PUBLIC VERSION
`
`UNITED STATES INTERNATIONAL TRADE COMMISSION
`Washington, D.C. 20436
`
`In the Matter of
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`CERTAIN DIGITAL PHOTO FRAMES
`AND IMAGE DISPLAY DEVICES AND
`COMPONENTS THEREOF
`
`Investigation N0. 337-TA-807
`
`COMMISSION OPINION
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`I.
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`INTRODUCTION
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`On January 3 and 9, 2012, the Commission found the following respondents in default
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`pursuant to 19 U.S.C. § 1337(g)(l) and Commission rule 210.16: Nextar Inc. (“Nextar”) of La
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`Verne, California; WinAccord Ltd. (“WinAccord Taiwan”) of Taipei, Taiwan and WinAccord
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`U.S.A., Inc. (“WinAccord USA” —domestic affiliate of WinAccord Taiwan) of San Jose,
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`California (collectively, “the WinAccord respondents”); and Aiptek International Inc. (“Aiptek”)
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`of Hsinchu, Taiwan. Comrn’n Notice (Jan. 3, 2012); Comm’n Notice (Jan. 9, 2012). On
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`December 7, 2012, the Cormnission found Pandigital, Inc. (“Pandigital”) of Dublin, Califomia in
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`default and in violation of section 337 pursuant to Commission rule 210.17 for failure to
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`participate in the investigation, including by failing to file a pre-hearing statement and brief. 77
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`Fed. Reg. 74220-21 (Dec. 13, 20l2).1 All other respondents have been tenninated from the
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`investigation based on consent order stipulations and settlement agreements. The investigation is
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`now before the Commission to consider issues pertaining to remedy, the public interest, and
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`bonding.
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`I Nextar, Aiptek, WinAccord Taiwan, WinAcc0rd USA, and Pandigital are collectively referred
`to herein as “the defaulting respondents.”
`
`

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`PUBLIC VERSION
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`II.
`
`BACKGROUND
`
`The Commission instituted this investigation on September 27, 2011, based on a
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`complaint filed by Technology Properties Limited, LLC (“TPL”) of Cupertino, California on
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`August 24, 2011. 76 Fed. Reg. 59737-38. The complaint alleged a violation of section 337 of
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`the Tariff Act of 1930, as amended, 19 U.S.C. § 1337, in the importation into the United States,
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`the sale for importation, and the sale within the United States after importation of certain digital
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`photo frames and image display devices and components thereof by reason of infringement of
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`certain claims of U.S. Patent Nos. 6,976,623 (“the ’623 patent”); 7,162,549 (“the ’549 patent”);
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`7,295,443 (“the ’443 patent”); and 7,522,424 (“the ’424 patent”). The complaint further alleged
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`the existence of a domestic industiy.
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`The Commission’s notice of investigation named twenty respondents, including the
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`defaulting respondents. No Commission investigative attorney participated in the investigation.
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`The ’623 patent was asserted against only Pandigital and was later tenninated from the
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`investigation by consent order stipulation. With the exception of the defaulting respondents, all
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`other respondents have been terminated from the investigation based on consent order
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`stipulations and settlement agreements.
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`On December 6 and 22, 201 1, respectively, the presiding administrative law judge
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`(“ALI”) issued initial determinations (“IDs”) finding Nextar, the WinAccord respondents, and
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`Aiptek in default under section 337(g)(1) and 19 C.F.R. § 210.16 because these respondents did
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`not respond to the complaint and notice of investigation. Order No. 14 (Dec. 6, 2011), Order No
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`17 (Dec. 22, 2011). The Commission determined not to review these IDs. Comm’n Notice (Jan.
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`3, 2012); Comm’n Notice (Jan. 11, 2012).
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`2
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`

