In the Matter of UNITED STATES INTERNATIONAL TRADE COMMISSION

COMMISSIONERS

Susan Liebeler, Chairman Anne E. Brunsdale, Vice Chairman Alfred E. Eckes Seeley G. Lodwick David B. Rohr

Address all communications to Kenneth R. Mason, Secretary to the Commission United States International Trade Commission Washington,. DC 20436 I, *A UNITED STATES INTERNATIONAL TRADE COMMISSION Washington, D.C. 20436

In the Matter of ) 1 CERTAIN DYNAMIC RANDOM ACCESS ) Investigation No. 337-TA-242 MEMORIES, COMPONENTS THEREOF AND 1 PRODUCTS CONTAINING SAME )

AND ERRATA TO COMMISSION ACTION ORDER

On September 21, 1987, the Commission issued an Action and Order in the above-captioned investigation, disposing of the issues on review and issuing 8 limited exclusion order prohibiting the entry of infringing DRAMS of 64 and 256 kilobits (and any combination thereof such as 128 kilobits) manufactured by Samsung Company, Ltd. and/or Samsung Semiconductor & Telecommunications

Co., Ltd., whether assembled or unassembled. The Commission's order also prohibits the entry of infringing DRAMS of 64 or 256 kilobits (and any combination thereof such as 128 kilobits) manufactured by Samsung Company,

Ltd. and/or Samsung Semiconductor & Telecommunications Co., Ltd.,. incorporated into a carrier of any form, including Single-Inline-Packagesand

Single-Inline-Modules,or assembled onto circuit boards of any configuration. I The Commission has also determined to prohibit the entry of computers (such as mainframe, personal, and small business computers), facsimile equipment, telecommunications switching equipment, and printers containing infringing

DRAMS of 64 or 256 kilobits (and any combination thereof such as 128 kilobits) manufactured by Samsung Company, Ltd. and/or Samsung Semiconductor &

Telecommunications Co., Ltd. -2-

It has come to the Commission's attention that there is a typographical

error in paragraph 8 of the Commission's Order, which may lead to confusion in

the application of the bonding provision of the Order, since it refers to the wrong paragraph of the Order (i.e., paragraph 6 rather than paragraph 7) in

establishing the amount of the bond. Therefore, the Commission is issuing

this errata. Paragraph 8 of the Commission's September 21, 1987, Order is

% corrected to read as follows:

8. Products identified in paragraphs (Z), (3), (4), or (5) of this Order are entitled to entry into the United States from the day after this Order is received by the President, pursuant to - subsection (g) of section 337 of the Tariff Act of 1930, until such time as the President notifies the Commission that he approves or disapproves this action, but no later than 60 days after the date of receipt of this Order by the President, under bond in the amounts identified in paragraph (7) of this Order. Persons importing such products shall certify to the best of their knowledge the number of DRAMS subject to this Order contained in such products, pursuant to procedures to be specified by the U.S. Customs Service;

By order of the Commission.

xenneth R. Mason Secretary

I Issued: October 1, 1987 ) In the Matter of ) 1 - CERTAIN DYNAMIC RANDOM ACCESS ) Investigation No. 337-TA-242 MEMORIES, COMPONENTS THEREOF 1 AND PRODUCTS CONTAINING SAME )

NOTICE OF ISSUANCE OF LIMITED EXCLUSION ORDER

AGENCY: U.S. International Trade Commission.

ACTION: Notice is hereby given that the Commission has issued a limited exclusion order in the above-captioned investigation prohibiting the unlicensed importation of certain dynamic random access memories (DRAMS) of 64 and 256 kilobits, or any combinations thereof (such as DRAMS of 128 kilobits), manufactured abroad by Samsung Company, Ltd. and/or Samsung Semiconductor & Telecommunications Co., Ltd., or any of their affiliated companies, parents, subsidiaries, licensees, or other related business entities, or their successors or assigns, whether assembled or unassembled, or incorporated into a carrier of any form, including Single-Inline-Packages and Single-Inline-Modules,or assembled onto circuit boards of any configuration. The order also prohibits the unlicensed importation of computers (such as mainframe, personal, and small business computers), facsimile equipment, telecommunications switching equipment, and printers containing infringing DRAMS of 64 or 256 kilobits (or any combinations thereof such as 128 kilobits) manufactured by Samsung Company, Ltd. and/or Samsung Semiconductor & Telecommunications Co., Ltd., or any of their affiliated companies, parents, subsidiaries, licensees, or other related business entities, or their successors or assigns.

AUTHORITY: The authority for the Commission's determination is contained in section 337 of the Tariff Act of 1930 (19 U.S.C. 5 1337) and in section 210.58 of the Commission's Rules of Practice and Procedure (19 C.F.R. 5 210.58).

FOR FURTHER INFORMATION CONTACT: Judith M. Czako, Esq., Office of the General Counsel, U.S. International Trade Commission, telephone 202-523-0359. -2-

SUPPLEMENTARY INFORMATION: The Commission instituted this investigation on March 19, 1986, in response to a complaint filed on February 7, 1986, by Texas Instruments, Inc. (TI) of Dallas, Texas to determine whether there is a violation of section 337 (19 U.S.C. 3 1337) and 19 U.S.C. S 1337a in the importation and sale of certain dynamic random access memories (DRAMs). The complaint alleged that such importation and sale by the nineteen named respondents constitute unfair methods of competition and unfiir acts by reason of infringement of certain claims of ten U.S. patents owned by TI. The complaint further alleged that the effect or tendency of these unfair methods of competition and unfair acts is to destroy or substantially injure an industry, efficiently and economically operated, in the United States. During the course of the proceedings, thirteen of the original nineteen respondents were terminated from the investigation on the basis of license and settlement agreements. On May 21, 1987, the presiding administrative law judge (AU) issued her initial determination (ID), finding that there is a violation of section 337 # 1337a and 19 U.S.C. 3 in the importation and sale of certain DRAMs by two of the remaining respondents, Samsung Company, Ltd. and Samsung Semiconductor & Telecommunications Co., Ltd., and that there is no violation of section 337 and 19 U.S.C. 1337a in the importation and sale of certain DRAMs by the other four remaining respondents, Hitachi, Ltd. and Hitachi America, Ltd. (the Hitachi respondents) and NEC Corporation and NEC Electronics, Inc.

# Subsequently, the Hitachi respondents were terminated from the investigation on the basis of a license and settlement agreement. 52 Fed. Reg. 26577 (July 15, 1987). On July 24, 1987, the Commission ordered review of certain portions of the ID, and requested written submissions regarding certain specific questions raised by the issues under review. The Commission vacated certain portions of the ID, including those concerning the Hitachi respondents, and determined not to review the remainder of the ID, which thereby became the determination of the Commission. The Commission also requested written submissions concerning the questions of remedy, bonding, and the public interest. 52 Fed. Reg. 29077 (Aug. 5, 1987). Having considered the record in this investigation, including the written submissions of the parties and comments from the U.S. Customs Service and members of the public, the Commission made its determinations disposing of the issues on review, and the questions of remedy, bonding, and the public interest.

Notice of this investigation was published in the Federal Register of March 19, 1986 (51 Fed. Reg. 9537). -3- Copies of the Commission's Action and Order, the nonconfidential versions of opinions issued in connection therewith, and all other nonconfidential 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, 701 E Street NW., Washington, D.C. 20436, telephone 202-523-0161. Hearing-irnparied individuals are advised that information on this matter can be obtained by contacting the Commission's TDD terminal on 202-724-0002. By order of the Commission. ./&L&c Kenneth R. Mason Secretary Issued: September 21, 1987

UNITED STATES INTERNATIONAL TRADE COMMISSION Washington, D.C. 20436

1 In the Matter of 1 ) 2 CERTAIN DYNAMIC RANDOM ACCESS ) Investigation' No , 33 7 - TA - 42 MEMORIES, COMPONENTS THEREOF ) AND PRODUCTS CONTAINING SAME 1 1

COMMISSION ACTION AND ORDER

The Commission instituted the above-captioned investigation on March 19,

1986, in response to a complaint filed on February 7, 1986, by Texas

Instruments, Inc. (TI) of Dallas, Texas. The investigation is to determine . whether there is a violation of section 337 (19 U.S.C. 8 1337) and 19 U.S.C.

0 1337a in the importation and sale of certain dynamic random access memories (DRAMs). Notice of Investigation, 51 Fed. Reg. 9537 (March 19, 1986). The complaint alleged that such importation and sale by the nineteen named respondents constitute unfair methods of competition and unfair acts by reason of infringement of certain claims of ten U.S. patents owned by TI. The t complaint further alleged that the effect or tendency of the unfair methods of competition and unfair acts is to destroy or substantially injure an industry, efficiently and economically operated, in the United States.

On May 21, 1987, the presiding administrative law judge (ALJ) issued her initial determination (ID) finding that there is a violation of section 337 and 19 U.S.C. § 1337a in the importation and sale of certain DRAMs by two of -2- the remaining respondents, Samsung Company, Ltd. and Samsung Semiconductor &

Telecommunications Co., Ltd., and that there is no violation of section 337 or 19 U.S.C. 8 1337a in the importation and sale of certain DRAMS- by the other four remaining respondents, Hitachi, Ltd. and Hitachi America, Ltd. (the

Hitachi respondents), and NEC Corporation and NEC Electronics, Inc.

Subsequently, the Hitachi respondents were terminated from the investigation on the basis of a license and settlement agreement. 52 Fed. Reg. 26577 (July

15, 1987). c On July 24, 1987, the Commission determined to review certain portions of the ID. Specifically, the Commission ordered review of:

1. Whether U.S. Letters Patent 3,716,764 is valid and infringed by the accused imports. Review was limited to the validity and infringement issues arising out of the interpretation of the term "central region" in the patent claims, and the question of infringement under the doctrine of equivalents.

2. Whether U.S. Letters Patent 3,940,747 is valid and infringed by the accused imports. Review was limited to the question of infringement under the doctrine of equivalents.

3. Whether U.S. Letters Patent 4,081,701 is valid and infringed by the accused imports.

4. Whether U.S. Letters Patent 4,543,500 (the '500 patent) and U.S. Letters Patent 4,533,843 (the '843 patent) are valid and infringed by the accused imports.

5. Whether respondent NEC Corporation is licensed under the '500 and '843 patents.

6. Whether complainant TI'S activities, and those of its licensees, with respect to the patents in issue constitute an industry or industries, efficiently and economically operated, in the United States.

7. Whether the infringing imports have the effect or tendency to substantially injure a domestic industry or industries. -3-

The Commission requested written submissions concerning specific questions raised by the issues under review. The Commission vacated certain portions of the ID, including those concerning the Hitachi respondents, and determined not to review the remainder of the ID, which thereby became the determination of the Commission. The Commission also requested written submissions concerning the questions of remedy, bonding, and the public

interest. 52 Fed. Reg. 29077 (Aug. 5, 1987).

ACTION

Having reviewed the record in this investigation, including the written submissions of the parties concerning the specific questions raised by the issues under review, the Commission has determined to reverse the portion of

the ID finding that the imported DRAMS manufactured by respondent Samsung Company, Ltd. infringe claims 16, 17, and 19 of U.S. Letters Patent 3,716,764, and the portion of the ID finding that U.S. Letters Patent 4,543,500 is

unenforceable. The Commission has also determined that there is a single industry, efficiently and economically operated, in the United States, devoted

to the production of DRAMS under claims 1, 2, 3, 4, 5, and/or 6 of U.S. Letters Patent 4,081,701, claims 6 and/or 7 of U.S. Letters Patent 4,543,500,

claims 6 and/or 7 of U.S. Letters Patent 4,533,843, claims 16, 17, and/or 19

of U.S. Letters Patent 3,716,764, and claims 1, 2, and/or 3 of U.S. Letters Patent 3,940,747. In addition, the Commission has determined that the infringing imports manufactured by respondent Samsung Company, Ltd. have the

effect and tendency to destroy or substantially injure an industry, -4-

efficiently and economically operated, in the United States. Although the

Commission has determined to affirm the ID in all other respects, it has made

certain additional findings and adopted certain different and additional

reasons for its conclusions. Thus, the Commission has determined that there

is a violation of section 337 of the Tariff Act of 1930 in the unauthorized importation into the United States, and in their sale, of certdin dynamic

random access memories which infringe claims 1, 2, 3, 4, 5, or 6 of U.S.

Letters Patent 4,081,701, claims 6 or 7 of U.S. Letters Patent 4,543,500, or c

claims 6 or 7 of U.S. Letters Patent 4,533,843, and which have the effect and tendency to substantially injure an industry, efficiently and economically operated, in the United States.

Having determined that there is a violation of section 337, the

I Commission considered the questions of the appropriate remedy, bonding during

the Presidential review period, and whether public interest considerations

preclude the issuance of a remedy. The Commission considered the submissions

of the parties, comments received from members of the public and the U.S.

Customs Service, and the entire record in this investigation. The Commission

has determined to issue a limited exclusion order prohibiting the entry of

infringing DRAMS of 64 and 256 kilobits (and any combination thereof such as 128 kilobits) manufactured by Samsung Company, Ltd. and/or Samsung

Semiconductor & Telecommunications Co., Ltd., whether assembled or

unassembled. The Commission's order also prohibits the entry of infringing

DRAMS of 64 or 256 kilobits (and any combination thereof such as 128 kilobits)

manufactured by Samsung Company, Ltd. and/or Samsung Semiconductor & -5-

Telecommunications Co., Ltd. incorporated into a carrier of any form, including Single-Inline-Packages and Single-Inline-Modules, or assembled onto circuit boards of any configuration. The Commission has also determined to

prohibit the entry of computers (such as mainframe, personal, and small

business computers), facsimile equipment, telecommunications switching equipment, and printers containing infringing DRAMS of 64 or 256 kilobits (and any combination thereof such as 128 kilobits) manufactured by Samsung Company,

Ltd. and/or Samsung Semiconductor & Telecommunications Co., Ltd. I The Commission has also determined that the public interest factors

enumerated in section 337(d) of the Tariff Act of 1930 (19 U.S.C. I 1337(d)) do not preclude issuance of such an exclusion order and that the bond during the Presidential review period should be in the amount of $0.22 per 64K DRAM

I. and $0.52 per 256K DRAM.

ORDER

Accordingly, it is hereby ORDERED THAT--

1. Dynamic random access memories of 64 or 256 kilobits (or any combination thereof such as dynamic random access memories of 128 kilobits) manufactured by Samsung Company, Ltd. and/or Samsung Semiconductor & Telecommunications Co., Ltd., or any of their affiliate4 companies, parents, subsidiaries, licensees, or other related business entities, or their successors or assigns (hereinafter "SAMSUNG"), that infringe claims 1, 2, 3, 4, 5, or 6 of U.S. Letters Patent 4,081,701, claims 6 or 7 of U.S. Letters Patent 4,543,500, and/or claims 6 or 7 of U.S. Letters Patent 4,533,843, whether assembled or unassembled are excluded from entry into the United States for the remaining terms of the patents, except under license of the patent owner or as provided by law; -6-

2. Dynamic random access memories of 64 or 256 kilobits (or any combination thereof such as dynamic random access memories of 128 kilobits) manufactured by SAMSUNG, that infringe claims 1, 2, 3, 4, 5, or 6 of U.S. Letters Patent 4,081,701, claims 6 or 7 of U.S. Letters Patent 4,543,500, and/or clgims 6 or 7 of U. S . Letters Patent 4,533,843, incorporaked into a carrier of any form, including Single-Inline-Packages and Single-Inline-Modules, are excluded from entry into the United States for the remaining terms of the patents, Kxcept under license of the patent owner or as provided by law;

3. Dynamic random access memories of 64 or 256 kilobits (or*any combination thereof such as dynamic random access memories of 128 kilobits) manufactured by SAMSUNG, that infringe claims 1, 2, 3, 4, 5, or 6 of U.S. Letters Patent 4,081,701, claims 6 or 7 of U.S. Letters Patent 4,543,500, and/or claims 6 or 7 of U.S. Letters Patent 4,533,843, assembled onto circuit boards of any configuration, including memory expansion boards, are excluded from entry into the United States for the remaining terms of the patents, except under license of the patent owner or as provided by law;

4. Computers (such as mainframe, personal, and small business computers), facsimile machines, telecommunications switching equipment, and printers, manufactured by SAMSUNG, containing 64K or 256K DRAMs (or any combination thereof such as dynamic random access memories of 128 kilobits) manufactured by SAMSUNG, that infringe claims 1, 2, 3, 4, 5, or 6 of U.S. Letters Patent 4,081,701, claims 6 or 7 of U.S. Letters Patent 4,543,500, and/or claims 6 or 7 of U.S. Letters Patent 4,533,843, are excluded from entry into the United States for the remaining terms of the patents, except under license of the patent owner or as provided by law;

5. Computers (such as’mainframe, personal, and small business computers), facsimile machines, telecommunications switching equipment, and printers, containing 64K or 256K DRAMs (or any combination thereof such as dynamic random access memories of 128 kilobits), manufactured by SAMSUNG, that infringe claims 1, 2, 3, 4, 5, or 6 of U.S. Letters Patent 4,081,701, claims 6 or 7 of U.S. Letters Patent 4,543,500, and/or claims 6 or 7 of U.S. Letters Patent 4,533,843, are excluded from entry into the United States for the remaining terms of the patents, except under license of the patent owner or as provided by law; -7-

6. Pursuant to procedures to be specified by the U.S. Customs Service, persons seeking to import products identified in paragraphs (2), (3), (4), or (5) of this Order shall, prior to the entry of such products into the United States, certify that they have made appropriate inquiry and thereupon state that to the best of their knowledge and belief any DRAMS incorporated into, assembled onto, or contained in such products are not covered by this Order; 7. The dynamic random access memories ordered to be excluded are entitled to entry into the United States under bond in the amount of $0.22 per 64K DRAM and $0.52 per 256K DRAM from the day after this Order is received by the President, pursuant to subsection (g) of section 337 of the Tariff Act of 1930, until such time as the President notifies the Commission that he approves or disapproves this action, but no later than 60 days 0 after the date of receipt of this Order by the President;

8. Products identified in paragraphs (2), (3), (4), or (5) of this Order are entitled to entry into the United States from the day after this Order is received by the President, pursuant to subsection (g) of section 337 of the Tariff Act of 1930, until such time as the President notifies the Commission that he approves or disapproves this action, but no later than 60 days after the date of receipt of this Order by the President, under bond in the amounts identified in paragraph (6) of this Order. Persons importing such products shall certify to the best of their knowledge the number of DRAMS subject to this Order contained in such products, pursuant to procedures to be specified by the U.S. Customs Service;

9. The Commission may amend this Order in accordance with the procedure described in 19 C.F.R. I 211.57; 10. A copy of this Action and Order shall be served upon each party of record in this investigation; and -8-

11. Notice of this Action and Order shall be published in the Federal Register.

By order of the Commission.

