• HQ H288282
• Sep 20, 2017

• Type : 19 U.S.C. § 1337; Unfair Competition • HTSUS :
•  Related:   H284032; H259071; H067500; H121519; H242025   

OT:RR:BSTC:IPR H288282 CBC/JW

Mr. Patrick J. Flinn
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, GA 30309-3424

RE: Ruling Request; U.S. International Trade Commission; Limited Exclusion Order; Investigation No. 337-TA-989, Certain Automated Teller Machines, ATM Modules, Components Thereof, and Products Containing Same

Dear Mr. Flinn:

This ruling letter, issued under 19 C.F.R. § 177, is the result of an inter partes proceeding that the Intellectual Property Rights Branch, Regulations and Rulings, U.S. Customs and Border Protection (“CBP”) administered pursuant to section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337, that involved your clients, Diebold Nixdorf, Inc., and Diebold Self-Service Systems, Inc., (collectively “Diebold”) and Nautilus Hyosung, Inc., and Nautilus Hyosung America, Inc., (collectively “Nautilus Hyosung”) as the two parties with a direct and demonstrable interest in the question presented by the ruling request.

In your letter, dated July 17, 2017, which included declarations by Schroeder and Flack, accompanied by four and eight exhibits, respectively (“Ruling Request”), submitted on behalf of your client Diebold you requested an administrative ruling, pursuant to 19 C.F.R. § 177, whether certain automated teller machines, ATM modules, components thereof, and products containing same to be imported by Diebold are subject to the limited exclusion order (“989 LEO”) issued by the U.S. International Trade Commission (“ITC” or “Commission”) in Investigation No. 337-TA-989. On August 11, 2017, Nautilus Hyosung submitted a response letter to the Ruling Request, which included a declaration by Howard and fourteen exhibits (“Nautilus Hyosung Opposition”). Both parties presented arguments to CBP during the proceeding held on August 25, 2017. Post-proceeding briefs were subsequently submitted by both parties to CBP on September 1, 2017. Diebold’s post-proceeding submission included a declaration by Sorensen accompanied by two exhibits and a reply declaration by Schroeder accompanied by source code exhibits B, C, D, and E (collectively “Diebold Post-Proceeding Submission”) and Nautilus Hyosung’s included a rebuttal declaration by Howard accompanied by eight exhibits (collectively “Nautilus Hyosung Post-Proceeding Submission”). Replies to the post-proceeding submissions were submitted by both parties to CBP on September 8, 2017. Nautilus Hyosung’s reply included a reply declaration by Howard and one exhibit (collectively “Nautilus Hyosung Reply”).

FACTS:

A. Investigation No. 337-TA-989

Diebold, the ruling requester and respondent in the underlying investigation, manufactures ATMs, in part by importing components from its German partners, formerly known as Wincor Nixdorf, AG. See Certain Automated Teller Machines, ATM Modules, Components Thereof and Products Containing Same; Inv. No. 337-TA-989, Limited Exclusion Order at 2, Doc. ID 617247 (July 2017). Diebold competes with Nautilus Hyosung, the complainant in the present investigation. Diebold Post-Proceeding Submission at 22, citing Daniels Tr. at 87:3–5.

The complaint alleged violations of section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337, in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain automated teller machines, ATM modules, components thereof, and products containing the same by reason of infringement of U.S Patent Nos. 7,891,551 (“the ‘551 patent”); 7,950,655 (“the ‘655 patent”); 8,152,165 (“the ‘165 patent”); and 8,523,235 (“the ‘235 patent”). 82 Fed. Reg. 33513 (July 20, 2017). The notice of investigation named Diebold as respondent. Id. The Office of Unfair Import Investigation was not a party to the investigation. Id. The ‘551, ‘655, and ‘165 patents were terminated from the investigation. Id. On March 13, 2017, the presiding administrative law judge (“ALJ”) Shaw issued the final initial determination (“ID”), which found a violation of section 337 with respect to the ‘235 patent. ALJ ID at 342. The ID found that by importing articles infringing such patent, Diebold had competed unfairly with Nautilus Hyosung’s own ‘235-patented Cash and Check in Module (“CCiM”). Id. at 316. The ALJ recommended the issuance of a limited exclusion order and cease and desist orders against Diebold. Id. at 342.

Diebold appealed to the Commission. Comm’n. Op. at 5. The Commission reversed the ID’s finding that certain prior art did not disclose the preamble to claim 1 of the ‘235 patent and, after reviewing an infringement issue, affirmed the ID in all material respects. Id. at 1–2. The Commission issued a notice of finding a violation of section 337 as to the ‘235 patent. 82 Fed. Reg. 33513. Accordingly, on July 20, 2017, the Commission issued a limited exclusion order and cease and desist orders, prohibiting, inter alia, the importation of articles that infringe claims 1-3, 6, 8, and 9 of the ‘235 patent. Id.

B. The ‘235 Patent

The “invention [of the ‘235 patent] relates to . . . an ATM . . . capable of automatically depositing a bundle of cashes and cheques inserted at once.” Col. 1, ln. 6–11. The ‘235 patent contains one independent claim, held valid by the Commission and directed to an ATM configured to accept “a bundle of banknotes including at least one cheque” for deposit. With the limitations relevant to this ruling in bold, it reads as follows:

Claim 1

1. A cash and cheque automatic depositing apparatus for automatically depositing a bundle of banknotes including at least one cheque, the apparatus comprising:

a bundle insertion unit configured to receive the bundle of banknotes from a user;

a bundle separator coupled to the bundle insertion unit and configured to separate the bundle of banknotes received at the bundle insertion unit into individual sheets and transfer each of the individual sheets with a predetermined time interval;

a main transfer unit coupled to the bundle separator and configured to horizontally transfer the individual sheets of the banknotes along a main transfer path;

a verifying unit installed on the main transfer path and configured to verify authenticity or abnormality of each of the banknotes by acquiring features information on each of the banknotes, the verifying unit configured to produce a verification result indicating the authenticity or abnormality of each of the banknotes, the verification unit further configured to perform tripartite detection of overlapping of the individual sheets in the main transfer unit using three different sensors;

an abnormal sheet branch transfer unit having an abnormal sheet branch transfer path branched from the main transfer path, the abnormal sheet branch transfer unit configured to transfer abnormal banknotes verified by the verifying unit;

a first gate configured to selectively route the verified banknotes to the abnormal sheet branch transfer path or the main transfer path;

an abnormal sheet unloading transfer unit coupled to the first gate, the abnormal sheet unloading unit having an abnormal sheet unloading transfer path and configured to return the abnormal banknotes to the user;

an authentic cheque transfer unit coupled to an end of the main transfer path, the authentic sheet transfer unit having an authentic cheque transfer path and configured to transfer at least one authentic cheque in the bundle of banknotes verified by the verifying unit;

an authentic cash transfer unit coupled to the end of the main transfer path, the authentic cash transfer unit having an authentic cash transfer path and configured to transfer authentic banknotes other than cheques verified by the verifying unit;

a second gate configured to route the at least one cheque transferred by the main transfer unit to the authentic cheque transfer path and configured to route the banknotes transferred by the main transfer unit to the authentic cash transfer path;

an authentic cheque storage cassette coupled to the authentic cheque transfer unit, the authentic cheque storage cassette configured to store therein the at least one authentic cheque transferred by the authentic cheque transfer unit;

an authentic cash storage cassette coupled to the authentic cash transfer unit and configured to store therein the authentic banknotes other than cheques transferred by the authentic cash transfer unit;

a cheque standby unit placed in the main transfer path between the first gate and the second gate, the cheque standby unit configured to hold the at least one authentic cheque to return the at least one authentic cheque to the user responsive to receiving user instructions cancelling depositing of the at least one authentic cheque; and

a depositing controller connected to the first gate, the second gate and the verifying unit, the depositing controller configured to transfer the authentic banknotes to the main transfer path but transfer abnormal banknotes to the abnormal sheet branch transfer path based on the verification result, and transfer each of the individual sheets in the banknotes determined to be a cheque to the authentic cheque transfer path and the banknotes other than the cheque to the authentic cash transfer path based on the verification result.