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`PUBLIC VERSION
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`On November 7, 2012, the ALJ issued an ID (Order No. 48) finding the last remaining
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`respondent, Pandigital, in default and in violation of section 337 under 19 C.F.R. § 210.17
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`because it failed to file a pre-hearing statement and brief as required by the ALJ’s Procedure
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`Schedule. Order No. 48 (Nov. 7, 2012). On December 7, 2012, the Commission determined not
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`to review the ID finding Pandigital in default and in violation of section 337, and requested
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`public briefing on the appropriate remedy, the public interest, and bonding with respect to the
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`defaulting respondents. The Commission also sought specific briefing from TPL regarding its
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`remedy and bonding requests. 77 Fed. Reg. 74220-21 (Dec. 13, 2012). On December 21, 2012,
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`TPL filed responsive briefing, and submitted a proposed limited exclusion order (“LEO”) and
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`proposed cease and desist orders (“CD05”) directed against each of the defaulting respondents.2
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`No other responses to the Commission notice were received.
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`III.
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`DISCUSSION
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`A. Default under Section 337(g)(1) and Commission rule 210.16
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`The Commission is authorized to issue an LEO directed against the covered products of a
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`defaulting respondent under section 337(g)(l) if:
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`(A) a complaint is filed against a person under section 337;
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`(B) the complaint and notice of investigation are served on the person;
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`(C) the person fails to respond to the complaint and notice or otherwise fails to
`appear to answer the complaint and notice;
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`(D) the person fails to show good cause why the person should not be found in
`default; and
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`(E) the complainant seeks relief limited solely to that person.
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`2See Complainant Technology Properties Limited LLC’s Written Submission on Remedy, Bond,
`and Public Interest (“TPL B12”)(Dec. 21, 2012).
`
`3
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`

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`PUBLIC VERSION
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`19 U.S.C. § 1337(g)(1). When these requirements are satisfied, the Commission must “presume
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`that the facts alleged in the complaint are true and shall, upon request, issue an exclusion from
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`entry order or a cease and desist order, or both, limited to the defaulter, unless, after considering
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`the effect of such remedial orders upon the public health and welfare, competitive conditions in
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`the United States economy, the production of like or directly competitive articles in the United
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`States, and the United States consumers, the Commission finds that such orders should not be
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`issued.” Id. Commission rule 210.16(a)(1) also provides that “[a] party shall be found in default
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`if it fails to respond to the complaint and notice of investigation in the marmer prescribed in
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`§ 210.13 or § 210.59(c), or otherwise fails to answer the complaint and notice, and fails to show
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`cause why it should not be found in default.” 19 C.F.R. § 210.16(a)(l).
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`The Commission found that each of these statutory requirements were satisfied with
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`respect to Nextar, Aiptek, and the WinAccord respondents. TPL filed its complaint on August
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`24, 2011. The Secretary to the Commission served all respondents with the complaint and notice
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`of investigation by mail on September 22, 2011, in accordance with Commission rule 210.11.
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`See Notice of Investigation, Certificate of Service (Sept. 22, 2011) (EDIS Document 459720).
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`The FedEx and UPS shipping histories indicate that Nextar, Aiptek, and the WinAccord
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`respondents received the complaint and notice of investigation on September 23, 2011 and/or
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`September 26, 2011. See Order No. 14; TPL’s Motion for Default Judgment Against Aiptek
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`(Nov. 7, 2011). Nonetheless, Nextar, Aiptek, and the WinAccord respondents failed to respond
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`to the complaint and notice of investigation and did not otherwise appear. The ALJ subsequently
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`issued Orders directing Nextar, Aiptek, and the WinAccord respondents to show cause as to why
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`they should not be found in default. Order No. 13 (Nov. 18, 2011). Nextar, Aiptek, and the
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`WinAccord respondents failed to respond to the AL.l’s show cause orders. Finally, as discussed
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`4
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`

