|Federal Circuit Addresses Inducement of
Patent Infringement by Foreign Silicon Wafer Maker
8/23. The U.S. Court of Appeals (FedCir)
issued its opinion [26
pages in PDF] in MEMC v. Sumco, a patent infringement case
involving technology for the preparation of semiconductor grade single crystal
silicon, which is used in integrated circuits.
Summary. A US silicon wafer company (MEMC) with a US patent brought
suit in a US court under US law against a Japanese silicon wafer company (Sumco) that makes
wafers in Japan, and sells them to another Japanese company, which in turn sells
to a company in the US (Samsung Austin Semiconductor, which is not a party).
MEMC alleges that Sumco directly infringed its patent, and that Sumco induced
infringement of its patent by Samsung Austin Semiconductor. The District Court
granted summary judgment to Sumco on both claims.
The Court of Appeals affirmed on the direct infringement count, but reversed
on the inducement of infringement count. It held that one can only be held
liable for direct infringement for infringing activities that occur within the
US. However, a foreign infringer that sells to a foreign supplier of a US
company, provides technical support to the US company, and knows of infringing
activity of the US company, may be held liable for inducement of infringement.
Background. MEMC Electronic Materials
is incorporated in the state of Delaware. It operates manufacturing facilities around
the world, including in Europe, Japan, Malaysia, Korea, Taiwan and the US. (See, SEC
10-Q dated August 9, 2005.) It supplies silicon
wafers for the semiconductor industry. It is the assignee of
U.S. Patent No. 5,919,302, titled "Low Defect Density Vacancy Dominated
Silicon". This patent discloses a method of preparing single crystal silicon
that is substantially free of agglomerated intrinsic point defects.
Sumitomo Mitsubishi Silicon Corporation (which is also known as Sumco) is
also a supplier of silicon wafers for the semiconductor industry. Sumco makes
its silicon wafers at its manufacturing plant in Yonezawa, Japan. Mitsubishi
Materials Silicon Corporation and the Sitix Division of Sumitomo Metals Industries, Ltd.
formed Sumco Corporation as a joint venture in February of 2002.
MEMC alleges that Sumco infringes its patent. It alleges that Sumco sells these
silicon wafers to Samsung Japan Corporation, which then sells them to
Samsung Austin Semiconductor, which is
located in Austin, Texas. Samsung makes
semiconductor, telecommunications, and digital media products. Samsung Austin
makes Dynamic Random Access Memory (DRAM) chips. MEMC further
alleges that Sumco encouraged and enabled Samsung Austin to use the silicon
wafers at issue by manufacturing wafers according to Samsung Korea's
specifications, by providing technical support to the Samsung Austin facility,
and by agreeing to indemnify for patent infringement liability.
District Court. MEMC filed a complaint in December of 2001 in
U.S. District Court (NDCal) against
Mitsubishi Materials Silicon Corporation and Mitsubishi Silicon America
Corporation. MEMC later amended the complaint to include Sumco Corporation,
Sumco USA Corporation, and Sumco USA Sales Corporation. The amended complaint
alleges direct infringement of the patent under 35 U.S.C. § 271(a), and
inducement of infringement of the patent under 35 U.S.C. § 271(b).
The District Court granted summary judgment to the defendants on both direct
and inducement of infringement. This appeal followed.
Court of Appeals. The Court of Appeals affirmed the grant of summary
judgment on the direct infringement count. See, opinion, at pages 7-14.
35 U.S.C. § 271 pertains to infringement of patents. § 271(a) provides that "Except as
otherwise provided in this title, whoever without authority makes, uses, offers
to sell, or sells any patented invention, within the United States or imports
into the United States any patented invention during the term of the patent
therefor, infringes the patent."
Sumco makes wafer in Japan, and sells them to a company in Japan. The statute
requires that the alleged infringer "offers to sell, or sells any patented
invention, within the United States or imports into the United States" for there
to be patent infringement. The Court of Appeals wrote that "It is
well-established that the reach of section 271(a) is limited to infringing
activities that occur within the United States."
The Court of Appeals also concluded that Sumco's communications, and other
activities, with Samsung Austin Electronics, did not amount to "offers to sell".
It elaborated that the term "offers to sell" is defined "according to the norms
of traditional contractual analysis". This means that the defendant must
communicate "a manifestation of willingness to enter into a bargain, so made as
to justify another person in understanding that his assent to that bargain is
invited and will conclude it". It concluded that sending e-mail regarding
technical support does not amount to "offers to sell".