The Patent Office allowed the claim in view of the amendment adding the two bolded limitations: configuration of the verification unit “to perform tripartite detection of overlapping of the individual sheets in the main transfer unit using three different sensors,” and requiring the bundle separator to “transfer each of the individual sheets with a predetermined time interval.” In the notice of allowance, the examiner observed that the “closest prior art,” U.S. Patent Application Publication No. 2006/0163027 to Hobmeier et al. (“Hobmeier”), lacked both. App’x. G at 357–58.

With respect to the claimed separator unit’s “predetermined time interval,” the Hobmeier disclosure cited by the Examiner instead found that the problem of bunching could be solved if “the transport speed is preferably lower in the singler than in the connected transport paths.” ¶ [0040]. Where Hobmeier had elected to slow down; the patentee chose to wait.

C. The Accused Products

The products accused of infringement in the underlying investigation were ATMs incorporating Diebold’s Cash/Deck Deposit Module version 2 (“CCDMv2”). ALJ ID at 4–5. Specifically they comprised the Diebold 77xx series with ActivMedia and 99xx series with ActivMedia sidecar. Id. The CCDMv2/ActivMedia module alone was found to contributorily infringe. Id. at 164.

Regarding the requirement of “transfer each of the individual sheets with a predetermined time interval,” the ID found that the CCDMv2 “practice[s] this limitation,” by “transfer[ing] . . . notes . . . [ ] and maintain[ing] a [ ] relying on “documentary evidence” and “testing.” ALJ ID at 114.

Regarding tripartite detection, the ALJ found infringement by an ultrasonic sensor, Hall sensors, one or more photo sensors, and magnetic image character recognition (“MICR”) sensor. ALJ ID at 120–22. Specifically, Judge Shaw observed that measurements indicating [ ] photo sensors [ ] find length, which may be indicative of multiple, partially overlapped sheets. Id. at 120–22, 125–26. As Diebold’s own source code explains, [ ] Id. at 129. Ultrasonic sensors are also responsive to air bubbles between overlapping sheets, in which ultrasonic waves can echo. Id. at 120. Hall sensors measure the thickness of passing media as they go between moveable rollers. Id. at 121, 124. MICR sensors can determine if the media contain too many lines of magnetic text or are unreadable because one line is stacked on top of another. Id. at 122–23.

Diebold’s demonstrative markup of its product manual below depicts the sensors in the CCDMv2 head unit found to perform tripartite overlap detection:

[ ] Ruling Request at 5; RX-0444C (CCDMv2 OEM Manual) at WN989000494.

In addition to accepting the theories of how these sensors could detect overlap, the ALJ relied on testing of the articles with fake checks that were too long, too thick, or printed with irregular magnetic text in order to confirm the responsibility of each of the types of sensors for overlap detection. ALJ ID at 123–27. For example if the testing caused the machine to reject a check that was the right length but too thick, the Hall sensor could be implicated; or vice versa vís the photo sensor. Id. A check that was perfect in all regards but for its magnetic text could only have been rejected by the MICR and so on. Id.

Finally, the ALJ reviewed the source code to confirm the individual responsibility of both the only ultrasonic sensor and a specific photo sensor, the [ ] Id. at 128–29. Specifically regarding the photo sensor, the ID pointed to the [ ] function in the [ ] file,” which “measures the [

] Id. at 129. [

] Id.

D. The Redesign

Diebold has focused its redesign on both of the claim limitations added by amendment. Specifically, it has provided them with new firmware called [ ] Schroeder Dec. at ¶ 4. Diebold alleges that its redesigned separator unit transfers sheets [ ] and therefore no longer “transfer[s] each of the individual sheets with a predetermined time interval.” Ruling Request at 10. Diebold also alleges that it has disabled the infringing photo sensor and Hall sensors in its verification unit, which therefore no longer “perform[s] tripartite detection of overlapping of the individual sheets in the main transfer unit using three different sensors.” Id. at 9. Thus, Diebold claims that its redesigned CCDMv2 lies outside the scope of the 989 LEO.

Regarding the predetermined time interval, Diebold has provided code governing its separator unit, with new [ ] highlighted:

[ ] Ruling Request at 10, citing Schroeder Dec. at ¶¶ 16, 21–24, Ex. 4. It also provides a flowchart for context:

[ ] Diebold Post-Proceeding Submission at 7, citing Sorensen Dec. at ¶ 36.

Regarding the Hall sensor, Diebold asserts, relying on declarations from the engineers responsible for the redesign, that the firmware was modified, removing “all functionality” with a compile flag [ ] set to zero and pictured below:

[ ] Flack Dec. ¶ 7. See Ruling Request at 8, citing Schroeder Dec. at ¶ 15; Flack Dec. at ¶¶ 6–17; Flack Dec., Exs. 2, 4, 6, 8. Mr. Flack declares that “[u]sing the compile flag, the firmware [he worked on] is modified such that it does not create a [ ] class or object and thus cannot detect a CLAMP_DETECTED error because the object for detecting that error does not exist in the software and the sensor board [ ] will not record any data for the Hall sensor.” Flack Dec. at ¶ 10.

Moving onto the photo sensor, Diebold asserts that its new [ ] function, quoted below with changes highlighted, “uses only the [ ] sensor to calculate whether the length of a note is greater than a given threshold and to generate the [ ] error”:

[ ] Ruling Request at 9, citing Schroeder Dec. at ¶¶ 10–13, Ex. 2. A Diebold employee involved with the redesign has declared that the amended code functions as alleged and, apart from the three cited instances, is unchanged. See Schroeder Dec. at ¶¶ 3–4. See also Flack Dec. at ¶ 3 (declaring the functionality of the CI Tech firmware used for the Hall sensors).

Nautilus Hyosung disagrees. Regarding the predetermined time interval, it argues that the separator unit does not actually [ ] questioning whether Diebold has satisfied its burden to show that either the quoted code operates between each separation or that the [ ] Nautilus Hyosung Opp. at 10; Howard Dec. at ¶¶ 65–74. Nautilus Hyosung also contends that, taking Diebold’s representations about the predetermined time interval code as true, the limitation is still met because the ID construed the limitation to have its plain meaning instead of Diebold’s earlier proposed construction requiring identical time intervals. Nautilus Hyosung Post-Proceeding Submission at 7, citing Joint List of Disputed Claim Terms. Finally, Nautilus Hyosung argues that Diebold’s redesign would still infringe under the doctrine of equivalents, which the ALJ cited as an alternative basis for his infringement finding “to the extent” the Commission held the limitation not literally infringed on appeal. Id. at 12–13; ALJ ID at 114–15.

And regarding tripartite detection, Nautilus Hyosung argues that the Hall sensor was not actually disabled because the CCDMv2 source code still contains references to Hall sensor values and because the device could not operate safely without using the sensors to [ ] Nautilus Hyosung Opp. at 8–9. Howard Dec. at ¶¶ 32–45.