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`PUBLIC VERSION
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`further below, complainant seeks relief solely against Nextar, Aiptek, and the WinAccord
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`respondents with respect to section 337(g)(l) and Commission rule 210.16. Accordingly, all
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`conditions for relief against these defaulting respondents have been met in this investigation.
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`B. Default under 19 C.F.R. § 210.17 —Other Failures to Act
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`Rule 210.17 of the Commission’s Rules of Practice and Procedure, 19 C.F.R. § 210.17,
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`provides a basis for the Commission to find a party in default and in violation of section 337 for
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`failures to act other than the statutory form of default. Specifically, under Commission rule
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`210.17, the ALJ or the Commission may draw adverse inferences and issue findings of fact,
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`conclusions of law, determinations (including a violation of section 337), and orders that are
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`adverse to the party who fails to take required actions in Commission investigations. 19 C.F.R.
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`§ 210.17. Such failures to act include, but are not limited to, the “failure to file a brief or other
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`written submission requested by the ALJ or the Commission during an investigation or a related
`
`proceeding.” 19 C.F.R. § 2l0.17(e). Upon a finding that a respondent has failed to take required
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`actions under Rule 210.17, the Commission may find the party in default and in violation of
`
`section 337, and thereupon may issue appropriate remedies after consideration of the effect of
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`such remedial orders upon the public health and welfare, competitive conditions in the United
`
`States economy, the production of like or directly competitive articles in the United States, and
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`the United States consumers.
`
`The Commission found Pandigital in default and in violation of section 337 pursuant to
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`Commission rule 210.17. 77 Fed. Reg. 74220-21 (Dec. 13, 2012). Pandigital filed a response to
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`the complaint and notice of the investigation on October 21, 201 1, and participated in the
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`investigation until July 31, 2012, when counsel for Pandigital withdrew its appearance. Notice
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`of Withdrawal of Shartsis Friese LLP as Counsel for Pandigital, Inc. (July 31, 2012). In his
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`5
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`

`
`PUBLIC VERSION
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`order finding Pandigital in default, the ALJ noted that Pandigital did not file a pre-hearing
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`statement and brief on August 23, 2012, as required by the ALJ’s Procedural Schedule. Order
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`No. 48 at 2-4. The ALJ also noted that Pandigital did not respond to his Order to Show Cause
`
`(Order No. 47) as to why it should not be found in default and in violation of section 337. Id In
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`light of these failures to act, the ALJ made adverse inferences and detenninations against
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`Pandigital finding it in default and in violation of section 337. Id. The ALJ recommended that
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`the remedies and bond requested by TPL in its pre-hearing brief, i.e., an LEO, CDO, and 100
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`percent bond, be issued against Pandigital in accordance with sections 337(d) and (f). Id; see
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`also TPL Pre-Trial Brief at 269-74 (Aug. 23, 2012). The Commission detennined not to review
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`the ID finding Pandigital in default and in violation of section 337 pursuant to Commission rule
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`210.17. 77 Fed. Reg. 74220-21 (Dec. 13, 2012).
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`C. The Commissi0n’s Determination of Appropriate Remedies
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`The Commission has determined that the requirements for relief under section 337(g)(1)
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`have been met with respect to Aiptek, Nextar, and the WinAccord respondents, and that the
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`requirements for relief under 19 C.F.R. § 210.17 have been met with respect to Pandigital, as
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`discussed above. Accordingly, for these reasons and as further set forth below, the Commission
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`has determined to: (1) issue an LEO directed against the covered products of the defaulting
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`respondents; (2) issue CDOs directed against the defaulting respondents; (3) permit importation
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`under bond during the period of Presidential review for the covered products of the defaulting
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`respondents; and (4) set a bond in the amount of 100 percent of the entered value of the covered
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`products of all defaulting respondents.
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`6
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`

