• HQ H297262
• Aug 09, 2018

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

OT:RR:BSTC:IPR H297262 CBC/JW/CAB

VIA EMAIL:

Gregory Corbett
Wolf Greenfield & Sacks, P.C.
600 Atlantic Avenue
Boston, MA 02210

[email protected]

RE: Ruling Request; U.S. International Trade Commission; Limited Exclusion Order; Investigation No. 337-TA-1012, Certain Magnetic Data Storage Tapes and Cartridges Containing the Same

Dear Mr. Corbett,

Pursuant to 19 C.F.R. part 177 the Intellectual Property Rights Branch (“IPR Branch”), Regulations and Rulings, U.S. Customs and Border Protection (“CBP”) issues this ruling letter.

We find that the redesigned LTO-7 and LTO-8 magnetic data storage tapes at issue are subject to the limited exclusion order (“LEO”) issued by the U.S. International Trade Commission (“ITC” or “Commission”) in Investigation No. 337-TA-1012 pursuant to section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337. Sony has failed to meet its burden to demonstrate that certain redesigned LTO-7 and LTO-8 magnetic data storage tapes that have been prescreened by a verification plan developed by Sony (collectively, “products at issue”), will avoid infringement of the patent at issue in the LEO. Specifically, we find that: (i) the products at issue in this case are limited to articles that have passed through Sony’s verification plan, (ii) none of the evidence produced by Sony in this proceeding is the result of articles that were subjected to Sony’s verification plan, and (iii) Sony failed to provide the relevant evidence for us to determine whether its verification plan would have been effective had it been in place. Accordingly, Sony has failed to meet its burden to demonstrate that the products at issue are not subject to the LEO.

This ruling letter is the result of an inter partes proceeding administered by CBP. The inter partes proceeding involved the two parties with a direct and demonstrable interest in the question presented by the ruling request: (1) your clients, Sony Corporation, Sony Corporation of America, Sony Electronics Inc., Sony Storage Media Solutions Corporation, Sony Storage Media Manufacturing Corporation, Sony DADC US Inc., and Sony Latin America Inc. (collectively, “Sony”); and (2) Fujifilm Corporation and Fujifilm Recording Media U.S.A., Inc. (collectively, “Fujifilm”). See, e.g., Ruling Request at 1, 3; Comm’n Op. at 1–2.

The parties were asked to clearly identify confidential information [[with red brackets]] in all of their submissions to the IPR Branch. See CBP Email to the Parties Dated April 18, 2018. Upon review, CBP has determined that not all of the information identified by Sony should be granted confidential treatment, and only information bracketed in red [[ ]] will be redacted from the published public version ruling. See infra Section III.A.

If there is information in this ruling letter not currently bracketed in red [[ ]] that either party believes constitutes confidential information, or is information subject to an administrative protective order in the underlying ITC investigation or other related proceding, and should be redacted from the published ruling, then the parties are asked to contact CBP within five (5) business days of the date of this ruling letter.

Please note that 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. As discussed in greater detail in Section III.A, a request for confidential treatment of information submitted in connection with a ruling requested under 19 C.F.R. part 177 faces a strong presumption in favor of disclosure. 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 the Freedom of Information Act (“FOIA”) (5 U.S.C. § 552) (“FOIA”), the common law, and the relevant Customs regulations—favoring transparency and disclosure.

BACKGROUND

ITC Investigation No. 337-TA-1012

Procedural History at the ITC

The Commission instituted Investigation No. 337-TA-1012 on June 27, 2016, based on a complaint filed by Fujifilm. 81 Fed. Reg. 43243 (July 1, 2017); Comm’n Op. at 1–2. 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 magnetic data storage tapes and cartridges containing the same by reason of infringement of one or more of claims 1, 4–9, 11, and 14 of U.S. Patent No. 6,641,891 (“the ’891 patent”); claims 2, 5, and 6 of U.S. Patent No. 6,703,106 (“the ’106 patent”); claim 1 of U.S. Patent No. 6,703,101 (“the ’101 patent”); claims 1, 2, 4, 5, and 7-11 of U.S. Patent No. 6,767,612 (“the ’612 patent”); claim 1 of U.S. Patent No. 8,236,434 (“the ’434 patent”); and claims 3 and 10 of U.S. Patent No. 7,355,805 (“the ’805 patent”). Id. The notice of investigation named as respondents Sony Corporation of Tokyo, Japan; Sony Corporation of America of New York, New York; and Sony Electronics Inc. of San Diego, California. Id. The Office of Unfair Import Investigations participated as a party. Id.