Furthermore, Nautilus Hyosung alleges that the CCDMv2 still uses the [ ] photo sensor to perform overlap detection, citing its expert’s conclusion that the following code calls upon the [ ] to obtain the sheet’s length when the [ ] sensor is [ ] which its expert declares could often happen with an overlapped note.

[ ] Nautilus Hyosung Opp. at 6–8; Howard Dec. at ¶¶ 20–23.

Nautilus Hyosung also asserts, first, that the [ ] MICR sensor is itself [ ] different sensors in accordance with the ITC’s holding that tripartite detection could be performed by multiple sensors of a kind and, second, that additional photo sensors other than the [ ] perform overlap detection, citing its expert in support of both propositions. Nautilus Hyosung Opp. at 5–6.

ISSUE

Whether Diebold’s redesigned ATMs are covered by the asserted claims of the ‘235 patent and therefore fall within the scope of the Commission’s limited exclusion order from Investigation No. 337-TA-989, such that they would be excluded from entry for consumption in the United States.

LAW AND ANALYSIS

A. Ability to Issue a Ruling Letter Under 19 C.F.R. § 177

A preliminary question is whether Diebold’s appeal of the Commission’s Final Determination from the underlying investigation, as discussed in further detail below, precludes CBP from ruling on the question presented, specifically under 19 C.F.R. § 177.7 (which addresses situations in which no CBP ruling will be issued).

It has long been the position of U.S. Customs and Border Protection (including its predecessor, the U.S. Customs Service) and the Treasury Department that, to further the sound administration of the Customs and related laws, “persons engaging in any transaction affected by those laws fully understand the consequences of that transaction prior to its consummation.” For this reason, CBP “will give full and careful consideration to written requests from importers and other interested parties for rulings or information setting forth, with respect to a specifically described transaction, a definitive interpretation of applicable law, or other appropriate information.” 19 C.F.R. § 177.1(a). See Proposed Revision Relating to Issuance of Administrative Rulings by Headquarters Office, Notice of Proposed Rulemaking, 40 Fed. Reg. 2437 (January 13, 1975); Issuance of Administrative Rulings by Headquarters Office, Final Rule, 40 Fed. Reg. 31929 (July 30, 1975) (promulgating this provision of 19 C.F.R. § 177 as it appears, unchanged, in the current edition of the Customs regulations).

“Generally, a ruling may be requested under the provisions of this part only with respect to prospective transactions—that is, transactions which are not already pending before a Customs Service office by reason of arrival, entry, or otherwise.” Id. Additionally, “[n]o ruling letter will be issued with regard to transactions or questions which are essentially hypothetical in nature or in any instance in which it appears contrary to the sound administration of the Customs and related laws to do so.” 19 C.F.R. § 177.7(a). Moreover, “[n]o ruling letter will be issued with respect to any issue which is pending before the United States Court of International Trade, the United States Court of Appeals for the Federal Circuit, or any court of appeal therefrom.” 19 C.F.R. § 177.7(b) (emphasis added).

Notably, on September 15, 2017, Diebold filed its petition for review and notice of appeal with the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) under 19 U.S.C. § 1337(c) and 28 U.S.C. § 1295(a)(6), appealing, inter alia, the Commission’s Final Determination (and related Commission Opinion) of July 14, 2017, which resulted in the limited exclusion order at issue directing the exclusion from entry of Diebold ATM modules covered by certain patent claims. See Diebold Nixdorf, Inc. v. ITC, No. 17-2553. Importantly for purposes of this ruling letter, the appeal to the Federal Circuit involves the Commission’s Final Determination, resulting from the investigation under section 337, that a violation of this section exists based on the legacy products accused and found to infringe the relevant patent claims included in the limited exclusion order. The Commission’s Final Determination whether there is a violation of section 337 by those legacy products involves an issue that is separate and distinct from the administration of the exclusion order by Customs and its authority, under 19 C.F.R. §§ 177 or 174, to determine whether an unadjudicated article may be entered into the United States in light of an exclusion order (particularly where the article in question is a new or modified product or one that allegedly is not subject to exclusion from entry for some other reason or development, such as a license or patent exhaustion defense).

CBP has repeatedly adhered to the position that appealing a Commission Final Determination to the Federal Circuit does not foreclose CBP from ruling on the admissibility of other products that were not adjudicated during the investigation at the Commission. See CBP HQ Ruling H284032 at 13–15 (April 7, 2017) (“‘CBP has issued ruling letters during the pendency of appeals at the Federal Circuit that involve a final determination of the Commission because, although the general matter was on appeal, the particular issue before the Federal Circuit [involving the legacy products found to infringe] was not the subject of the administrative ruling.’”), quoting CBP HQ Ruling H259071 at 8 (December 10, 2014). See also CBP HQ Ruling H067500 (August 5, 2009).

Since, as noted above, Diebold’s appeal of the Commission’s Final Determination does not involve ATM modules running the [ ] redesigned software, the subject of this ruling request is not an issue pending before the Federal Circuit and, consequently, CBP is not precluded under 19 C.F.R. § 177.7(b) from ruling on the admissibility of the redesigned ATM modules, just as it would not be precluded from issuing a protest decision under 19 C.F.R. § 174 through an application for further review challenging an exclusion from entry of an article that was not adjudicated by the Commission during the underlying investigation but may be subject to an exclusion order issued by the Commission.

B. Treatment of Confidential Business Information Submitted Under 19 C.F.R. § 177

As a preliminary matter, Diebold has requested confidential treatment in connection with this ruling request for certain information from its submissions, claiming that the disclosure of such information would likely cause substantial harm to its competitive position and, on this basis, seeks to have the information in question redacted from any ruling that is published in accordance with 19 U.S.C. § 1625(a). Disclosure of information related to administrative rulings under 19 C.F.R. § 177 is governed by 31 C.F.R. § 1, 19 C.F.R. § 103, and 19 C.F.R. § 177.8(a)(3). See 19 C.F.R. § 177.10(a). Moreover, the determination whether to include or redact information within a published ruling is guided by various federal laws—and the relevant standards for their application—that involve confidentiality and disclosure, to include the Freedom of Information Act (“FOIA”) (5 U.S.C. § 552), the Trade Secrets Act (18 U.S.C. § 1905), and the Privacy Act of 1974 (5 U.S.C. § 552a). See CBP HQ Ruling H121519 at 1 (February 8, 2011).