`
`PUBLIC VERSION
`
`1. Limited Exclusion Order
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`Having found the requirements of section 337(g)(1) and Commission rule 210.17
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`satisfied, the Commission presumes that the facts alleged in the complaint are true, including the
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`factual allegations concerning infringement of the asserted patent claims by each of the
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`defaulting respondents. As requested by TPL, and based on the allegations set forth in its
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`complaint, the Commission has determined to issue a limited exclusion order covering each of
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`the defaulting respondents’ digital photo frames and image display devices and components
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`thereof that infringe, as specified by TPL’s infringement allegations contained in its complaint,
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`one or more of claims 9, 11-12, and 14 of the ’443 patent, claims 25-26 and 28-29 of the ’424
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`patent, or claims 1, 7, 11, 17, 19, and 21 of the ’549 patent (“covered products”). See TPL
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`Complaint 111172-75, Exhs. 13, 76 at 1]4, 76-B (Aiptek); TPL Complaint 111]119-22, Exhs. 50, 52,
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`76 at 1]24, 76-L (Nextar); TPL Complaint 1111123-28, Exhs. 53, 55-57, 76 at 111126 and 28, 76-M,
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`76-N (Pandigital); TPL Complaint 1111147-51, Exhs. 72, 74-75, 76 at 1138, 76-S (the WinAccord
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`respondents).
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`2. Cease and Desist Orders
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`In addition to the requested limited exclusion order, TPL also asked the Commission to
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`issue CDOs directed against each of the defaulting respondents. TPL Br. at 3-4. As set forth
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`below, the Commission has determined to issue cease and desist orders directed to Aiptek,
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`Nextar, WinAccord USA, WinAccord Taiwan, and Pandigital, which prohibit, inter alia, the
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`importation, sale, advertising, marketing, and distribution of covered products in the United
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`States by the defaulting respondents.
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`The Commission generally issues a CDO directed against a domestic respondent when
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`there is a “commercially significant” inventory of infringing, imported product in the United
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`7
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`

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`PUBLIC VERSION
`
`States. See, e.g., Certain Hardware Logic Emulation Systems & Components Thereofl Inv. No.
`
`337-TA-383, USITC Pub. No. 3089, Comm’n Op. at 25 (Mar. 1998). ln the case of defaulting
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`domestic respondents, the Commission infers that the domestic defaulting respondent maintains
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`commercially significant inventories in the United States. See, e.g., Certain Agricultural
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`Tractors, Lawn Tractors, Riding Lawnmowers, and Components Thereof (“Agricultural
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`Traclors”), Inv. No. 337-TA-486, Comm’n Op. at 18 (Aug. 19, 2003) (“The Connnission has
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`inferred that a defaulting domestic respondent maintains commercially significant inventory in
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`the United States.”). Consistent with its practice, the Commission finds it appropriate to infer
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`that domestic defaulting respondents Nextar, WinAccord USA, and Pandigital maintain
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`commercially significant inventories in the United States. Moreover, TPL has presented
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`evidence showing that these domestic defaulting respondents maintain commercially significant
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`U.S. inventories, offer for sale, and/or sell to consumers within the United States infringing
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`products, both in its complaint and its response to the Commission’s request for submissions.3
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`See TPL Br. at 4, Exhs. I (CX-183C), L; TPL Complaint 1l1[123-24, Exhs. 53 at 2, 55 at 3, 76 at
`
`fllfil26 and 28, 76-M, 76-N (Pandigital); TPL Complaint 1H[119-20, Exhs. 50 at 2, 76 at 1]24, 76-L
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`(Nextar); TPL Complaint 1[1[147-48, Exhs. 72 at 2, 76 at 1138, 76-S (the WinAccord
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`respondents). Therefore, CDOs directed against domestic defaulting respondents Pandigital,
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`Nextar, and WinAccord USA are warranted and appropriate.
`
`With respect to foreign defaulting respondents, the Commission has declined to draw
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`adverse inferences concerning domestic inventories of infringing products. See Agricultural
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`3For all proposed respondents, and specifically for the WinAccord respondents, TPL alleged in
`its complaint that “[o]n information and belief, either by itself or through its subsidiaries, or
`through third parties acting on its behalf, WinAccord [defined as the combination of WinAccord
`Taiwan and WinAccord USA] is engaged in the manufacture, importation, sale for importation,
`or sale after importation into the United States of infringing electronic devices.” See TPL
`Complaint 111]28, 147.
`
`8
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`