Kenneth R. Mason Secretary Issued: September 21, 1987 TABLE OF CONTENTS

Table of Abbreviations ...... ,.iii

PROCEDURAL HISTORY ...... 4 GENERAL BACKGROUND ...... 14 APPEAL OF ORDER NO . 22 ...... 16

The '764 Patent: Process for Encapsulatinq Electronic Components in Plastic ...... 18 Background ...... 18 Claim Construction ...... 18 Validity ...... 21 Infringement I ...... 25 Samsunq's Process ...... 26 Analysis ...... 26 Conclusion Regardiny the '764 patent ...... 33 The '747 Patent: Hiqh Density. High Speed Random Access Read-Write Memory ...... 33 Prosecution History Estoppel...... 34 Doctrine of Equivalents ...... 36 Conclusion Reqardinq the '747 patent ...... 40 The '701 Patent: Hiqh Speed Sense Amplifier for MOS Random Access Memory ...... 41 Conclusion Regarding the '701 patent ...... 44 The '500 and '843 Patents: Sense Amplifiers ...... 44 Background...... 44 Claim Construction...... 45 The '500 Patent Claims ...... 45 The '843 Patent Claims ...... 46 Validity ...... 46 Enforceability of the '500 Patent ...... 46 NEC's Licensinq Defense ...... 51 Infringement ...... 60 THE DOMESTIC INDUSTRY ...... 61 SUBSTANTIAL INJURY ...... 75 I TLNDENCY TO SUBSTANTIALLY INJURE ...... 79 REMEDY ...... 82 Exclusion order ...... 84 Cease and desist orders 92 - ...... 2. BONDING ...... 94 THE PUBLIC INTEREST ...... 96 ADDITIONAL VIEWS OF CHAIRMAN LIEBELER AND VICE CHAIRMAN BRUNSD.LE ...... 98 DISSENTING VIEWS OF COmISSIONER ECKES AND CUWISSIONER ROHR ON REMEDY AND PUBLIC INTEREST ...... 105 APPENDIX iii

Table of Abbreviations

ALJ...... the presiding Commission administrative law judge (Judge Saxon)

C.A.F.C..... U.S. Court of Appeals for the Federal Circuit

C.C.P.A..... U.S. Court of Customs and Patent Appeals (one of the predecessor courts to the CAFC)

DRM...... dynamic random access memory device IA(s) ...... Commission investigative attorney(s) ID...... initial determination K....,...... kilobit

H...... , megabit

NEC...... NEC Corporation

I NECEL...... NEC Electronics, Inc. (NEC's U.S. subsidiary)

PTO...... U.S. Patent and Trademark Office SIM...... single-incline-module SIP....,.... single-incline-package .. TI...... Texas Instrument, Inc. TI Ex.....,. Texas Instrument, Inc. exhibits Tr...... transcript of evidentiary hearing

PUBLIC VERSION

UNITED STA I'ES INl'ERNA'I'IONAL "I"CII.)E CoMPI.tS3.tON Washirigton, D.C. 2.0436

In the Mattar of t 3 CER'TA'CN DYNAMIC kt6NDOM ACCESS 'Inve s j.gcxt ion No , 3 7- I'F1-24 7. MEMORIES, 1 COMPONENTS "I'HE:R€OF 1 AND PROOllCTS CONTAXNXNG SAME

The Commission institutad this invcstiyatinn riri March 1.9, 1986, in response to a complaint filed on February 7, 1906, by 'laxas :Instruments, 11ic

("11) of Dallas, 'faxas. The investigation is to determine whether there is a violation of section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) and 19

U,S,C. g 1337a in the importation and sala of certain dyridmic random access memoric-s (DRAMS), 2' The complaint alleged that such importation and sale by the nincteen named respondents constitcntc! unfair rno thorls of coinpcltiti.on and unfair acts by reason of infringement of certain claims of 1.w II.Ii. pataiits

these unfair methods of competition and unfair acts i s 1-0 dcstiroy or

.-..I/ See a1 sa, Ciddit;i.onal Views of Cliairman I..iebelnr and Vice Chai.i-rnaii i. Vi. 13 runscla IQ , I)i s s wit rig aw s o F Comni i. s s ionar I.::(: kes and Conimi :s s i or)(:!r Rohr on Rwiiody and Public 1nt;erest.

Notice 53. ;?/ af in\/c>stigat;i.on, Fed. Reg. 9537 (Mal-ch 19, 1986)- substarit j a 1.l.y inj uro ari j rrclu s 1,ry , eff 1. c I.erit1 y arid ecorionii (:a 3. :I y opc.'r.atod , j n

the United Stat~sI

On May %.I., 3.987, tl'icz pi"esi.djng admini stra.l:i.ve law judge (h1.J) isstied ari

initial determination (:T.U), firitling that thcrc? is a violation OF section 337

and 19 U.S.C. S 13372 in the importation arid sale of certain DRAMS by two of

the remaining respondents, and that there is no violation of section 331 and

19 U.S.C. S 3.337a in the importatjon and sa1.e of cortairi DRAMS by the other

four remaining respondents. 011 July 24, 1987, the Cornmission 5/ ordered review of portions of the ID, vacated othar portions of the XD, --

arid determined not to review the remainder of the ID, which thereby became the

I detarmination of the Conimission. 'The Commission requested writteri

subiiiissions responding to specific quastions raised Iny Lhc? issuas on review,

as wel.1 as sihrnissioiis concernj.ng remedy, bonding, and the public

*.3/ Of those four i-emaining rc!sporidents, two (Hjtachj , Ltd, and Hj tachj America, Ltd,) haw since baen termi.natcxl from tha investigation on the basis of a :Licerise arid settlt-lmont agreemirrit. 52 Fed Reg. 26577 (d'uly 15, 1981).

_-4/ The origina.1 dtxndline for Commission rev ew, ;July 10, ,1981, was extended the by Commission. 52 Fed. Reg, 23631 (July 8 1987) I

-5/ The Commission vacated those portions of the :LD concerniny the Hitachi respoiidents, based ori the settlement agreement.

:L987). We -6/ 52 Fed, Reg. 29077 (hug. 5, note that some of the parties seem to have attempted to preserve issues for review by using such statcrmerits as "the AI-J made other erroneous findings which should he rawiewcd. 'I Such statements do riot properly raise issues in the! mijlnrier specified in the C.F,R, Commission's ru1.e~. 3.9 S ~:l.~),54(~)(~1)(i~.).-(j.\/),We further notc! that wo rel.ied on the fact that the pinrti.es abandoiied certain Issues when WQ made our determination to review only selectod parts of khc? XI), and our present determination relies on the fact that tl~epartias raised on1y I Jmited CUI challenges .to the .Factual findings and lagal conclusions contained in the 3

7/ interest. .-

Having reviewed the record in this investigation, including the written suhniissions of the partins concerning t;he specific qrmstions raised by t;he issues under. review, the Commissjon has determi.ned that there is a violation of section 337 of the 'Tariff Act of 1930 in thc? unauthorized importation into the United States, arid in the sale, of certain dynamic randoni access memories manufactured by Samsung Company, Ltd. and/or Sanisiing Somiconductor Ei,

'felacommui.licatioris Co., I.td., which infringe claims 1, 2, 3, 4, 5, or 6 of

U.S. Letters Patent 4,082,701, claims 6 or / of U.S. Lattcrs Patent 4,543,500,

I or claims 6 or 7 of U.S. Letters Patent, 4,533,843, and which have the effect and tendency to substantially injure an industry, eFFiciently and economically operatod, in the United States.

The Commission has determined to issue a limited exclusion order prohibiting the entry of infringing DRAMS of 64 and 256 kilobits manufactured by Samsung Company, Ltd. and/or Samsung Semiconductor & T'al.ecommunications

Co., Ltd. The Commission has also determined that thr! public interest factors enumerated in section 337(d) of the Tariff Act of 1.930 do not preclude

7/.... In addition to wi-itten submissions from the parties cmcarriincJ the issues on re\rir!w and the iss~icsOF rmedy, tiw public int;erc!st, and bonding, the Commission received wi-itten submissions from the U .SI Custonls Sarvica, the Ministry of 'rrada and Industry of the Hapub1i.c of Koroaz, and suhiiiissions from various companies which purchase and distribute DRhMs, and scrl 1 equipment arid materials to WRAM producers. 4

issuance of such an exclusion order a/ and that tlre bond durjrrg the Presidential review period shou1.d be in the alnourrt of $0.22 (nor 64K 1)HflM and DRAM. $0.51. per. 256K

g/ PNOCEDURRL IiIS'I'OHY

This investigation was instituted on March 19, 1987, in response to a TI, TI complaint filed by -lo/ complained of unfair acts and unfair mothods

of competition in the importation and sale of certain DRAMS, coinponerits

thcreof, and products containing the sqme, by reason of direct, contributory,

and induced infringement of certain claims of eight U.S. product patents, and DRAM'S the manufacture abroad uf the subject in accordance with a method , which, if practiced in the United States, would infringe certain claims of two

U. S I process patents. -"- The complaint a1 leged that thesc? unfair. acts arid

8/ Sse Uissenting Views of Commissioner Eckes and Commissioner. Hohr on Remedy and Pub'Lic Interest.

%/ Because of the length and comp1axit;y of the procaadjngs in this invastigation, only those aspects of thr! procedural history which .i.n\mlwed Commission determinations or which trave boen raised on rcview are discussed herein,

..-10/ Supplements to the complaint were filed on February 13, 2.7, and 28, 1986, in response to requests for further infor*mation and clarification by thG Office of the General Counsel. arid the Office of Unfair Import Investigations (01J:LI),

1I/ The teri patents at issue are U.S. Letters Patent 3,716,764, entitled PFocess for Encapsulating Electronic CoiirponcEnts in P:I.astic (the '764 patent); U,S. Letters Patent 4,043,027, entitled Process for EnCapsUl.?Atillg Electronic Components in Plastic (the '027 patent); U,S. Letters lJat:errt 3,541,543, elititled Diriary Decoder (the '543 patent;); U.S. 1.etters Pateiit 3,940,747, (Footnota continued on next pagc) methods of competition hawo the effect or tendency to destroy or sub!i.tarit:i.a:l.ly i ff i i i. i. n j ure an e i c Q nt 1y and aconom ea 1:I. y opa ra tad tlotnta s ,t c rit:l~i!St ry . "l'ha

al.l.egadly engage in the manufacture and axportat ion I;o or :i.mportati.on i.i.ito i,he States U,SI United of a1legedl.y infringing DRAMS, Eight; r.trsponderit;s al. :I.egedly

(Footnota continued from prewious piiigc) arititl ed High Donsity, High Speed Random fi(:ces!i H~atl-Wv.jLO Menlory (th~"747 ~ritiLl.~~cl patent); U.S. Lattsrs kvtxmt 4,08 L,7Ul, I-Iiyh Sp~wlS~rise hngIi.f:.i.er patent); for MOS Random Nccess Mentory (the '7O:l U I SI I...c!tt;crs I.'at;arit 4, 543, !NO, entit led High Perfor*lnanco 1)ynami.c Srmse fhpI:i.fi(>r wi:tAi Vol.taga :loorjt for liow (tho, fidclross Lines '500 patent,); U.S. Letters Piat~nt4,533,843, ontj,tlc?cl Hjqh Par.Formiinca Dynamic Sense Ampl.ifiar with Vol.ttage I3oost for Row fitltlrc>ss I...inas (the I843 patent;); IJ,SI Letters PiSterit; 4, 249, eri1,itl.d Circuj t MOS :1!34, 1:1'ii.;c?g1~t;h~I Capacitor Using :Implanted Region to Change 1'l.ircstiol.d (thc? ' 1.94 pat;ent) ; U.S. Letters Patent 4,240,092, entitled Random fi(;ce!js Memory Ce1.1. wj.th Different Capacitor and 'Transistor Oxide 7'hi.ckne:js (tha '092. I:mtent); arid U.S. Letters Patent 4,49!5,376, entl.tled Carrier for I'ritc?griStd C:i.rcuit (the I376 patent). 6

engage in the importation into and sale in the United States of al.l.~!g(atlly

infringing DRAMS,

F'ol1.0winy institirti.on, the invcEstigation was raferred to a prosjdi.rig

administrative law judge (ALJ). Tn response to a motion filc?d by the 'Toshiba FILJ respondents, on May 12, 1986, the issued an 11.) (Order. No. 7) designating

the investiga.tion "more complicated I I' 'The Coinmission determined not to rewiew

that IC), which thereby became the determinatioii of the Commission, 53. Fed.

Reg. 2.2143 (June 18, 1986). The deadline for completion of the investigation

was extended to Septomber 23., 1987,

Neither the complaint nor the notice of investigation specified on the

, public record the patent claims and products involved in the allegations TI against each respondant , -- Instead, filed a confidential exhibit with

tho complaint *-14/ indicating the specific claim(s) of each patent being

asserted against each specific product of each rcspondent. During discovery,

respondents were ordered to produce schematic drawings of thair products which

TI believed to be infringing. On May 9, L9U6, r'l: filed a Supplolnmt to t Confidential Eixhibit RC-I, in which j specified certain addj tj.onal products

of certain rcspondents which 'IX bclieved also infringed the patents in TI controversy. In addition, asserted in the Suppl.ement that om of

13/ Commissioner Eckes and Commissioner Rohr note that they have Fzservations concerniny the failure of a complainant to specify on the public record the patent claims and products at issue in the complaint. Nothing in this investigation has satisfied tham that this is appropriate, as a matter of Commission policy.

_I14/ Confidential Exhibit BC-1. 7

'376 piAtent), which previ,ot.isly Iiatl not ham in 1.:3s1.1ewith respect: to any of

IUE:C:'s products, NEC filed a motion to str:i.ke tkial; gorti.on of T:I:'s Supplement

of wh:i.ch allaged irifririgenmrit the '316 patent by NIX, argui.ny that t;he

inc:l.usiori of this a:I.lagatiori expanded the scope of the :irivest.igatioii, which oF cou 1.d be tlone only by anieridmerit of the cornplaint and notice investigation. AI J 'TI lhe ... granted NIX'S motion. (Order No. 2.2, Jurw 4, 1986) I sought

i-tsc,oris:i.deratj,an, or in the alternative leave to appaal Order 1\10, 22 to \:he

Colnrniseioii. The A1.J denied reconsideration, but graritad leave to fjle an

app1,icat;ion for int;erlocutor*y review, (Order No, 36, June '11, 1986 ,) The TI Fed, , Conmiissioii denied Is application for interlocutory reviaw, 53 Keg.

289138 (Nug. 13, 'L986)- k'ollowing issuance of: the fiL.;I's final 'tD, r.1: (appealed

the AI..J's cleterminatjori striking the a1.legatjo11 of infririgcrrncrit of the '376

patent by RIEC, It The avidaritj.ary tiearirig commeiiccxl on August, 18, 1987. was coiiducted

in five seyrnants, the first four devoted to the issues of patent validity and

infringement , arid the fifth tjcvoted to the affirmative defenses and economic

issues, The evidgntiary hearing was concluded on February 6, 1987, and the

recorcl was cl.os~don March 6, 1987. During the course of the proceadings

before the presiding ALJ, thirteen of the raspondents entered into set;tlament

agrwments with TI, and wOre teriiiinated from the iriverrt;igatioii I

..-.. ...---...... - .-.._.-*. -

.....-15/ Respo~~dentnNEC (Japan) and its IJ. S. subsid:iar.y I\KC;EL, are sonic?timas col'lectivaly refarrad to as RlliC. 8

On September 22, 1986, tho! Commission inwestiyatiwa attorney "' filed a motion requesting that the AI-J determine that tho circumstances of the

investigation warrant prasontation of evidence and ir\ryuinc?rits to th~?f9l.J

concerning the issues of remedy, the public interest, arid bonding, 'Ihe k1.J

detarmined that the ALJ did not have authority to dc:t on the mokion, but

certified the motion to the Commission for resolution. (Order No. 143,

SGptanibar 25, 1987.) On January 8, 1987, the Cotitmission determined that the

AL3 should not be authorized to hear testimony or receive evidcnce concerning

those issues. Commission Action and Order, 3anuary IS, 1987.

On November 20, 1986, TI and respondents Sharp Corporation and Sharp Electronics Corporation filed a joint motion to terminate the investigation as , to those respondents on the basis of a license and settlement agreemcmt.. On

December 23, 1986, the ALJ issugd an :LO terminating those respondents on the

basis of the agreement. The Commission determined not to review that TU,

which became the determination of the Commission. 52 Fad. Hay. 4393 (February

31, 1987), On January 5, 1987, and respondents Fujitsu imited t ujjtsu T.C 1. and Microelectronics, 'Cnc. filed a joint motion to twminatc! tha inwostigdtion as

to those respondents on the basis of a licotisc arid settlaniont agrecmcrit. On

,January 8, 1981, the ALJ issued an "I terminatinq those respondants on tho

basis of the agreament. lhe Commission determirted not to review that LC),

3.6/ attorneys from the Commission's Office of Unfai.r Import %weu.a1. ~%itrst;l.gat:ioris took part in the procaedings, 9

4393 which bcxame t;he detarmination of the Cotninissiori. 52 I::'c!d . I4aq , (I:G>hrt,iary

11., 3.987) * T1 On January 2.8, 1987, arid resporidents "roshi ba Corporat;:i.on arid "l'oshiba

America, Inc. filed a joint motion to terminate thQ lnvestiqi9ti.on as to those

resporiderits on tho basis of a liceri!je arid settl enwnt aqrc!omc!nt, On F'crI:)ruary

5, 1987, the AL.J issued an :ID terminating those respondents on t;ha ba:ii.s of

the agreement. The! Commission determined not to review that :LD, which became

Reg. the determinat;ion of the Commission, 52 Fcxl. 7495 (March i.t, '1987).

On February 2, 1987, T':T and respot7dents Matsushi ta E:] octie*ic :I:ridustr.iaX

CO, , Ltd,, Matsushi ta Electronics Gorp, , and Mdtsush.ita El.e(:tric CoriWriati.t>n

of America filed a joint motion to t;eriiiinat;c! tha iwestigat:i.ori to thoso ,

respondents on the basis of a liccanse tnnd Sat; t1ernc:iit iwjrccninc!ri.t;. On I~(-~l:)ri.iai~*y

32, 1987, the AI..J issued an 31) tcrmiriati.rig tliosc? rtrspon(lerits on t,ha lnasjs of

the ayreoment , 'l'he Commission tlotc!r'minatl not 'to if*c:!vi(!iu .l;liat :HI, which bacarne 9!5F)4 the determination of the Commission. 52. Fed, Reg. (Miarch 25, 3.987),

On February 4, 1987, I'S and respondents OK'T Iilectr c 'I:nt:lust~-y Coininany and QKI America, Iric. filed a joint motion to terminate the investiqat;iori as to

those resporidmts on the basis of a license arid sc>tt;l(.rm rrt ayro?chrnc.rnt, On the Fekiruary 17, 1987, tho AI..J i!jsued an I:n terminating t;ho:;e resporitlerit:j on The bas:i.s of the agrament, Commi.ssion detamiiricad not to r~\/i.aw,that :HI,

wh:ich Inc!cainci thc datc!t-mi.I.iat;i.oii of the Comn)j.ssjori, 52 Fed, rex^, 9553 (March

25, 1.987). TI: On F-ehruary 6, 1987, arid rC?!iporidetlt!j Mit;r;t.lbj shi. F:I.ectri.c Col*-poiwl:iori

;9rid M:i.t;!;~~bi!;l~i.E:1.~~:~tron'i,cs Ainerica, :Cnc , f:i. l.~da jo,irrt motion t;o t;~!~.*ininatct;hc 10 investigation as to those respondents on tiha basis of a licmse and set;t:l.einent; TE) agreonierit, On February 17, 1.987, the fY...Jissucxl an tc!r.iiij niatirig those respondents on .the hasis of the agreom@nt. 'Tho Commission dotormined not to II:), whj j the Fed, review that ch became the detcrrnliriat on of Commi s s ion, 52 '. ,

Reg. 9553 (March 25, :1987). NE:C On Clpril. 24, 1986, the respondents filccl a motion for summary detarmination terminating the inwestigation CIS to theiii. IUEC argued that it had ari iniplicrd licorise under the '500 arid '843 patents, and hc?nc~could not infringe those patants, bacausa of its oxpress licanso From TI under U,S. (the Letters Patent 4,239,993 '993 patent) I 'The '500 arid '043 patents are the 11, only patents in controversy asserted against NEC by I'he '993 patent is not; itself at issue in this InvQstigation, but both the '500 and the '843 patonts are continuations of the '993 patent. The AI..J denied NIX'S motion on tho ground that there existed genuine issues of material fact which rendered summary determination inappropriate. (Order No. 16, May 24, 'l986),

On September 3, 1986, respondent NEC filed a motion for summary determination, and respondent NEC Electronics ,Filed an alternative motion for summary determination. fit the September 22, 1986, session of the evidentiary hearing, the ALJ denj.ad those motions, stiAtiny that beccai.iso th~ywoiv Filad after the evidentiary hearing commencd on kugust 18, 1986, the motions were not in complianca with Commission rule 210.50 (19 C.F.R, S 2'10.50), which requires that disposit;iwe motions be filed at loast 30 days pi-inr to commencoment of tihe ewicleiitiai-y hearing. On Saptalnbor 24, '1986, ,the IUEC

filed the the respondents a motinn .For reconsideration of nI...J's chnial, fit I. 1

Octobar 6, '1986, sassion of the a\r:i.d(!I.i.t.i.ai-yI'icsd-iny, ,bI'i~AL.J dani~I the fi for reconsj.clerat.i.ori, OII Octobei- 9, :I 9OG , NkX rc!spondGnt.s lc!d a request

Leave to .Fi 1.e an ai:)pI,icatioii for intc?rlocutoi*y reviaw crf the Al...J's ruling, ...J' on ~l"I.ieAI granl:c?d that motion October 22, 1906, (Order No. 1149) I The

Coiirmiss:i,on cleterniincid to deny RIE:C:'s app'licintion for intarlocutory review. 52

Fed. Reg. 7496 (March 11, 1987).