On February 15, 2017, the Commission determined not to review the Administrative Law Judge’s (“ALJ”) order (Order No. 24), granting a motion to terminate to terminate the investigation as to the ’101 patent. Comm’n Op. at 2–10; 83 Fed. Reg. 11245 (March 14, 2018).

On September 1, 2017, the Administrative Law Judge (“ALJ”) issued his final Initial Determination (“ID”) finding a violation of section 337 with respect to asserted claims 1, 4–9, 11, and 14 of the ’891 patent. Id. The parties appealed to the Commission, which determined to review-in-part the ID’s findings with respect to the each of the five remaining patents in suit. Id.

On March 8, 2018, the Commission affirmed the ID with modification. Id. The Commission found a violation of section 337 only with respect to the ’891 patent and affirmed its validity. Id. The Commission issued, inter alia, a limited exclusion order (“1012 LEO”) prohibiting the entry for consumption into the United States, entry for consumption from a foreign-trade zone, or withdrawal from a warehouse for consumption of magnetic data storage tapes and cartridges containing the same that infringe one or more of claims 1, 4–9, 11, and 14 of the ’891 patent that are manufactured abroad by, or on behalf of, or imported by or on behalf of respondents (i.e., Sony) or any of their affiliated companies, parents, subsidiaries, agents, or other related business entities, or their successors or assigns, for the remaining term of the ’891 patent except under license of the patent owner or as provided by law. See id.; 1012 LEO.

Rule 177 Proceeding before the IPR Branch

Procedural History

On April 13, 2018, Sony submitted a letter requesting an administrative ruling pursuant to 19 C.F.R. part 177, which included exhibits A–S and appendices A and B (collectively, “Ruling Request”). On May 15, 2018, Fujifilm submitted a response to the Ruling Request, which included exhibits 1–12 and an appendix (collectively, “Fujifilm Response”). On May 23, Sony submitted a reply to the Fujifilm response, which included exhibits T–W (collectively, “Sony Reply”). On May 25, CBP conducted a teleconference with the parties, during which the Sony Reply was discussed. In an email to the parties that day, CBP revised the procedural schedule to provide additional time for Fujifilm’s sur-reply. See CBP Email to Parties dated May 25, 2018. On June 11, 2018, Fujifilm submitted a sur-reply to the Sony Reply, which included exhibits 13–20 (collectively, “Fujifilm Sur-Reply”). Both parties presented arguments to CBP during oral arguments held on June 15, 2018. Both parties subsequently submitted post-hearing briefs on June 22, 2018. Fujifilm’s post-hearing brief included exhibits 21–24 and Sony’s post-hearing brief included exhibits X–AA.

The Products at Issue

The present ruling is issued pursuant to 19 C.F.R. pt. 177, which requires that a ruling request be directed to a specifically described transaction. See 19 C.F.R. § 177.1(a)(1). Sony defines the particular transaction as the importation of certain newly-redesigned magnetic data storage tapes, including newly redesigned Linear Tape-Open (“LTO”) LTO-7 and LTO-8 generation magnetic data storage tapes, manufactured by or on behalf of, or imported by or on behalf of, Sony”that have been prescreened by a “verification plan” which Sony developed to “ensure that no infringing products are imported into the United States” (collectively, “products at issue”). Ruling Request at 1, 19 and 22; Exh. B of Ruling Request (Nakashio Decl.) at ¶ 47.