`
`PUBLIC VERSION
`
`Tractors, C0mm’n Op. at 18-20. In Agricultural Tractors, the complainant asserted that the
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`Commission should extend its practice of drawing an adverse inference that a defaulting
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`domestic respondent maintains commercially significant inventory in the United States to
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`defaulting foreign respondents. Id. at 12-13. The Commission declined to do so because it
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`found that the foreign respondent did not itself own any domestic inventories and instead relied
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`on independent U.S. intermediaries for importing, distributing, and offering for sale the
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`infringing articles in the United States. Id. at 18-20. Relying on this specific factual finding, the
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`Commission determined not to issue a CDO against the foreign respondent. Ia’.
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`Notwithstanding Agricultural Tractors, where the complaint alleges facts showing that a
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`defaulting foreign respondent either maintains domestic inventories of subject products or
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`engages in extensive domestic activities with respect to the subject products, the Commission has
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`issued CDOs against defaulting foreign respondents. For example, the Commission has
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`previously issued CDOs directed against foreign defaulting respondents where complainant
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`alleged internet sales and submitted evidence of sales to U.S. customers and Customs’
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`detainment of shipments to U.S. customers. See, e.g., Certain Toner Cartridges and
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`Components Thereof (“Toner Cartridges”), Inv. No. 337-TA-740, Complaint W 9-14, 588, 591,
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`595, Exhs. 401, 401B-C, 406, 421 (Aug. 23, 2010), Comm’n Notice, Comm’n Op. at 7-8 (both
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`Sept. 27, 2011); Certain Birthing Simulators and Associated Systems (“Birthing Simulators”),
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`Inv. No. 337-TA-759, Complaint 111]3.5, 7.4, Exh. 14 (Dec. 30, 2010), Comm’n Notice (Aug. 29,
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`2011); Certain Automotive Vehicles and Designs Therefor (“Automotive Vehicles”), Inv. No.
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`337-TA-722, Complaint W 21, 51, Exhs. 17-21 (May 17, 2010), Comm’n Notice (Mar. 10,
`
`2011).
`
`9
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`

`
`PUBLIC VERSION
`
`Relevant to these authorities and distinguishable from Agricultural Tractors, TPL alleged
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`facts in its complaint showing that foreign respondent Aiptek engages in significant domestic
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`activities, such as importing and selling infringing articles in the United States via online sales.
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`TPL Br. at 4; see also TPL Complaint 1i73, Exh. 13 at 2 (newegg.com screenshot showing offer
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`for sale), Exh. 76 at ll 4 (Smith decl.), Exh. 76-B (newegg.com screenshots showing receipts for
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`U.S. sales). TPL further argues that there is evidence that Aiptek has “commercially significant”
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`inventories of the accused products in the United States by reason of its use of online retailers.
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`TPL Br. at 4. Specifically, TPL contends that Aiptek is selling accused products in the United
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`States through amazon.com, and that these sales establish sufficient domestic ties to warrant
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`imposition of a CDO. Id. (citing Complaint Exhibit M —amazon.com screenshot offer for sale).
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`Similarly, with respect to foreign respondent WinAccord Taiwan, TPL argues there is
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`evidence that WinAccord Taiwan, in conjunction with WinAccord USA, has “commercially
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`significant” inventories of the accused products in the United States from importation of
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`infringing articles and sales of these articles through online retailers. TPL Br. at 4; see also TPL
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`Complaint ll 148, Exh. 72 at 2 (winaccordusa.com screenshot showing offer for sale), Exh. 76 at
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`fll38 (Smith decl.), Exh. 76-S (WinAccord receipt showing U.S. sales) (the WinAccord
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`respondents).
`
`Section 337(g)(l)' expressly states that “the Commission shall presume the facts alleged
`
`in the complaint to be true and shall, upon request, issue an exclusion from entry or a cease and
`
`desist order, or both” unless such exclusion or order is found to be contrary to the public interest.
`
`See 19 U.S.C. § l337(g)(1) (emphasis added). Therefore, the Commission must presume that the
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`facts alleged in the TPL complaint, including TPL’s allegations that foreign defaulting
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`respondents Aiptek and WinAccord Taiwan maintain commercially significant inventories in the
`
`10
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`