On January' 6, 1987, the NEC rospoiideiits again filed a motion requesting it termination of the investigation as to thom. NEC argued that should be terminated from the investigation because: (1) the '500 arid '843 patents (as noted, .the only patents asserted against RIEC) arc! iriva'1i.d for double

patenting; and, in the a:l.terriative, (2.) NEC has an jmpliocl license under those two patents. 011 March 18, '1.987, the 61-J i.ssud an '111 (Ordar Rlo. 3OG) granting the Nt:C:'s motion for. termination on grourid that NFC Iias an imp1 iod 1 j CQIISB

under the '500 arid '843 patents, ' but I-ejecting IUEC's dor.ibl.e patantiny defense. '1 he Commission determined 'to. rcviaw the :l:l) and rcnraiid,kd it to th(-I ID ALJ with instructions to issuo ;In in coriforiiiity with rule 210.53(d) (19 F. the C, R. 210.53(d)) that included findings arid coiiclt~sionsriccossary for disposition of all material issues of.fact, law, or discretion 1:)resonted in

the record with rospoct to NEC and tho other respondents, 52 Fed. Reg. 13324

(flpril 22, 1987).

On March 20, 1987, the Hitachl. rosporrdoiits filed a motl.or1 to terminate

the investigat;ion as to thcm. Hitachi, .lil<~NE(:, arguad that it has an

iml:ilied licenqe undt:!r tho '500 and ' 843 patents. Hitachl a1so argued, with

respect to the '376 patent (the only other patent iAs:SQrtc?cl <>CjiAiiist Witachi), 12

that the DRAMS manuvactured by Hitachi do not have a tendency to injure the

domestic industry because Hitachi had di scontinuad making arid selling the only DRAM's TI that had alleged infringe that patent. The 14L.d' issued an 1.0

granting Hitachi's motion with respect to the '500 and '843 patents, and No. 2, denying the motion with respect to the '376 patent. (Order 324, fipril

1987). The issuos and arguniants raised by the Hitachi motion and tho :Ill wQra IO almost iderrtical to those involved in tho NIX (Order No, 306). "I'hc!

Commission determined to review and remand the 1:D to tho fit,.;) with instructions

to issuo an ID in conformity with rula 220.53(d) that includes findings and

conclusions necessary for the disposition of all material isswas of fact, law,

or discration presented in the record with respect to Iiit;,xhi and the other I respondents. 52 Fed. Reg. 18030 (May 13, 1987).

On May 21, 1987, the CSLJ issued what is by far the longest IO in

Commission history. The ALJ carefully addressed the issues of piatant validity

and infringoment involving the .ten patents in controversy, and addressed the

economic issues involving the respondents remaining in the investi.gatioi7. In

brief, the ALJ determined that ,there is a violation of section 337 in the

importation and sale of certain DRAMS by respondents Samsting Company, I..td. and

Samsrriig Samicondwctor and Te Lcconimunications Co. , Ltd. 'I'ha? AI...;I ft.irthw

dcterrnincxl that there is no viol.atjon of section 337 in tJrc j.mportijlti.ori and of sal.@ certain URfiHs by respondents Ilitachi, L.I:d, , Ilitacki ninori,ca, I..td,, Nk:C

Hitachi, l...t;d. and Hitachi America, Ltd. (the Hitachi respondents), fj.led a Ray. 26577 L987.) respondents. 5% Fed. (July L!5,

all parties rc>maining in the investigation, the Coiiimiss:i,on, on ;July 24, '1981, determined to review cortairi portions of tihe AIJ' s final ID:

1. Whether 11.5. Letters Patent 3,7:L6,764 is \ra.I.id and infringed by the accused imports. Review was limited to thtr val.idit;y arid infririgeintrnt issues arising owt of the interpretation of the term "central region" in the patent claims, and the question of infringeinfirit under the cloctrinc:! of equiva Lents,

940,741 is 2. Whether U , S. L.etters Patent 3 , Val. id ancl irifr-iiiged by tht! Review accused imports, was limited to the cywstion of i.rift-inycment under the doctrine of equj V(a:l.elit:j. U. 4,OU id 3. Whether SI L.et;ters Patant 1, 701. is ~1.ancl inI'ri.iigt!d by the accused imparts, 4 U 4 543, S , Whether , S . I...ett.eu.s Patant 500 (t;hc! I !iOO pat,arit) arid U, , 533,843 U43 I...et;ters Patcnt 4, (the I patent) diw wtal:i.cl avid .i,rifi*.j.n(rt\d by t;hc accused imports,

TI'S 6, Whather complainant acti vitjc!s , and thoso of j ts 1j cfirisc?~!~, wit;h respect to the patxrits in iss~t~constitute ;3ti ind~ist;~"yor intlt.irjk;ri,es, United efS1:icient:I.y and economical ly operated/ j n the Stat;aa , 7, Whether the infringing imports have the effect or tencltmcy t;o sulnstaritl.iiI.ly injure a domestic industry or .i.tId~.I~j.I;~i~~~j,

i if i '1he Conim i s s ion requQ s .I.: e d wri t tie n s 1.1 Inm i s s ons c o nc e tw i ng s QQ c (1 14

determinod not to review the remainder of the ID, which therl;!by kecame the

determination of the Comnrission The Commission also requested written

submissions concerning the questions of mmedy, the public i.nterest, and

bonding. 52 Fed. Reg. 29077 (Aug. 5, 1987).

17/ GENERAL RACKGROIJRID

0 dynamic random access memory or DRAM is a monolithic jntegrated mcmory of circuit containing thousands of mr!mary storage calls (bits), each which

~1scml1.ycontains a transistor arid capacitor, H stored program can bs created

in the DRAM by charging selected capacitors. The storage cells in a DHnM are

ariwyed in a rectanguI.ar* array of columns aiid rows, which al.lows each cell to ,. be accessed independent ly (random access) . 'rhe electr4cal charye stored in

the calls must be regenerated (or refreshed) both after being accessed, and

periodically because of charge leakage. This I-acyuirad regeneration of tho

charge makes the device "dynamic," as opposed to other random access memory

circuits, called static RAM'S (SRAMs), which do not require refresh charges.

DRAMS vary in the speed at which the storage cells can be addressed (access

time), and in density (the number of capacitors per [)HAM, exprassad as

multiples of 1,024 bits, called kilobits, abbreviated K),

[)RAMdesign and production trxhno'logy have e\/o'Lvad continually since the

introduction of the 1K DRAM in 3.970. Every several years, IIHAM capacity has G4K, quadrupled, i .e., fo 1. Lowing the :I.K WflPl, the 4K, 'I.EjK, and 256K UIMM, WQI-Q

"-17/ A brief tcxhnological history of the DRAM can be founcl Iii Lhc TI) at, of H 30.41, and a glossary terms can lne fowid at fippc:!ndi.x to tke 1:lJ. 02.4 introduced , and in 1.at;a 'l.905, the 1. mnqabit ( I., , 000 hit:j , Ie*apI**Qsarlt4as of 3.M) DRAM was introcl~~cedirit;o the U,SI nii31-I<<\tI I.'w~ tIie!j(! SLI~CMX~~II~J capacity ORRMs is known (3 "gQr\Qrir\tiOn"hy the i.r\d(.I:jt;ry . .. . successl we I he time betwc!cn DRfPl ganc,i-at:i oris has kacomc compressed , As higher capacity DRAMS are inl:rocli.ic~d, dc?marid Poi- lower. ~qw:3.t;y I.)lifiMs 16K 64K d~~I.i~.ies.Thus, by 1986,, sal.es of URkMs wcr~snia1.1, sa3es of Dl.(AMs were dec lining, and 256K DRAMS were becoming tha dominant generation. 'The ability of a DRAM manufacturer to compete depends on its ability to keep up with competitors both in developing new generation DRAMS and in brinyiny the new generation to market. This involves substantial research and development

in DRfW design, structure, and function. It also inwo'lwes a substantial

investment in production teclinology and methods , and a substantial. "ramping up" affort to bring production yields to a commercially wiahl~! lewr?l.

DRAM production can be divided into sawcral basic manufacturing

operations. l'hc initial stage is tho growth of a silicon crystal, which is

then sliced thinly, and one surface is highly po1.islied (silicon wafer or slim

productiari) . --I*/ Onto this surface is imprinted 1.1~el.~ctr.icial cii-cui1.r.y DRAM'S which performs thc! function. 'This procans is known drr wtxi=er.

fakwication, and is the core of tho "front; eiid" opcratioii:s of IIHCIM

procluction. Waf er Fabrication inwo lvas repmtad photo1i.thocJraphj.c steps, and

the implantation of impurities (doping) in precise dispositions on the silicon

_..-

--18/ Si1,icon wafers arc LIIied in the pi-oduction of many 01;hei- seniiconduct;ors in addition to DRAMS. 16

wafer to .Form the transistors, capacitors, and othar Functional electrical

elements of the DRAM. Following wafer fabrication, each individual chip or

"die" on the wafor is electrically tested, and dafectiwe dica ara marked for

discards, Finally, the dice are cut apart, and each functional die is wire

bonded to a metal load frame and encapsulatad in, usually, a plastic or

ceramic housing. After final elactrical and environmental testing, the

functioning DRAMS are ready for sale. The process of wira-bonding,

aricapsulatirig, and testing are referred to as the "tmck--ond" operations.

DRAM's are sold to a wariaty of intermadiata producars, makc! circuit

boards, and to end-users, such as manufacturers of conipul.ars, coniputcr

peripherals, talecommunications equipinant, iAnd othav. e 1actroni.c: daw ices I

rquj ring a dynamic mcmory capacity I

NO. Y.9/ RFPEAI- OF 0HUI::H 22 -.-

'1-1 has appealed the AI.J's detarnrination striking the a1 legation of

infringement of .the '376 patent hy NE:C. NE:C opposcd '11's patitian for rewi.~w

on this issue.

The action of the AL.J in granting NE:C's niotion to strike TI'S a1.legatj.011~

of irrfr:i,ngc?mgnt of thc '3'76 patent is arialagous in smhstanca and offect to tha

denial of a motion to amend a complaint;. Indeed, the AlJ specifjcal.ly noted

thc ,tl.rat, in wiew of the circumstancas of thc investigation, f3I.J WrAs deciding th motion to strike by appl.ying the standards applicalnlc to a motj.on to animd

I...... __..._ .I" ...... - .. .--._...... - 'L 7

evidentiary hewing.

is the AI-J that tkia appropriate standard fiw assessj.ng NE:C:'s matior) the of in st;andard for amendment a complaint sat forth c..:otirmission rt.11.a %.'LO. 22(a).

We bQ1iovcr that tho FII...J's determination was correct, and therefot**e we affiriii I Order No. 22. I. Bac kgray,m;l

U,S. Letters Patent 3,716,764 (the '764 patent) issued on Feki-uary 1.3,

1973, and is assigntld to 'TT, Claims '1.6, '17, and 19, the claims at issue, claim a process fur manufacturiny semiconductor dcvl.cc>s. '"The A1.J found claims 16, 17, and 19 of the '764 patent valid, arid infringed by Samsurig under

the doctrine of cqtiiwal.erits. The Cotninission datarminad to iceview the AIJ's

findings of val.i.dity arid infringement arisjng from thRI..J's i ntorprstation of the 24/ the term "cmtxal reyion" as it appears in claims. -'- On raview, thc

Commission datcrminas that ,the '764 patarit is valid mcl riot infringed. E)/ ,

claims based on the language of the claims, tlw spclcjfica,tj.on, the prior art,

2J The patents at issue on review can be found in the Appendix to this opinion. ID A detailad description of the cl.aimed invention is contained in the at 45-58,

E/ 52 Fad. Reg. 29077-9 (hug. 5, 1987).

-25/ ..- Chairman Liebeler and Vica Chairman Brunsdala wou1.d affirm tho AL.J's findings regarding validity and infringemcmt of the '764 patent, See their Add it iona 1 Vi~ws , jrnfing.

221 Fromson v. FIdvarice Offset Plate, :I:iic,, 720 F.2d 1565, 1569, 2.2.0 U,S,P.Q. 1'137, 1142 (Fed Cir, 1983). 19

,

IO, ._I30/ U,S. I...~t;tersPatwit 3,716,764, col.. lints 40.41I 20

ccntrial iwgion of the assombly , Clause 16(c:) i.3 si,mil,w l;o cla~isn1.6(k)) in the ps that it rc>fers to connecti ng crloctrodos on the wafer to conductor stri

tha,t are at the central region. Clausc! t.ti(d) speciFi.Qs that tho central

region of the assemh1.y is enclosed irr plastic to "surround tha wafer arid lead

wires and part of the conductor strips." I'his clause descri.bes the claimed

process wheroby the portion of the lead framo which contains the conductors

and wafers, i.Q. , the cantral region, is encapsulatnd, k'inal ly , the last !jt,op

of tho process, as claimed in cl.a~iseZti(e), requires that thc conductor strips

be severtxl at "posi,tions spaced from ,the cerr.kr&l ragion t;o Ql.:i.miniatc" l,ha , raniairider of the nieta:I sheet. The refererice to central ragjorr iri tlic! sc!vet*i ng

the be by Sanrsurrg, k~ecause leads coi.ild riot sclvared at posj tions spaced Ti-oni 33/ the central region cis required hy clause! .Lti(o). --

A:ItIiougI'r the specification docs not define the term ceritral. region, it A describes the c I.aimed process in detail. carQFu.1I-oadiny of the specification supports the above definition of the term "centra 1 34/ g/ region,'I -

III, Validity ID'S it: The Commission reviewed the validity C1etemlinat;:ion as rel.ated Lo of t;he interpret;ation of the ''central region." "rlw tliscu!$s%on wtnI.idity is

limited accordingl.y, l'hc Commission adopt;:$ thc f\I..J's finclings of fact aiid concl.usions of law to .the clxlxnt they are not .i.i.ic~,ti!~istaritwith the i Comnii s s ion ' s dateriiii nat oil .

Respoiid~ntsarguod that early samj coiidiictxw eiicapsul at ion work of :CBM anticipated the c l.aini(?d invention. 'r'1-10 fl1.J F~LIII~tihat titic! pi**iorwork at .I:13M did not anticipate the claimed invention. Dr'. Edward Wajcla of J.UM desi.gnc?d a One miniaturized circuit that was eiicapscil.atcd. of Wajtia' s devices was comprised of: encapsulated transistors and diodes suspended bc>twcan leads of a

of frame. --36' Wajda's device was made by ctdtting away a center portion a 3 7/ metal sheat so that the strips did not extend over ttw entirc! rrhec!t. .-.".-

The frame was shaped like two combs with the teeth extending toward cmcl'i other.

The RLJ cornparad aach process step anutneratod in c1,a.i.m 1.6 with t;ha prior 22

art; process of Wajda, 3*/ '1 he AI. J found that Wajda' s pi-occes woulcl sati.sfy

step did (a) of clai.nr 16. .."'--'I9/ tjowcver, Wajda's procc:js according to I.I~Q ()I.,;,

not satisVy staps (b) and (c) of cl.ii1.m 1.6 sinco Wajdii (.!i.ical:)s(.il.at;acl w/ scmiconductor wafers prior to attaching' them to tlia r:oriductor* strips,

According to the lar~guiw~eof claim 16, Wajda' s process did 1101; "concluct;i\/ely

connect on6 face of a semiconductor wafer to one of said conductor strips" or

"conductiwely connect electrodes on the opposite face of the wafer to

conductor strips." I-.41/ In Wajda's process, after tho oncapsuhted

semiconductors were attached to the device, the portion of the lead frame

containing the semiconductors was than encapsulated, so that six strips

I (Leads) extended from the side of the encapsulatd package. Clause L6(d) is

therofore satisfied by Wajda's process, as tha RI..J found. The AI.;)' also found .In that the severing step of clause 16(~)was satisFisd. 1.--''I summary, the

Commission concludc?s that; the Wajda process docs not; antici patc tha clailrled

invention because it docs not disclose! !jtal:)s I.tj(k)) and (c), c:l.ai.lns :I./ arid 1.9

are not anticipated because thay are dapandant on claim 1.6.

38/ fi detailed description of Wajda's process and the AI.J's analysis is in %e .CD at 64-69.

-39/ Id, at 68-69,

...-40/ ID at 65, lr 1185, 1177--3.3.80, Matsushita Physical Exhibit Id,

I.-41/ U.S. Letters Patent 3,716,764, col., 10, 1.ines 44-49. In g/ at 70. 3, 43/ Resporidents a I. .leged that IJ, SI l...~ttors I:'iatant 348, 105 --'.-. (Doy le I 105)

anticipated or rendered obvious the claimed i.riveriti.on, DoyI.o ' 1.05 discloses

an encapsulated somicont.l\.ictor device, The samicontfuctor dew ice (wafar) is AM soldered betwaen the ends of two conductor strips, 44/ The t.let;erminacl that the Doy:le '105 patwit disclosed most of the el.enit,iit;s cliainisd iri the '764 steps patent, but that Doy'le "1.05 did riot disclose 16(b) and (c), With

respect to step 16(b) the A1.J stated .-...I.*

The ' 105 patent does not disclose "coriductiwe1.y connecting oncl! faco of a semicoiiductor wafer to om of saj.d conductor strips in the ~~-_tr,~l-,,_r~y~~r~"becausc it teaches the sol.doriiig of a samj conductor device batw~eiitwo conductor ],cads at the ends of the two l~ads,riot in. the cmter or midpoint of the coiiductor. 451 , TI?@ Commission disagrees wi.th the f\l..;J's detxrmiiiatioii that step 16(b) is

not satisfied by Doyla '105 bacausc lhy1.e ' 105 shows sol.dcririg a wafor botwenn

two conductor leads in tha central rayion of a laad frame. "' A 1though Doyle '105 discloser$ clausc? 16(b), thc Commission agrees with the AI-J's

finding that Doyle '105 does not anticipate claim 3.6 of the '764 patent because Doyle '105 does not show step I.G(c). '" Stap L6(c) requires that one separate lead wires corinect face of tho scmicoridr.ict;or wafer to 0114 of the

I43/ Matsushita Exhibit 10'1. d.?/ Matsushita F'xhibit 103.,

...-45/ :ID at 74.