Sony’s Redesigned LTO Tape Cartridges

According to Sony, it “has developed redesigned LTO-7 and LTO-8 magnetic data storage tapes that have a lower ‘coercivity.’” Ruling Request at 2. Sony explains that “[e]ach manufacturing ‘production lot’ is comprised of magnetic (and other) material that is painted onto large rolls of supporting tape material.” Exh. B of Ruling Request (Nakashio Decl.) at ¶ 28. “The materials from each ‘production lot’ are used to make multiple ‘jumbo rolls’ of magnetic tape.” Id. A “jumbo roll” “consists of 14,000 meters of magnetic tape that is wound into a giant roll.” Id. “The tape manufactured on each ‘jumbo roll’ is used to produce 658 individual LTO cartridges.” Id.

“Each jumbo roll is sliced along its length into 47 different ‘channels’ or ‘pancakes.’” Id. at ¶ 29. Each pancake comprises 14 positions. Id. at ¶¶ 29, 31. “[E]ach ‘position’ on each ‘pancake’ (or ‘channel’) corresponds to magnetic tape that will be used in a single LTO cartridge. Id. at ¶ 30.




Id. at ¶ 29. “The tape from each of the 47 ‘pancakes’ (or ‘channels’) is ultimately wound into LTO cartridges.” Id. at ¶ 31.

Sony indicates that it modified its manufacturing process for its LTO 7 and LTO 8 tape to “ensure that the magnetic layers do not have a coercivity equal to or higher than 159 kA/m” by altering its process for [[ ]] and modifying its manufacturing processes for [[ ]] Nakashio Decl. at ¶ 25; see also Ruling Request at 19, 22.

Sony’s “Verification Plan”

In addition to the above-noted changes to its manufacturing process, Sony “developed a robust verification plan to implement [a] [[ ]] threshold and ensure that no infringing products are imported into the United States.” Nakashio Decl. at ¶ 47. Sony states that “Sony’s redesign and quality testing ensures that its Redesigned LTO-8 [and LTO-7] Data Tapes’ coercivity values all fall below a threshold of [[ ]], one that is a full [[ ]] lower than the claimed coercivity range.” Id. at 19 and 22 (citation omitted) (emphasis in the original); see also id. at 4 n.4 (“Sony’s manufacturing quality control process involves testing multiple portions of multiple magnetic tape ‘jumbo rolls’ in each production lot, and disqualifies cartridges measured with a coercivity above [[ ]] (i.e., [[ ]] less than the lower limit of the claims) from being imported into the United States.”); Nakashio Decl. at ¶ 47 (“Sony has developed a robust verification plan to implement this [[ ]] threshold and ensure that no infringing products are imported into the United States.”); Sony Reply at 10 (“Sony has designed a longitudinal magnetic tape with a coercivity value below 159 kA/m, and has created quality control procedures to disqualify any tape with a coercivity above [[ ]] thus avoiding infringement of the ‘891 patent.”); Sony Post-Hearing Brief at 19 (“The data shown below [referring to the coercivity test results of Sony’s redesigned tapes submitted throughout the course of this proceeding], combined with Sony’s rigorous and conservative quality control and voluntary disqualification procedure, ensures that the Redesigned LTO-7 and LTO-8 Data Tapes will not infringe the ‘891 patent.”).

Sony indicates that its verification plan includes testing of the redesigned tape as it is made. Ruling Request at 19 and 22; Nakashio Decl. at ¶¶ 44-50. “For each production lot, Sony takes numerous coercivity measurements across multiple jumbo rolls.” Ruling Request at 19 and 22; Nakashio Decl. at ¶¶ 48. “And for each jumbo roll Sony takes at least [[ ]] different coercivity measurements, spread across the roll in different ‘channels’ and “‘positions.’” Id. During oral argument before the IPR Branch and in Sony’s post-hearing brief, Sony further specified that “Sony’s quality control and voluntary disqualification protocol requires at least [[ ]] coercivity measurements for each jumbo roll, taken at different positions from each of at least channels [[ ]].” Sony Post-Hearing Brief at 3-4; Oral Arg Tr. at 26:4-5. According to the Declaration of Dr. Ross submitted with the Ruling Request, “Sony’s policy regarding the redesigned tapes is to do three things upon measurement of a coercivity value greater than [[ ]]: ”