`
`PUBLIC VERSION
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`United States and/or are engaging in violative activities in the United States, are true. Based on
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`the factual allegations in the complaint cited by TPL, the Commission finds sufficient evidence
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`that Aiptek and WinAccord Taiwan offer for sale, sell, and distribute in the United States digital
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`photo frames, image display devices, and components thereof that infringe the asserted patents
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`via online sales. The evidence in the complaint, cited above, includes screenshots showing
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`offers for sale and receipts evidencing the sale of the infringing products in the United States.
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`We find that this evidence demonstrates sufficient commercial activities in the United States to
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`warrant the imposition of a CDO directed against Aiptek and WinAccord Taiwan. See Toner
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`Cartridges, Complaint 111]9-14, 588, 591, 595, Exhs. 401, 401B-C, 406, 421 (Aug. 23, 2010),
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`Comm’n Notice, Comm’n Op. at 7-8 (both Sept. 27, 2011); Birthing Simulators, Complaint 111]
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`3.5, 7.4, Exh. 14 (Dec. 30, 2010), Comm’n Notice (August 29, 201 1); Automotive Vehicles,
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`Complaint 111]21, 51, Exhs. 17-21 (May 17, 2010), Comm’n Notice (Mar. 10, 2011).
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`Accordingly, the Commission has determined that CDOs directed against foreign respondents
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`Aiptek and WinAccord Taiwan are appropriate.
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`D. Public Interest
`
`When issuing a default remedy under sections 337(d), (t), and (g), the Commission must
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`weigh the remedy sought against the effect such a remedy would have on the following public
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`interest factors: (1) the public health and welfare; (2) the competitive conditions in the U.S.
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`economy; (3) the production of articles in the U.S. that are like or directly competitive with those
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`subject to the investigation; and (4) U.S. consumers. See 19 U.S.C. §§ 1337(d), (t), and (g)(l).
`
`TPL contends that issuance of the LEO and CDOs would not adversely impact the public
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`interest factors. TPL Br. at 4-6. TPL asserts that: (1) the digital photo frame products at issue
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`do not have uses or applications that relate to the public health and welfare; (2) TPL’s and its
`
`ll
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`

`
`PUBLIC VERSION
`
`licensees’ products are widely available in the United States and TPL and its licensees are able to
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`meet the demand for the subject products; and (3) the public interest favors the protection of U.S.
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`intellectual property rights. Id.
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`The Commission agrees with TPL that issuance of the LEO and CDOs will not adversely
`
`impact any of the statutory public interest factors. Based on the record before the Commission,
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`there is no indication that exclusion of the infringing products of the defaulting respondents will
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`impact in any way the public health and welfare, competitive conditions in the U.S. economy,
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`the production of articles in the U.S. that are like or directly competitive with the subject digital
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`photo frames and image devices, or U.S. consumers of these products. Accordingly, the
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`Commission has determined to issue an LEO and CDOs barring importation into the United
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`States of the infringing digital photo frames and image display devices and components thereof
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`of the defaulting respondents and finds that the statutory public interest factors do not preclude
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`the issuance of these remedies.
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`E. Bond During the Presidential Review Period
`
`Section 337(i)(3) provides for importation under bond during the period of Presidential
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`review and states:
`
`(3) Subject to the provisions of paragraph (2), such determination
`shall, except for purposes of subsection (c) of this section, be
`effective upon publication thereof in the Federal Register, and the
`action taken under subsection (d), (e), (f), (g), or (i) of this section,
`with respect
`thereto shall be effective as provided in such
`subsections, except that articles directed to be excluded from entry
`under subsection (d) of this section or subject to a cease and desist
`order under
`subsection (f) of
`this
`section shall, until
`such
`determination becomes final, be entitled to entry under bond
`prescribed by the Secretary in an amount detennined by the
`Commission to be sufficient to protect the complainant from any
`injury.
`If the detennination becomes final,
`the bond may be
`forfeited to the complainant. The Commission shall prescribe the
`
`12
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`