46-/ So:I.dcr conducts electricity,

-47/ -.I :I:D at 74, 2.4

.it Ici(a). :1ii summary, Doyle '1.05 doas not anticipate claim 1.6 becaus~ clues

wore not anticipated by Doyle '105, bocausc! thcy are dependent; on claim 16. X Rcsporiclents argued that the 1'7: -3116 Lransistor --!jO/ anticipated the '764 U.S.C. was 'TI patent under 35 f 102(b) because it sold by more than on~

year boPoi-e the affective fi tiny date of thr! '764 patent. '-.""I According to TI respor1de1lt:i, the process utied to produce the X-.386 transistor is the same

as ?;hat of c1.ai.m 16, 'Therefore, if the IT X--3tl6 transistor Was in commercial d use prior to the! iffectiwe filing dater of the '764 patelit;, the '764 pcaterbt; TI wou1.d he inwaI.id. l'he RL.7 found that the X-386 transistor was not sold or 511 'Tha usad by anyone except "I'J: prior t;o the critical filing (Jato, I--"

Commis:jiori expiwssly adopts that finding I 'i'h~Commission, ~QWQIICI-,t.loc?s riot

.. --. -... ..-....." ....-.----...... _

50/...... - 'Ihe "11 X--.386 trans i.:itor LJ~~San cxperimantal trans istor lnada by 'I1 zp& Ex, accortJi~~gto a mar1ua:I. proctrss, 111 40 F . 25

Basd on the above analysis and the analysis in the ID, th~Conmission determines that the claimad invention is not anticipated. 'The Conitni.ssion adopts the CII-J's determination that the invention of tlw '764 patent is nanabvious and adopts ,the ID with respect to that i.ssuc

, IVI 1nf;ringement TT a1 leges that Sanisung's DRAM encapsulation process i.nfi-irigas claims 16,

17, and 19 of .the '164 patent. The fl1.J (htotwi.irwd I:hat !hiisuiig's process E)5 / infringes thosQ claims undar the doctrinc? of (X~LI ivdlrxits I .".-- 'I'hc!

C:oninlj ssion claterniincd to rowiew on1.y tha issue of wkietkwr Saiiisu~~g'sptf*ocess ii ij /

infringes tho ' 164 patmt undar tha doctrim of equIvalai?ts I -""

For the reasons given bslow, the Commission rovcrscs thOlJ's conclusion

rogardiiiq infringement and determinos .tihat tho Si2mriLlng [IRRMs at .i.ssue (lo not 57/ infringe the '764 patent. --

_..-I_.___

53/.. .- 35 U.S.C. S 102.(f)(1982). -54/ ID at 90 of -55/ -. "l'l~a Rl..J"s discussion infringement is cotitain~din th~:ID at; 1:10...1%%.. 26

.%%E?.unsI_s-P.ESS.?2 '

lhe steps used by Samsiing to encapsulate its I:)WAMs was fully clcscii-ibad in

E' of; the ~n, ~kieComniissiori adopts that dascriptioii for puiyoscs 1.1.w

following analysis, Thc reI.c\rarit stops in Saina~.irigs F?ricapsul.at%on~I-~CQSS are

summarized bo1.0~.

Clt thr? start of Samsung ' s encapsu lati on pr.ocas s , the 1)RRM Lo be

encapsulated is attachfid to a "die pad" which is conrrectcxl to the lead frnrnn

used in the process, Whisker wires are used to connect tha DlWM to the

conductors which comprise the laad frame. Af'ter tho OHnM is connectad to the

die pad and the whiskor wires are connected between thro conducting leads and

the DHCIM, the :lead frame placed in a mold. Encapsulating flt.iid is than 1. is

injected into the mold. CIfter the encapsulating fluid hardens, a trimming

device severs part of the conductors to form separate Finished UIMMs. 0s part

of the severing step, the die pad support arms are savered, so the die pad

cannot be electrically connectfid to any outsido circuit,

0 - HE&.?A._S

"l'tie doctrine of equivalents is a judicial.ly creatcd doct;i-i.ne ~~I-iicIi

insures that a party that doos not 1i.tei-ally infringe a pa't;F?nj: is prevanted

from "stealing the benafit of tha patant" by malci.ng a dcvicc? cont;ajniiig only

minor changes to tha patentcbd dovice, The :hiprr?mc? Court has stated that an

accused device or process that doos not 1iteral.ly infringe a claim may be

found to infringe that c'1.ai.m if the accuscd dovice or process "prwForms

$J/ ID ID at ll.3.--11.5.geh &il:,id. at: 153-156 (descripti.ori of Sanisury's encapsulation process in the context of the '027 patant), th same iwsu1t" as claimed prodi.ict or process, G~er,~.~,gnlt&.--Mfci. Ca-,-.y._ !3 !j / l...j.ndeRir Produc,!L(h;, 339 U.S. 605, 608 (:l.950),

I:n examining the range of equival.ents to wliich an invention is a1it;i.t;led, the fact-finder must look at the proscxut;ion history of thc patent, the I, pj.oiiear/riun-..pj.o~i~~eiMstatus of the invention, and the prior art. p .Ma , Inc, Co u. Deere-.__. 6, -4 755 F,2d 1570, 1575, 225 U.S,P,Q. 236, 239 (t:ad. Cir. 1985). If the fact-finder finds that the accused process fails to meat one prong of thc "function, way, result" tast, then tho fact -Fiiider. cannot find

aiial.y7inc~the ''way'' in which a function is performed, the Tacl;-.fincJer must

In order to ana:l.y+e whether Samsuiig's encapsulation process as a whole is

eyui.val,ent to the procass claimed in the '764 patent, tho Commission may limit

its djscussioii to only a few claim limitations if those claim limitations

damanstrate that Samsung ' s procc?ss does not satisfy the "function, way , test. resul.1;" cu~,Perkin-Elmer, 82.2 F.2d at 1533, 3 U.S.P.Q. 2d at;

1.325, 'The Coinmission only examines the Li.mi t;atioris tlicjcussod )Del.ow, bacause

"-"59/ ... Thjs test wi:ll k>c+ referred to in tlw remajndar of this opiiiioii as 1,hc "function, way , rosu'l t" tost, 20

those J.imitations show that Samsung' s process do~snot prForm substantially

tlie same fuiictioiis claimed by the '764 patent in sulnsta~it;j.allytlit? sanie way as

claimed by t;he '764 patent.

T'ha limitations that the Commission will exanljiw arc: (a) thc stop of

connecting tlic semiconductor dcwiw to a conductor; (b) tlic! nxis tence of' a

sicla piece; and (c) the sowcri-ing step. :tn tha followjny analysjr;, the

C:ominissj.on adopts most of the f>l..J's hc1si.c factual PiritJinqs, since thc

C;onimissi.ori's examination of the rccord in 1 i.gIit of the parties ' petit;ioiis for

review laads the Commission to concl.utlc? that thosQ F~xctunlFindings arc!

suppoi-ted by the rcxord. rr (a) The step of connecting the semiconductor dewi.c.p&o--q. conductor .-.....

Clause (b) of claim 16 of the '764 patent roquiras:

coiiductiwely connecting one face of a semiconductor wafer to p_n$ofsaid conducto.r-s,~h.~.~in the centra 1 ragion

.I,,

A1.S that Claim 16(ln) (empl.iasirr added). The found the di.e pad used iii "is Samsung' s encapsu I.at;ion proccss a ' conductor strip' iaS [that tarin is] 60/ usod i.n the chirns." .-I.

of rnata I. which provides an ol.actrical connection betwaeri t;tic! seiiiiconductor

.60/ ... .-, :I:D at 1.19 (emphasis added), 29

.~iw chip * '61/ - ~~le~I.J,tiowcver, went oil to stat(> tkiat. ii~tkiot.ig~i tf:i.e patl was not a conductor, the die was conduc tive1.y corinec t;ad t;o c:oritluct:or- :jtil..i.ps .i.n tho central. regjoii, and so the Samstrny process was Ll~aequiwalerit; 07 tkio clai,iiiec:l process.

In its petition for review TL asserts that thcn A1.J iricoi-rect1.y foi.iricJ that the die pad is not a conductor. IX's assertion, howewei-, i.s iricoi**i-ac:t. Uricler

TI' s interpretation any conductive strip couI.d serve as a coiiductoi-, whether hot or it would attach the URAM to any outside circuj.try. I-lowc?wei-, the pi-ioi- art showed mottiods for encapsu1.ati.on which did not; irivol.we attaching a

samiconductor device directly to a contluctor strip corinected to the o~i.tsI.tfe circuitry. Thus, one of the points of novelty of the '764, pi'dtclrit; was its

he requirement that the samiconductor (lowice at;t;ache:d t;o c'x contluct;or strip connected to the outside ci.rcuitry, 111 light; of tho pi+ioi- ai-t,, "K[:'s

interpi-ctation 01' the tGrm "conductor s tri.p" ,i.s too i)iv;;u:l, rlorer)\/ci**,the? AI..;.I found that the DRAMS in Samsung' s processas ai-@ condi.icl.:iwaly con~~echac!1.0 1,hc di.G pad in order to provide a reversc hias wolt;aga circwit, ra.tl.ic?r than .to

connect the DRAM to the outside ci.rcui.try. L2/ IJsi,ng t;he the t:l1.a pati i.n tho thj s mariner was neither claimed rior taught; k)y '764 patsrit:.

11s rioted abowe, a ,Pact--fiiidcr iiiust look to tlia claim 1:i.Iii.i.t;ati.c.Iris of a

patent i.n order to datermine whether an accused process pci-forins suks1;ant;ia:I.I.y

the sinme function in sc.ihstanti.aI.ly the :jdma way as that c:'lini.rnatl i.n the paten,t

"6:1/...... II) at 13.8, :ID ...... -6%/ at 3.3.3 30

%d at at issue. &r&,LnzElmer, 822 F.2d at 1533, 3 U.S.P,Q. 1.325. Hero, tha DRAMs claims of tho '764 patent; require tliat one face of the at issue bc?

connactad to a conductor strip conncxted to .tha outside circuitry, The die lhs die is pad is not such a cond(ictor strip. pad not eqiiiwalent: to tha th conductor strips claimad in I764 patenk, Inccausa Simsiincj's dia pad

pei-forms a different function (j. ,e,, creation of a rwers(? I:)ias voltago

circuit) than that perforrncid hy the "conductor strip" (Aaiinod 111 thc I764 ci patmt, (i, e,, a connection to the outsj.de rcujtry) ,

The conclusion thiat th~?clia pad is not cqui.wc\lant to a c:c)nduct;or strip

cot.ild a1so be reached by stating that SamsuiicJ's process perforills the same

,Function (i,e., conductiwcly connecting tho IIHAM I-.o a strip) but in a I different way (is@,,to a strip which is not a "conductor"). In any wont,

the Commission finds that this differencc! botwmn Sainsung' s encapsulation

process and the process claimed in the '764 patent moans that tho accused process is not the eyuiwalant of that claimed in the 'I64 patent.

(b) Tkexistence of a side pioce Clause (a) of claim 16 of tho '764

patent states in part;inant at part:

a substantial1.y flat niotal sheet tiawi 119 recesses therein which divide ,tihe sheet into a plurality of conductor strips which are spaced apart from one aiiotticr far at part least a major of thair I.engths arid !~KCI-w~,&~n--td J,~~.?;an~~of-?;h~ 3?i t';aq!.!tl!?.9-c-at-3~- ir..~-~d_s_"~...tha I.crast..O!E ."..____sidejj-e-c-3 which is spaced Pi-om contrcll i-c!cjioii of: tli~ assembly , . , . wmt; on to find that Samsungls dam bars were eqi,iivaIerit Lo 1.h~claimed sida piece. the In its pcltit;iori for roviow "13 did riot; qircsL:ioii 6:I 3's f.int:ljii9 nonexistence b;he regarding tho of the s itlc? pime in Sainni.ing pvwcess, wc"n though that finding precluded a finding of 1 i lxral i iifrj rigemelit and ewn TI though sought reversal of the nl...J's i'inding that t;hciv WCAS no literal infringeniont. Thus, 11 may bo decmed to agrm with the UIJ that the dam bars are not side pieces as defined hy the '764 patent. ..-64/

Moreover, the Commission finds that the dam bars do not functjon in substantially the same way as tho sitlo piece clai.med in the '764 patent. The side pi.eca in the process claimod in the '764 patent is used to hold the conductor strips in place during encapsulation by connec tinq tho conduc1;or strips "at at least, one of thc ends of thc conductor st,rjps." lhe use of a sicie piece also allows a si.ngle piece of mota1 to he usad in the encapsulation procass,

While the dam bar also halps hold tho conductor strips or "Iaads" in ,he pl.ace, it doas so hy connecting thc mi.dd1.e scxtions of: the leads. %/ ends of the leads of one lead framc. are joinccl to tha ends of tho leads in a the '2' nciqhboring lead frame, rathar than to dam hr. 'r1-w d=\m kmrs also servo the function of forming a "dam" during the injectjon of the

-_ .".-64/ 19 C.F,R. 210.54(a)(2). g!/ IrJ at 1.11.

6G/ Samsung Physical. Exhibits fi, B, and 0, 32 encap!ju:lat;i.oii fluid, thus keeping thc? oricapsulatj rig fluid from flowing outside

I 671 of the proper Inomxlaries , The in dani bars used Samsurig ' s encapsu:lation piwcess thortrfore pi?rform a different ~'~.inction,.,.--prowi.tJinya dam during Qrrcapsu'Lcation--,,.fi-ointhat of the

side piece c:l.aimed in thc '764 patent. Moreowcr, thc? dam bar pcrformn tkic function of 'I joining thc conductor stri.ps" in a different way-.--by corrnectirig the conductor strips in the middle-.. than tha side piece clajniad in the '7G4 patc?nt, Indeed, i.f any part of :.;amsung' s pi-ocess cari be :;ai.d t;o pwforni th@

!;Lie step of (c) saw~~~~stcrp-...... The sowering is dascrjbc!d iii cI.aus~!(e) claim 1.6 of tihe '764 patarit which requires:

[S'jevering the conductor strips at posj ti ons spaced froni the central region to eJ.i.minat;a the remainder of the shoet .-....-.-.....inc:l.udinq the side piocc..

C3.a:i.m 1.6(e) (emphasis addd), '111~ fi1.J' found that the Smisung process inclwled 33

69/ tho claimed severing step. -

As noted above, hbwcver, the Comniissioii fliids that the! Samsung arrcapsulation process does not ~ise(A sitla p:iec:e oi'. the! cqu:ivriI.errt of i2 itla .. . fuI..ly by the piwo. II'ierefoi-e, the limitatjon in c1,ausc (Q) cianrrot, ~JC:, niat

Samstrny pi-ocess ,

111 light of the above discussion, the Conlnij ssion f.intls that: sevGral elements (or their equivalents) of the '764 claims ai-e not found in the

Sarisung process, 72' Tlierefore, after exanrining SanrsuncJ's pi-occlss in its entirety, the Commission finds that thc? Samscrng encaps~ili~tionprocess tloas not perform substantially the same function in substantially tha sanm way to obtain the same result as tihe process c'I.aiined in tha '164 pat.errt.

i C . conc lusioC..,,reg_,rd nq the ' 764 patent

The Commission reverses thQ In's concl.usi,on ragarrli.ng iiiFi-ingeinerrt under the doctrine of equivalents, and deterniincs that tlrc 8arnsuiig oiicapsulatjoi, process at issue thes not infringe cl.ai.ins under the doctrine of aquivalents,

....-69/ .i:n at I?.l,,

.._"70/ A:I:t;l~oi.igh the Commission has riot expl.1.citl.y di scu:s:secl cliainrs 17 arrd 1.9, appiies the above cliscussion aqua l'ly to thosa c1.iai.ins btcause those dependent c i co t i t i 1ai iii $5 rpo ratx l~sI :i. m i tat ions rr que s on . 34

transistor memory cells. "/ TI alleges that Samsung's 64K, 120K, and 256K

DRAMS inFringe claims 1, 2, and 3 oF the '747 patant. 'The AIJ Found that

Sainsung' 5 DRAMS do not infringe the '747 patent. The Comniission clnterminod to

roviow only that part of tho TO relating to infrinqement undw the doctrine af

equivaI.ents, z?k In so doing, the Commission gave particular consideration

to -1'1's arguments regarding prosc?ctrtion history cstoppel and thc application

of thc doctrine of equivalents to thc '747 patent. For thc reasons stated

balow, tho Commission aWir.ms t;ho NJ's conclusion thiit tho SamsiJncj's U#Af% at

issue do not; infringe tho '747 patent.

from history estoppel prevents claim 4 of tlw '747 patant cowring SPI-ISC

I amp1.i Fi.ars which do not have onc! mans for pt!rPoi-inir\g koth sarising md 73/ T:,: rcrfrcshing (restoring) and which (lo not inclLtdc dirmmy cells. --."

disputed this conclusion and argued that thc Ai J's jntei-prctation of the '747

patent claims impermissibly limits thc? '147 patent to the ambodi.ment in thc

specification.

In thc patent application which Inwame the '747 patent, TI originally

submittcd 27 claims to the PTO. ---14/ ~11of the original claims were

rejoctc?d as vague and indcfinitc undcr 35 U.S.C. S 11.2, and origi.nal claims 1,

Q/ A description of the '747 patent is coiitaiticd in the 113 at 243-.253 I

.-.I12/ 5% Fod. Nog. %90'/7 (flug, 5, 1987). :ID -...73/ . at; 3 90.

.....74/ - "1'1 EX. 603 at; 22-27, 35

soparate est;op(nc?d T.I. f rani cowering IIRAMe with sensc! ancl i-c!!frosIi anlpli fior

circuits or without dummy cal1.s.

In its petition for review 11 argued that the limital;iO~'is of original to simply to claim 3 were added claim 1. owercama thr? indofinitenass , TI: ostoppel rejection. Thus, argues, no should haw been found. .b-tt& -1'1'5 argument is incorivxt, since origi.na1 claim 3 was rojectad as

indefinite and aritjci,patecJ, 76' Moreowor, in amending original claim 1, 'T:f

stated :

acknowladged t;hat its arnended c'I.aim 1 was anieridcxl to ovai-coina the! grinr

Ex, at; a lei./ 71 GO3 46-47, fiftc!r further ameridnicwt.:, anmiclod claim 1. ultimately lnecanie claim I of tha '741 patent. 11 at 76/I. Ex. 603 39. The PTO examiner cited tliree prior ai-L references in 3.07. niaking the section rejection ..-..-. a St~i.iipatrant, a Stain article, and a lu at pat;er1t, I.. 43 , 36

The ALJ propt?r ly interprat;ad t;hc prosecution history as requiring that a

single sense and refresh aiirplifier means and dummy ce1l.s be included in any

infringing dewica. Contrary to 11's argumant, this docs not mean ,that the AL;J the lin\itvcA '747 patent to its specification. Instead, it niearis only that the

range of aqui.walmts cowc;red by the '747 patwit doas not incli.idc? devices which

do lint have a single sense and refresh amplifier ntearis and dummy calls.

not irifi-:i,nga the ' 747 patent; under the doctrino of eq~ri.wial~iit!i~'TIic! 4 tiw IC) C:niiirni.ssi.onadopts thc anGi1.ysis conta,i.ncnd .i.n 111'1 .t;h i.s .i.ssue.

3

.. . I :I' contends that the FsI...Jerred on two counts in concluding that Samsurig ' s

64K and :I.%.8K CIRnMs do not j.nfri.nga the '147 pnton.t widor the doctrina oF

equi val.alitzj I First, [ I 37 c ] c/L

3 Sacand, T.I: contends that tho 61...;1' srrcxl by not comparing the i-accused Samsung DRRMs as a who1.e to the cl.ai.mn at issue, Both of thase objections can ha resolwd by analyzing wliethsr Sa~i~s~ng'stj4K mc!

