‘\Q3\ONH4 5?
`OfficeofUnfairImportInvestigations “'9l\\
`‘t
`1 \r§
`
`i‘ \\“"Ig.~ '1
`
`t
`
`W/7 Q \~\o
`
`UNITED STATES INTERNATIONAL TRADE COMMISSION
`
`WASHINGTON. DC 20436
`
`November 28, 2017
`
`VIA E-MAIL AND OVERNIGHT MAIL
`Dr. Lakshmi Arunachalam
`222 Stanford Ave.
`Me11loPark, CA 94025
`Tel: 650-690-0995
`
`Re:
`
`Complaint of Dr. Lakshmi Arunachalam Concerning Certain IOTDevices and
`Components Thereof (IoT, the Internet of Things —WebApplications) Displayed
`on a WebBrowser, (Dkt. No. 3263)
`
`Dear Dr. Arunachalam:
`
`I am writing again to identify certain deficiencies with regard to the Amended Complaint
`that was officially received by the Commission on November 7, 2017, and supplementary
`exhibits. Thank you for filing the Amended Complaint and the supplementary information.
`Based 011our examination so far, we would like to draw your attention to certain critical
`deficiencies that remain with regard to the Amended Complaint, exhibits, and supplements that
`must be corrected.
`
`As my October 16 and November 7, 2017 letters to you stated, the Commission
`(1)
`rules require that a complaint describe “specific instances of alleged lmfair importations.” 19
`C.F.R. § 2l0.l2(a)(3). The Commission rules also state in part that a complaint should include
`“[a] showing that each [respondent] is importing or selling the article covered by . . . the above
`specific claims of each involved U.S. patent. When practicable a complainant shall [include] a
`chart that applies each asserted independent claim of each involved U.S. patent to a
`representative involved article of each named [respondent].” 19 C.F.R. § 210. l2(a)(9)(viii).
`
`Based on our review, the Amended Complaint, exhibits and supplements still do not
`
`Page 1 of 4
`
`

`

`identify the necessary specific instances of alleged unfair importations for twenty nine of the
`thirty proposed respondents. The infringement charts identify certain web-based applications for
`the proposed respondents that are alleged to infringe the claims of the ‘340 patent. See EDIS
`Doc ID 627100, File ID 1238127 through 1238157. However, the information is insufficient to
`reasonably conclude that these web applications are imported, sold for importation, or sold alter
`importation, into the United States, by the proposed respondents. While we understand you
`believe the Federal Circuit’s holding in ClearC0rrect v. Align, 810 F.3d 1283 (Fed. Cir. 2016) is
`“moot,” it is a precedential opinion fi‘omthe U.S. Court of Appeals for the Federal Circuit, and
`the Commission is obligated to following its holding. Please provide additional information to
`address this deficiency.
`
`With respect to proposed respondent Apple, Inc., and as addressed in my October 16 and
`November 7 letters, the specific instance of importation identified in the Complaint is the
`purchase of an iPhone 7 by the complainant in Inv. No. 337-TA-1065. However, in your
`Amended Complaint and exhibits, the article that is compared to the asserted independent claims
`of the ‘340 patent (iPhone 8) (see EDIS Doc ID 627100, EDIS File 1]) 1238127) is not the same
`article on which the Amended Complaint relies for evidence of a specific instance of importation
`(the iPhone 7 purchased by the complainant in Inv. No. 337-TA-1065). In the 1065
`investigation, for example, the complainant included exhibits showing that it purchased the
`iPhone 7 in the United States (e.g., by including receipts), showed that the iPhone 7 was
`imported (e.g., including a picture showing that it was “Assembled in China”), and then for
`infringement it included a claim chart allegedly showing that the iPhone 7 practices certain
`claims of the Asserted Patents. See Certain Mobile Electronic Devices and Radio Frequencv
`and Processing Components Thereof Inv. No. 337-TA-1065, Complaint, Exhs. 30, 31 (showing
`importation of an iPhone 7), Exhs. 15, 16C-20C (Public Versions) (claim charts for the iPhone 7,
`purportedly showing how they infringe certain claims of the asserted patents). Please either
`include a claim chart showing how the iPhone 7 practices the independent claims of the ‘340
`patent, or supplement with specific instances of importation of the iPhone 8.
`
`(2) My October 16 and November 7 letters to you also stated that with respect to the
`economic prong of the domestic industry requirement, the Commission rules describe that
`relevant information in a complaint includes, but is not limited to, significant investments in
`plant and equipment, or labor and capital; or substantial investment in the exploitation of the
`subject patent including engineering, research and development or licensing. 19 C.F.R. §§
`210.12(a)(6)(i)(A)-(C). The investments must be made “with respect to articles protected by the
`patent.” 19 U.S.C. § 1337(a)(3) (“For purposes of paragraph (2), an industry in the United
`States shall be considered to exist if there is in the United States, with respect to the articles
`protected by the patent, copyright, trademark, mask work, or design concerned . . . ”).
`
`The information provided thus far with respect to the economic prong of the domestic
`industryrequirement for the ‘340patent is over-inclusivefor at least two reasons: E
`there are
`costs that very likely cannot be relied upon to satisfy the economic prong of the domestic
`industry requirement (rmder the prevailing legal precedent). Second, there are investments
`included in the overall total amounts that Complainants allegedly have made that do not relate to
`the ‘340 patent, or articles protected by the ‘340 patent.
`
`Page 2 of 4
`
`

