On February 18, 2020, ALJ McNamara issued an Initial Determination on Violation in INVT SPE’s ITC case against Respondents Apple, HTC, and ZTE, finding INVT SPE failed to show a violation of Section 337 of the Tariff Act of 1930. The ALJ found no asserted claims were infringed, no claims were invalid, there was no requisite domestic industry, and, of particular interest to our readers, that none of the asserted patents are essential to 3G or LTE standards.  

On April 3, ALJ McNamara issued a Recommendation on the Public Interest and Remedy, which is confidential.  We expect a public version of that ruling in the coming weeks.  Even though ALJ McNamara ruled that the patents were not essential nor infringed, the ITC procedural rules require in all cases that the ALJ also issue a recommendation on public interest and remedy because the decision will be reviewed by the full ITC Commission, which could disagree with the ALJ on infringement and address the public interest/remedy issues.  Under the current schedule, the ITC has until May 18, 2020 to determine whether to review ALJ McNamara’s decision.  The ITC is soliciting public comments due by May 5 regarding the impact on the public interest from an exclusion or cease-and-desist order on 3G and LTE enabled devices at issue.

Background

INVT SPE is a special purpose entity that holds upwards of 700 telecommunications patents previously owned by Inventergy, who receives a portion of the net revenues generated by INVT SPE by the license or sale of these patents. INVT SPE filed the case on October 19, 2018, seeking to block the Respondents’ 3G and LTE enabled communications devices from sale and import into the U.S.  INVT asserted that claim 4 of U.S. Patent No. 7,206,587 (the ‘587 Patent) and claims 3 and 4 of U.S. Patent No. 6,760,590 (the ‘590 Patent) were essential to the European Telecommunications Standards Institute (ETSI) 3G and LTE standards.  INVT also asserted that claims 1 and 2 of U.S. Patent No. 7,848, 439 (the ‘439 Patent) were essential to the LTE standard.

Decision

ALJ McNamara considered whether the asserted patent claims were essential under the ETSI 3G and LTE standards based on the definition of “essential” in the ETSI intellectual property rights (IPR) policy dated October 8, 2018:

not possible on technical (but not commercial) grounds, taking into account normal technical practice and the state of the art generally available at the time of standardization to make, sell, lease, otherwise dispose of, repair, use or operate EQUIPMENT or METHODS which comply with a STANDARD without infringing that IPR.

ALJ McNamara then determined that the asserted patent claims of the ‘587 and ‘590 Patents were not essential because “it is clear that the CGI encoding of the 3G and LTE standards function in a fundamentally different way from the CGI encoding of the asserted claims.”  ALJ McNamara further determined that those claims were not infringed.

Because the ALJ’s decision is subject to review by the full Commission, the ALJ often discusses alternative scenarios in the event that the Commission disagrees with part of the ALJ’s decision.  ALJ McNamara does this in a few ways concerning essentiality.

First, she states that INVT would establish that claim 4 of the ‘587 Patent would be essential to the 3G and LTE standard if her construction of “encodes the information” limitation is rejected by the Commission and construed broader (“covers any CGI encoding technique for which ‘the most significant bit of the plurality of bits is less susceptible to errors in a propagation path than other bits of the plurality of bits”).

Second, ALJ McNamara reviews individual claim limitations to determine whether each of those would read onto the 3G and LTE standards.  She uses the shorthand that the limitations “are essential” to the standards, but this should be understood to mean that the limitations read onto the standard; only patent claims as a whole–i.e., all limitations of the claim, not just individual limitations of a claim–are infringed and could be “essential” to a standard.  She found that INVT had shown that all limitations of the asserted claims read onto the standard and were met by the accused Apple products EXCEPT for the “encodes the information” limitation.

ALJ McNamara also determined that claims 1 and 2 of the ‘439 Patent were not essential to the LTE standard, finding that the “data obtaining” limitation does not read onto the LTE standard.  She rejected INVT’s experts assertion that the claim limitation is met because LTE products are “capable” of certain demodulation and decoding, because “mere capability of a claimed feature is ipso facto not tantamount to the requirement that the claimed features must be mandatory.”  Accordingly, ALJ McNamara ruled that she could not rely on the Apple products’ compliance with the LTE standard alone as establishing infringement of those claims, and further found that they did not infringe those claims.

ALJ McNamara concluded that there was no infringement and, therefore, no violation for which a remedy should be issued.  She stated that “Respondents jointly made an argument that tied to the public interest the issue of the ‘Fair, Reasonable and Non-Discriminatory‘ or ‘FRAND’ negotiations” and that “a subsequent public interest, remedy and bond filing will provide in-depth analysis of the Parties evidence on the FRAND negotiations in the alternative in case the findings of this decision are overturned to find that the Asserted Patents are standard essential.” 

A confidential version of ALJ McNamara’s Analysis and Findings With Respect to Recommendation on the Public Interest and Recommendation on Remedy and Bond was filed April 3, 2020 and we expect a public version to be available in the coming weeks. In the meantime, the ITC has solicited comments from the general public regarding the impact an exclusion or cease-and-desist order on 3G and LTE enabled devices would have on the public interest.  Any comments from the public are to be filed by May 5, 2020.