Congress enacted FOIA to overhaul the earlier public-disclosure section of the Administrative Procedure Act that gradually became more “a withholding statute than a disclosure statute.” Milner v. Dep't of the Navy, 562 U.S. 562, 565 (quoting EPA v. Mink, 410 U.S. 73, 79 (1973). Accordingly, there is a strong presumption in favor of disclosure, which is consistent with the purpose as well as the plain language of the Act. United States Dep't of State v. Ray, 502 U.S. 164, 173 (1991). Thus, FOIA mandates that an agency disclose certain information unless it falls within one of nine exemptions. Milner, at 565. These exemptions are “explicitly made exclusive,” EPA, at 79, and must be “narrowly construed,” FBI v. Abramson, 456 U.S. 615, 630 (1982). Exemption 4 of FOIA, which is especially relevant here, provides that FOIA does not apply to matters that are “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” 5 U.S.C. § 552 (b)(4). See also Chrysler Corp. v. Brown, 441 U.S. 281, 291 (1979). Furthermore, it is worth noting that, as a general matter, the proscriptions of the Trade Secrets Act are “at least co-extensive with Exemption 4 of FOIA . . . [such that], unless another statute or a regulation authorizes disclosure of the information, the Trade Secrets Act requires each agency to withhold any information it may withhold under Exemption 4 of the FOIA.” Venetian Casino Resort, LLC v. EEOC, 530 F.3d 925, 932 (D.C. Cir. 2008) (quoting Canadian Comm. Corp. v. Air Force, 514 F.3d 37, 39 (D.C. Cir. 2008) (emphasis added). See also Dow Chem. Co. v. United States, 476 U.S. 227, 234, n. 2 (1986) (“Dow's fear that EPA might disclose trade secrets revealed in these photographs appears adequately addressed by federal law prohibiting such disclosure generally under the Trade Secrets Act, 18 U.S.C. § 1905, and the Freedom of Information Act, 5 U.S.C. § 552(b)(4).”).

That said, “Congress did not design the Freedom of Information Act exemptions to be mandatory bars to disclosure.” Chrysler Corp., 441 U.S. at 293, 294 (“We therefore conclude that Congress did not limit an agency's discretion to disclose information when it enacted the FOIA.”) (emphasis added). See also GTE Sylvania v. Consumers Union of United States, 445 U.S. 375, 378, n. 2 (1980) (“The theory of the so-called ‘reverse Freedom of Information Act’ suit, that the exemptions to the Act were mandatory bars to disclosure and that therefore submitters of information could sue an agency under the Act in order to enjoin release of material, was squarely rejected in Chrysler Corp.”).

The test, for administrative rulings under 19 C.F.R § 177, to determine whether certain information is confidential (and therefore properly redacted from any published ruling) is identical to the federal government-wide standard for disclosure under FOIA Exemption 4 as it relates to the likelihood of substantial harm to the competitive position of the person submitting the information and requesting that it be withheld from publication. As with FOIA, the basic objective of administrative rulings under 19 C.F.R. § 177 favors disclosure to provide notice to interested persons of the reasons for the agency’s position and its decision-making process. See Chrysler Corp., 441 U.S. at 290, n. 10 (“We observed in Department of Air Force v. Rose that ‘disclosure, not secrecy, is the dominant objective of the Act.’ The legislative history is replete with references to Congress' desire to loosen the agency's grip on the data underlying governmental decisionmaking.”) (internal citation omitted). Notably, under 19 C.F.R. § 177.8(a)(3) referenced above, there is a general presumption that “[n]o part of the ruling letter, including names, addresses, or information relating to the business transactions of private parties, shall be deemed to constitute privileged or confidential commercial or financial information or trade secrets exempt from disclosure pursuant to the Freedom of Information Act, as amended (5 U.S.C. 552), unless, as provided in § 177.2(b)(7), the information claimed to be exempt from disclosure is clearly identified and the reasons for the exemption are set forth.”

In turn, 19 C.F.R. § 177.2(b)(7) provides that “[i]nformation which is claimed to constitute trade secrets or privileged or confidential commercial or financial information regarding the business transactions of private parties the disclosure of which would cause substantial harm to the competitive position of the person making the request (or of another interested party), must be identified clearly and the reasons such information should not be disclosed, including, where applicable, the reasons the disclosure of the information would prejudice the competitive position of the person making the request (or of another interested party) must be set forth.”

Significantly, § 177.2(b)(7) was added to this section through rulemaking (T.D. 75-186, 40 Fed. Reg. 31929, July 30, 1975) that promulgated a final rule based on a previous notice of proposed rulemaking (40 Fed. Reg. 2437, January 13, 1975) where the text as proposed did not contain (b)(7) or any other provision addressing the treatment of putative confidential business information. The “substantial harm to a competitive position” standard adopted in § 177.2(b)(7) to handle confidentiality issues is identical to that standard for FOIA Exemption (b)(4) contemporaneously established by the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) in National Parks & Conservation Asso. v. Morton, 498 F.2d 765 (D.C. Cir. 1974). See N.H. Right to Life v. HHS, 136 S. Ct. 383; 193 L. Ed. 2d 412; 2015 U.S. LEXIS 7169 (2015) (Thomas, J., dissenting from denial of the petition for writ of certiorari). In 1974, a year before the promulgation of the Customs final rule, the D.C. Circuit construed the word “confidential” in Exemption 4 and determined that commercial information is “confidential” if disclosure would “cause substantial harm to the competitive position of the person from whom the information was obtained.” National Parks, 498 F.2d at 770. See also N.H. Right to Life, 136 S. Ct. at 384. The D.C. Circuit later elaborated that, when applying this test, there was no need to show actual competitive harm and that actual competition and the likelihood of substantial competitive injury sufficed. See Public Citizen Health Research Group v. FDA, 704 F.2d 1280, 1291 (D.C. Cir. 1983). See also N.H. Right to Life, 136 S. Ct. at 384. Accordingly, to overcome the strong presumption in favor of disclosure, ruling requesters seeking confidential treatment must prove that: (1) they actually face competition; and (2) substantial competitive injury would likely result from disclosure. See Gov't Accountability Project v. FDA, 2016 U.S. Dist. LEXIS 114927, at *15 (D.C. Cir. 2016). Conclusory and generalized allegations of substantial competitive harm are unacceptable and will not support a ruling requester’s efforts to withhold certain information from publication. See Public Citizen Health Research Group, 704 F.2d at 1291. There is no dispute that Diebold faces actual competition and therefore the relevant analysis will focus on the second prong above.

As suggested above, the relevant Customs regulations not only mirror the general presumption in favor of disclosure but also place the burden on the person requesting confidentiality to demonstrate that such information qualifies. See FCC v. Schreiber, 381 U.S. 279 (1965) (upholding a rule requiring public disclosure except where the proponents of a request for confidential treatment have established their burden to justify that such information should not be disclosed). Moreover, the provisions of the Customs regulations that place the burden on the ruling requester to establish, during the administrative proceeding, that the information at issue constitutes confidential business information is consistent with the burden the government must satisfy in an action brought against it under FOIA challenging the position an agency has taken not to disclose information pursuant to one or more of the exemptions. See 5 U.S.C. § 552(a)(4)(B). See also United States Department of Justice v. Landano, 508 U.S. 165, 171 (1993) (“The Government bears the burden of establishing that the exemption applies.”).

This line of inquiry is further illuminated by the “general right to inspect and copy public records and documents” that courts have historically recognized, including in patent cases involving highly sensitive information. Apple Inc. v. Samsung Elecs. Co., 727 F.3d 1214, 1221 (Fed. Cir. 2013) (quoting Nixon v. Warner Commc’ns, Inc., 435 U.S. 589 (1978)). The nature of this right, rooted in the common law, is not conditioned on a proprietary interest in the information, see Nixon, 435 U.S. at 597, although certainly there are instances where an interest in the information may rise to or approach such a level. Instead, the only interest necessary to compel access to such information is found in the “citizen's desire to keep a watchful eye on the workings of public agencies.” Nixon, 435 U.S. at 597-98.

