Lsi Corporation v. Itc ( 2015 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
LSI CORPORATION, AGERE SYSTEMS LLC,
Appellants
v.
UNITED STATES INTERNATIONAL TRADE
COMMISSION,
Appellee
FUNAI ELECTRIC CO., LTD., FUNAI
CORPORATION, INC., P&F USA, INC., FUNAI
SERVICE CORP., REALTEK SEMICONDUCTOR
CORPORATION,
Intervenors
______________________
2014-1410
______________________
Appeal from the United States International Trade
Commission in Investigation No. 337-TA-837.
______________________
Decided: March 20, 2015
______________________
DAVID E. SIPIORA, Kilpatrick Townsend & Stockton
LLP, Denver, CO, argued for appellants. Also represent-
ed by MATTHEW CHRISTIAN HOLOHAN; DAVID FRANKLIN
2 LSI CORPORATION v. ITC
NICKEL, Foster, Murphy, Altman & Nickel, PC, Washing-
ton, DC.
CATHY CHEN, Office of the General Counsel, United
States International Trade Commission, Washington, DC,
argued for appellee. Also represented by DOMINIC L.
BIANCHI, WAYNE W. HERRINGTON.
CHRISTOPHER D. BRIGHT, McDermott, Will & Emery
LLP, Irvine, CA, argued for all intervenors. Intervenors
Funai Electric Co., Ltd., Funai Corporation, Inc., P&F
USA, Inc., Funai Service Corp. also represented by PAUL
DEVINSKY, CHRISTOPHER LAURENCE MAY, JOSHUA DAVID
ROGACZEWSKI, Washington, DC; NATALIE A. BENNETT,
Chicago, IL. Intervenor Realtek Semiconductor Corpora-
tion represented by STEVEN BAIK, Sidley Austin LLP, Palo
Alto, CA.
______________________
Before TARANTO, MAYER, and HUGHES, Circuit Judges.
TARANTO, Circuit Judge.
LSI Corporation and Agere Systems LLC (collectively,
LSI) appeal from an order of the United States Interna-
tional Trade Commission. That order rejected LSI’s
allegation that Funai Electric Co., Ltd., Funai Corpora-
tion, Inc., P&F USA, Inc., Funai Service Corporation, and
Realtek Semiconductor Corporation (Funai and Realtek)
violated 19 U.S.C. § 1337 by importing WiFi chips or chip-
containing products that, according to LSI, infringed two
of LSI’s patents—U.S. Patent Nos. 6,452,958 and
6,707,867. Regarding the ’958 patent, the Commission
concluded not only that the asserted claims did not cover
the accused products and were invalid, but that LSI failed
to demonstrate a domestic industry relating to articles
protected by the patent. LSI challenges all of those
conclusions. Regarding the ’867 patent, the Commission
could not find a § 1337 violation because the patent
LSI CORPORATION v. ITC 3
expired before the Commission could complete its review,
and it terminated the investigation as to that patent. But
the Commission denied LSI’s motion to vacate the admin-
istrative law judge’s finding that the accused products did
not infringe that patent. LSI challenges the denial of
vacatur.
We affirm the Commission’s no-violation decision re-
garding the ’958 patent. We do so on the ground that LSI
has shown no error in the Commission’s finding that LSI
failed to establish the existence of the required domestic
industry. We do not address the infringement and inva-
lidity rulings of the Commission. As to the ’867 patent,
we conclude that LSI has not shown that the Commission
abused its discretion in declining to vacate the ALJ’s
finding of no violation based on that patent.
BACKGROUND
In March 2012, LSI filed a complaint with the Com-
mission alleging that Funai and Realtek had violated 19
U.S.C. § 1337 by importing WiFi chips and products
containing those chips, which LSI argued infringed cer-
tain claims of its patents. The Commission instituted an
investigation, 77 Fed. Reg. 22,803 (April 17, 2012), and
the assigned ALJ, after several extensions, set the eviden-
tiary hearing to begin on April 2, 2013, J.A. 55.