128K DHRMs as a whole perfom s1,ibstantially thc same .Function in sirk)r;tiant;ially the samo way to ohtain tha samo ra!;ult ids t;lic IIRAMo cl.d~i.iiic~cli.i.1 tlie '747 3 S patent C;ravxr-,a?_k_,fifg,,.J(CAU.~ i,.,&ds,-<&,-,3 9 U , , 60!5, 600 ( :i 9!N) , (d) of tho '747 C aim I, clauso patwit st'~t;as iii pc:rt.i.iiwit part:

a plurality of sense and I--?-$%!> anipl.i.fier mnarrs, . . I each [sense and refi-ash) ampl.if.ior mmiins %ncl.wli.ng dummy storaqc! cells, each storago cs11 boi.ng direct1.y coupled to a diPfermt one 01: the mnc! port.i.riiis of each

data l,i.ne, I , I I

Claim l(d) (ornphasis addgd).

The ALJ found that Samsung's 64K arid 128K DHRMs C

8-0' Moreover, as noted akiove, the (hmI1lis:ii.o~~determines

J ..-81/

I. -... "-..I.-...-. _._._I... I -.... _._".

'In ..._.110/- at 2.95. 38

''I tie AI. 3 al so found that 9amsuiig I s 64K arid J 7HK I)I{AMs L 3 8%/ *- 1

c

3 When

takan together.. those two findings fully support tha conclusion that thc!

Sanisung 64K and 128K DRAM8 arc! not equivalent to the DRkMs clajnied in tha '747

,

(Footnote continued from previous pago) Review of thc Initial Oetormjnatjori at 56. II's argiinwnt, hnwawer, concantratcs only on thr? patmt claims. Undar 35 IJ.S,C. S 11.2, jnc\i-acJr-dph 6, of mc!ans--pl\is.-functjoii claims, such as the claims tlw '747 patant, ceiinot be rwd read in isolation. Jnstcad, such claims niinst l.1~ in conjunction with the patent. spc'ci ficatjoii. c

I

...-#2/ ID at 296. [

I 39

patc?nt, The Commission therefore affirms thc Ai. 3's conclusion that Samsung' s

3.20K 64K and DRAMS do not infringe the '747 patent under the doctrine of

infringement, J The AI. Pound that Samsung' s 256K DRAM [

'3 TI contends that the ALJ' s analys is ragdrding Saiasiuq's %56K ORAM

contains two errors. first, L s4/ 1- Sacand ,

TC contends that the :V..J errad by not examining the 2S6K LIHAM in its entirclty 1. when determining that tho DRAM did not infringe the '747 patant. '[he

Commission, however, finds that there is no error in tho ALJ's analysis with

respect to either point.

I:

1

" .I- ..--"...... "...... - ... I-C...... -

."-84/- TI'S Petition for Review of the Initial Detc.rilr.inatjoi7 at 57-59.

-.U5/ TD at 301-302. 40

c

] When taken togethQr, thoao I two findings support the conclusion that the Samsung 256K 1)HhMs are not

equivalent to tho DRAMS claimed in tho '747 patent. 'Iho Commission therefore

affirms tho AI-J's conc Lusion that Ihmsi.tng's 25GK I)"I doos not infringo tlis

'947 patwit under t;hc doctrine of infringoniorrt .

...Conclusion" .------..-.-._.... regardins ._- -. .-.- the -.-. --'74~-a.~e~l; ._ 11.w basic factual findings arid tha legal analysis in tha :CO rcgartling

infringement of tho '741 patorit arc correct, l'ha Commission, thcrafora,

adopt!% tho I:8 and affirms the 1:O's conclusion that $amsung's 64K, l.lOK, and of the 256K DlifiMs do not infringe claims 1, 2, and 3 '747 patent imhr the

doctrine of ayuiwal.ents,

"I...... -... "..... I .._.-_. - -_--...- 4 I.

docti- in^ of equj val.ents

of t f: regard i ny .thQ i s s (.le i.nf r i. nycmorit I~c~ca~i$5 c! i. cf ocl s riot con lx .i. il s pc? c i. .i. c f j ridiiigs regarding whettier ailJ el emorits of t;hs '7O:i. patorit: are found iri DRAMS. Samsung ' s .-09/ Noithar does the 3.11 refer t;o any admjssionr; or stipulations by the parti~swhich would olnvi.ata .the iiecxd for :ipaci.Fi.c f indings, The Commission has therefore detc!riilined to st,ippl.emerit the expl icit factual findings which exist in the :ID. .-90/ 42

256K I.[) at 378, ThG AI..J made' similar statements about Samsuiig' s DRAM: KM4 The Samsung 256K DIIAM, part numl..,er 1.256, i.s depictad in TI Fxhibit; 2205A. The Sanisung device Ilterally OF 2.56K infringes claims 1 through 6 the '701 patarit. (Tr. 9773-9793) *** After consideration of the testimony ij\nd thc? argumants of thc! parties, it is found that oach elenicnt of claims 1-6 or the ayuivalant is present in all of the Samsung DRAMS . (Tr, 9791.-9792, ) Complainant proved that the Samsung 256K DRAM literally infringes c'laims 1-6 oF the '702 patant.

ID at 380, 382

'1 ticse statements iridicata that after examining the evidence offared by of all the parties, tl~cRI..J found ttic? testilnoriy UT TI'S two expart witnesses

(Foat;rioLe coiitinued fi-orn prewious pago) the fai.lui-c! of tha :[I)to coi.itai.n fi.ntl.i.ncJsrcgardincJ thc timing and voltaga (;E I~velof certal.n vo:l.tacp sigria1.s us~dj.11 Ijanisulig's 64K and 25CK CIRhMs, Samsung ' s Pot;ition for IIewi.ew of .the :l:rii.tiCA1 I.Iatai.a.i.nati.r)n at ti%, 65, Although Sanisung did not raise the failure of thc IIJ to contaiii other findings, ijlnd hence ~iiid~rthe (3ommi.ssion's rt.il.os Sanisung has abandoned ,those issues, the Commissiori \ias determined as a matter of pol.icy to supp1.ement the infringcment aria1ysi.s in the .HI, 'This riot maan that the containad (:loas riot Coniniissiori is alnrogat:i.ng the gc?nc:!ral. ru1.e that; al.1. material issues raised in a petition for rewicw wi:l..l be deemad to hawe Inecm alnc:xndoned,

128K 9-l-/ Samsurig's DRAM iS stnip:I.y two 64K DRRHs st;aclted t;ogethr. 31, at; 521, "l'lierefore, only the 64K IIRAM iieed he tliscussotl.

44

ljterally infringe tho '701 patent;. tiaving dcterwiried that the LMM'ls at i ssw

.Li:tc?ra.Lly infringe the c'taims of the ' 70'L patorit, 1;h~clo1nm'i.s3i(in \/m:e;\t:cs the

In's determination regarding infr:ingemeiit; trridcr. ths doctrj nc of' equj val.eiits,

, S, 4,54.3,500 IJ. L.c)ttc>rs Patent (tha '500 patent) W~Sissued ari Sclpt;embor

24, 1.985, arid U.S. l.ett;c?rs Pat;ent 4,533,843 (the 'tl4:l patent) was i.ssuad on

August; 6, 1985. Both thQ '500 and '843 patentis relate to sense amplifiers for

DRRMs and both yrcw out of tha same parent patent, U,S. I...c.I:&au.s Ikiterit (the 4, 239, 993 '993 patent) , !?." The fi1.J' Found the '500 patQr1.t wal.itJ bi.it

of the '043, '993 W/ Chl:)i.c:j '500, arid patents can bc! f'ouricl iri the Appendix,

....98/I .. C:.l,a:i,ms6 arid 7 of tkic '500 anti '1143 patents, which diFfor somawhat, are sint out :in the 11:) at; pag? 386, TI to supp1,emental oath, for t.loirklc patentirig, for '3 I"ia.i.l.t,ii-c! tJ i.:j(:I.o:;a tAie kest

of mods as required urrder'35 IJ.S,C. S 1.1.2., and for T:l's pi*act;:i.c(? fil:ii~c~ numerous continuation patent applications , I-'i,ncil1.y , l\I!::(.: iai..gucarl 1;ha.t 1. 9 licensed to practice both the '500 and '843 patc-!nts. "l'ha RI..J. a1,so fourid that

NEC is impliedly licensed to practice both the '500 ialld '843 patents.

Thc! Commission determined to review the ALJ ' s rletei-iiij.I.iatioI.is of valicl:i.t;y and infringcment with respect to both patants. Ibving consi.dc?red tha rtacord and' the argumcnts of the parties, the Comniisrj.io11 affiriiis the A1.3" s covic1.irr;joris regarding validity and infringement of both patents, i-evar!;es the fXd" s r; r; determination that the ' 500 patmt j 1menforccml:)l e, a11t1 affiriiir~ wi1.h riiodi.fi.cation the fll,,.J'sconcl.usi.on .thdt NIX .i.s l:i.cc,n:tc!cl uriclar the '!.jO0 arid '893 patents,

relation to t;ha pi~1.'l--upmeans voltago. 'the AI..J datar*mi.n(sd that claims 6 and 7 of the '500 patent require that the precharge bit line \/oltigg(> b~,,-,~yuu,~ to the puIl--.i.ip voltage of the hit kino, With resptact .to the woi-d :I.ine vol.taga, the yy A1.J determined that the word I.inc! is lnoostod fib^!!^ thc supp1.y vol.tage.

The? Commission agrees with thc! AI... J's construction of the claims and arlopts the of 'HI with raspcxt to constiwction the '500 patant c1.aims. 46

3. * -___.-....'The '843~atent .- .....---..-._._claim the The AL.J construed the claims of '843 patent, k~asecl oil the prosecution the history and the prior art. --'-"-"00/ CIccording to WJ, the pi-ocI'iarge wol tag~ '843 level in tho device claimad i.n thc? pii\tont cdn ha slightly ]-QSS_than the

full supply voltage level. (i,e., one thi-eshold voltago below tho suppI.y

voltaya), hut not 'low enough to he halF of tho supp1.y vol.t,nyo. The r:I.;niins of

thc '843 patmt are not bi-bad enough to covor DHAMs that, uti I :i zo niicl-qmi nt, 10L/ seris ing , -."- 'The Comnlissi.on ayrms with the kl. ;J's const,ruct;.ioi-i of tho 843 claims and adapts .l;hc :I:[)with rospoct Lo construcLion of .the ' patant

c lajnis .

, :I;II. Validity

The Comniission expressly adopts tha M.J's determination of waljdi,t;y with

regard to the '500 and '843 patents.

IV. Enforceability of thI,'500Patent

During the early part of this inwastigation, "I1 contendad in rasponcic? to

NEC/Hitachi Iriteri-ogatory No, 55 that the chjnls af tho '500 patLent sI'~ould be

construed as royuirinq ,that thc word boost wultago lcvol not %)e iwisr!d above portion the supply voltage level, Aftw the of thr? cvi.c.lsril.lary heal-ing on the

' 500 patwit, 'T'I moved %o changc? :its answer, r:ontendi.ricJ tiiat .its e~wli.c?r dnswcr

at 420-427, I1.00/._..- 11:)

.-I"-101/ l:D at 426. Ei00 tho ' patent, c1.ajnis so that: t;hc claims WCIV l:imjl,c.d to IlI

the its TI answer to iriterrogiat;ory, a~~din answer as arilencled, assartcx! two of tlif'Fereiit positions rrqai~li,iigtho scopa of t;ha c1.ainis t;ha '500 pataiit, Nii::c No. opposecl 1:I's motion Inefore the ALJ. In Ordei- 297 the AI..J grarited TI'S No. niot;i.on to changc*r its answer to nlE:C/I..litachi .I:iitoi-rogatoi-y 55, J 1ri the I.[), the AI... deterniiriad that; tha '500 patent was uiienforcoabl e with respect to NIX and Samsung klecauso T.1 changed its i.rit,c?rroc)c:itory answ~i-with regard to the scopo of tho claims of the '500 patciit, Ewen though tho HI. J

Commission, TI On review before tho allegod that tli~dw process issue position tha was not i-ais~dbofoi-a tha fl1.J; that ~',l:'s was cl..ear at hawing; aiid that the respondents were not pi-e judiccd bwacrso thcli-a was considarable w ~wiclence, j.z I , the I.anyuage of ,th~c'laims, the proncacuti.on history, tha

spcci.I.:.'l.cat1.or.i, and exp~rttestimoiiy, all. indicating that "1'1 s initial response 104/ to the intari-ogatoi~.y was iiicoi-rect ,

-..102/ "... 11:) at 414. On review, respondents argued that; they have been prejudiced by "1'1's

change in position because they have been denied ,the opportuni. ty to prosent

adcl.it:i,onal. evidence at; th~evident;iary hcaririg; that respondcnts did not put

on any evidance regarding 711s r(;vi.sed scope 01' the clai.icis; and %h(At thcy i wouScl have sought additional dj scovery arid the SSUCI of claim jritcrpretation

WOIJ Itl have been pursued much more thorotighly if it had lwaii iAp$)i'*i.S(?dof '13:'s

i The 1As argued that NIX'S development. of tkw racortl !I ari jnipl jctl cons(?nt NE:.(.: to T.C.'s change and that has not kaen pi*r?jl.dicc>dby T:I:' :$ cl.iaAnya in pos'I.tion IO7/ so as to Ino clapri.vad of dtnc process of law. -"--

The Commission det;eriiiincs that; NE:(: and Samsung wQrC* riot. prcjudi ccld by I. -1'1's so OP revision of i'ts interroqatory cnnswer iAs to k)e cienied dim process

S~UJ. The Commission, therefore, reverses the AI..J's fi.nding that; the '500

patent is unenforceable with respect to NEC and Sclmsung,

Pats!nt claim interpretation is a question of law, Parties are not; bound

to ,their interrogatory answer, as if their answers were admissions ..'-..

11'.I:I.it;(?I-r.ogatoI-ic:!s do riot supersede or supplenierit pl cadi rigs, nor do tihey bind

parties as an a'I.:I.qation or aclmissi.on i.n a pl.oarling or pra.-tricAl. 49

w. 108/ D~II~W~IICrisostomo, 689 f'. 2d 069, 075 (9th Cir. :I.!jt32),

35 ....11.0/ -._ U.S.C. s 1.03.

2. .I...:1 :I.... ._./ pj.I 50

the voltage .lewel, "dd , In short, prosecution j.iistory nhowed that "I Z's original interrogatory answer was wrong.

Rn examination of thc pretria:I. briefs f ilnd by the partl es demoristrat;es that raspondents werQ aware of and litigated both alternative iritarpretati.ons of tho cI.ainis and thus they were not prejudiced by 'T;I:'s cliarigcd answor. :In its 'Trial Metnorandmm, Filed on October LO, 1906, prior to the hearing on tha

' 500 patorit, TI comineiitxd that the I nta1. 2104a [IRkM, an a1 logod l t.ml of pi-j or art, di.d not show boosting the word 1.i.na o\kov~the supply vciltaga, VdtJ, ,thci-ohy implying .that thc? c1.aims of l:ha ' iiO0 patent di"~Cli"i;lbJi'i t;o ORAMs which %he V 1. 1.3/ boost word l.i.iic! above I.--- Raspoiidcwts, in thaii- l'i**i.al dd '

ewn jf the I.aiiguagc! of [the '500 patent] wwc, to Lm construad to bo li.m:i,tc;dto means For boostinq thc? word line address voltage above V,jd, thescn claims are invalid under 35 IJ,S.C, 5 102(g) as anticipated by t,l.icr :Tnt;c?l 2:lID DIIAM, the MOSlEK 4816 DHHM or the Rlati.ona1 4295 DRAM. -114/

the is Based on above trial. memoranda, it clear that respondmts were aware of

'TI'Salternative claim interpretations,

It is also clear that in preparing thoir inwa1idjt;y defense, respondents were not relying on -11's oriyinal interrogatory answar QS boi.ny the only

possible claim construction, During the ewidontiary liaaririg, resporidents argrmd invalidity basad on looth a'l..ternati.wc? c1.ai.m ~i~.itar~i-c!tatioi.is,t:,i.i-st, 5 1

would Inc ii~\/aI.idin view of several. items of allcgcrd prioi- art, i .e., the c.laj.med invention wouJ.tJ be i.n\/a.l.'I.das iiuiticipated aiid/or i 116/ l.I.l.L/ TI'S ob\/ ou s . .-.-. In addition, c!xpert, Dr. Foss, testifid coi~cei-riing tho scope? of tlia claims, ..--'"'/ This ewideiice supports 13:'s position that respondents were awai-c? of 'TI'S changCd claim coiistriiction prior to the hearing,

:In summary , tlie Commission cor~ludesthat rosporidents werc not prejudiced

bca denied due process of law, and that tho 'FiOO patent is onforcmblc.

1:L5/ ---_. Tr 12261, line 11. -.. 18, and Tr 12263, :Line 24 to Tip 12264, line 4, and Tr 3.2.331-34t1, items, .I_....116/ The AI-J conclucletA that those the Mostc?k 4816 DRAM arid National Somicoiidt~torDRfiM, wei-e not i:)rior art, .ID at 434.450. 4,239,993 (the '993 patent). '1'1 argued that a djsclajmr pi-ow~s~or~in tbic

express license of the '993 patent (hcreinaftcr mPt!rrod to as the "'993

license") precludes the finding that NE"C is licensed to practice thc '500 and

'843 patents, The (ILJ detwmined that NEC is impliedly licensed cnrtder the

'500 and '843 patents, On revic?w, the Commission dotennines that NEE is

licensed by -1.1 to practice the '500 and '843 patents for sevaral. alternativo

reasons as explainad below. NEC does not, thoroforo, infringe the '500 and

04'3 I patents,

First, the terms of tha '993 li,censo nocessitato thc Commj.ssion's fjiidjny NEC NU: khat i.s also licans~dirnder the '500 and '843 pntontr,. .h1975, and 'TI .i 993 119/ .Cn eritcred into a cross license! agreaintar\t, , Q . , t:h(:! ' l ic:cm!rc!. ---I 1.

Artj clc! II:I: of the' ' 993 license -1 I granted NF,C----. r

1

The 'term 1.IC:ENSED PHODIJCT'S is tjcfincd in rlr*ticl.a C, Section L2 OF the '993

license as 1

J (Emphasis nddcd. ) :I:t;c?nrs (a)

through (e) are I:

1 'The 1975 5 3

...... 5 4

11 it When fi1.ad the ' 500 pat;ent; appl,icatian, imp1 icj t;ly adniit;t;ed that; the inventions claimad in tha ' 500 and '1143 patorits IT suplnor'ted hy t;he specif:icat;ion of the '993 patent;, At; that timo, '1J. descrj LmJ the ~.nvmti.oriof lows tho I500 patxnt as fo'l. :

to the rspresantations tho PT'O l.eatl Conriiii.ssioii 1x1 concl.t.iclo that tho suhject

of' the '500 1 niattcr and '843 c:Lainis is 1. :J the icanssd I993 patant, Thus, nIE:C is 1.icensacI uridGr tlia 500 aiitl '843 piat;arits .