`
`PUBLIC VERSION
`
`terms and conditions under which bonds may be forfeited under
`this paragraph.
`
`19 U.S.C. § l337(j)(3). TPL argues that no bonding privilege should be afforded to the
`
`defaulting respondents under section 337(g)(1) during the period of Presidential review.4
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`TPL Br. at 6-8. Alternatively, TPL argues that in the event a bond is permissible, the
`
`Commission should impose a bond in the amount of 100% of entered value during the
`
`Presidential review period. Id.
`
`1. Whether Respondents Found in Default Under Section 337(g) May
`Import Infringing Articles Under Bond
`
`Complainant submits that section 337(j)(3) authorizes the Commission to permit
`
`importation of infringing products under bond during the period of Presidential review only
`
`when there are “articles directed to be excluded from entry under subsection (d) of this section or
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`subject to a cease and desist order under subsection (f) of this section.” TPL Br. at 6-8 (citing 19
`
`U.S.C. § 1337(j)(3)). Because section 337(g)(l) is absent from this provision, TPL argues that
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`section 337(j)(3) does not authorize the Commission to pennit importation of infringing products
`
`under bond for defaulting respondents under section 337(g)(l). Id
`
`TPL’s argument is inconsistent with the Commission’s practice of permitting importation
`
`under bond during the period of Presidential review by respondents found in default under
`
`section 337(g). See Birthing Simulators, Comm’n Notices (May 2 and August 29, 2011);
`
`Certain Radio Control Hobby Transmitters and Receivers and Products (“Hobby Transmitters”),
`
`Inv. No. 337-TA-763, Comm’n Notices (June 8 and Sept. 30, 2011); see also Certain Soft Drinks
`
`4 TPL acknowledges that Pandigital may import under bond since it was found in default and in
`violation under section 337(0) and 19 C.F.R. § 210.17, and relief and bonding were
`recommended by the presiding administrative law judge under section 337(d). See Order No. 48
`(Nov. 7, 2012).
`
`13
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`

`
`PUBLIC VERSION
`
`and Their Containers, 337-TA-321, Limited Exclusion Order (Dec. 27, 1991). The Commission
`
`finds no reason to depart from this practice.
`
`The Commissi0n’s long-standing practice of allowing importation under bond during the
`
`period of Presidential review, even in default cases, is consistent with the legislative history and
`
`the purpose of section 337(j)(3). Importation under bond in default circumstances is consistent
`
`with the statutory purpose of providing the President the opportunity to review the Commission’s
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`determinations and remedial orders for 60 days before the infringing articles are actually
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`excluded from entry into the United States. Denying importation under bond, as urged by TPL,
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`would be an immediate defacto exclusion of infringing articles prior to the end of the period of
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`Presidential review.
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`Interpreting section 337 such that the bonding provision does not apply to defaulting
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`respondents, as TPL argues, would also defeat the legislative intent of other provisions in the
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`statute, which indicate that the bond provision of section 337(i)(3) applies to Commission
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`determinations rendered under section 337(g). Specifically, section 337(c) states, with respect to
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`appellate review of Commission determinations:
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`Notwithstanding the foregoing provisions of this subsection,
`Commission determinations under subsections (d), (e), (f), and (g)
`of this section with respect to its findings on the public health and
`welfare, competitive conditions in the United States economy, the
`production of like or directly competitive articles in the United
`States, and United States consumers, the amount and nature of
`bond, or the appropriate remedy shall be rcviewable in accordance
`with section 706 of title 5.
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`19 U.S.C. § 1337(0)) (emphasis added). Because this provision refers to determinations under
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`subsection (g) with respect to the Commission’s findings on “the amount and nature of bond,”
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`section 337(0) indicates that Congress intended that remedial orders issued pursuant to
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`l4
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`

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`PUBLIC VERSION
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`subsection (g) include authorization of importation under bond during the period of Presidential
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`review.
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`Moreover, sections 337(d) and (f), specifically mentioned in section 337(i)(3), serve as
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`the guide in interpreting section 337(g) because the terms “exclusions of articles from entry” and
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`“cease and desist orders” used in this subsection are defined only in sections 337(d) and (f).
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`Only sections 337(d) and (f) provide the enforcement mechanisms for these Commission orders.
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`Therefore, Congress must have intended for the Commission to refer back to these subsections
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`when construing section 337(g) and thus to use the enforcement mechanisms of sections 337(d)
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`and (t) when executing section 337(g), and to apply the bonding provisions under section
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`337(i)(3).
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`Accordingly, the Commission has detennined to permit importation under bond by
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`Nextar, Aiptek, and the WinAccord respondents, which were found in default under section
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`337(g)(1). TPL does not contest that the bonding provision applies to Pandigital, and the
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`Commission finds that Pandigital may import under bond infringing articles during the period of
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`Presidential review.
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`2. Amount of the Bond
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`TPL seeks a 100 percent bond for importation of infringing products if the Commission
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`permits importation under bond during the period of Presidential review with respect to
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`defaulting respondents under section 337(g)(1).
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`With respect to Pandigital, TPL submits that the Commission has set a 100 percent bond
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`during the period of Presidential review when, as here, there are a wide variety of products,
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`pricing variations, and distribution methods. TPL Br. at 2, 7-8 (citing Certain Digital
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`Multimeters & Products with Multimeter Functionality (“Digital Multimeters”), Inv. No. 337­
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`TA-588, Comm’n Op. at 12-13 (June 3, 2008) (setting a 100 percent bond where each
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`15
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`