The Court of Appeals reversed the grant of summary judgment on the inducement
count. See, opinion, at pages 14-21.
§ 271(b) provides that "Whoever actively induces infringement of a patent shall be
liable as an infringer."
The Court of Appeals wrote, quoting from the Federal Circuit's
opinion [PDF] in Minn. Mining & Mfg. Co. v. Chemque, Inc., 303 F.3d
1294 (2002), that "``In order to succeed on a claim of inducement, the patentee
must show, first that there has been direct infringement,´´ and ``second, that
the alleged infringer knowingly induced infringement and possessed specific
intent to encourage another’s infringement.´´" It added that circumstantial
evidence of intent may suffice.
The Court of Appeals held that an indemnification agreement will generally not establish
an intent to induce infringement.
However, it wrote that "SUMCO had knowledge of MEMC's patent as well as
knowledge of Samsung Austin’s potentially infringing activities. In addition,
there is evidence that SUMCO provides substantial technical support to Samsung
Austin in the form of e-mail communications." It added that Sumco "sent a
shipment of certain wafers directly to Samsung Austin", and that "there is
evidence that SUMCO personnel made several on-site visits to Samsung Austin,
during which technical presentations on the SUMCO wafers were made." Also, the
Court noted that a witness for Samsung Austin testified that it will not enter
into an agreement to buy wafers from a wafer supplier unless the supplier will
also provide it with technical support for the wafers. And these create genuine
issues of material fact.
The case is remanded to the District Court for further proceedings on the
inducement of infringement count.
This case is MEMC Electronic Materials Inc. v. Mitsubishi Materials
Silicon Corporation, et al., U.S. Court of Appeals for the Federal Circuit,
App. Ct. Nos. 04-1396 and 04-1513, an appeal from the U.S. District Court for
the Northern District of California, D.C. No. 4:01-CV-04925, Judge Saundra
Armstrong presiding. Judge Schall wrote the opinion of the Court of Appeals, in
which Judges Newman and Dyk joined.
|FCC Releases Report and Order on Satellite
Must Carry Requirements in Alaska and Hawaii
8/23. The Federal Communications Commission
(FCC) released a
Report and Order [25 pages in PDF] in its proceeding titled "In the Matter of:
Implementation of Section 210 of the Satellite Home Viewer Extension and Reauthorization
Act of 2004 to Amend Section 338 of the Communications Act". See also, FCC
The Congress included the Satellite Home Viewer Extension and Reauthorization
Act of 2004 (SHVERA) in the huge omnibus appropriations bill,
(108th Congress), that it enacted late last year. § 210 of the SHVERA applies to
"a State that is not part of the contiguous United States", which means the
states of Hawaii and Alaska. § 210 amended 47 U.S.C. § 338(a), which pertains to
the carriage of local television broadcast stations by satellite carriers. It added the
"(4) CARRIAGE OF SIGNALS OF LOCAL STATIONS IN CERTAIN MARKETS- A satellite
carrier that offers multichannel video programming distribution service in the
United States to more than 5,000,000 subscribers shall (A) within 1 year after
the date of the enactment of the Satellite Home Viewer Extension and
Reauthorization Act of 2004, retransmit the signals originating as analog
signals of each television broadcast station located in any local market within
a State that is not part of the contiguous United States, and (B) within 30
months after such date of enactment retransmit the signals originating as
digital signals of each such station. The retransmissions of such stations shall
be made available to substantially all of the satellite carrier's subscribers in
each station's local market, and the retransmissions of the stations in at least
one market in the State shall be made available to substantially all of the
satellite carrier's subscribers in areas of the State that are not within a
designated market area. The cost to subscribers of such retransmissions shall
not exceed the cost of retransmissions of local television stations in other
States. Within 1 year after the date of enactment of that Act, the Commission
shall promulgate regulations concerning elections by television stations in such
State between mandatory carriage pursuant to this section and retransmission
consent pursuant to section 325(b), which shall take into account the schedule
on which local television stations are made available to viewers in such State."
On April 29, 2005, the FCC adopted a notice of proposed rulemaking (NPRM).
The NPRM is FCC 05-92 in Docket 05-181.