Several months before the scheduled hearing, on Jan-
uary 10, 2013, this court in InterDigital Communications,
LLC v. Int’l Trade Comm’n clarified certain requirements
for entities seeking to take advantage of the Commission’s
exclusionary remedy under § 1337. 707 F.3d 1295, 1296
(Fed. Cir. 2013) (referred to by the parties as InterDigital
II because it was a decision accompanying a denial of a
petition for rehearing). The statute bars importation of
articles that infringe a patent “only if an industry in the
United States, relating to the articles protected by the
patent . . . exists or is in the process of being established.”
§ 1337(a)(2). The statute adds, as relevant here, that
4 LSI CORPORATION v. ITC
such an industry exists “if there is in the United States,
with respect to the articles protected by the patent,”
“substantial investment in [the patent’s] exploitation,
including . . . licensing.” § 1337(a)(3)(C). In InterDigital
II, we stated that, when a complainant seeks to establish
the existence of such an industry based on its investment
in licensing activities, the complainant must show that
those licensing activities relate specifically to “articles
protected by the patent.” 707 F.3d at 1298. Such an
investment, we said, “must pertain to products that are
covered by the patent that is being asserted.” Id. at 1297–
98.
Discovery in the LSI investigation at the Commission
closed a month later, on February 8, 2013. After holding
a week-long hearing in early April 2013, the ALJ issued a
final initial determination on July 18, 2013. The ALJ
found that LSI had proved the existence of a domestic
industry by virtue of LSI’s substantial investment in
licensing its patents to third parties, thereby satisfying
§ 1337(a)(2) and (a)(3)(C). In so doing, the ALJ did not
address InterDigital II or identify any licensee-produced
articles that practiced the asserted patents. The ALJ also
found that the asserted claims had not been proved inva-
lid. But the ALJ ultimately concluded that Funai and
Realtek had not violated § 1337 because their products
were not covered by the asserted claims of the ’958 and
’867 patents.
The Commission affirmed the ALJ’s finding of no in-
fringement of the asserted ’958 patent claims, but unlike
the ALJ, it also held that those claims were invalid for
obviousness. In addition, the Commission reversed the
ALJ’s conclusion that LSI had established the existence of
a domestic industry. As relevant in this court, the Com-
mission reasoned that there was no evidence that LSI’s
licensing activity related to any article practicing the ’958
patent and that, without evidence of any such article, LSI
had not proved the domestic industry required by
LSI CORPORATION v. ITC 5
§ 1337(a)(2) & (a)(3)(C). J.A. 37 (relying on Certain
Computers and Computer Peripheral Devices and Compo-
nents Thereof, Inv. No. 337-TA-841, Comm’n Op. (Jan. 9,
2014), 2014 WL 5380098, at *22–23 (interpreting Inter-
Digital II)). On those multiple grounds, the Commission
found no violation of § 1337 based on the ’958 patent.
The ’867 patent expired on February 23, 2014, after
the ALJ determination, and it is undisputed that the
Commission therefore could not find a § 1337 violation
based on that patent because it could not exclude imports
as infringing an expired patent. For that reason, the
ALJ’s finding of non-infringement of the ’867 patent was
not reviewable by the Commission. LSI accordingly filed
a motion to terminate the investigation as to the ’867
patent and to vacate the ALJ’s finding of non-
infringement of that patent. The Commission granted the
motion to terminate the investigation as to the ’867
patent, J.A. 38, 42, but it denied vacatur, stating that
“[v]acatur is a discretionary matter,” J.A. 41.
LSI appeals. We have jurisdiction pursuant to 28
U.S.C. § 1295(a)(6).
DISCUSSION
We review the Commission’s final determination un-
der the standards of the Administrative Procedure Act.
19 U.S.C. § 1337(c); see Corning Glass Works v. Int’l Trade
Comm’n, 799 F.2d 1559, 1565 & n.4 (Fed. Cir. 1986). We
may set aside the Commission’s legal conclusions only if
they are “arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.” 5 U.S.C.
§ 706(2)(A); see Pass & Seymour, Inc. v. Int’l Trade
Comm’n, 617 F.3d 1319, 1323 (Fed. Cir. 2010).