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`PUBLIC VERSION
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`respondent set prices differently thereby preventing clear differentials betwccn complainant’s
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`products and infringing products)); see also TPL Pre-Trial Br. at 273-74. Complainant contends
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`that the small amount of financial information that has been produced by Pandigital in this case
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`demonstrates that there is a wide variation in the price for the various accused products. TPL Br.
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`at 7-8 (citing Exhibit K (JX-22C —listing quantity and dollar amount for various Pandigital
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`products)). Accordingly, TPL submits that the Commission should set a bond of 100 percent of
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`the entered value of Pandigital’s accused products. Id.
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`With respect to Nextar, Aiptek, and the WinAccord respondents, TPL requests that the
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`bond be set at 100 percent of the entered value of their imported infringing products on different
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`grounds. TPL argues that for cases involving defaulting respondents, a 100 percent bond is
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`typical and that this percentage is often assigned when reliable pricing information is
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`unavailable, which is the case here since Nextar, Aiptek, and the WinAccord respondents did not
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`participate in discovery. Id. (citing Certain Oscillating Sprinklers, Sprinkler Components, and
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`Nozzles (“Oscillating Sprinklers”), Inv. No. 337-TA-448, Limited Exclusion Order at 4-6 (Mar.
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`4, 2002), Certain Energy Drink Products, Inv. No. 337-TA-678, Comm’n Op. at 9-10 (Sept. 8,
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`2010); see also Hobby Transmitters, Inv. No. 337-TA-763, Comm’n Notice (Sept. 30, 2011),
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`Birthing Simulators, Inv. No. 337-TA-759, Comm’n Notice (Aug. 29, 2011), Automotive
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`Vehicles, Inv. No. 337-TA-722, Co1nm’n Notice (Mar. 10, 2011); H. REP. 100-40, Pts. 1-6. pp.
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`161-162 (1987). Accordingly, TPL submits that the Commission should set a bond of 100
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`percent of the entered value for the accused products of Nextar, Aiptek, and the WinAccord
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`respondents.
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`Further, TPL asserts that Order Nos. 9, 12, 16, 18-20, 23, and 28, which pertain to
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`settlements executed by TPL with respondents Coby Electronics Corporation; Aluratek, Inc.;
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`l6
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`

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`PUBLIC VERSION
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`Circus World Displays Ltd.; Curtis International, Ltd.; Royal Consumer Information Products,
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`Inc.; ViewSonic Corporation; CEIVA Logic, Inc.; and Audiovox Corporation, have no relevance
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`here as to an appropriate bond amount for any of the defaulting respondents because all of these
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`Orders relate to the termination of respondents that either took a license from TPL or agreed to
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`stop importing the infringing products into the United States. Id Thus, TPL submits that in each
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`instance bond Wasnot at issue and therefore these orders have no applicability here. Id.
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`To establish the appropriate bond amount, the Commission typically calculates the
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`difference in pricing between the complainant’s products and the respondent’s products. See
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`Certain Microsphere Adhesives,Processes for Making Same, and Products Containing Same,
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`Including Self-StickRepositionable Notes, lnv. No. 337-TA-366, USITC Pub. No. 2949,
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`Comm’n Op. at 24 (Jan. 1996). The Commission finds that there is little or no evidence in the
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`record of this investigation as to pricing of the defaulting respondents’ products. No discovery
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`was obtained from Aiptek, N