The just released Report and
Order provides that must carry mandates apply to both analog and digital
signals, and shall include high definition and multicast signals.
The Report and Order amends the FCC's rules to provide that "A
satellite carrier that offers multichannel video programming distribution
service in the United States to more than 5,000,000 subscribers shall, no later
than December 8, 2005, carry upon request the signal originating as an analog
signal of each television broadcast station that is located in a local market in
Alaska or Hawaii; and shall, no later than June 8, 2007, carry upon request the
signals originating as digital signals of each television broadcast station that
is located in a local market in Alaska or Hawaii. Such satellite carrier is not
required to carry the signal originating as analog after commencing carriage of
digital signals on June 8, 2007. Carriage of signals originating as digital
signals of each television broadcast station that is located in a local market
in Alaska or Hawaii shall include the entire free over-the-air signal, including
multicast and high definition digital signals."
This present Report and Order is FCC 05-159 in MB Docket No. 05-181.
|There was no issue of the TLJ Daily E-Mail Alert on Tuesday,
August 23, 2005.
|People and Appointments
8/23. President Bush announced his intent to nominate Thomas Barnett
to be Assistant Attorney General in charge of the Department of Justice's (DOJ)
Antitrust Division. If confirmed by the
Senate, he will replace Hewitt Pate, who has left. Barnett is currently
the acting Assistant Attorney General and Deputy Assistant Attorney General for
Civil Enforcement. Before joining the DOJ, he was a partner in the Washington DC
office of the law firm of Covington & Burling,
and vice-chair of the firm's Antitrust and Consumer Protection practice group.
See, White House
release. See also, November 19, 2004,
Barnett titled "Antitrust Enforcement Priorities: A Year in Review".
|Washington Tech Calendar
New items are highlighted in red.
|Wednesday, August 24
The House will not meet on Monday, August 1 through Monday, September 5. See,
and Republican Whip Notice.
The Senate will not meet on Monday, August 1 through Monday, September 5. See,
The Supreme Court is between terms. The opening conference of its October
2005 Term will be held on September 26, 2005
2:00 - 4:00 PM. The Department of States'
Telecommunication Advisory Committee (ITAC) will meet to prepare for
Group 3's Working Party on Charging and Accounting Principles. See,
notice in the Federal Register, July 13, 2005, Vol. 70, No. 133, at Page
40414. Location: undisclosed. The DOS states that "Access to these meetings
may be arranged by contacting Julian Minard at minardje at state dot gov.
Time: undisclosed. The
Department of Homeland Security's (DHS)
Homeland Security Science and
Technology Advisory Committee (HSSTAC) will hold a second meeting that is closed
to the public. See,
notice in the Federal Register, August 9, 2005, Vol. 70, No. 152, at Pages
46182 - 46183. Location: undisclosed.
|Friday, August 26
Deadline to submit initial comments to the Interim Chief Copyright
Royalty Judge in response to the request for further comments regarding rules for the
delivery and format of records of use of sound recordings for statutory licenses under
17 U.S.C. § 112 and
17 U.S.C. §114. The Interim Chief Copyright Royalty Judge, on behalf of
the Copyright Royalty Board, issued the notice of proposed rulemaking (NPRM)
on April 27, 2005. The Board has received comments, which reflected sharp
divisions among the parties. It now poses further questions. See,
notice in the Federal Register, Vol. 70, No. 143, at Pages 43364 - 43368.
|Monday, August 29
Deadline to submit initial comments to the
Federal Communications Commission (FCC) in response to
Notice [PDF] requesting comments on Continental Airlines' Petition for a Declaratory
Ruling regarding the state Massachusetts' attempt to regulate Wi-Fi hotspots. Continental
has installed a Wi-Fi hotspot for internet access and telecommunications at its frequent
flyer lounge at Boston Logan Airport (Logan). An issue is whether the demands of the
Massachusetts Port Authority for removal of the antenna are prohibited under the FCC's Over
the Air Reception Devices (OTARD) rules. This public notice is DA 05-2213 in ET Docket No.
|Tuesday, August 30
10:00 AM - 12:00 NOON. The Department of
State's (DOS) International Telecommunication Advisory Committee (ITAC) will
meet to prepare for the ITU-D's meetings of
Group 1 and
Group 2, which will take place in September, Geneva, on September 6-9 and 12-15,
notice in the Federal Register, July 8, 2005, Vol. 70, No. 130, at Pages
39544 - 39545. Location: Room 2533A, State Department.