Test the adjacent pancake(s) to ensure that the coercivity of that pancake is not within the claimed range; Segregates this pancake for further coercivity testing in each position (i.e., tape cartridge location) to determine if the individual cartridge has a measured coercivity value below [[ ]]; and Measure the coercivity of each position within the pancake (i.e., tape cartridge), and any position which results in a measured coercivity value greater than [[ ]] is not shipped for importation into the United States.

See Exh. A (Ross Decl.) of Ruling Request at ¶ 85; Ruling Request at 22-23. Mr. Nakashio also states, “[i]n the event that a particular tested ‘position’ (destined to be a tape cartridge) is found to have a coercivity greater than [[ ]] . . . Sony will disqualify the entire ‘pancake’ and ensure that no tape drawn from the pancake (corresponding to 14 cartridges) is imported into the United States.” Nakashio Decl. at ¶ 50. In its post-hearing brief, Sony further stated that “[t]o the extent that any samples in those channels [referring to channels [[ ]]] test above [[ ]] (i.e., a full [[ ]] below the claim limit), those channels will be disqualified for import into the United States, and the next adjacent channel will be tested until two coercivity measurements at different positions within a channel yield coercivity values equal to or below [[ ]].” Sony Post-Hearing Brief at 3-4. Evidence of the Products at Issue Submitted by Sony

The products at issue are certain newly-redesigned magnetic data storage tapes that have been prescreened by a “verification plan” which Sony developed to “ensure that no infringing products are imported into the United States.” Ruling Request at 1, 19 and 22; Exh. B of Ruling Request (Nakashio Decl.) at ¶ 47. Over the course of the inter partes proceeding, Sony submitted 240 coercivity measurements taken from seven jumbo rolls across two production lots of redesigned tape. Sony Post-Hearing Brief at 3. However, none of the evidence submitted by Sony as part of the inter partes proceeding comes from redesigned magnetic data storage tapes that were subjected to prescreening by Sony’s verification plan. See Oral Arg. Tr. at 24:8-20; Sony Post-Hearing Brief at 23 (“this quality control procedure was conceived after analyzing Sony’s first lot of Redesigned tapes, and its second lot was consumed for qualifications by the TPCs”).

Sony’s Ruling Request Dated April 13, 2018

In Sony’s Ruling Request, Sony submitted the results of coercivity testing for the redesigned LTO-8 data tapes and the redesigned LTO-7 data tapes from both Dr. Ross’s testing and Sony’s internal testing. See Ruling Request at 16-21.

Dr. Ross’s Testing Procedure

Thirty sample cartridges of Redesigned LTO-7 and thirty sample cartridges of Redesigned LTO-8 were sent by Sony to the lab Dr. Ross used to perform coercivity measurements. Exh. A of Ruling Request (Ross Decl.) at ¶ 47. “[T]he thirty sample cartridges of Redesigned LTO-7 tape and the thirty sample cartridges of Redesigned LTO-8 tape were taken from various locations throughout the jumbo roll, including from across 9 different ‘channel/pancakes’ and from 3 different ‘positions’ on each ‘channel/pancake.’” Id. at ¶ 48.

Dr. Ross tested three sample locations taken from each of the twenty-seven sample cartridges of the Redesigned LTO-7 and three sample locations from each of the twenty seven sample cartridges of the Redesigned LTO-8 each from the beginning, middle and end of each cartridge. Id. at ¶ 53; Ruling Request at 16-17;  Dr. Ross used a vibrating sample magnetometer (VSM) to measure the coercivity of the Redesigned Data Tapes and measured coercivity in the longitudinal direction. Id. at ¶¶ 63-64.

