orders

AGENCY: U.S. International Trade Commission.

ACTION: Notice.

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SUMMARY: Notice is hereby given that the U.S. International Trade 
Commission has found a violation in the above-captioned investigation. 
The Commission has determined to issue a limited exclusion order and 
cease and desist orders. The investigation is terminated.

FOR FURTHER INFORMATION CONTACT: Megan M. Valentine, Office of the 
General Counsel, U.S. International Trade Commission, 500 E Street SW, 
Washington, DC 20436, telephone (202) 708-2301. 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. General information concerning the Commission 
may also be obtained by accessing its internet server at https://www.usitc.gov. The public record for this investigation may be viewed 
on the Commission's electronic docket (EDIS) at https://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 1, 2016, based on a Complaint filed by Fujifilm Corporation of 
Tokyo, Japan, and Fujifilm Recording Media U.S.A., Inc. of Bedford, 
Massachusetts (collectively, ``Fujifilm''). 81 FR 43243-44 (July 1, 
2016). The Complaint alleges violations of section 337 of the Tariff 
Act of 1930, as amended, 19 U.S.C. 1337 (``section 337''), in the sale 
for importation, importation, and sale within the United States after 
importation of certain magnetic data storage tapes and cartridges 
containing the same by reason of infringement of certain claims of U.S. 
patent Nos. 6,641,891 (``the '891 patent''); 6,703,106 (``the '106 
patent''); 6,703,101 (``the '101 patent''); 6,767,612 (``the '612 
patent''); 8,236,434 (``the '434 patent''); and 7,355,805 (``the '805 
patent''). The Complaint further alleges the existence of a domestic 
industry. The Commission's Notice of Investigation named as respondents 
Sony Corporation of Tokyo, Japan, Sony Corporation of America of New 
York, New York, and Sony Electronics Inc. of San Diego, California 
(collectively, ``Sony''). The Office of Unfair Import Investigations 
(``OUII'') was also named as a party to the investigation. The 
Commission later terminated the investigation as to the '101 patent. 
Order No. 24 (Jan. 18, 2017); Notice (Feb. 15, 2017).
    On September 1, 2017, the ALJ issued his final ID finding a 
violation of section 337 with respect to claims 1, 4-9, 11, and 14 of 
the '891 patent and asserted claims 1, 2, 4, 5, 7, and 8 of the '612 
patent. The ALJ found no violation of section 337 with respect to 
asserted claims 9-11 of the '612 patent; asserted claim 2, 5, and 6 of 
the '106 patent; asserted claim 1 of the '434 patent; and asserted 
claims 3 and 10 of the '805 patent.
    In particular, the Final ID finds that Sony's accused products 
infringe claims 1, 4-9, 11, and 14 of the '891 patent and claims 1, 2, 
4, 5, 7, and 8 of the '612 patent under 35 U.S.C. 271(a). The Final ID 
also finds that Sony's accused products do not infringe claims 2, 5, 
and 6 of the '106 patent, claim 1 of the '434 patent, and claims 3 and 
10 of the '805 patent. The Final ID also finds that Sony has not shown 
that the asserted claims of the '891 patent, the '612 patent, the '434 
patent, or the '805 patent are invalid under 35 U.S.C. 102, 103, or 
112. The Final ID further finds, however that, while, Sony has not 
shown that the asserted claims of the '106 patent are invalid under 35 
U.S.C. 102 or 103, Sony has shown that the asserted claims of the '106 
patent are indefinite under 35 U.S.C. 112. The Final ID also finds that 
Fujifilm has satisfied the technical prong of the domestic industry 
requirement with respect to the '891 patent and the '612 patent, but 
has not satisfied the technical prong with respect to the '106 patent, 
the '434 patent, and the '805 patent. The Final ID further finds that 
Fujifilm has satisfied the economic prong of the domestic industry 
requirement with respect to the '891, '612, and '106 patent pursuant to 
19 U.S.C. 1337(a)(3)(A) and (B) for the asserted LTO-6 DI products. The 
Final ID finds that Fujifilm has not satisfied the economic prong 
requirement for the asserted LTO-7 DI products.
    The Final ID finds Sony has not shown that the '891, '106, and '805 
patents are essential to the LTO-7 Standard. The Final ID also finds 
that Fujifilm has not breached any provisions of the Fujifilm AP-75 
agreement, in particular sections 8.2 or 11.11. The Final ID further 
finds that Sony has not shown that the AP-75 agreement warrants barring 
Fujifilm's claims or terminating the investigation. The Final ID also 
finds that patent misuse does apply to bar Fujifilm's claims and that 
Fujifilm has not waived its rights to enforce the patents-in-suit. The 
Final ID also finds that Sony does not have an implied license to the 
patents-in-suit. The Final ID further finds that Sony has not shown 
that patent exhaustion applies.
    On September 12, 2017, the ALJ issued his recommended determination 
on remedy and bonding. As instructed by the Commission, the ALJ also 
made findings concerning the public interest factors set forth in 19 
U.S.C. 1337(d)(1) and (f)(1). See 81 FR 43243; 19 CFR 210.10(b). The 
ALJ recommended that the appropriate remedy is a limited exclusion 
order and a cease and desist order against Sony. The ALJ recommended 
that the Commission require no bond during the period of Presidential 
review. The ALJ further found that public interest factors do not bar 
or require tailoring the recommended exclusion order. The ALJ also 
found that even if the asserted claims are essential, the public 
interest does not favor tailoring or curbing and exclusion order 
because Fujifilm did not breach its obligations under the AP-75 
Agreement.
    On September 18, 2017, Sony and OUII each filed petitions for 
review of various aspects of the Final ID. Also on September 18, 2017, 
Fujifilm filed a contingent petition for review of various aspects of 
the Final ID. On September 26, 2017, Fujifilm, Sony, and OUII filed 
responses to the various petitions for review.
    On October 6, 2017, Fujifilm filed a post-RD statement on the 
public interest pursuant to Commission Rule 210.50(a)(4). Sony filed 
its statement on October 13, 2017. No responses were filed by the 
public in response to the post-RD Commission Notice issued on September 
13, 2017. See Notice of Request for Statements on the Public Interest 
(Sept. 13, 2017); 82 FR 43567-68 (Sept. 18, 2017).
    On December 12, 2017, the Commission determined to review the Final 
ID in part. Notice (Dec. 12, 2017); 82 FR 60038-41 (Dec. 18, 2017).
    Specifically, the Commission determined to review-in-part the Final 
ID's finding of violation with respect to the '891 patent. In 
particular, the Commission determined to review the

