Appeal from the United States International Trade Commission in Investigation No. 337-TA-698.
STEVEN M. LEVITAN, Hogan Lovells U.S. LLP, of Palo Alto, California, argued for uPI Semiconductor Corporation. With him on the brief were JENNIFER M. LANTZ, CLARK S. STONE, and EDWARD C. KWOK. Of counsel were CATHERINE E. STETSON and SEAN MAROTTA, of Washington, DC.
CLARK S. CHENEY, Attorney, Office of General Counsel, United States International Trade Commission, of Washington, DC, argued for appellee. With him on the brief were PAUL R. BARDOS, Acting General Counsel, WAYNE E. HERRINGTON, Assistant General Counsel, and CLINT A. GERDINE, Attorney.
WILLIAM M. ATKINSON and M. SCOTT STEVENS, Alston & Bird, LLP, of Charlotte, North Carolina, argued for Richtek Technology Corp., et al. With them on the brief were THOMAS W. DAVISON and BENN C. WILSON, of Washington, DC; YITAI HU and ELIZABETH H. RADER, of Menlo Park, California. Of counsel was KIRK T. BRADLEY.
Before NEWMAN, MOORE, and CHEN, Circuit Judges.
Newman, Circuit Judge.
Before the court are the appeal of respondent-intervenor uPI Semiconductor Corp. (" uPI" ) and the companion appeal of complainant-intervenors Richtek Technology Corp. and Richtek USA, Inc. (together " Richtek" ) from rulings of the International Trade Commission in an action to enforce a Consent Order, Certain DC-DC Controllers and Products Containing Same, Inv. No. 337-TA-698 (75 Fed. Reg. 446). We affirm the Commission's ruling that uPI violated the Consent Order as to the imports known as " formerly accused products," and affirm the modified penalty for that violation. We reverse the ruling of no violation as to the " post-Consent Order" products. The case is remanded for further proceedings in accordance with our rulings herein.
uPI and Richtek are technology companies in the business of designing and selling DC-DC controllers. DC-DC controllers convert direct current from one voltage to another, and are embodied in chips for use in " down-stream" electronic devices such as computer mother-boards. Founded in 1998, Richtek Technology Corp. has its principal place of business in Taiwan. Richtek USA has its principal place of business in California. uPI was founded in 2005 by former Richtek employees and has its principal place of business in Taiwan. uPI chips are imported into the United States either directly or as incorporated in various downstream devices.
Richtek in 2010 filed a complaint with the International Trade Commission, alleging that uPI misappropriated Richtek's trade secrets and infringed Richtek's United States patents, and that uPI's importation, sale for importation, or sale after importation of DC-DC controllers and
products containing these controllers violated 19 U.S.C. § 1337 (Section 337) of the Tariff Act. Three Richtek patents are at issue in this appeal: U.S. Patent No. 7,315,190 (" the '190 patent" ), No. 6,414,470 (" the '470 patent" ), and No. 7,132,717 (" the '717 patent" ).
Shortly before the evidentiary hearing scheduled by the Commission's Administrative Law Judge (" ALJ" ), uPI moved to terminate the investigation, pursuant to 19 C.F.R. § 210.21, by unilaterally offering to enter into a consent order whereby uPI would cease importation of all products produced using or containing Richtek's trade secrets or infringing Richtek's patents. Over Richtek's objection, the ALJ agreed to enter the consent order substantially as drafted and proposed by uPI. The Commission declined to review the ALJ's grant of uPI's motion, and, on August 13, 2010, the Commission terminated the investigation and entered the Consent Order.
The Consent Order includes the following provisions:
A. Effective immediately upon the entry of this Consent Order, uPI will not import into the United States, sell for importation into the United States, or sell or offer for sale in the United States after importation, or knowingly aid, abet, encourage, participate in, or induce importation into the United States, the sale for importation into the United States, or the sale, offer for sale, or use in the United States after importation, without the consent or agreement of Richtek, any DC-DC controllers or products containing same which infringe claims 1-11, 26, or 27 of U.S. Patent No. 7,315,190, claims 29 or 34 of U.S. Patent No. 6,414,470, or claims 1-3 or 6-9 of U.S. Patent No. 7,132,717, or which are produced using or which contain Richtek's asserted trade secrets.
D. UPI will not challenge the validity of Richtek's intellectual property rights in any administrative or judicial proceeding to enforce the Consent Order, but may do so in any other proceeding.
F. The requirements of Paragraph A of this Consent Order shall be of no further force and effect with respect to Richtek's asserted trade secrets ten (10) years after issuance of this Order.
Approximately one year later Richtek filed an Enforcement Complaint alleging, inter alia, that uPI was in violation of the Consent Order. The Commission instituted an enforcement proceeding, the ALJ held an evidentiary hearing, and, on June 8, 2012, the ALJ issued an Enforcement Initial Determination (" EID" ). The EID separated the accused uPI products into two categories: (1) products that were accused in the prior ITC investigation of infringing Richtek's patents or accused of being produced using or containing Richtek's trade secrets (the " formerly accused products" ); and (2) products allegedly developed and produced after entry of the Consent Order (the " post-Consent Order products" ).
The ALJ found that the formerly accused products contained or were produced using Richtek's trade secrets and that the formerly accused products alone, or incorporated into downstream products, infringed the '190, '470, and '717 patents. The ALJ also found that the post-Consent Order products infringed the '470 and '717 patents. However, the ALJ found that the post-Consent Order products were independently developed, and therefore not produced using Richtek's trade secrets,
due to " clean room" procedures uPI implemented. The ALJ stated:
[T]he evidence shows that uPI took steps to insulate its new product lines from any misconduct that took place in the past. uPI has satisfied all of the elements of the independent development defense, regardless of any similarities that ...