For the LTO-8 data tapes Dr. Ross tested three sample locations on each of 27 different redesigned LTO-8 tapes. Ruling Request at 16-17. For the LTO-7 data tapes, “Dr. Ross requested and directed the testing of 27 Redesigned LTO-7 tapes.” Ruling Request at 20. Three different samples were taken from each tape. Id.

Sony’s Internal Testing Procedure

Sony’s internal testing procedure was slightly different than Dr. Ross’s testing procedure. Exh. A of Ruling Request (Ross Decl.) at ¶ 86. Sony’s internal testing incorporated the “stacking” method, while Dr. Ross’s did not. See Ruling Request at 19. “Sony stacks three layers of magnetic tape together, and then proceeds to punch out a sample for VSM measurement.” Exh. A of Ruling Request (Ross Decl.) at ¶ 86. Sony’s internal testing procedure, like Dr. Ross’s, measured coercivity in the longitudinal direction. See e.g., Exh. B (Nakashio Decl.) of Ruling Request at ¶¶ 21, 24.

For the LTO-8 data tapes, Sony conducted internal testing involving 20 different redesigned LTO-8 tape samples. Ruling Request at 17. The coercivity values for the redesigned LTO-8 Data Tapes were measured in channels [[ ]]. Nakashio Decl. at ¶ 35. Notably, no coercivity measurements were taken from channel [[ ]], although such measurement is required by Sony’s verification plan set forth in Section I.B.2.b. Id.

For the LTO-7 data tapes, Sony’s internal testing results were based on 18 different sample LTO-7 tapes. Ruling Request at 21. The coercivity values for the redesigned LTO-7 Data Tapes were measured in channels [[ ]]. Nakashio Decl. at ¶ 33. With respect to this testing for the Redesigned LTO-7 Data Tapes, Mr. Nakashio noted “[t]he [[ ]] channel rather than the [[ ]] channel was used for the Redesigned LTO-7 tape testing because of an error related to servo writing (i.e., one unrelated to any magnetic properties of the tapes).” Id. Again, no coercivity measurements were taken from [[ ]], although such measurement is required by Sony’s verification plan set forth in Section I.B.2.b. Id.

Sony’s Reply Dated May 23, 2018

Since the submission of Sony’s Ruling Request, Sony manufactured additional production lots of its Redesigned LTO-7 and LTO-8 Tapes, including a production lot consisting of ten additional jumbo rolls of Redesigned LTO-7 and LTO-8 Tapes. Sony Reply at 12. “Five of the ten jumbo rolls were tested for coercivity at multiple locations across the roll and at both the beginning and end of the roll.” Id. at 18 (citation omitted); see also Exh. T of Sony Reply (Nakashio Sec. Decl.) at ¶ 12 (“Of the ten jumbo rolls of this new lot, I measured the coercivity of the beginning and end of every other roll at multiple positions of all the rolls, called channels”). Coercivity was measured in the longitudinal direction. Exh. T of Sony Reply (Nakashio Sec. Decl.) at ¶ 6. Sony again used the “stacking” method to measure the coercivity. See e.g., Exh. U of Sony Reply (Ross Rebuttal Decl.) at ¶ 10. The rolls were then later slit and converted into both the Redesigned LTO07 and LTO-8 tapes. Sony Reply at 18. Coercivity measurements for the five rolls were taken in channels [[ ]]. Sony Reply at 19 (citing Exh. T of Sony Reply (Nakashio Second Decl.) at ¶ 13. Notably, no coercivity measurements were taken from channels [[ ]], although such measurement is required by Sony’s verification plan set forth in Section I.B.2.b. Id. “In addition to testing the coercivity of the jumbo rolls as part of the manufacturing process, Sony also tested the coercivity of several of the pancakes that were made from Roll No. 5, at the beginning and end of the pancake.” Sony Reply at 19 (citing Exh. T (Nakashio Sec. Decl.) at ¶ 14). Coercivity measurements were taken from channels [[ ]]. Sony Reply at 20. Notably, no coercivity measurements were taken from channels [[ ]], although such measurement is required by Sony’s verification plan set forth in Section I.B.2.b. Id. ISSUE