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Final ID's findings with respect to anticipation and obviousness. The 
Commission further determined to review the Final ID's findings 
concerning secondary considerations.
    The Commission also determined to review-in-part the Final ID's 
finding of violation with respect to the '612 patent. Specifically, the 
Commission determined to review the Final ID's finding that the 
asserted claims of the '612 patent are not obvious. Accordingly, the 
Commission also determined to review the Final ID's finding that 
Fujifilm has satisfied the technical prong of the domestic industry 
requirement with respect to the '612 patent.
    The Commission further determined to review-in-part the Final ID's 
findings with respect to the '106 patent. Specifically, the Commission 
determined not to review the Final ID's finding that the asserted 
claims of the '106 patent are invalid as indefinite. Accordingly, the 
Commission determined to review the Final ID's findings with respect to 
the remaining issues with respect to the '106 Patent.
    The Commission also determined to review-in-part the Final ID's 
findings with respect to the '434 patent. Specifically the Commission 
determined to review the Final ID's finding that Sony's accused LTO-7 
products do not infringe claim 1 of the '434 patent. The Commission 
also determined to review the Final ID's finding that Fujifilm's LTO-7 
DI products do not practice claim 1. The Commission further determined 
to review the Final ID's finding that claim 1 is not obvious.
    The Commission further determined to review-in-part the Final ID's 
findings with respect to the '805 patent. Specifically, the Commission 
determined to review the Final ID's finding that Sony's accused LTO-7 
products do not infringe asserted claims 3 and 10 of the '805 patent. 
The Commission also determined to review the Final ID's finding that 
U.S. patent No. 6,710,967 (``Hennecken'') does not anticipate claims 3 
and 10.
    The Commission also determined to review the Final ID's findings 
that the asserted claims of the '612, '106, and '805 patents are not 
essential to the LTO-7 Standard.
    The Commission further determined to review the Final ID's findings 
concerning the economic prong of the domestic industry.
    The Commission determined not to review the remaining issues 
decided in the Final ID.
    In its notice of review, the Commission posed several briefing 
questions to the parties, and requested briefing on remedy, the public 
interest, and bonding. 82 FR at 60040. On January 3, 2018, the parties 
submitted their initial responses to the Commission's briefing 
questions. On January 12, 2018, the parties filed their reply 
submissions.
    On December 26, 2017, Quantum Corporation filed a submission in 
response to the Commission's notice. On January 2, 2018, Hewlett 
Packard Enterprise Company filed a submission in response to the 
Commission's notice. On January 3, 2018, International Business 
Machines Corporation filed a submission in response to the Commission's 
notice.
    Having examined the record of this investigation, including the 
Final ID, the petitions for review, the responses thereto, and the 
parties' submissions on review, the Commission has determined to find 
that a violation of section 337 has occurred with respect to the 
asserted claims of the '891 patent. The Commission has found no 
violation with respect to the '612, '106, '434, and '805 patents.
    The Commission affirms with modification the Final ID's findings 
that the asserted claims of the '891 patent are not invalid as 
anticipated or obvious.
    The Commission finds that Sony has shown by clear and convincing 
evidence that the asserted claims of the '612 patent are prima facie 
obvious over the asserted prior art and that there are no secondary 
considerations that overcome this finding. Accordingly, the Commission 
finds that Fujifilm has failed to satisfy the technical prong of the 
domestic industry requirement by failing to show that its domestic 
industry products practice a valid claim of the '612 patent. The 
Commission has further determined not to reach the Final ID's findings 
concerning the technical prong with respect to the '612 Patent.
    The Commission determined not to review the Final ID's finding that 
the asserted claims of the '106 patent are invalid as indefinite. 
Accordingly, the Commission has determined not to reach the Final ID's 
findings on the remaining issues with respect to the '106 patent.
    With respect to the '434 patent, the Commission has determined to 
construe the limitations ``a power spectrum density at a pitch of 10 
micrometers ranges from 800 to 10,000 nm\3\ on the magnetic layer 
surface'' and ``a power spectrum density at a pitch of 10 micrometers 
ranges from 20,000 to 80,000 nm\3\ on the backcoat layer surface'' 
recited in claim 1 of the '434 patent to require that the entire 
surface of each layer must have power spectrum density measurements 
within the claimed range. The Commission has further determined to find 
that Fujifilm has failed to show by a preponderance of the evidence 
that the accused LTO-7 tapes infringe claim 1 of the '434 patent. The 
Commission has also determined to find that Fujifilm has failed to 
satisfy the technical prong of the domestic industry requirement with 
respect to the '434 patent. The Commission has determined to affirm 
with modification the Final ID's finding that Sony has failed to show 
by clear and convincing evidence that the asserted prior art renders 
obvious asserted claim 1 of the '434 patent. Specifically, the 
Commission has determined not to reach the question of whether the 
asserted prior art discloses the limitation ``the magnetic layer has a 
center surface average surface roughness Ra, as measured by an atomic 
force microscope, ranging from 0.5 to 2.5 nm.''
    The Commission has determined to affirm with modification the Final 
ID's finding that Fujifilm has failed to show by a preponderance of the 
evidence that the accused LTO-7 tapes infringe claims 3 and 10 of the 
'805 patent. The Commission has also determined to affirm with 
modification the Final ID's finding that the asserted prior art does 
not anticipate the asserted claims of the '805 patent. The Commission 
also corrects the misstatement in the Final ID's ``Conclusions of Fact 
and Law'' that Fujifilm failed to satisfy the technical prong with 
respect to the '805 patent. See Final ID at 385.
    The Commission has determined to affirm with modification the Final 
ID's finding that the asserted claims of the '612, '106, and '805 
patents are not essential to the LTO-7 Standard. In particular, with 
respect to the '106 patent, the Commission has determined not to reach 
the issue of whether the LTO-7 Standard requires a tape having a 
magnetic layer that contains an abrasive. The Commission has determined 
to otherwise adopt the Final ID's findings that the LTO-7 Standard does 
not require practice of the asserted claims of the '612, '106, and '805 
Patents. The Commission has determined not to reach any other issues 
concerning Sony's essentiality defenses.
    The Commission has determined to find that Fujifilm's plant and 
equipment and labor and capital investments in its LTO-6 domestic 
industry products are significant under section 337(a)(3)(A) and (B), 
thus satisfying the economic prong of the domestic industry requirement 
with respect to the '891 patent. The Commission has determined