Therefore, a determination whether to grant a request for confidential treatment must balance the likelihood of substantial harm to a competitive position against the need to provide the greatest amount of transparency possible to the agency’s decision-making process. In light of the above, a request for confidential treatment of information submitted in connection with a ruling requested under 19 C.F.R. § 177 faces a strong presumption in favor of disclosure and the person seeking this treatment must overcome that presumption with a request that is narrowly tailored and supported by evidence establishing a likelihood of substantial harm to a competitive position that outweighs the general history and public policy—embedded in FOIA, the common law, and the relevant Customs regulations—favoring transparency and disclosure. To that end, any request for confidential treatment must provide a particularized showing of the specific harm that will result if certain information is disclosed. Broad, unsubstantiated allegations of harm without specific examples articulating reasons for the harm will not suffice.

Notwithstanding the above, it is well recognized by the Federal Circuit and among various federal district courts that, in civil actions arising under the patent laws: [S]ource code requires additional protections to prevent improper disclosure because it is often a company’s most sensitive and most valuable property . . . [S]ource code might represent a company's most sensitive and confidential property and [] in U.S. litigation, extreme measures are ordered to protect its confidentiality. As a result, district courts regularly provide for additional restrictions on discovery to account for the unique characteristics of source code. Drone Techs., Inc. v. Parrot S.A., 838 F.3d 1283, 1300 n.13 (Fed. Cir. 2016) (internal citations, quotes, and parentheticals omitted).

Recognizing the significance of source code that is understood in district court actions and Commission investigations under section 337, any source code submitted as part of the administrative record for an inter partes ruling request under 19 C.F.R. § 177 will not be subject to disclosure without permission of submitter. Nevertheless, as at least one district court has acknowledged: Software [patent] cases present unique challenges for the parties and the courts because, prior to discovery, plaintiffs usually only have access to the manifestation of the defendants' allegedly infringing source code and not the code itself. From this manifestation, plaintiffs must somehow divine whether the defendants' code infringes. Although defendants vigorously and rightly guard their source code, until plaintiffs have access to it, plaintiffs are typically unable to give highly specified infringement contentions. American Video Graphics, L.P. v. Electronic Arts, Inc., 359 F. Supp. 2d 558, 560 (E.D. Tex. 2005). Therefore, as noted above, requests for confidential treatment in the context of section 337 exclusion order-based rulings under 19 C.F.R. § 177, especially those involving software running on a particular device, must be narrowly tailored, fully supported by evidence showing a likelihood of substantial harm to a competitive position, and still permit a description of the device’s operation.

Based on the framework above, the information for which Diebold has established a likelihood of substantial harm to its competitive position if disclosed (or consists of information that was redacted from the public version of the agency record at the Commission) has been [bracketed in red] for redaction from the published ruling but otherwise has been described or identified to the greatest extent allowed throughout this ruling (including, whenever possible, with citations referencing the confidential agency record at the Commission from Inv. No. 337-TA-989).

C. Law of Patent Infringement

Determining patent infringement requires two steps. Advanced Steel Recovery, LLC v. X-Body Equip., Inc., 808 F.3d 1313, 1316 (2015). The first is to construe the limitations of the asserted claims and the second is to compare the properly construed claims to the accused product. Id. To establish literal infringement, every limitation recited in a claim must be found in the accused product, whereas, under the doctrine of equivalents, infringement occurs when there is equivalence between the elements of the accused product and the claimed elements of the patented invention. Microsoft Corp. v. GeoTag, Inc., 817 F.3d 1305, 1313 (Fed. Cir. 2016). One way to establish equivalence is by showing, on an element-by-element basis, that the accused product performs substantially the same function in substantially the same way with substantially the same result as each claim limitation of the patented invention, which is often referred to as the function-way-result test. See Intendis GmbH v. Glenmark Pharms., Inc., 822 F.3d 1355, 1361 (Fed. Cir. 2016).

Under section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337, the Commission has authority to conduct investigations into imported articles that allegedly infringe United States patents and impose remedies if the accused articles are found to be infringing. See 19 U.S.C. § 1337(a)(1)(B), (b)(1), (d), (f), (i). 19 U.S.C. § 1337(d), in particular, empowers the Commission to direct the exclusion from entry of articles found to infringe the asserted patents. When the Commission determines there is infringement and thus a violation of section 337, it generally issues one of two types of exclusion orders: (1) a limited exclusion order or (2) a general exclusion order. See Fuji Photo Film Co., Ltd. v. ITC, 474 F.3d 1281, 1286 (Fed. Cir. 2007).

Both types of orders direct CBP to bar infringing products from entering the country. See Yingbin-Nature (Guangdong) Wood Indus. Co. v. ITC, 535 F.3d 1322, 1330 (Fed Cir. 2008). “A limited exclusion order is ‘limited’ in that it only applies to the specific parties before the Commission in the investigation. In contrast, a general exclusion order bars the importation of infringing products by everyone, regardless of whether they were respondents in the Commission's investigation.” Id. A general exclusion order is appropriate only if two exceptional circumstances apply. See Kyocera Wireless Corp. v. ITC, 545 F.3d 1340, 1356 (Fed. Cir. 2008). A general exclusion order may only be issued if: (1) “necessary to prevent circumvention of a limited exclusion order;” or (2) “there is a pattern of violation of this section and it is difficult to identify the source of infringing products.” 19 U.S.C. § 1337(d)(2). See also Kyocera, 545 F.3d at 1356 (“If a complainant wishes to obtain an exclusion order operative against articles of non-respondents, it must seek a GEO [general exclusion order] by satisfying the heightened burdens of §§ 1337(d)(2)(A) and (B).”).

In addition to the action taken above, the Commission may issue an order under 19 U.S.C. § 1337(i) directing CBP to seize and forfeit articles attempting entry in violation of an exclusion order if their owner, importer, or consignee previously had articles denied entry on the basis of that exclusion order and received notice that seizure and forfeiture would result from any future attempt to enter articles subject to the same. An exclusion order under § 1337(d)—either limited or general—and a seizure and forfeiture order under § 1337(i) apply at the border only and are operative against articles presented for customs examination or articles conditionally released from customs custody but subject to a timely demand for redelivery. See 19 U.S.C. §§ 1337(d)(1) (“The Commission shall notify the Secretary of the Treasury of its action under this subsection directing such exclusion from entry, and upon receipt of such notice, the Secretary shall, through the proper officers, refuse such entry.”); id. at (i)(3) (“Upon the attempted entry of articles subject to an order issued under this subsection, the Secretary of the Treasury shall immediately notify all ports of entry of the attempted importation and shall identify the persons notified under paragraph (1)(C).”). See also ClearCorrect Operating, LLC v. ITC, 810 F.3d 1283, 1295 (Fed. Cir. 2015) (“This section [1337(i)] permits the Commission to exclude ‘articles’ from importation into the United States; however, it is difficult to see how one could physically stop electronic transmissions at the borders under the current statutory scheme . . . . A construction of the term ‘articles’ that includes electronically transmitted digital data is also not reasonable when applied to Section 337(i)(3). This section reads, ‘[u]pon the attempted entry of articles subject to an order issued under this subsection, the Secretary of the Treasury shall immediately notify all ports of entry of the attempted importation and shall identify the persons notified under paragraph (1)(C).’ Not only can an electronic transmission not be subject to an ‘attempted entry’ through a ‘port of entry,’ it also cannot be intercepted at a ‘port of entry’ as contemplated in the statute.”)