Whether certain newly-redesigned magnetic data storage tapes, including newly redesigned Linear Tape-Open (“LTO”) LTO-7 and LTO-8 generation magnetic data storage tapes, that have been prescreened with Sony’s verification plan (collectively, “products at issue”), manufactured by or on behalf of, or imported by or on behalf of, Sony are subject to the 1012 LEO. See Ruling Request, at 1, 10–11, 16, 21-23; Exh. A (Ross Decl.) of Ruling Request at ¶ 85; and Exh. B (Nakashio Decl.) of Ruling Request at ¶ 50.

LAW AND ANALYSIS

Treatment of Confidential Business Information Submitted under 19 C.F.R. pt. 177

As a preliminary matter, Sony has requested confidential treatment in connection with this ruling request for certain information from its submissions and 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. part 177 is governed by 31 C.F.R. part 1, 19 C.F.R. part 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 (dated 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, 562 U.S. at 565. These exemptions are “explicitly made exclusive,” EPA, 410 U.S. 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 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.”); see 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 pt. 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 decision making.”) (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 (1) they actually face competition, and that (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 Sony faces actual competition and therefore the relevant analysis will focus on the second prong above. See Comm’n Op. at 137–40.

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 generally 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. pt. 177 faces a strong presumption in favor of disclosure. 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.

Therefore, as noted above, requests for confidential treatment in the context of section 337 exclusion order-based rulings under 19 C.F.R. pt. 177 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 Sony 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. The evidence has otherwise 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-1012).

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).

As for the first step above, “the proper construction of a patent's claims is an issue of Federal Circuit law[.]” Comcast IP Holdings I LLC v. Sprint Communs. Co., 2017 U.S. App. LEXIS 3981, at *11 (Fed. Cir. 2017). Moreover, the ultimate construction of a claim limitation is a legal conclusion, as are interpretations of the patent’s intrinsic evidence (the patent claims, specifications, and prosecution history). UltimatePointer, L.L.C. v. Nintendo Co., 816 F.3d 816, 822 (Fed. Cir. 2016) (citing Teva Pharms. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 841, 190 L. Ed. 2d 719 (2015); see also Multilayer Stretch Cling Film Holdings, Inc. v. Berry Plastics Corp., 831 F.3d 1350, 1357 (Fed. Cir. 2016) (“Claim construction is a question of law, reviewed de novo, but any extrinsic fact-finding by the district court in the course of claim construction is reviewed for clear error.”). The second step to establish infringement involves the comparison of the claims to the accused product, which is a question of fact. Apple Inc. v. Samsung Elecs. Co., Ltd., 839 F.3d 1034, 1040 (Fed. Cir. 2016) (en banc).

The scope and meaning of the asserted claims is determined by looking to the words of the claims themselves, the specification, the prosecution history, and if necessary, any relevant extrinsic evidence. Advanced Steel Recovery, 808 F.3d at 1315–17. Moreover, claim terms are generally given their ordinary and customary meaning, which is the meaning they would have to a person of ordinary skill in the art at the time of the invention. Poly-America, L.P. v. API Indus., Inc., 839 F.3d 1131, 1136 (Fed. Cir. 2016) (citing Phillips v. AWH Corp., 415 F.3d 1303, 1312–13 (Fed. Cir. 2005) (en banc)). “Importantly, the person of ordinary skill in the art is deemed to read the claim term not only in the context of the particular claim in which the disputed term appears, but in the context of the entire patent, including the specification.” UltimatePointer, 816 F.3d at 822 (quoting Phillips, 415 F.3d at 1313); see also Retractable Techs., Inc. v. Becton, 653 F.3d 1296, 1305 (Fed. Cir. 2011) (“It is axiomatic that the claim construction process entails more than viewing the claim language in isolation.”). In particular, “the specification ‘is always highly relevant to the claim construction analysis. Usually, it is dispositive; it is the single best guide to the meaning of a disputed term.’” Phillips, at 1313 (quoting Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1582 (Fed. Cir. 1996)). However, while claims are read in view of the specification for which they are a part, it is improper to read limitations from the embodiments in the specification into the claims. Hill-Rom Servs. v. Stryker Corp., 755 F.3d 1367, 1371 (Fed. Cir. 2014).