A
We first address the Commission’s finding of no prov-
en domestic industry for the ’958 patent—a finding that,
if it stands, suffices to support the Commission’s decision
6 LSI CORPORATION v. ITC
that LSI proved no violation of § 1337 based on the ’958
patent. LSI makes only one argument to challenge the
no-domestic-industry ruling. It contends that the Com-
mission acted arbitrarily and capriciously by retroactively
applying a purportedly “brand new legal standard” an-
nounced by the Commission in its January 2014 Certain
Computers decision to an evidentiary record produced in
early 2013. LSI Opening Br. 52. LSI contends that, had
it known that it would be required to prove a licensing-
related article covered by the patent, it would have ad-
duced additional evidence sufficient to meet that stand-
ard. LSI’s argument is focused entirely on notice at the
close of discovery and the submission of evidence; it
makes no argument about lack of notice at the earlier
dates of its licensing activities. We reject LSI’s challenge.
To begin with, it is anything but clear that a “retroac-
tivity” problem could arise in this context. Even aside
from the notion that “retroactivity is not only permissible
but standard” in agency adjudications, Bowen v.
Georgetown Univ. Hosp., 488 U.S. 204, 221 (1988) (Scalia,
J., concurring), the Supreme Court has indicated that
when a new rule of law “authorizes or affects the proprie-
ty of prospective relief, application of the new provision is
not retroactive.” Landgraf v. USI Film Prods., 511 U.S.
244, 273 (1994). Here, the most that the Commission has
done is to limit the circumstances in which it will issue a
prospective exclusionary remedy, leaving LSI with its full
set of patent-enforcement rights under Title 35. It is
unclear if this situation presents a retroactivity issue
even if the Commission applied a new rule of law. See id.
at 293 (Scalia, J., concurring in the judgment) (“Since the
purpose of prospective relief is to affect the future rather
than remedy the past, the relevant time for judging its
LSI CORPORATION v. ITC 7
retroactivity is the very moment at which it is ordered.”). 1
And LSI does not present an adequacy-of-notice issue
separate from “retroactivity.”
We need not resolve the foregoing issues, however, be-
cause it is clear that LSI did not experience the kind of
unfair surprise as to the governing legal standard that it
need to establish to sustain its retroactivity challenge.
The Commission did not “attach[ ] new legal consequences
to events completed” before the consequences were an-
nounced—before LSI could take action to avoid those
consequences by amassing evidence in discovery and
submitting it at the ALJ hearing. Vartelas v. Holder, 132
S. Ct. 1479, 1491 (2012) (internal quotation marks omit-
ted) (discussing retroactivity standards). And that con-
clusion suffices to answer LSI’s retroactivity challenge
and also to answer any procedural-rights concern about
adequate notice.
This court’s decision in InterDigital II—which came
before discovery closed and evidence was submitted in this
case—stated the patent-covered-article requirement for
§ 1337(a)(3)(C) that the Commission held LSI failed to
satisfy. LSI does not argue, let alone show, that the
Commission was wrong in its conclusion on the domestic-
industry issue if InterDigital II’s articulation governed.
LSI does not argue, and we do not think, that InterDigital
1 See also Am. Steel Foundries v. Tri–City Cent.
Trades Council, 257 U.S. 184, 201 (1921) (the Clayton
Act’s withdrawal of a right to injunctive relief could be
applied to past violations because “relief by injunction
operates in futuro”); Ctr. for Biological Diversity v. USDA,
626 F.3d 1113, 1118 (9th Cir. 2010); Miccosukee Tribe of
Indians of Fla. v. United States, 619 F.3d 1286, 1288
(11th Cir. 2010); Al-Bihani v. Obama, 619 F.3d 1, 22 (D.C.
Cir. 2010); Starbucks Corp. v. Wolfe’s Borough Coffee, Inc.,
477 F.3d 765, 766 (2d Cir. 2007).
8 LSI CORPORATION v. ITC
II’s formulation of the requirements for proving a domes-
tic industry under § 1337(a)(3)(C) differs from the Com-
mission’s articulation in Certain Computers in any way
that is material to this case. Nor does LSI challenge
InterDigital II as incorrectly decided or dispute this
court’s authority to depart from earlier Commission
decisions concluding “that there was no separate technical
prong for licensing.” Certain Computers, 2014 WL
5380098, at *19.