Significantly, unlike district court injunctions, the Commission can issue a general exclusion order that broadly prohibits entry of articles that infringe the relevant claims of an asserted patent without regard to whether the persons importing such articles were parties to, or were related to parties to, the investigation that led to issuance of the general exclusion order. See Vastfame Camera, Ltd. v. ITC, 386 F.3d 1108, 1114 (Fed. Cir. 2004). The Commission also has recognized that even limited exclusion orders have broader applicability beyond just the parties found to infringe during an investigation. See Certain GPS Devices and Products Containing Same, Inv. No. 337-TA-602, Comm’n Op. at 17, n. 6, Doc ID 317981 (Jan. 2009) (“We do not view the Court’s opinion in Kyocera as affecting the issuance of LEOs [limited exclusion orders] that exclude infringing products made by respondents found to be violating Section 337, but imported by another entity. The exclusionary language in this regard that is traditionally included in LEOs is consistent with 19 U.S.C. § 1337(a)(1)(B) - (D) and 19 U.S.C. § 1337(d)(1).”).

However, this is not the only difference between district court injunctions under section 283 of the Patent Act and Commission exclusion orders under section 337 of the Tariff Act. For example, the traditional test for injunctive relief, used by district courts in accordance with the Supreme Court’s decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), “does not apply to Commission remedy determinations under Section 337.” Spansion, Inc. v. ITC, 629 F.3d 1331, 1359 (Fed. Cir. 2010). This difference between exclusion orders under Section 337 and injunctions under the Patent Act follows “the long-standing principle that importation is treated differently than domestic activity.” Id. at 1360, citing United States v. 12 200-Ft. Reels of Super 8mm Film, 413 U.S. 123 (1973) (“Import restrictions and searches of persons or packages at the national borders rest on different considerations and different rules of constitutional law from domestic regulations. The Constitution gives Congress broad, comprehensive powers ‘to regulate Commerce with foreign Nations.’ Art. I, § 8, cl. 3.”). See Buttfield v. Stranahan, 192 U.S. 470 (1904) (“As a result of the complete power of Congress over foreign commerce, it necessarily follows that no individual has a vested right to trade with foreign nations, which is so broad in character as to limit and restrict the power of Congress to determine what articles of merchandise may be imported into this country and the terms upon which a right to import may be exercised. This being true, it results that a statute which restrains the introduction of particular goods into the United States from considerations of public policy does not violate the due process clause of the Constitution.”)

Moreover, in the district courts, the criteria for adjudicating a violation of an injunction against future infringement by a party whose legacy products have already been adjudged to infringe requires application of the colorable differences test. TiVo Inc. v. Echostar Corp., 646 F.3d 869, 876 (Fed. Cir. 2011) (en banc). Under this test, if new or redesigned products are so different from the product previously found to infringe (focusing not on differences randomly chosen between the two but on the specific features of the product found to infringe in the earlier infringement trial), such that they raise a fair ground of doubt as to the wrongfulness of the defendant's conduct, the new or redesigned products are deemed to be more than colorably different from the legacy one adjudged to be infringing and violation of the injunction at this point would not be the appropriate consideration. Instead, a new trial would be required to litigate the infringement question. Id. at 881-83. The initial inquiry under the colorable differences test, therefore, focuses on whether the modification in question is significant. Id.

Exclusion orders, however, apply to any articles—new, modified, or otherwise—that are “covered by” the patent claims included in the exclusion order. See Certain Optical Disk Controller Chips and Chipsets, Inv. No. 337-TA-506, Comm’n Op. at 56-57, USITC Pub. 3935, Doc ID 287263 (July 2007) (“The Commission's long-standing practice is to direct its remedial orders to all products covered by the patent claims as to which a violation has been found, rather than limiting its orders only to those specific models selected for the infringement analysis . . . . [W]hile individual models may be evaluated to determine importation and infringement, the Commission's jurisdiction extends to all models of infringing products that are imported at the time of the Commission's determination and to all such products that will be imported during the life of the remedial orders.”). The Commission has confirmed that this requires CBP to employ the traditional two-step test for patent infringement, and not the colorable differences test from TiVo, when administering a Commission exclusion order under section 337 to determine whether an imported article, or one at issue in a ruling request, is within the scope of that exclusion order. See Certain Sleep-Disordered Breathing Treatment Systems and Components Thereof, Inv. No. 337-TA-879, Advisory Op. at 10, n. 2, Doc ID 539875 (Aug. 2014). See also Certain Erasable Programmable Read Only Memories, Inv. No. 337-TA-276 Enforcement Proceeding Comm’n Op. at 11, Doc ID 43536 (Aug. 1991) (“The Commission has always issued its orders in terms of ‘infringing’ products, and has always intended them, as in this case, to prohibit to future importation or sale of products which were not specifically adjudged infringing in the violation proceeding, but do in fact infringe. The Commission has consistently issued exclusion orders coextensive with the violation of section 337 found to exist. Thus, in cases where the violation found involves infringement of patent claims, the Commission has consistently ordered the exclusion of articles which infringe the relevant patent claims.”)

Lastly, despite the well-established principle that “the burden of proving infringement generally rests upon the patentee,” Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S. Ct. 843; 187 L. Ed. 2d 703; 2014 U.S. LEXIS 788 (2014), the Commission has held that Medtronic is not controlling precedent and does not overturn its longstanding practice of placing the burden of proof on the party who, in light of the issued exclusion order, is seeking to have an article entered for consumption. See Certain Sleep-Disordered Breathing Treatment Systems and Components Thereof, Inv. No. 337-TA-879, Advisory Op. at 6-11. In particular, the Commission has noted that “[t]he Federal Circuit has upheld a Commission remedy which effectively shifted the burden of proof on infringement issues to require a company seeking to import goods to prove that its product does not infringe, despite the fact that, in general, the burden of proof is on the patent to prove, by a preponderance of the evidence, that a given article does infringe the patent in question.” Certain Integrated Circuit Telecommunication Chips, Inv. No. 337-TA-337, Comm’n Op. at 21, n. 14, USITC Pub. 2670, Doc ID 217024 (Aug. 1993), citing Sealed Air Corp. v. ITC, 645 F.2d 976, 107-08 (C.C.P.A. 1981) (emphasis in original).

This approach is supported by Federal Circuit precedent. See Hyundai Elecs. Indus. Co. v. ITC, 899 F.2d 1204, 1210 (Fed. Cir. 1990) (“Indeed, we have recognized, and Hyundai does not dispute, that in an appropriate case the Commission can impose a general exclusion order that binds parties and non-parties alike and effectively shifts to would-be importers of potentially infringing articles, as a condition of entry, the burden of establishing noninfringement. The rationale underlying the issuance of general exclusion orders—placing the risk of unfairness associated with a prophylactic order upon potential importers rather than American manufacturers that, vis-a-vis at least some foreign manufacturers and importers, have demonstrated their entitlement to protection from unfair trade practices—applies here [in regard to a limited exclusion order] with increased force.”) (internal citation omitted).

Accordingly, the burden is on Diebold to establish that the redesigned ATMs do not infringe the asserted claims of the ‘235 patent, either with their new features or with those found to infringe at the Commission.

D. Infringement Analysis

1. “[T]ransfer [of] each of the individual sheets with a predetermined time interval”

After Diebold asked the Commission to interpret the claim as requiring “identical time intervals,” the ALJ instead gave the term its plain meaning. Joint List of Disputed Claim Terms; ALJ ID at 43–45. Thus, even taking Diebold’s allegations as true, [ ] does nothing to avoid infringement.