Accordingly, the ordinary and customary meaning of the claim language generally controls unless the patentee acts as his own lexicographer and provides a special definition for a particular claim term or the patentee disavows the ordinary scope of a claim term either in the specification or during prosecution. InterDigital Communs., LLC v. U.S. Int’l Trade Comm’n, 690 F.3d 1318, 1324 (Fed. Cir. 2012); see also Hill-Rom Servs., 755 F.3d at 1371 (“There are only two exceptions to this general rule: 1) when a patentee sets out a definition and acts as his own lexicographer, or 2) when the patentee disavows the full scope of the claim term either in the specification or during prosecution.”) (quoting Thorner v. Sony Computer Entm't Am. LLC, 669 F.3d 1362, 1365 (Fed. Cir. 2012)).

The standards for finding lexicography and disavowal are “exacting.” Pacing Techs., LLC v. Garmin Int’l, Inc., 778 F.3d 1021, 1024 (Fed. Cir. 2015). “To act as a lexicographer, a patentee must ‘clearly set forth a definition of the disputed claim term’ and ‘clearly express an intent to define the term.’” Id. (quoting Thorner, 669 F.3d at 1365. “Similarly, disavowal requires that ‘the specification [or prosecution history] make[] clear that the invention does not include a particular feature.’” Id. (quoting SciMed Life Sys. Inc. v. Advanced Cardiovascular Sys., Inc., 242 F.3d 1337, 1341 (Fed. Cir. 2001). For example, disavowal or disclaimer has been found based on “clear and unmistakable statements by the patentee that limit the claims, such as ‘the present invention includes . . .’ or ‘the present invention is . . .’ or ‘all embodiments of the present invention are . . . .’” Id. (citing Regents of Univ. of Minn. v. AGA Med. Corp., 717 F.3d 929, 936 (Fed. Cir. 2013); Honeywell Int'l, Inc. v. ITT Indus., Inc., 452 F.3d 1312, 1316–19 (Fed. Cir. 2006); SciMed Life Sys., Inc., 242 F.3d at 1343–44).

Ultimately, “[t]he only meaning that matters in claim construction is the meaning in the context of the patent,” Trs. of Columbia Univ. v. Symantec Corp., 811 F.3d 1359, 1363 (Fed. Cir. 2016), and “[l]egal error arises when a court relies on extrinsic evidence that contradicts the intrinsic record.” Ruckus Wireless, Inc. v. Innovative Wireless Solutions, LLC, 824 F.3d 999, 1003 (Fed. Cir. 2016) (citing Lighting Ballast Control LLC v. Philips Elecs. N. Am. Corp., 790 F.3d 1329, 1338 (Fed. Cir. 2015), cert. denied by Universal Lighting Techs., Inc. v. Lighting Ballast Control, LLC, 136 S. Ct. 1226; 194 L. Ed. 2d 185; 2016 U.S. LEXIS 1155 (2016). Therefore, “[t]he construction that stays true to the claim language and most naturally aligns with the patent's description of the invention will be, in the end, the correct construction.” Papst Licensing GmbH & Co. KG v. Fujifilm Corp., 778 F.3d 1255, 1261 (Fed. Cir. 2015) (quoting Renishaw PLC v. Marposs Societa' per Azioni, 158 F.3d 1243, 1250 (Fed. Cir. 1998), adopted by Phillips, 415 F.3d at 1316).

Lastly, only those claim terms that are disputed must be construed and only to the extent necessary to resolve the dispute. See O2 Micro Int’l Ltd. v. