Licensing Company With No Domestic Industry Wants ITC Do-Over
Last September, the ITC terminated Integrated Circuits and Products Containing the Same (Inv. 1148) after finding that complainant Tela Innovations had no domestic industry as required by Section 337. As a patent licensing company, Tela had attempted to establish the existence of a domestic industry by subpoena, arguing that chips covered by the patent were manufactured at Samsung’s fabrication facility in Austin, Texas. The ITC’s administrative law judge, however, found that the Samsung chip Tela put forward as a “domestic industry product” did not actually practice the asserted patent and that Samsung had in any event not made sufficiently significant investment in its production.
Now Tela has filed a second ITC complaint asserting the same patent against the same respondents but with an updated domestic industry argument. This time, they’ve added two more third-party licensees (Qualcomm and TSMC). But these are not new licensees—both companies have license agreements with Tela resulting from broad legal settlements that pre-date Tela’s previous ITC complaint.
Respondents (Intel and four device makers using Intel chips) have asked the agency not to institute the second investigation, arguing that the complaint is precluded by both the previous ITC investigation and parallel district court litigation:
Tela’s complaint is an unprecedented act of gamesmanship that ignores the dispositive, preclusive judgments against it in two recent proceedings. First, the Commission found no violation in a just-ended investigation involving the same patent and accused products, concluding there is no relevant domestic industry. . . . Second, in a parallel declaratory judgment action, the Northern District of California granted summary judgment that the accused chips do not infringe the ’523 patent. . . . While Tela has tweaked its DI theory to try to justify litigating this matter for the third time, its regurgitated infringement claims and its DI claims are barred by res judicata, collateral estoppel, and the Kessler doctrine. Respondents therefore respectfully request that the Commission deny institution of an investigation based on Tela’s complaint.
In the alternative, respondents have also asked the ITC to designate the case for early disposition on the preclusion question.
It is clear that an ITC investigation based on Tela’s second complaint will serve no public interest. The complainant has no domestic industry of its own, and as with many domestic industry by subpoena cases, Tela’s licensees—the supposed beneficiaries of trade relief—are opposed to the litigation. As Intel notes in its public interest statement:
Tela’s Complaint is yet another baseless attempt to extract a settlement to resuscitate its failing licensing business—not to protect the domestic industry of its licensees. Indeed, Tela’s licensee Samsung has stated that it “has not and will not be benefitted or protected by exclusion of Intel’s integrated circuits in [the 1148] investigation,” but rather that it has been harmed by its forced participation in the litigation.
Furthermore, the respondents can be and are being sued in federal court. Indeed, Intel is currently challenging the validity of the patents through inter partes review proceedings at the Patent Office.
Instituting an investigation based on Tela’s Section 337 complaint will serve no patent policy or trade policy goals. The ITC would be allowing litigation merely for the sake of having more litigation.