' 843 patents becausc? tho inwontions c'I,ai.mad in the I500 mid ' 843 patcwts ai-o 5 !:i

....-.--.*. -...... "_.._...... ---... cannot he :i.giioi-ad when considering the 1:i.coiisiiig issw. The IJ. S. Court of

, 57

filing of the terminal. disclaimers containing common ownership pro\~isioiisin

into one for the "practical purpose" of constiwing tlic '993 li.censo, 'rIws(:r

actions of SI considered. in light of the C.C:.P.fS.'s dacis'rons., l.aads tho

Commission to conclude that NEC is lj.ccrns@d undci- t;hc '500 and '043 patcnts. I. ;it?/ As noted abova, 1'1 arguad that (3 d'rscl.ai.moi- prr)wi.s ion - in the '04):l

3 fj !ANI j cens~preclud~s nding that NF.C j s 1 iccms(.\d to practi co tlic ' arid ' 043

patents. Theit provision states: c

3 L/ ._I_13

I Thc Commission finds that the existence of the discI.aimci- pr*o\~isioiidoes not

prec'lude tho finding that NEC is licensed. En the casc? of C~S$-I v. Aeicoso~

-I_..."-I.-Research C:o. -132' the Seventh Circuit found an implied license a\ren though

the express license contained a disclaimer simi1.w to tho onc qinotad ahova.

The court interpreted tho disclaimer as excluding subject matter of a

substantially diFferent nature and not davicos a1,reacly pu.otectc?d ky tho [othar

I.X, ..-:l.30/ NIX Kxhihit 503, Article section 3 58

patent]. 'I ---133/ In view of all the facts srrrroirndjng the 'I:L/NF(: Iicense,

the Commission finds that the ahovwquoted d isr:laimc!r provi3irm doas not

p~~eclirdcthe finding that NKC is licmsed.

Fourth and finally, the Commission dctcrminos that Nl;C is 1. icensed to

practice the '500 and '843 patents as a matter of patent. law. Ganerally

speakinq, if one has an axprass license to practice a patent, he gets an

implied license to practice any other patent owned by the licensor that is 134/ necessary for the licensee to practice the patent exprossly licensed. -

After analyzing the facts in this investigation in light of the Seventh

Circuit's decision in Minnesota Mining-& Mfq. Co. v. E.1. LIuPont do Nemours C

@., 135' tho Commission agrees with the A1.J's conclusion that NEC is , - licensod as a matter of patent law.

In Minnesota Mininq & Mfq., supra, tho Seventh Circrijl. found an implied

license after carefully analyzing an intnrfarc?nc:a mttlomont agraemant between

3M and DuPont. As part of the settlement, agrocrment, 3M and DuPont

cross.-licensed each other under two spmific patarrts. Aftar tho acjroement was

executed, 3M notified Il)uPont of a dominating 3M patent, appljcation, and

subsequently sued DuPont for infrinycment of the doininatinq patent. OuPont

argued that although the agreement did not expressly include the dominating

-233/ Green, 374 F.2d at 794. -134/ Einhorn, Patent L.icensing Transactions, 1984 S 1.03[1]. -135/ Minnesota Mining & Mfg. Co. v. E.X. IhrPont de Nemolrrs C Co., 448 I-,2d 54, 171 U.S.P.Q. 11 (7th Cir. 1971) 59

patent, r)i.iPont was impI.iwl.ly 1,icaiiscxI tinder the clomiiiatirig patont, 'The court

agreed with DuPont:

hpplying tho policy of fairness underlying thc of doctrine estoppa 1, courts hawa consistently he1.d that it is inequitable for a licensor of a patent, to negate the licansed right by assartinq ixqainst1361 the 1.i.cnnsoe (3 later-acquilcaci tjominating*** patent. It is inconceiwabla thdt DuPont wou1.d havt? agrond to tha of ternis of the agrec!m(mt as written if it, had been awaro the [doininatingl application and the possibility of its maturing into a domjnwting patcnl.. Yet 3M kiiaw of this possibility, aithar actually or constrircti.vc?ly, at tha tinw the scttlement agreement was signed, but reniaj ned si Iont , .!.E/

Tha A1.J found, usjng an analysjs similar 1.0 1.h Scwen1.h Cjrciijt's Lfl, analysis in that NIT: i.s ,impliadly licanst?d to prac:tic:r? 1:h~ '500 and '843 I patents. Tha claims of the '500 and '843 patent arc! bi-oadar in scopc! than the

claims of thc! '993 pnttrnt. Since the IUL3: IURAMs dl.l.ogad to infringe the '500

and '843 patents satisfy all of tha elements of claim 1 of the '993 patent

of 238/ under the doctrinc! equivalents, NEC is practicing tha '993 patent. - NEC's Indeed, the A1.J specifically found that DREIMs practice the '500 and '843 NEC patents. cannot practice the '99.3 patant without infrinqing the '500 and

'843 patents. To avoid an inequitable resul.t, NF:C must Inv found to be

licensGd under tho '500 and '843 patents,

:In summary, the Commissin affirms ths RI.J's cnriclusiari that NFX is

at 33, 136/ 448 F.2d at 57, 1.71 U.S.P.Q. wt --.137/ .- 448 F,2d at 581, 1.71. U.S.P.Q. .LA. If), I_.I138/ Appendix C:, 6; :Lr) at 605--69:1 . 60

VI :139/ . Jnfrj,,n-aA --

'T.1' allegos that Samsung's 64K, UK, and 2t16 NHMs jnfringe claims 6 and of thn of I ' W:3 patent and %hat Sinnlsung' s 256K IIRAM irifrinyns chiins 6 ulnd / thc '500 patent. The A1.J detcrminad that Samsung' s 256K DRAlYl 1 i 1.oral ly -.. infri.nges the two patents, whilo !;amsung's 64K and 121lK DRAMS do not i.nfringc! t.hoso patents. kfter reviewing the Ill in light of both the record and tha parties' petitions for review, tha Commission has concluded that tho AIJ's analysis is correct. The Commission, therefore, affirm thc kl.J's dctermination that Samsiing 256K IIHCIMs infringe both the '500 and '843 patents, while its 64K and 128K DRAMS do not infringe either patent.

TI NEC 139/"_._ a1.lege.s that various DRCIMs infringe claims 6 and 7 of both the '500 aiid '843 patents. BQCBIJ~~tha Commission finds that.NI:iC has a license to practiccz the '500 and '843 patents, the Comniission need not determine whether Nl32's DRAMS infrincJc t;ha claims at issuc! of '500 and 'IMjl patents. l'ha Conniiission thoraforc? vacates that part of the ID which 'deals wj th whether NEC infringes cl.aims 6 and 7 of %he '500 patent and claims 6 and 7 of the '843 t pa cr 1'1 t , 61

of the Tariff Act of 1922 and of sectjail 337 Tariff Act of 5930 iridicatc:! that

rig 'I he dynanric nature of coritc!mporary niariufact;ur:i clof i.OS a static,

..I._146/ :I:[) at '754, 64 6 !.i

Computers for a dotarmination that there i.s on1.y one .i.iidi.isti-y . :I:n .tlia instxint n casQ the exploitxtion of al'l .Five valid pa,tcmts "-..-""" remaining :i.

-'-1.50/ product;, cont ro\I e rs y results in the product;ion of a single comnrei-cia1 151/ DRQMs , -""--

, 'laxas I.nstrumcnts e~pl.~it!jthe ' 747 patent; in its procJuct;i.on of 16K, 64K account , %.561(, and IM I'lRAMs , which for viic*tual.l.ya L 'I. ci.irront i.)RAM TI: th:! production. Of t;hQ remaining patents, practices '764 patxnt; iri the

assmbly of its 641( and %!561( [)HAMS pri.nrai-i'Ly in its [ 1 pl.ani:s, and in

(F'ootriotc:! cont j iit~cclf I-om previous pago) of OIIO 01- ailother dens i. t;y rif OliAM, that iiok o\/cit*y~:)i~i~l~(:t avery ~~espoiicl~~~~tis , acci.ised of j.nfrj ngsmorit, and that DRAMS of djfferenlt dens1Ljes do not compstc! with each othar, and ai-a not necassari1.y iiiadc tising t;hc! same aqi.iipmc!nt or facilJ,t.i.es by ~(Gs~cIII~~II~;!; ._ NEX' s view, that the C:ommissioii sh~ulclcorisi.dGr tha imported prodticts in dc!tei-mining incJi.ist;i-y, ori.gi.riatod with the first tieadboxes case , Certain tieadboxes and Paptrrntaking Machine Fornling Sactions for No, tlie Contint.iaus Pi-oduction of Papar and Components I'horeof, :I:nw. 337-'TA-82, 3.3.38 USI'lC Pub. No. (1981). T'hat approach has since been t;horougl'ily discradited , Sm Cartain Products with GI-em I.ins Charactar t)api.cti.ons, .Tnv, No. 337--TA--201,i?SI'TC PLI~.No. 1815 (1986). Thc Commission's detai-nination of domestic industry is riot based an ,the imported prodircts subject to investigation, but on an examination of tihe domestic sxploitation of the patents at issue. Several of the patents ai-a oxpl.oi.tad in thc! production of more than one density of DRAM, arid tl.it.is it; would be inappropr.i.ata to f:ind these to he ,the products of cli Ffererrt i.ndustri.c!s, :I:n additi.on, whathai- the respondents manufacture different; densi t;.i es of DRAMs tnsing same equj.pment: or facil.itios is i.rra1,evant to tho dotnas-tic; indust;i-y isst,ie, 'The racord is TI clear that uses many of the same processes and equi pinwit, j,ri nian\.ifacturi119 I:)ROMs of (litfarant tlansiti.es , and .tIioi-fifoi+C this .i.s not (A k)tisi.s for defining separate industries by DRAM density, Finally, the (.:omntjssioii has hold that t t t .i r w c om pa j. ion hc! two c>n (:I otno s .i. (; pi-od IIc t; s and nipoi" t s , 0 he twe ori iAi* i OLIs domc>st:ical ly pi-od~icodproclucts, should riot be iisod to dcfi ne sepiili-at,(\ clorncsti c with In\/ No i.ricli.isti+i.os, Coi~*tainPi-odiic ts C;i-wiil.iris I.)hi;Ir*ta(;t(>P.!lop i.cti.ons, . I No (:i Ei... 337-..."l'A..-.;!O:l, IJSI.'K P~ib. I :l.81.5 986) al. 6 I 'T1ieI-cfoIe~>,that I)l\'kMs of cli. Ffareiit cIe~isi.tj.~sai-o noI; pai-fact :j\,Ib:j titwtes Poi- nach (iI;ii~i-,arid iti,~y not compet:e clirect,ly wi t;h ono anot;her does not, in our vjow, suppoi-t; a concl~.isioii c that tho tl i. ,Pf(I rc>rit (:I ens i. t; i. o s WQ t;t.ic proc;l~.i(: I; cif $3 o p;nratc (1 rime !j t; i. i. iirJi.is tr i.a s ,

6 H 69 70

OF Upsti-eam arid (:Ioimstrc?;im pi-ocliicti.on w:t.i.w i.%i.es, i. , e , , t;he production silicori crystals, chemicals, arid I.ead frams, and prodmtjori of IMs S irig lo--:Tn 1ine-Modu J.es (S ) and IS i,ng I.e--.l:n'I. i,ne--#)ackagos(HPsS) , are not part of DRAM production in the United States, Accordingly, WB hawc! riot includad -. . ,these actiwities in .tihe domestic waLuc!-~iiddad analysis, WIii.1.a l.1 does manufacture many of the inputs into its DRAM production, thc! waluc! of those upstream production actiwitias is properly i-efl.ectad as di.rc?ct material. SIP costs. and S1.M production are carried out aftei- a DRAM has k)~!eri

of different cammei-ci al proclucts than a DRAM. We dc?tri-ml ne that; thsc

administratiwe expc!iises from our aiia1ys.i s, No ar*gummt;s haw(! Ineeri mado which

prod~iction-.reI.ated in the DRAM industry than in any other industry.

'Thc?refore, there is no iwason to clapart from pi-acadent wVth rospc;ct to exclusion of royalties , overhead, and general. and administratiwe expenses from the analysis, Exc:Lutling ,tlie items disci.issed iAho\/c from the HI... J' s walire-added analysis, the resu1,t;ing domestic value added for '11:'s 64K arid 256K 71

TI'S Uriitod Stat~s, We also do not Ins11 ieve that Japanese wafsr fabrication operations can he incIucled i.n a clomestic i,ndi.istry, nor that thc Commission TI should consider the U.S. value addocl to DRCIMs wafer fabricated by overseas in analyzing whether there is a domastic indt.ltjtI-y, Such an industry would activity have little, if ariy, direct prodi.icti.onreI.atcd in thc Unitxd States, ?is upstraam and w0i.i ld he based primari 1.y on IJ. I-nsaarch and dovelopmnnt, and U, downstream mani.ifacturing activity, and S . corporata di r~~t~.oii,These

i s act;ivi.ties, are not; rslevant, to 1.ha qi.wst;lon of whethei- Lhor*c a domrs1.i c t %65/ irlcll.1 s ry . -"-

--..165/ S-22 Additi.onal. Vitrws of Chairrtian 1.iebeI.c.r and Vice Chaj rnian Drunsdale, ._..--...-infra, 7%

domestic "l'ha Commission tlfitarmines tha axistonca of d iric1u:itr.y as of: thc? 166/ time thQ coinpI.aint is filed, ---I The coniplairit; in this investigation was i. f 1.ed in February 1.906, Respo~~dentNE:(:: argues that neither Y.C nor Motoro1.a

were producing ORfiMs in the Ilnitxd WiAtas at that tima, and that therafore .. .

there is no domestic industry. We coriciii- that Motoi-oh is not a part of the

domestic industry, since it ceased producing UHAMs in the United Statas in

complaint 167/ c 1 before the was filed. --

With respect to TI., NEC argues that; there was a relatively small vol.uiiic! of

arid TI production of C 1 DRAMS during 'J prodtic tiori 0.1' [ ] IJHhMs was shifted from 'TJ's C 1 plaiil, to its ;Ja(nanesa plant during the second 1-"*/ IV, ha1.f of C -,:lis 256~product:ion facjlity jri I)al.1Fas, I.)MOS is it\ d. new ~)~larit, which s'tar*ted prot:lucl;i.on only :in 19i15 . 1:

'j tiowever, this does riot mean that the doniest;ic :iridus.t;i-y did riot

c!xist at tkiat time, t3r.inging a I.)liAM wiifsrr fabricat.i.ori facil,i.ty ful.ly on-ling

is not merely a matter of turning on the equipnic:!nt;: :Kt frec(~eiit,lyrequi,r.es

Co, _.._I..166/ Ha:l.l.y/M:i.dwayMf'g, v, IJ, S. Iii.tarnatj.ol.iaI.'Trade Commission, 714 F.2d

:I.:l3.7 (Fed, Cir. 1983) I Deterioration in the condition of the domestic indiistiCy durj ny thQ Commission's pi-oceedincycr does not undeimine the conclusion that a domestic industry existed at Lho time the coinplaitit was fi.I.ed. 73 74

5 c5 ths domestic industry was neff j wit, arid unocoriuiilJ cal , l\lK a1so ai-g~sthat.

i wi th its Japanese operations, indj cate that thc IJ. SI j iidustry was iwff icient

and uneconomical, as doas TI'S decision to haw a beam oF pi-orli.iction eriginaers IV from its Japanese plant work on bringing the DMOS plant on line.

The relative cost structures of T.1:'s IJ.S. arid Japanese oparations are

irrelevant to the question of efficient and economic operation of the U.S.

industry. Whi1.e a showing that TI'S operations were significantly higher cost

than those of othec,,U.S. producers might be probativcr on this issue, there arg

too many wari.ab1.e~hetweon production in the Us!$. and Japan for sirch a , comparison to be meanirigfu1., Simi Iarly, the natio1ia.l Ity of the oiigjiieers

responsible for woi-kiny out the ;orol:)l.enis in hrinyinq r:i:'s DPlOS :CV plant i,ip to 5 commercial production qualification s ii-relowant. t.jiia1ly, as iiotod

prcviously, 1)HAM wafor 12ahri.cation is a highly :rcwsitiva and cornplicabc?d

manufacturj ng opcratioii, "I'ha fact that -1'1 had problems, [

] does not Inem tihat the

domestic industry was inefficient or uneconomical, particularly in view of

Tl's systems in place for dealing with, and eventual resolution of, those

problems, and its abi lity to pi-oducc! cominerc'I.ally acceptahle [)RAMs

Accordingly, WQ determinc! that there is a single domestic industry,

efficiently and economical%y operated, dowoted to tho production of IMAM^

under claims 1, 2, 3, 4, 5, and/or 6 of U.S, I..ett;ers Patent 4,081,701, claims .S. 6 and/or 7 of 0,S. I..ettai-s Patent 4,543 , 500, claims 6 ancl/or 7 0.l: IJ I..otters

Patcmt 4,533,843, claims 3.6, 1.7, and/or 1.9 of lJ,S, let,i:c?rs Pat.ont; 3,716,764, l.-/L/ and c I.ai.nis l., 2., ;niid/o~- 3 of I1 I $ I I..att;oi**:jI;)atcbrit 3, 940, 747. 75

I.Iha coinplaj iiant in a sect;ion 337 inwe!itigatioti must show that; respondents' unfaii- methods of compati.1:i.on and wifai.r act:$ hawe the affect 01- to 172/ tcmdency destroy or si.ihstanti;all,y i,iiji,irc! t;ha domc?stic i.ndi.istryI -

quaritcim of injury nccc?ssai-y to sidtis,Py the injury i-aqi~i.rament, holding that

wc ..-171/ To the cxtent not inconsistent; with the foregoing discussion, adopt ALJ' the s f inclings of Fact coiicorriing domc?sti.c intJi,ist;i-y I

172./ 19 U.S.C. g 1337(a). lendency to substantjally injurp is disci.issecl &Tow, 76

nnrmaI.ly estab1.ish that t;ho inl'i-ingor hol.cls, or t;hre&lx?ns to hold, ci of in significant amount tho domast;ic market for thc pi-oduct, q~~estion01- has

made signiificant sales of that prodiict. .--"" l'ht! spocific lawal of any

indicator of injury is not dispositiwe of the issue of substantial injui-y, and

the Commission considers the special charac:teri.stics of oach industry in

assessing its condition ALJ's DRAM Wa adapt tho concl.usion that 1:L's business sufferad

substantial injury in 1986. - Employment; and pi-oduct.i.oii in the IJriitQd , States dec I.inc?d, and "1'1 suffered I: 1 1.osses i.n 1.9135 and I.OU6 on its

doniost;ical ly--produced DRAMS ,

We bel iowe that l.hc conclusjoii that infrjiiqi.ng imports of Sanrstrrrg 64K and

of 179/ idarraritad by .tho QV i.dence record I -

U, -.l77/ Textron Inc. v , SI 1nt;erriat;j.orial. Tradc Comniission, supra, at; 1029,

...-...-.178/ ID at 807.

..-:1.79/ T'l~eonly infringing imports remainincj r.indev. iriwestjgat:i on ai-e Samscrng ' s imports of 64K and 256K DRtlMs , 'The ... ,I dotcr.minr:!d, arid WI? affirm %he RI DRAM!; clotc!rriri.nat:i.oi7, that Sanisurig ' s 64K arid 256K 1.itcrally irifringa the '701. patent, and ,that Siimsung ' s 256K [)RAMS 'I. itora 1ly inPri.nga .the I500 and 043 s patx?rit;s , Wi.tl.1 rc>spect to Sanisung' s DRAM!;, we hawo ~-cwei-s~donly the k1.J' clc?tc!i-inJ,nation t;hat Samsirnq' s Ej4K iw~d256H I:)RflMs i.nfri.nya the ' 764 pitent i.iridar* tht,! of ~OC~I**~.IIQQC,,U~V~~QII~;S , 77

Samsi.ing's {J.S. market share for 64K I.)HAMs 1: 1 tlui-ing al 1 four quarters of 1985, 1- ] during the first two quartars of 1986, arid

3 C 1 percent, while thc domosti.c i.ricltrsti-y ha1.d [ peifwvit of t;he iiiai+kat;.

Samsung's market share during the first tihree quai3xr.s of 3986 was [ ]

..-180/ The portion of the domest;ic indust;ry devoted to pi-ocl~~ctionof 64K DRAMS consists only of I: 1 -1'hare was no ofFercd ,that any other DRAM pr.oof domestic producer nianufactured 69K DRAMS in conncctj on wl th any of: the patents at issue, with the exce1:)tion of [ ] 1,h.i.c11,t;i.ia AI..J cle~t;ei-ni~iriad it practiced the ' 764 patent uriti I. slwt ~CJUJII operat;ioris :in C: 3 HawQ\/ai-, we have clet.ai-miiwd that [ "j .i.s not part of the c:lomnsI:i.c industry,

I8X/ .. - 11:) Appwidjx A at; 22, Table 3.2a.