LSI’s argument, therefore, necessarily rests on the as-
sertion that InterDigital II had no effect on the Commis-
sion’s prior precedent until the Commission itself adopted
InterDigital II’s interpretation in its January 2014 Cer-
tain Computers opinion. See LSI Response Br. 27–28.
That contention is baseless. LSI offers no reason that our
explicit interpretation of the statute’s requirements in
InterDigital II should not have applied prospectively to all
parties seeking access to the Commission’s exclusionary
remedy. Indeed, even if the statute were ambiguous and
the Commission could, after InterDigital II, adopt an
interpretation different from ours, the conclusion would
be the same: the decision in InterDigital II certainly was
the governing interpretation of the statute at the time
relevant here—when discovery closed and the ALJ hear-
ing took place. See Nat’l Cable & Telecomms. Ass’n v.
Brand X Internet Servs., 545 U.S. 967, 983 (2005) (noting
that, while an agency may “choose a different construc-
tion” of an ambiguous statute, “[i]n all other respects, the
court’s prior ruling remains binding law”); see also Garfi-
as-Rodriguez v. Holder, 702 F.3d 504, 531 (9th Cir. 2012)
(Kozinski, C.J., concurring) (appellate court’s “provision-
al” interpretation of ambiguous statute is binding for
purposes of retroactivity until relevant agency provides
an “authoritative” interpretation).
For those reasons, InterDigital II provided ample no-
tice of § 1337(a)(3)(C)’s domestic-industry requirement at
a time when LSI retained an ability to present evidence
LSI CORPORATION v. ITC 9
necessary to meet that requirement. The Commission’s
decision therefore did not involve retroactive application
of a rule to “a past act” that LSI “[wa]s helpless to undo.”
Fernandez-Vargas v. Gonzales, 548 U.S. 30, 44 (2006).
Those reasons suffice to dispose of LSI’s appeal relat-
ing to the ’958 patent. We emphasize that LSI challenges
only the Commission’s purportedly retroactive application
of the “brand new” requirement that “a complainant must
show the existence of protected articles to show a domes-
tic industry” under § 1337(a)(3)(C). LSI Opening Br. 52,
53. In its brief to us, LSI has not questioned the Commis-
sion’s substantive interpretation of § 1337(a)(3)(C) in
Certain Computers, or disputed the Commission’s under-
standing of that provision as precluding a complainant
from “rely[ing] on the accused products to satisfy the
domestic industry requirement.” 2014 WL 5380098, at
*21. Nor has LSI challenged the Commission’s finding
that LSI’s proof failed to meet the standard the Commis-
sion applied. In particular, before the Commission, LSI
did not seek to rely on the accused products as satisfying
the domestic-industry requirement, and the Commission’s
finding that LSI failed to prove the required patent-
covered articles did not depend on the Commission’s
disputed claim construction. J.A. 36–38; see J.A. 382–84
(ALJ determination). Accordingly, we need not and do not
review the Commission’s claim construction or its in-
fringement findings as to the accused products in uphold-
ing the Commission’s conclusion that LSI did not satisfy
the domestic-industry requirement. Whether accused
articles count under those provisions may be addressed in
future cases if the issue is properly raised.
Thus, even though LSI has raised substantial ques-
tions about the correctness of the Commission’s claim
construction relevant to determining infringement of the
’958 patent, we need not review that construction here.
We also need not and do not address the Commission’s
separate finding of invalidity.
10 LSI CORPORATION v. ITC
B
As to the ’867 patent, we conclude that the Commis-
sion did not abuse its discretion in declining to vacate the
ALJ’s finding that the accused products did not infringe
that expired patent. 2 LSI points to the established prac-
tice in the federal judicial system of vacating a court
judgment where the case becomes moot by happenstance
while on appeal, see United States v. Munsingwear, Inc.,
340 U.S. 36, 39 (1950), and to our having extended that
practice in a case involving mootness that occurred during
the judicial appeal of a final determination of the Com-
mission, Tessera, Inc. v. Int’l Trade Comm’n, 646 F.3d
1357, 1371 (Fed. Cir. 2011) (vacating Commission’s find-
ings of no infringement for patents that expired during
appeal to this court). Those practices reflect judgments
not of constitutional necessity but of remedial discretion.