1:30 - 3:00 PM. The
Federal Communications Commission's (FCC) Informal Working Group 2:
Satellite Services and HAPS will meet. See, FCC
notice [PDF]. Location: Leventhal Senter
& Lerman, 7th Floor Conference Room, 2000 K Street, NW.
Effective date of the Federal
Communications Commission's (FCC) VOIP customer lockout order. See, the order
contained in the FCC's document titled
Notice' [PDF], numbered DA 05-2085, and released on July 26, 2005. It requires, among
other things, that every interconnected voice over internet protocol (VOIP) service provider
must send every one of its subscribers an FCC mandated statement regarding E911, and that
every interconnected VOIP service provider must send to every one of its customers the FCC
mandated VOIP warning stickers. This order further requires that every interconnected VOIP
service provider obtain acknowledgement from every one of its subscribers, and that it
"disconnect, no later than August 30, 2005, all subscribers from whom it has not
received such acknowledgements".
|Wednesday, August 31
Deadline for the public to submit written comments
to the House Ways and Means Committee
regarding HR 3376, the "Tax Technical Corrections Act of 2005". See,
8/23. The U.S. Court of Appeals
(11thCir) issued its
[15 pages in PDF] in Horizon Aggressive Growth v. Rothstein-Kass,
a case regarding personal jurisdiction over an out of state defendant based upon
telephone calls to, and accessing computer servers in, the forum state. The
District Court held that there is no jurisdiction under the forum state's long
arm jurisdiction statute. It did not address the question of whether exercise of
jurisdiction would be consistent with the due process clause of the 14th
Amendment. The Court of Appeals reversed. It held that there is jurisdiction
under the state statute. The case returns to the District Court, which will
now address the more important due process question. This case is Horizon
Aggressive Growth LP v. Rothstein-Kass, et al., U.S. Court of Appeals for the 11th
Circuit, App. Ct. No. 04-12890, an appeal from the U.S. District Court for the Middle
District of Florida, D.C. No. 03-02356-CV-T-30-MSS. Judge Birch wrote the opinion of
the Court of Appeals, in which Judges Cox and Edmondson joined.
8/22. The Federal Trade Commission (FTC)
announced that on August 19, 2005, it granted early termination to News
Corporation's acquisition of Intermix Media,
Inc. See, FTC
notice [PDF], at page 2. See also, Intermix's July 18, 2005,
release announcing the transaction.
8/22. The Federal Trade Commission (FTC)
announced that on August 19, 2005, it granted early termination to
Carlyle Group's acquisition
of SS&C Technologies.
See, FTC notice
[PDF], at page 2. SS&C provides investment and financial management software and
related services. Carlyle and SS&C announced the transaction in a July 28, 2005,
8/22. The Progress and Freedom Foundation (PFF)
published in its web site a
pages in PDF] titled "The Digital Economy Fact Book, Seventh Edition, 2005". The
authors are Michael Pickford, Tom Lenard, Brooke Emmerick, and Alicia Fazzano.
8/21. Jonathan Schwartz, P/COO of Sun
Microsystems, gave a speech in Aspen, Colorado, in which he advocated an
open source project developing a royalty free digital rights management
standard. He spoke at a conference hosted by the
Progress and Freedom Foundation (PFF). See, Sun
release and PFF
8/18. A grand jury of the U.S. District Court (SDFl) returned a criminal
indictment that charges Chin Kan Wang and Robin Chang conspired to export and
did export radio communication encryption modules, from the US to the Republic
of China (Taiwan) in violation of
18 U.S.C. § 371
50 U.S.C. § 1702. See, BIS
|About Tech Law Journal
Tech Law Journal publishes a free access web site and
subscription e-mail alert. The basic rate for a subscription
to the TLJ Daily E-Mail Alert is $250 per year. However, there
are discounts for subscribers with multiple recipients. Free one
month trial subscriptions are available. Also, free
subscriptions are available for journalists,
federal elected officials, and employees of the Congress, courts, and
executive branch. The TLJ web site is
free access. However, copies of the TLJ Daily E-Mail Alert are not
published in the web site until one month after writing. See, subscription
P.O. Box 4851, Washington DC, 20008.
Copyright 1998 - 2005 David Carney, dba Tech Law Journal. All