...... -.'103/ Appendix A at ?I., I"ah1.e 1.7. 78

of dec lining IJ.S. consumption, while infrinqiny impor'ts .iIi(:i-c>ascd and held i3

sjgnjficant share of the U.8. market for the 64.K IJRAMs.

256X 1.9tI6, Samsiriig did not iniport any l)l?Wl:s innt il :I:i.ifr%ncJing.imprrrts 0.P

Sanisung 256K DRAMS [ from 1 parcenl. of clo~~~st.iccoiisumption in

the first climrter OF 1.9Iltj, to [ ] parcerit in i-.l.ie sacorid cdut\i**tt!ip,and to [ 'J

parcent in the third qua,rtor. I'he dolneskic industry ' s market sharc? 1.85/ dacreased from L' 'j porcmt in tha i?ai.irth quarter of 19U5, - to c 1 parcent in the first quarter of 1986, than increased to L 1 percent in the

second quarter, and to [ ] percent in the third quarter. Overall, the

domestic industry accounted for I: :] parcent of domestic consumption during

1986, 8 the first throe quarters of whila Samsimg's imports accounted For C ]

percent. TI, considered alone, accounted for C 1 pel-cent of domestic

consumption in the First two quarters of 1906, and [ ] parceiit of domastic

consuniption in the third quartor, *.- lo6/ Sanisuny's 1J.S. market share For 256K

DRAMS was substantial and incrmsad, 111djcatjng that !;amsung's infi-jngiiig ic imports wQre a causa of substnrit:i.c\l.i.nj iri-y to tha domes t inchistry ,

i i IJ I S. consumptj on of 2.MK DRhMs ncrcascrcl sjqnj f cantl y t1'ii-oughout

1985--II6. 'Tho shara OB consi.imption accountd for' by non-inFr incJiiicJ iniports and

I-tori-domestic industry 256K DRhMs was [ 1 percent in the first quai-tor of

3.986, I: 'j percent in the second quarlxr, and [ ] parcent .in tha ,third

25GK .--.104/ Tho portion of the domastic industry devoted to production of DRAMs TI iiicI.~ides ' s operations and ~IECEL'sCa 1.ifoivi.a operations producing 256K DRAMS urider the '500 and '843 patents.

NECEL. 256K 'TI did _I-185/ Only was producinq DlifiMs at thi.s time. not sa'l.1 any of i.ts domestic 256K DRAM production durj.ng 1905, 79

quarter, 1:n an expanding mai-kat for 256K C)liAMs, !;i.liiisi.ing' (3 abi.1.i.ty to rapidly increase its market sliara to a si.griificant level j ndicatt-\s that infi-j ngirig

Samsmg imports wera a cause of si.iks1;anti.a1 injury .

Since the rQcord contains no evidence of downsti-eani imports containing infringing =s.yjq IXAMs, we hawe not consiclei-cd rlownst;i-e;nm i.mpoi-,ts in determining causation of substantial injury by iiifriiigj ng Sanisung imports.

Similarly, sinca there is no avidsnt:o in .the rccoi-d c;is to .the wol.uma (or pri cc) of infringing Sanisung DRAlVls imported through tho gray (pai-a1 le3 ) market, we have not coiisi.dQrtld such i.mport;s in cASSC2:$S'i.i'lCJc:4~~.i~i~ti.~n of substmtial injury by :iamsung's iiifri.iiginq imports,

thQ of wc! :3ased on QWi.deiicc iri thc? racoi-(l t;h i.s i.n\/a:iti.g,At;iori, coiic1,i.id~ i that; the significant wo1umes of in\poi-t;ed 17fi-ing1 ng :;amsung 64K ancl %!dK DRkMs coiitri.hutQd to thc! substariti.al. injury suffcli-cxl hy the? chinas tic i.iidusti-y rlirring

1.986, -187/

TO TENDENCY S 1Jn ST ANTIAI.. I..Y XNJU I<€

The Commission in its datarminatian of tendency to .substantially injure tho domestic industry considers such factors as substantial foreign manufacturing capacity combined with tho intenti.on to parictrato the I),SI market, - The Fedoral Circuit has dmlinad to specify a lcgal standard regarding what is reqirirwl to establish a tend(-mcy to sinkstaiiti.al.1.y iiiji,ire, but; has rejected the standard that unfair methods or' acts that rasu1.L in owon

crijoycrd a fair clegrec! of s~~cccssjn the U.S. lllZf.\M miflrdtet;, and i s scelci~igto

increasa ,its pmsence i.n .&hatinarkst, [ 1 i'he

demonstratad ahi lity arid intent to pt-inetratc the [I. ti, markat, support an

affirmati.ve determination with respect; to tendency to substantially injure the

~ clomestic industry. DRAMS, it 1.f Sanisung does indeed cease production of 64K as j.t claims

plans to do, -- the possibility exists that it can shift; that picoductjori to capacity 256K or [ 1 DRAMs, -.-I19"/ which represant tho growing sectors of

the markot, Sarnsung has an astahl.i,shd snlns and markat.i.ricJ systom i.n thc

1Jri.ited States, and seeks to increase its market prosgnca, .in part, Iny L9%/ clunI.ifyinq its p~-ocli.ic:twi l;h itiajor rri.ist;otnoi~.s,'-'--- .l:n ,~ddi. t ion , t;he pri.c; iny

:l.!Jl/ Viere arcz as yet; ria imports of Samsung [ :] DRAMs, so tharo j.s no ?-iyrkliiig as to infringement by ,these pntaritial. imports. C:orisc?c?iAaritly, WQ ha\ra not; considered tham in our* aria1ysj.s of tendericy to sulnstaritj.al.ly injure, Exs. ._-192/I._.... 'rr. islt; 1.6,1.70, 1':1 42:l.O at 'I, 4236, 4267, 4x68, 429%.at 1.!5--1.6, 4292b. of Samsung I s importc?cl I.)lifiMs is nrit rast;r..i.c~tQdby Lhc 1;a.i.i- Marknt Vi>l.i.le (FMV)

prices established for Japanese producers by the? U.S I /Japanese I;wlicoriductor. J Agreement. This fact, in Light ai' the [ t.1ii.i.t waI.ires of DRAMS Samsung' s during 1985 and 1986, supports the 1,ikcl.ihood.that; the prices to J of of Samsung DRAMS will continua he at tha [ tha markGt, gxarting

aL ] pressure on domestic prices despite Lhe; FMV pricing of Japanese imports, rhese factors support tl~aco11c1.1,isi.on .that infrincJ%ny :;amsung itnports 3 1. 9 / haw the tendency ,to injure the clom~stic iriclcr!j.try I -.-

I. a2

H EMEUY

The Commission has broad discretion jn sel,ecting the form, scope, and

of 33/ its extent tho remedy in a section proccxdinq, arid jud i.ciml rc!vi.c?w of

choice of rewody necessardly is limitcd. ---3.94/ .t:n ac~dition, t;tw (::oinini.ssi.on -.. has the power to make factual. detc!rmiriatioris i.n the remedy pliase of' a section its 337 investigation, to th? extent nocessar'y, in ordc!r* I:o reach

detcriniriatj on, 'These factual dntermj nations may bc made on thc basis of the

evidencc of record in the violation phase of the investiyati.on, or on thc

basis of information submitted by the parties in the remedy phase of the

investigation,

Complai,nant TI requested that the Commission issue a very broad general 0. TI that excl.usion order iii this case. --lg5/ also requestc!d the Commission

...I-- ---I"___..-- S.A. --.l94/ Viscofan, \/. United States, 787 F.2.d 544, 548 (Fc?d. Cjr. 1986) (affirming Commission rainedy dotermination in Cortain Processes ror the No. Manufacture of Skinless Sausage Casj.ngs and Resul.ting Product, J'nw, No. 337-T&-:L48/169, \JS.H"; Pub. '1624 ('l.984)), 'TI r.195/ .- . sought an exc1,usion order pi-ohibjt-ing the importation of: (1) infringing URhMs, and components Lhercof such a:; die, wafcr*s ancl slicc!s, si ngle--in--lj.nc package nlodul.es (SlPs), singl.e-.in-~.lIna memoi'*y niodu1.as (SI:MMs), and any other davicc2s used as tioldc?rs of: or' trlarisporting mc.!d:id for IIHAMS (holder devices); (2) printed circul t boards, memory cxparisjon hoards, and otlic!r boards that contain inFr*inyiny UHAMs; (3) coiiipwter!; (such as minframe, small business, and porsonal computers), facsjmi IC? and telacommunlcatioris equipinent, computcir priritcrs, and sulnnssainblias of' any of khe foregoing which are! manufactured by either Samsung or. NkC, containj.ng irifrj ngj nc~URhMs; (4) computars (such as nminfrarna, small business and personal coinputera), facsi.mi1.e and tel.ecomniunicatio~isequipment, computer printers, and subassembJ.ics of any oP tho foregoing containing in.i-'ri.rryiny BROMs; (5) lead frames, masks, reticles, instrumants, equipment, or' any other materials or products, the importation of which thc U ,SI Custoins Servicc is satisl'ied wou Id (Footnote contini,~edon next page) inwcstigation, argued that any remedy granted by the C:ommi ss.iaii sIioii1.d be a

"conditiotia'l." QXC Li.ision order, .Limited to 64K wid %5ill( I:)RAMs , which would self-destruct; if 11 did .not offer to license Samsung on ternis comparable to those offerad the previously settling raspondwts .---L97/

The Commission investigative attorney (IA) recomniondad that tha NE(: Commission issue a limited exclusion ordar directed at and

(Footnote coriti iitid from pi-cwi ~LISpage) con-trikxitc? .to or i.nc:liicc! l;he i.nfri.nycment of oiic or more cla.iins of one or more of the patants idontifi ecl in Paragraph (1) .

--196/ 7'2 rcqiierrtecl that the Coiiiinission .i.ssi.ic o\'.dQi-s r-cqiiriiig AllX and Samsuny to: (1) cmse and desist; from marketing, distributing, .solling and/or offering for sale i.niportad WAMs or componmts tliei-eof, or I)IIAMs or components States, of thereof fabricated by NEC and SamscmcJ in jii violation . c~asa the IJnJtc?d section 337; (2) and desist t'roin violatiiiy scxtion 3.17 by induciny or contributing to the infringement of certain claims of the patents 1.1: contends (3) are infringad , incl.uding .the '764 pat~nt; CQ~BCand dcisist from wiol.atiny section 337 by using contributori1.y infringing lead frames, masks, reticles, instruments, aquipment, or any other materials or gi-od~icts to fahi-icate DRAMS or components thereof in the United States. "DRAMs" is defined in the proposed orders as all ORHMs, iiicluding but 1.i.mitod to, 64K, '12OK, SIMMs,t~ot 2561(, and 1Pl DRAMS, components thereof, SlPs, and othcr devices used as holders of or transporting media for I)lWMs. i;ss ht;tachmcii'ts 2, to I., andic 3, Brief of Complainant Texas Instruments Incorporated on Ramedy , Pub1 1.nterast and Bonding Issues (hereinafter I".[ i3i-i.af) for .tl.ia toxt oF 1,1ie pi-opos~dordars ,

-I_197/ Rrief to the Commission by Samsung Company, I .tcl . and Samsung Semiconductor & Tel.acommunicati,ons Co. , I..tcl , lir?gc~rcli.iiyVt.iIn1. i.c :1:ntc!i-ast,

Rcmedy , and Bonding (herei naftclr Samsunc~131-j of) at 19--20I 84

1.98/ ?:amsung, - and that the Conimirrsi.on issue cease and dasi st; orclers agai.nst

NKC and Samsunq, prohibi tirig tha i.mpoi"tati.on ancl 1.1s~of iciateri.a'l.s, components

and equipment in tIi@ manufacture of I3RCIMs i.11 thc 1jni.ted StiaLos t;l'iat i.rifririge 299/ the ral.c?vant patents. --- i Exclusion order -.. In determj.ri.1'.ngwhcthet- t;o :is~a yenera1 exclusion

order, .t:Iia Commission Inal.iaricas the r.oiiipl.iai~iari~t's i,nI.;or~!st in o5)l:a.i.niiig tho protection from al.l potcntial forcigii iiifri ngsrs, againsl, j tilieiwit; %Or>/ to potantial. of a ganaral oxcl.usion oi~ulov. cli.si-~i~)t1.q i:ti,niatx ti~~lr?, .- Iho C:omrriission requires that a complaiiiarit scekjng h cpn~ra1cxclusioti ~~-clot~.

R p !i R of i. pro\I e I' both a wid s t-oatj patte rii of u ndu tho i-i z wl LI i. t; :; ~CIt ci 1-1 t;cwl IIV e nt.I, II

arid certain business condi.ti.ons from whi.cli [the (.:omniissi.on] n\i.ght;i-ca:$ot~~bly I manufacturars i.nfaiP that foreign otliar khan tlio ra!sponclRrit;s to ,t;l~c to inwest;i.gati.on may attempt enter the IJ I SI market; with infringing

86

respect to any othar imports, We do not hal.iewa that a concli.ision of

infringement; by the nowsettled respondents can bs made on the basis of their.

sc!ttlomerit ayrcements . 1110 sattlement agreements antoi-ed int;o by the formar

respondents do not admit infringamont, and it is generally recognized that a for respondent may choose to sett1.a a section 337 inwosti.giiti.on reasoris othei-

than an admission of violation.

"1'1 made no allegations concarnjng foralgn infringement strj ts based on the

forcliqn patants corraspondiny ,to tho 1J.S. patants in sirit. I'L's rwiclcmx that

othor non-respondent companies are poisod to ontor tlie IJ. S. mai-kat wj t;h

i.nfrinying OHrlMs is not conwinciny. :I:nfv.iiicJalnaiitWAS a hotly corihs'td issue thl jii s jnwestigatjan, and involved numerous exti-on~ely Icat.od tmAiiilcal I cmp1 We %04/ questions. do not hel.iawr? th'at TI'S affi.clavit;s and claim charts, .-

sulnmit.tecl during the remedy phase of the inwestigatian, and its arguments

based an joint ventures and 1.icensing agreements, arc! a sufficient basis For

tha Commission to conclude that it is probable that potential imports will be

infringing. This is particulmly true in light of the HI..J's conclusion (with

which we agree) that it is possible to make comp1et;aly functional DRAMS

without infringing any of tha pattants in controwarsy, 7'1 has not, therafora, .

demonstrated a widespread pattern of unauthorj,zed use of its patontod

tcchnoloyy.

a'!/ 117 addition, wo notc that most; of the chlm charts 'TI. has sirbnlittad inwo~I.\~athr? ' 764 patent, whicli wr? have detc!rwi.iwd i.3 riot iiiEr.irigcad .i.n t;hi.s jriwost;lgatian, and thc '092 patent, which the HI...;I' datc\i-mlned j s not pi-actlcod by tha clonrastic iiidtistry, a concl.usi,ori whic:h tha (:onimissi.oii c;lotclrmined not to rewiaw, oneth the loss riot present;, k)ut a wjo1at;ion of section 337 has lne~iitlot;oi-ni.iiwcl to axist, .is of c)r whera tho wi.olat;ion l:i,mi.t4 to orio or *;I smrA1.l ritmbar

I-(!spor'iderit;!j, 1,hc Coninij.ssi.ori has C~IIC~.I,I~OC!.Chat I~~~J~IICO of a 1:inijtod ~XC~US~~II

n) ,is oi-der, di.i-c-!ctc-!cia-t thr! i-esponclerit( i.nwol.vc?d iri t;hn wiol.dki.m, p p5+/ We appro I- i at; e , hawa concl udcd that a 1dnij.t;ed excl.usi011 ol"dcr should bo issued in %his inwesti.qntion.

We hawo determined to exc1.udo both asscmhled and unassembled infringing

MWMs manufactured by Samsi.ing, The infrincpment which wo Iiawc? found is in tho- electric circuitry embodied in thc silicon chip itself, kl.though we have defined the industry on tho hasis of the conimorci.al product, .the! assembl.ed .

DRAM, in usable form, it is appropriate to prohibit importat;ian of unassonlblad

DRAMS, that is, itnportati.on of .the fabri.ctntod wafers or chips (die), with tho

infringing DRAM circuitry embodied thcreiri, si.iicc it, is the chips themselvos, up to which makc the wafor, that haw^ k)can fl~*txi**ni:1nrxI iriFri.nLyo I

Wc have detarniinod to exclude only infririgIn(r Imports of 64K arid 2t~6K

UIIAMs (ii?CltAdiiig combi.nnti.ons thar.c?of, i , r!, , 1.2fIK 1)RkP'ln) I 'T'hsc-! WCI"G the only

Snnisung DRfIMs detcrinj ried Lo III~U.~ ng~ any of' the patents .i 11 ~oiitr*o\iei-sy.

Sanisunq i.s iiot ct.~r~-ant:l.y:i.mport;ing [ I:)l?fiPI$ i.nt;o tho United !;tdtes, and it ewon appoars f'roni tlie record that Samsung doas not manufactuit.c [ ] DlZkMs at

this time!, 88

'There is no i.nfoit.mati.on .in .tlic! rc:!coi~*dcoricai#wi.ny ;my othnr clonsi.%y

(generation) of Samsrriig DRAM. Alt.l.iougl'i there is ai7 obvious conric?ction b~tweeri of generations of URAMs, inc I.uding .tha app1,ication knowldyc! gained in the

dovelopnwnt and manufacture of an earlier generation to the development arid di. nianu.Facti.ira of a 1.atar ggnaration, thelea am also si.yni.fi.cant t-'.Fl?roncasI Wo

do not bc!I.ieve that infringeniont of the pateiit;s iii controwclrsy by future

no may I-toI.d true for fut;ure DRAMs as well.. Sinccr the1-e Iias bean dctoi-mination

of infringement nyainst any Samst,iiig I.)RAMs othor than 64X c:\ricl %!'i(iK I.)HAMs, thc!rcl

is no unfair act or mettiad of competit;ion in the importation or sale of any

there can, in our wiew, be no injury to the domc?stic industry by raason of We 1~rifaj.rimports of lDl4AMs other t;I.iati 641( and %561( [)RfiMs . hauo, tharaFora, G4K deterrriincd riot to exclude imports of I)RAM!r other than Sanmirng or 256K

I')RAMs ,

through 1905 were imported embadded in downstredm products. LCZ' Similalely,

the aggregate value of DRAMS contained in the four catogories of downstream

21111/ products we have datarmined to axc1,ude was siyni.ficarit in l.086. --

Consequently, we concludo that it is appropriate to prohibit importation of I

computers (such as mainframe, sinall hi.isi.ness, iand pc!i-sonc\l. computers),

facsimile machines, teI.~coniiilunjcatj.oiisswitching equjpnlent,, and pi-int~rs, , which contain i.rifr.l.nying !;amswy QllK or %%K l)Rfii'l!s (or any combination

1.hsrmf) ,

We conc1.ude that it j.s not appi<*opr.iatc!to i ssu~a "condj t;joiial" excl~rsIon

ordar of the nature rnquc?stc:!d hy Smsuny . WG do not belic!va the Commi,ssi.on

5hOtild interfere with TI'S legitimate rights to llconse its patonts to whom it; 209/ pleases, on whatewer terms i.t can neyot;i.ata. A-

In order to warrant the exclusion of upstream products or components of

act, tha article($) dotarmiiicd ,to be the subject of the unfair tho Coinmission

has relied upon a determination of contributory or induced inf ririgement

TI --207/ Ex. 4966a. 9 1.

sJ:i.ccs, in this case. Contrary to I:C's aryLimrwt, the 19l.J dld pwt, make a

the domestic industry. Tl~oH1.J conc1irdod that, sjnco lUllC is Ijconsod under the

for of upstrwm aie*tic3.~s use in its maniiFactxrre of I)"% undar the '500 and

'043 patwits woulcJ bi! contributor4:I.y infringing. The HI. ;I did riot discuss the elcments of contrihirtory or inducgd infrinqement, nor did she makc! tho necessary findings, e.g,, whether the articles in question have a substantial non-infringing use, .-212' Moreover, tho H1.J did not ewcn mention contributory or iritlucc?d infringement in connection with Samsung . Scimswg's

U I S. manufacturing affiliate (Samsung Semiconductor, Inc. ) was not a party to

21j/ 'T'IIc Commj ssian also did not; mako any dotoi-nljnatjoris of ,induced or contributory infringemant in this investigat ion,

2]?,/ The existenca of a substantial non-infrjnging IJSC! for 1.1.~accused is 35 components a tlc?f'enscl ,to im aJ.1.wption of (:oi?%r"l.bLi1.:Oi"Y i.nfi..i.nycmmtI U.S.C. S 2.71(c). 9 2.