See U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513
U.S. 18, 25–26 (1994).
2 The Commission asserts that, because it under-
took to review the ALJ’s findings on the ’867 patent but
“t[ook] no position” on them, J.A. 3; see J.A. 41; 19 C.F.R.
§ 210.45(c), there is no “final determination” on the ’867
patent that we can review, see 19 U.S.C. § 1337(c). Alt-
hough the Commission took no position on the substance
of the ALJ’s findings, it issued an order that finally ter-
minated the investigation regarding the ’867 patent and
denied vacatur of the ALJ’s decision. The Commission
cites Import Motors, Ltd. v. Int’l Trade Comm’n, 530 F.2d
940 (CCPA 1976), and Block v. Int’l Trade Comm’n, 777
F.2d 1568, 1572 (Fed. Cir. 1985), in support of its no-
jurisdiction argument, but neither case involved a situa-
tion similar to the present one: Import Motors involved a
preliminary denial of participation to certain persons who
could intervene later in the proceeding, 530 F.2d at 946;
and Block involved an abatement of proceedings and
LSI CORPORATION v. ITC 11
The present situation does not involve the exercise of
this court’s discretion about dealing with mootness aris-
ing in the Article III courts. Here, the Commission lost
the ability under § 1337 to grant relief based on the ’867
patent while the ALJ determination was under review
before the Commission, and the Commission, besides
terminating the investigation as to that patent, had to
decide whether to take the affirmative step of vacating
the ALJ’s decision. That is a matter of the Commission’s
discretion, just as the Munsingwear/Tessera choice is a
matter of judicial discretion. The Commission is entitled
to its own choice, as long as that choice is reasonable,
about whether to set aside ALJ determinations that the
Commission cannot review because of intervening expira-
tion of the patent. See Vt. Yankee Nuclear Power Corp. v.
Natural Res. Def. Council, Inc., 435 U.S. 519, 558 (1978)
(“Administrative decisions should be set aside . . . only for
substantial procedural or substantive reasons as mandat-
ed by statute, not simply because the court is unhappy
with the result reached.”) (citation omitted).
We cannot say that the Commission’s decision to de-
cline to take the formal step of vacating the ALJ determi-
nation regarding the ’867 patent was unreasonable. Here,
the ALJ’s final initial determination, even if it were
treated as a final Commission determination on the
patent, would be subject to the well-settled rule that
“decisions of the ITC involving patent issues have no
preclusive effect in other forums.” Tex. Instruments Inc.
v. Cypress Semiconductor Corp., 90 F.3d 1558, 1569 (Fed.
Cir. 1996); see, e.g., Tandon Corp. v. Int’l Trade Comm’n,
831 F.2d 1017, 1019 (Fed. Cir. 1987). The ALJ decision
vacatur of the ALJ’s initial determination because of
changes in the patent claims, without prejudice to initia-
tion of a new proceeding involving the new claims, 777
F.2d at 1571–72.
12 LSI CORPORATION v. ITC
thus has no preclusive effect. (Indeed, the Commission
insists that the ALJ’s decision did not even become the
Commission’s determination. See Int’l Trade Comm’n Br.
61.) If someone invokes the ALJ’s decision before another
tribunal purely for the persuasiveness of its reasoning,
the success of that invocation depends on the decision’s
content, not its status. And if the decision is invoked as
evidence, the weight of the decision must be, at a mini-
mum, lessened by the fact that LSI had no opportunity to
secure even a single level of review. Cf. Kircher v. Put-
nam Funds Trust, 547 U.S. 633, 647 (2006) (issue preclu-
sion generally inapplicable if appeal was unavailable);
Block, 777 F.2d at 1572. In these circumstances, we do
not think that the Commission acted unreasonably in not
disturbing the ALJ decision, leaving other tribunals in
which the decision may be invoked to decide what if any
effect the decision should have.
AFFIRMED