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not to reach the issue of whether Fujifilm has satisfied the economic 
prong with respect to its domestic investments in its LTO-7 DI 
products.
    Accordingly, the Commission has determined the appropriate remedy 
is a limited exclusion order against Sony's products that infringe 
claims 1, 4-9, 11, and 14 of the '891 patent, and a cease and desist 
order against each of the Sony respondents. The Commission has also 
determined that the public interest factors enumerated in subsections 
337(d)(l) and (f)(1) (19 U.S.C. 1337(d)(l), (f)(1)) do not preclude 
issuance of the limited exclusion order and cease and desist order. The 
Commission has, however, determined to exempt Sony's magnetic data 
storage tapes and cartridges containing the same that are imported or 
used for the purpose of supporting Sony's warranty, service, repair, 
and compliance verification obligations. The Commission has further 
determined to set a bond at zero (0) percent of entered value during 
the Presidential review period (19 U.S.C. 1337(j)).
    The Commission's orders and opinion were delivered to the President 
and to the United States Trade Representative on the day of their 
issuance.
    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 Part 210 of the Commission's Rules of Practice and Procedure (19 CFR 
part 210).

    By order of the Commission.

    Issued: March 8, 2018.
Katherine M. Hiner,
Supervisory Attorney.
[FR Doc. 2018-05093 Filed 3-13-18; 8:45 am]
 BILLING CODE 7020-02-P