......

taking action under subsection (d) or (P) of this saction ~wli~cliprovldo for issuing permanent and tc?mporary c!xc'l.irsion orders, respectively] the Coinmissi.on

desist may issue I . , an order directing such p(\rsoii t;o coase and from angaging" in unfair acts, Com~nissi,oriarKckas and Commissionor I..odw.i.cknota that the plain language of the stat;ute peunjts the issuancc of a coasc and

212' Sanisung Seniiconductxrr, Inc also marltats and sclls I.)RAMs foi- the Korean rc S ams ung s poncl (xit s , 1.

in distributing, sal linq, or off~ririgfor sa1.c the lJiii.tod Btatos 64N and 256K in of DRCIMs imported violation section 337. fhi excl.usion order wi.1.1. have no only effect on infringing imports all-eady i.n tlia \Jiii.ted States; 'I:t wil. I. affact of future imports. In order to prevent the harm from thc! sale of jiiveiiloi-ies

...... -- ...... -. ..."_I...... -...... -- 94

the Section :)3l(q)(3) p~-ovidas For crrtry of inFr*i.ngincj articles upon .the

bond is to be set at a level. sufficient to "offset any competitivc advantage

resultinq from the unfair mathod of competition or iJnfai.r act enjoyed by 218/ persons benofitting from the importation." - of TT argued that a bond in the amount 100 percent ymJargm is

necessary to offset the competitive advantage gainwl by thG infringing imports , in this investigation. Samsung argued that instead of a fu1.1 va1.ue bond, the

Commission shou1.d impose a "raasonable royc\l.ty" bond, in the c\mor.int of [ ] 3 percsnt ad valorem for 64K DRAMS and L pe1-coi11. ad valor on^ for 256K IA DRkMs. --219' Tho asserted that the measurcment of competjtlve advaiil.age U.!;. is compl.@x, in light of thc? varying prices ii.1 thc! ORilM nrmket, and the

2.?./ Certain Airtight Cast-Iron Stoves, supra; Certaj n Moldod- In-Sandwj ch Panel Inscrts and Mothods for l'hair 'I:nsl.ailation, supra; (hrtain Plastic I:ood Storage Containers, sup=; Certain Compound Action Metal Cutting Snips and Components Theraof, supra; Certain Mrt Jawalry and Parts Thereof, supra; Certain Miniature Hacksaws, supra,

_I217/ 3.9 U.S.C, § 1337(g)(3), 22/ S. Rep. 1298, 93d Cong., 2d Sess. 198 (1974); 1.9 C.F,R. 210.58(a)(3).

-_--219/ Samsung calcir1,atad the bond amounts by taking tihe highest per unit royalty rate established in the 1.icenses agreed to by former respondents jii this investigation, and using .that rate to cal.ci.il.ate a pc2rcantage based on Sanrsurig's current DRAM prices. Samsurrg argued that a bond amount bascd on the base royalty rata in tho 1.i.cansas antered .into in st!ttli!mcwt of this invest;igation establishes TI'S valuatj on of the comlwti tiva advarrtago accruing i ,to nfrri. iiq i. ncj rcs poiiclcrn t s , .F i. 03 i. s i4 n i cari t non-pi- i. c c! 1x2net: i. t s , i. nc 1 idi 119 'I. ivii. rig (: 11I-v Q ha nei' t s , acc 1-1.1 incj .to IR rGspondent;s I:)y rcason of irifringiny imports , Conswjueritly , the also

i tm recommend e d a re a so 1'1ab roya :I.ty bond, ..--*..-"I s ugg c! s t, rig t; t; t; I?(? roy a 1t y

aiiio~.ints established betwean 11 ancl satt I,ed r~sporida~~t~can ha us~das a 1 star.,ting point for ca l.c~i:I.atinga bond amount;. -.-.-

Coiilpetitivc! advantage hcra cannot kip precisol.y calcul.at,ad I '~'he lack of

oT pracisa pi-ice information and tli~relatiwca1.y lir.o(;\d ranyc 1)RRM !:)i-'icos in the

IJ.5 . markst, pi-ecl.ud~ cJi rect price compai-l sons between Sanlsurig and 't";l: DI\'f-IMs as

%he basis hi- the bond amount.,. Donding is not., to hir? imposrad .AS l**i-antto.

imlnoi-tatioii during the! Presidential I-awiaw period, but rathpr 1-0 offsat the

adwantay~ , conipatitiva anjoyad by the i.nFri.ngincj .i.nipor'ts. bh bal.i.evr? that a full value bond would more than offsat Sarnsung's advantage and wou:I.d bc an

improper dotarrent to importa.ti.on.

We have detemiined to establish a bond based on a "reasonahle royalty,"

as recommended by the IA and Sarnsuny, Howover, we have sel.ectad an amount

which is a multiple of the highest Base Rate from the 11 license agreements

concluded in this investigation, hecausa of the nonqwico hcna fits gained by Samsung as a result of its unauthorized use of T:T's patanted technology. This

amount comes to !IO. 22 for 64K t)RAMs and !)iO.!j2 for %.SEjl( IIRflMs, Wa also

[email protected] that, in the case of rnulti4RAM units, wli~t;li6rSIPS, 8TMs, circuit;

Staff 13ri.of at 20-23 , _--.I-220/ in DRfiMs the articles , as certified by the impoi3xr. Ti fis noted above, our urrderstandiiiy of the license agrenmerrts errt;ered into during the investigation is that the actual. royalty ... 1 and prc:suniably mprosonts C

'J value of the pateni portfolios being J cross-licensed . Consequently , the Dasc Hate i.s presumab1.y C valuation L of 1 patent porLfo1io being licensed, in the context of an exclrangc of

:i.nta1l.et:tual property rights. :Cn the context of bontling, h~wev~r',thev'e is na exchange of .i ntel lectual praporty rights , and t1ier.o has been a fintli ng of

is offset 17al.e royalty amount appi-opt-iate to thta conrpeti ti.ve advantage gained

Customs gcr~c~ral.ly prefers a percentage of entered va1.ue bond, Customs has %22/ stated that it can enforce a flat per DHflM hand without yredt probloms. I-*-

223/ .ri-iE PIJBI ... I:C :I:NTE:REST-1-1 Section 337(d) pi-ovides that the Commission shall issue a remedy mless, ixI%er considering the c!ffact os' st.ich iewmedy upon ('1) the public hmlth and U.S. the ~i~:I.fai-e,(2) competitive conditjoris iii the economy, (3) U.S.

..I%.XU... C:i.tstotns Haply at 6, 97

..... "...... "...... "--....-...,.....--..I_._ .. welfare, competitive condjtions in the U.S. economy, ,the production of like or directly competitive arti.cl(?s in thc llnitad Statas, or 'tJ,G, consl.iiners. In the thc Certain Aramid Fiber, 22FjJ--- the Cornmiasion exc:ludod prdrret of single U,:;, altarriatc produccr in thq world From the ioarkflt. :Xn this cast?, thore are of: numerous alternate sources ~i~pplyfor U,s , pui~jy.asoru of DItfjMs, j iiclt~ljng tha 1.i.cansad Former raspondants.

..-.... "..----.- - No. 225/I-"- Iriv I 337-TA-1.94, IJSI'T'C Pub, 1824 (198c5), 99

ADDITIONAL VIEWS OF CHAIRMAN LIEBELER AND VICE-CHAIRMAN BRUNSDALE

We have joined the Commission in its decision and opinion. However, we have additional views on the validity and infringement of the '764 patent and on the scope of the domestic industry.

I. The '764 Patent We do not find that the AIJ8s interpretation of the term "central region" or the AL18s findings of fact and conclusions of law relating to validity and infringement were clearly erroneous without , governing precedent, or constitute an abuse of discretion. Accordingly, we would affirm the AXJ'S findings regarding validity and infringement of the

'764 patent. 11. DOMESTIC INDUSTRY We join the Commission in its discussion of domestic industry. While the Commission included in the domestic industry certain of TI'S domestic activities, it did not include general marketing, overhead, general and administrative expenses., royalties from licensees, or all TI'S research, development, and design investments. These

99 100 activities are carried out in exploitation of the patents at issue and add value to TI'S DRAMS. We believe these activities should also be included'in the domestic industry. As Chairman Liebeler first stated in Certain 1 Products with Gremlins Character Depictions, section 337 is a remedial statute designed to protect property rights (including intellectual property rights) from such unfair practices as patent infringement. An American patent owner should only have to show some domestic operations aimed at , exploiting the patent by himself, his assignees, or 2 his licensees. . TI easily bears this burden. In addition to actually manufacturing some DRAMS in the United

Y States, the record shows that TI did a considerable -I

amount of research, development, and design in this country. All of these activities occurred in the

1. Inv. NO. 337-TA-201, USITC Pub. 1815, at 3 (1986) (dissenting views of Vice-chairman Liebe1er)- 2. H.R. Rep. No. 571, 93rd Cong., 1st Sess. 78 (1973); Certain Double-Sided Floppy Disk Drives and Components Thereof, Inv. No. 337-TA-215, USITC Pub. 1860, at 28-29 (1986) (additional views of Vice-Chairman Liebeler). 100 0. 101 United States, and a11 were aimed at exploiting TI'S patents. Thus, TI argued, all should be considered in deciding whether a domestic industry exists. The Commission partly agrees with TI, but it reasons that when Congress said "industry. . . in the 3 United States," it meant production and production-related activities. Thus the Commission reasoned that only such research, development, and design as are coupled with "ongoing manufacturing activity in the United States" may be counted as a production-related activity. . , While we agree with the Commission that production and production-related activities should be included in the domestic industry, we do not believe that section 337 or Commission precedent requires domestic production or production-related 4 activities in order to find a domestic industry. We think that -all TI'S American research,

3. -See 19 U.S.C. §1337(a). '4 . -See Certain Cube Puzzles, Inv. No. 337-TA-112, USITC Pub. 1334 (1983); Certain Airtight Cast Iron-Stoves, Inv. No. 337-TA-69, USITC Pub. 1126 (1981); Certain Airless Paint Spray Pumps and Components Thereof, Inv. No. 337-TA-90, USITC Pub. 1199 (1981); cited with approval in Schaper Mfg. Co. v. ITC, 717 F.2d 1368, 1373 (1983). .. 101 102 development, and design should be a part of the domestic industry. Equating domestic industry with domestic manufacturing or manufacturing related activities does not give as much protection to American patent owners as section 337 could and should provide. We believe that all domestic activities associated with exploitation of a domestic patent should be included within the domestic industry. Patent holders do not make investment decisions based on whether activities are related to production. In , the real world, inventors and investors don't .think that way. They just recognize that they will have to spend money to exploit a patent. If they have, a "domestic industry" has begun. That is all that should be required. With the growth of patent law to include software, plants and biOteChnOlOgy, and the increasing importance of service industries, we should be wary that we do not import into a statute as important as section 337 an overly narrow view of the scope of protected domestic activities. If.we do, we may cause unnecessary harm in the future, even if we do not today.

102 103 The Commission declined to include in the domestic industry certain of TI'S upstream and . downstream domestic activities supporting its overseas wafer fabrication operations. In this case, we would have included in the domestic industry TI'S domestic activities (encapsulation, service, and sales, as well as some of TI'S research and development and design) supporting TI'S DRAMS for which wafers fabrication occurred abroad. Similar upstream and downstream activities were found to be a domestic industry in Cube Puzzles, Cast-Iron Stoves, and Spray Pumps and we would include them in

e . 103 104

337. Such an interpretation might have a significant deterrent effect on investment in intellectual

5 property.

5. -See Gremlins at 5-6 (dissenting views of Vice-chairman Liebeler)

104 -105-

Dissenting Views of Commissioners Eckes and Bohr Concerning Remedy and Public Interest

We concur with our colleagues that the appropriate remedy for the violation of section 337 found to exist in this investigation is a limited exclusion order. We nevertheless disagree most strongly with the scope of the exclusion order which our colleagues have oubmitted to the President for his approval. We find there is no justification for including, as our colleagues propose, downstream products, such as circuit boards containing any Samsung DRAMS, I/ computers, facsimile \ equipment, telecommunication equipment, or printers, within the scope of such an order. We therefore respectfully dissent from the Commission'r majority opinion. In several recent investigations the Commission has considered the appropriateness of including downstream products within the scope of an exclusion order issued under the authority of section 337. In Aramid Fibers, 2J the Commission specifically excluded downstream products from the ambit of its *< exclusion order and set forth the considerations which led it to that decision. The Commission found:

For the Commission to issue an exclusion order, complainant must establish that each of the products to be excluded, individually or collectively, can have the effect or tendency to substantially injure or de'stroy the domestic industry. 3J Further, the Commission also stated:

lJ Circuit boards containing only infringing Samsung DWs rhould certainly be excludable as attempts to circumvent a properly drafted Commission order. However, the proposed order contains no such limitation or just'ification.

2J Certain Aramid Fibers, Inv. No. 337-TA-194, USITC Pub. 1824 (krch 1986). 3J 3J 2.at 11. -106-

Consideration of the public interest factors also leads us to the conclusion that issuance of the broader exclusion order [sought by complainant] would not be in the public interest. k/

More recently, in the context of a Commission proceeding to modify the

exclusion order issued in Amorphous Metals, 5J three members of this Commission

determined to include downstream products in the exclusion order. They did so without explanation. In this investigation, a majority of the Commission has again determined to include downstream products within the rcope of the order.

Complainant has not established in this proceeding that any downstream

products, which incorporate Samsung DRAHS, have the effect or tendency to

substantially injure or destroy the domestic industry. Further, the rame public , interest considerations that led the Commission to reject the inclusion of

downstream products in the Aramid Fibers order are present in this investigation.

Section 337 prohibits only unfair methods of competition or unfair acts in the

importation or sale of articles vhich rubstantially injure or destroy domestic -. industries. The plain meaning of the statute is that unless articles injure he

domestic industry there is no basis in the statute for their prohibition. The

Court of Appeals for the Federal Circuit has recognized that a smaller quantum of injury may justify an affirmative decision in a patent based section 337

investigation. 6J However, there has never been a suggestion that articles may be

excluded unless they have been shown to have the effect or tendency to

substantially injure of destroy a domestic industry.

4J Id. at 14.

5J Certain Amorphous Metal and Amorphous Articles, Inv. No. 337-TA-143 (Modification of Exclusion Order Proceeding).

6J Textron, Inc. v. USITC, 753 F.2d 1019, 1028 (1985); Corning Glassworks v. USITC, 799 F2d 1559, 1567 (Fed. Cir. 1986). - 107 -

There are only two statements made by the ALJ in the ID that have any conceivable relationship to Samsung and downstream products. First, the ALJ stated, "Samsung's exports of downstream products contained DRAHS manufactured by F'ujitsu." 7J Then, the ALJ stated:

Imports of downstream products containing accused DRAMS affect the sales of competitive downstream products of TI'S customers and therefore adversely affect the demand for the U.S. industry's DRAMS. 8J

The only fact rpecific statement in the ID with regard to Samsung and

downstream products is that Samsung's own downstream products contain DRAMS

manufactured by a noninfringing producer rather than itr own DRAMS (DWfrom the

# only producer found to be infringing the patents at irsue). Thir fact does not even remotely support a finding that downstream products containing Sawung DRAMs

are injurious and thus entitled to be within the rcope of an exclusion order.

The AW's recond statement io a broad-based conclusion and presumably rests on a general reference to the transcript of the hearing. This reference contaiq certain estimates of DRAH consumption broken out to indicate the portion of total

DRAH consumption represented by downstream products. 9J A witnasr stated that measure of DRAH consumption would be inclusive of downstream productr containing

Samsung DRAMS. 10/ The only other reference to Samsung and downstream products in the transcript is an answer by TI'S witness under crosr examination that he had no

7J ID at 816. . 8J ID at 817. 9J Tr. at 14874.

10/ Tr. at 14876. -108-

knowledge about importation of downstream products containing Samsung DRAMS. llJ Neither of these references establishes that downstream product8 containing Samsung

DRAMs have injured the domestic industry. 12/

There is, in short, no evidence that any downstream product8 incorporating

Samsung DRAMS have ever been imported into the United States. The lack of any such

information precludes our finding that imports of downstream products containing infringing Samsung DRAMs have the effect of injuring the industry.

With regard to whether any downstream imports containing Samsung DRAMS might

have the tendency to injure the domestic industry, there is no evidence that

Samsung, or anyone else, intends to export any much product8 to the United States. There vas no evidence that Samsung could or would 8wi-h from wing mjitsu ' noninfringing importo in those products it does export to the United States. There

is therefore no evidence to support the contention that the general rtatement made

by the AIJ has any applicability to Samsung.

With regard to the public Interest, the Commission noted in Aramid Fibers, 'LS that at least two of the factors we must consider before determining to include downstream products within the .cope of an exclusion order are whether 8uch an

order would be unduly burdensome on legitimate trade and whether the order

contemplated is enforcaable.

The order AS drafted by the majority prohibits the import of any of the

downstream products if they contain AS much as a single prohibited DRAM. The

Y

11/ Tr. at 14970-71.

l2J The ALJ made certain findings with respect to downstream prodGt8 incorporating DRAMs of other respondents. Specifically, the AXJ notes that accused DRAMS from Hitachi and NEC (whose DRAMS are not covered by thir oxclusion order) are found in certain downstream products imported into the United States. These findings, however, have no bearing on an exclusion order that is based on Samsung DRAMs. - 109 -

products, themselves, might be valued at many thousands of dollars. In such

situations, the Commission has, heretofore, consistently found that such products

should not be prohibited entry.

The sweeping prohibition proposed by the majority could not be enforced short

of opening every single piece of high technology equipment imported into the United

States from any source to determine if any of the DRAMS are infringing Samsung

DRAMS. Surely, such draconian measures are not contemplated by the statute. It is

the Commission's respohoibility to ensure that its order is, in the first instance,

enforceable as written. In the present case, the order contemplated by the

majority would burden a substantial amount of legitimate trade 8nd would be

impossible eo enforce. The order would not, therefore', be in the public interest. ,