Nevertheless, Diebold argues that the plain meaning itself requires “each of the individual sheets” to share an identical “predetermined time interval” because “sheets” are plural but “a predetermined time interval” is singular. Diebold Post-Proceeding Submission at 4. Not so. “[I]t is generally accepted in patent parlance that [the indefinite article] ‘a’ can mean one or more.” N. Am. Vaccine, Inc. v. Am. Cyanamid Co., 7 F.3d 1571, 1575–1576 (Fed. Cir. 1993), citing Robert C. Faber, Landis on Mechanics of Patent Claim Drafting 531 (3d ed. 1990). See 01 Communique Lab., Inc. v. LogMeIn, Inc., 687 F.3d 1292, 1297 (Fed. Cir. 2012) (“[O]ur well-established precedent [is that] ‘[a]s a general rule, the words ‘a’ or ‘an’ in a patent claim carry the meaning of ‘one or more.’”), quoting TiVo, Inc. v. Echostar Communs. Corp., 516 F.3d 1290, 1303 (Fed. Cir. 2008). The presumption still applies when the article follows a plural noun. Certain Removable Electronic Cards and Electronic Card Reader Devices and Products Containing the Same, Inv. No. 337-TA-396, Comm’n Op. at 8–9, Doc. ID 169447 (Aug. 1998) (Electronic Card Readers) (holding that the plain meaning of a claim to “performing predetermined operations which provide a predetermined expected response” could be infringed even if the response “change[d] over time”) (emphasis added). The only time when an indefinite article should be read as requiring singularity is when the written description provides no support for a plural embodiment. See N. Am. Vaccine, Inc., 7 F.3d at 1577, citing 35 U.S.C. § 112 (requiring claims to be supported by a written description). But further exploration of the specification would go beyond CBP’s obligation to apply the matter already decided.

Moreover, the plain meaning of predetermination only requires that an interval’s length be determined before it begins. See Pause Tech. LLC v. TiVo Inc., 419 F.3d 1326, 1333–35 (Fed. Cir. 2005). It does not require determination prior to the operation of the device. Electronic Card Readers, at 8–9. Diebold does not disagree. Customs Tr. at 16:10-17 (conceding that varied time intervals “could satisfy ‘predetermined’”).

Diebold’s argument that the ITC held the plain meaning to require the [ ] found to infringe in the accused and domestic industry products is misguided. See ALJ ID at 114, 180–81. Mapping a claim onto an article does not implicitly interpret it to the narrowest infringing meaning. E.g., Ex parte Apostoloiu, Appeal 2011-001721, 3 (P.T.A.B. May 1, 2013). Exclusion orders require CBP to look to the adjudicated claim, not colorable differences with the adjudicated product.

Because Diebold’s redesign practices the claim limitation either way, CBP does not need to examine the factual merits of Nautilus Hyosung’s argument that “the alleged [ ] is improperly implemented.” Howard Dec. at ¶¶ 19–20.

2. “[T]ripartite detection of overlapping of the individual sheets . . . using three different sensors.”

The ID interpreted this limitation as having its plain and ordinary meaning. Specifically, “the phrase does not require using three different types of data.” ALJ ID at 55–57. Nautilus Hyosung argues both that Diebold did not disable two of its sensors as alleged and that “Diebold ignores the breadth of the ID’s infringement determinations” with respect to other sensors. Nautilus Hyosung Post-Proceeding Submission at 10.

I. Disablement of the Photo and Hall Sensors

As a preliminary matter, purely software-based disablement can avoid infringement of a claimed apparatus configured to be capable of a function. See Telemac Cellular Corp. v. Topp Telecom, Inc., 247 F.3d 1316, 1330 (Fed. Cir. 2001) (finding that software prevented an article’s otherwise capable hardware from infringing a system claim); Typhoon Touch Tech., Inc. v. Dell, 659 F.3d 1376, 1380 (Fed. Cir. 2011) (finding that a generic computer did not practice a claimed memory because an “apparatus as provided must be ‘capable’ of performing the recited function, not that it might later be modified to perform that function”). As the Eastern District of Wisconsin elaborates, “[a]lthough the combination of source code containing instructions . . . and configuration files written to allow that source code to cause a computer to execute a . . . function is structure capable of performing that function, the combination of source code containing instructions . . . and configuration files written to prevent the computer from executing a . . . function is not.” Mikkelsen Graphic Eng'g Inc. v. Zund Am., Inc., 2011 U.S. Dist. LEXIS 141548, *14–15, 2011 WL 6122377 (E.D. Wis. Dec. 8, 2011). Thus should Diebold’s modified software prevent three or more of its sensors from “perform[ing] tripartite detection of overlapping of the individual sheets,” its redesigned article will not infringe. See ALJ ID at 285 (refusing to find anticipation from hardware alone).

In support of its allegation that the Hall sensors have been disabled in the redesigned article, Diebold presents declarations from its Senior Developer of Hardware/Hardware-Related Software and from the Director of R&D at CI Tech Sensors, AG, which both designed and redesigned the relevant firmware. Schroeder Dec.; Schroeder Reply Dec.; Flack Dec.. It also provides an expert report. Sorensen Dec.. Nautilus Hyosung observes that Diebold’s employee declarations are self-serving and argues that they are mistaken, citing its own expert report in support. Howard Dec.; Howard Rebuttal Dec.; Howard Reply Dec.. In short, Nautilus Hyosung’s expert observes that: (1) the redesigned source code still contains references to Hall sensor values; and (2) Diebold’s allegations are not credible because the products could not function safely without the Hall sensors. Nautilus Hyosung Opp. at 8–9. Regarding the references to Hall sensors in the source code, Diebold’s hardware developer Mr. Schroeder counters that the CCDMv2 can only communicate with them through the CI Tech firmware. Schroeder Reply Dec. at ¶¶ 38–46. See Sorensen Dec. at ¶¶ 112–14. Specifically, they are not connected to the CCDMv2 [ ] directly but only though the [ ] which runs on CI Tech firmware. Schroeder Reply Dec. at ¶¶ 38–46. Mr. Schroeder further explains that the references to Hall sensor values in the [ ] source code are a legacy of other devices where the Hall sensor connects directly thereto. Id. He supports this further explanation by observing both that: (a) the CCDMv2 [ ] hardware has empty electrical pins where a Hall sensor would connect, in contrast to its [ ] pins, which do connect; and (b) the CCDMv2 [ ] source code facially references other devices, [ ] Id., citing Ex. B [ ] And with respect to the operability of the redesign, Diebold has [ ] Id. Diebold’s willingness to disclose the changed functionality in its new service manual says as much:

[ ] Ruling Request at 8, quoting Ex. A (Redesigned CCDMv2 OEM Service Manual) at 4-19. Nautilus Hyosung’s post-proceeding submission comprises its expert Dr. Howard’s assertions that the sensors “may” still infringe based on a new theory he admits was abandoned at trial. Howard Rebuttal Dec. at ¶ 13. (“I chose not to further discuss this file after my expert report.”) This ruling finds that Diebold has satisfied its burden of proof on the issue.

