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 Form 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.

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 release [PDF].

The Congress included the Satellite Home Viewer Extension and Reauthorization Act of 2004 (SHVERA) in the huge omnibus appropriations bill, HR 4818 (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 following paragraph:

"(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.

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, speech by Barnett titled "Antitrust Enforcement Priorities: A Year in Review".

The House will not meet on Monday, August 1 through Monday, September 5. See, House calendar and Republican Whip Notice.

The Senate will not meet on Monday, August 1 through Monday, September 5. See, Senate calendar.

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' (DOS) International Telecommunication Advisory Committee (ITAC) will meet to prepare for ITU-T Study 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.

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.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Public 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. 05-247.

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 Study Group 1 and Study Group 2, which will take place in September, Geneva, on September 6-9 and 12-15, 2005. See, 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 "Public 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".

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, notice.

8/23. The U.S. Court of Appeals (11thCir) issued its opinion [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, release.

8/22. The Progress and Freedom Foundation (PFF) published in its web site a book [131 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 release.

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 (conspiracy) and 50 U.S.C. § 1702. See, BIS release.

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