`

`Certaininvestmentsidentifiedintl1eAmendedComplaint(
`
`n1aynotqualifyasdomesticindustryinvestments.TheCommissionhas
`-)
`found ir1prior Section 337 investigations that litigation costs and patent prosecution costs did not
`qualify as investments in a domestic industryl Fmthermore. investments nrade in sales and
`marketing cannot usually be used to satisfy the economic prong of the domestic industry
`requirement.2 To the extent you ca11provide infonnation that is not over-inclusive in this way.
`please do so.
`
`As I stated ir1my November 7. 2017 letter to you with regard to the
`wl1icl1remains true for the Amended Complaint and exhibits. the
`
`same
`
`way,
`
`you can
`
`Inc. v. U.S. I111’!Trude Comm ’n. 660 F.3d 1322 (Fed. Cir.
`1 See J0/m )t[e::n/ingzm Associates,
`2011) (affirming the Conm1ission"s determination that Complainant did not satisfy the economic
`prong of the domestic industry requirement, noting that “[w]e agree with the Connnission that
`expenditures o11patent litigation do not automatically constitute evidence of the existence of an
`industry in the United States established by substantial investment in the exploitation of a
`patent"); Certain Loom Kitsfor Crenringlinked Articles. hrv. No. 337-TA-923. Cormn’n Op. at
`pp. 6-8 (Feb. 3. 2015) (the Cormnission formd that patent prosecution costs were not investments
`in a domestic industry, and reversing the Final ID’s determination).
`
`3 See Certain Soft-Edged Trmnpolines and Components Thereof hrv. No. 337-TA-908. Conm1’n
`Op. at pp. 54-57 (May 1. 2015).
`
`Page 3 of 4
`
`

`

`(3) We also note that the supplements you have filed with the Conmrission still do not
`correct the many deficiencies with respect to the allegations in the Amended Complaint of
`“unfair methods of competition and unfair acts in the importation of articles (other
`than articles provided for in subparagraphs (B), (C), (D), and (E)) . . . .” rmder 19 U.S.C . §
`l337(a)(l)(A) (emphases added). In particular, the Amended Complaint and exhibits remain
`deficient in that they do not plead the legal elements of specific theories that fall rmder 19 U.S.C.
`§ l337(a)(l)(A): see also, 19 C.F.R. §§ 210. l2(a)(6)(ii). By way of example only. the acts
`described under the different headings in the Amended Complaint still are not set forth with
`sufficient clarity or detail to conclude that they relate to the importation of articles into the
`United States.
`
`Please correct the above-identified deficiencies by the close of business December 5,
`2017. To the extent that you cannot provide the additional information by that date you can ask
`for a further postponement of the Commission’s vote on whether to institute, which is currently
`December 7. 2017. Please be advised that the Cormnission’s determination to institute an
`investigation based on the allegations in the Amended Complaint may be impacted by your
`response(s) and supplementation addressing the requested information.
`
`Sincerely,
`
`/s/ Margaret Macdonald
`
`Margaret Macdorrald
`Director
`Office of Unfair Inrport Investigations
`U.S. International Trade Commission
`Tel: (202) 205-2561
`
`Page 4 of 4
`
`