Diebold also alleges disablement of the infringing photo sensor. As with the Hall sensors, Diebold presents declarations from Mr. Schroeder and its expert Dr. Sorensen, which Nautilus Hyosung contests in reliance on Dr. Howard. Specifically, Diebold modified the length-based overlap detection code (the [ ] function in the [ ] file) found to infringe at the ITC by replacing the replacing the [ ] with a call to whether the [ ] sensor [ ] instead. Schroeder Dec. at ¶¶ 10–11. Dr. Howard counters that the [ ] pictured below, still [ ] Howard Dec. at ¶¶ 22–23:

[ ] This begs the question of why [ ] has two means to obtain such a value and why, as Dr. Howard observes, it calls the [ ] when the [ ] sensor [ ] Diebold’s demonstrative of the spatial relationship between the sensors provides context:

[ ] Sorensen Dec. at ¶ 68. First, Diebold explains that the quoted function only runs at the beginning of each separation. Schroeder Reply Dec. at ¶¶ 5–28; Sorensen Dec. at ¶¶ 57–85. Diebold correctly focuses the inquiry to whether this could occur during the processing of an overlapped note not otherwise detected by the [ ] sensor [ ] The only time when the [ ] sensor would [ ] at the beginning of a separation would be if, during the previous separation, the [ ] sensor already detected and separated a double, by way of causing the [ ] continuing to [ ] the [ ] sensor. Id.  An undetected double would simply pass through in a single separation, its length measured by the revised code. Id. Diebold’s explanation is logical because it elaborates why after detecting and separating an overlapped note, a new length measurement relying on the [ ] would be necessary but could not possibly infringe. Dr. Howard’s rebuttal declaration merely restates his conclusion that any time [ ] is defined by the [ ] potentially infringes. Howard Rebuttal Dec. at ¶ 16. Cf. Phillips Petroleum v. Huntsman Polymers Corp., 157 F.3d 866, 876 (Fed. Cir. 1998) (refusing to be swayed by “wholly conclusory” expert declarations); 02 Micro Intern., Ltd. v. Beyond Innovation Tech. Co., Ltd., 449 Fed. App’x 923, 931 (Fed. Cir. 2011) (finding that lay testimony “may support a judgment of no literal infringement”). Accordingly, we find Diebold has met its burden of showing that the redesigned ATMs do not infringe the asserted claims of the ‘235 patent.

Nautilus Hyosung also points to additional legacy code, not referenced in the ID, which it alleges uses the [ ] to perform overlap detection, some of it length-based. Nautilus Hyosung Opp. at 6–8 (pointing to operations in the [ ] The threshold inquiry is whether Nautilus Hyosung’s argument has been waived under CBP HQ Ruling H242025 (June 24, 2013). In that case, the complainant Microsoft had accused a claimed “mobile device, comprising . . . an application program,” and then sought to establish before CBP that a different application program on the same device infringed. CBP declined to accept Microsoft’s new infringement theory. Similarly, Nautilus Hyosung has newly accused legacy software of providing infringing functionality to the legacy hardware. The analogy convinces because the ID cannot possibly have held, in the alternative, that the legacy product’s hardware or software infringed. Compare ALJ ID at 285 (refusing to find anticipation from hardware alone) with id. at 287–88 (refusing to find anticipation from software alone). Both are necessary conditions of the ITC’s holding of infringement, and Nautilus Hyosung is not entitled to replace either in this proceeding.

II. Other Theories of Tripartite Detection of Overlap

In addition to contesting the disablement of the known infringing features, Nautilus Hyosung also presents several new theories of infringement involving sensors that “the ID did not even need to mention . . . [like the] [ ] Nautilus Hyosung Opp. at 6. Nautilus Hyosung asserts that it “never argued, and the Commission never found, that the other photo sensors could not equally give rise to infringement.” See id. at 6 n.4. However, it has been CBP’s position that “CBP will not refuse entry on the basis of features that were present in the accused devices at the time of the ITC investigation but were not specifically accused and found to satisfy the limitations of the asserted patent claims in the exclusion order.” CBP HQ Ruling H242025, at 10–11 (June 24, 2013).

No conflict exists between this ruling’s refusal to find an implicit claim construction in the ITC’s analysis of the “transfer [of] each of the individual sheets with a predetermined time interval” and this ruling’s reliance on the factual theories articulated by the ITC regarding the “perform[ance of] tripartite detection of overlapping of the individual sheets in the main transfer unit using three different sensors.” A [ ] time interval is a new feature meriting new infringement analysis. In contrast, all of the newly accused features were present in the accused devices at the time of trial. In fact, Nautilus Hyosung had previously articulated and abandoned several of such theories, including overlap detection by the [ ]

First, Nautilus Hyosung avers that the [ ] is a sensor used in overlap detection. Nautilus Hyosung Opp. at 6. Nautilus Hyosung originally accused the [ ] of performing overlap detection but later abandoned the argument. Compare RX-0062C at 41 (accusing the [ ] of overlap detection as part of Nautilus Hyosung’s supplemental infringement contentions) with Nautilus Hyosung Pre-Hearing Br. 187 (accusing the [ ] only of abnormality detection) and Nautilus Hyosung Post-Hearing Br. at 61 (same). The ALJ decided accordingly. ALJ ID at 119 (only pointing to abnormality detection). While there is some debate as to whether the functionality of the [ ] involves new code, Diebold’s declarations that such code and functionality are unchanged are more convincing than Nautilus Hyosung’s expert declaration that merely points to “added comments.” Compare Sorensen Dec. at ¶ 101 and Schroeder Reply Dec. at ¶ 49 with Howard Rebuttal Dec. at ¶ 59.

Second, Nautilus Hyosung contends that the [ ] MICR sensor found to perform overlap detection is itself [ ] different sensors, pointing to the ID’s occasionally inconsistent plural references to “MICR sensors.” ALJ ID at 122–23. After all, the ID construed the claim to cover tripartite detection by multiple sensors of the same kind. Id. at 56. Curious then that the ID never mentioned that the MICR alone infringed. Even though the claim only requires “three different sensors,” the ID concludes that the accused products have “at least the four sensors identified by Hyosung”—not three, not [ ] Id. at 123. Moreover, hydra-headed sensors were known in the art at the time the ‘235 patent was filed. See Col. 4, ln. 13 (referring to “a CIS 110a [that] may include two scanning heads”). (Recall that the examiner found the use of “a plurality of sensors” to be one of two points of novelty. App’x. G at 357–58.)

Third and finally, Nautilus Hyosung’s expert points to several additional references to photo sensors in the source code of the accused products, pointing to the [ ] files. Howard Dec. at ¶¶ 27, 28, 59–61. Dr. Howard concludes that these files infringe because they appear to generate similar error codes to the [ ] length error found to infringe at trial. But while the ID found that the accused product could perform overlap detection “using at least one or more photo sensors,” it still only identified four as infringing and only the [ ] among photo sensors. See ALJ ID at 121–123, 125, 129. See also id. at 287–88 (declining to find the limitation anticipated by a “too long” error alone).

HOLDING

Diebold’s redesigned CCDMv2 and products incorporating it, including the Diebold 77xx series with ActivMedia and 99xx series with ActivMedia sidecar, are not subject to the 989 LEO because a limitation required by the relevant claims of the ‘235 patent is not met; namely the redesigned modules do not contain a “verification unit [] configured to perform tripartite detection of overlapping of the individual sheets in the main transfer unit using three different sensors.” Accordingly, the redesigned ATMs are admissible into the United States and may make entry for consumption, entry for consumption in a foreign-trade zone, and withdrawal from a warehouse for consumption.

This decision is limited to the specific facts set forth herein. If the ATMs differ from the embodiment described above, or if future importations vary from the facts stipulated to herein, this decision shall not be binding on CBP as provided for in 19 C.F.R. Part 177.2(b)(1), (2), and (4), and Part 177.9(b)(1) and (2).


Sincerely,

Charles R. Steuart
Chief, Intellectual Property Rights Branch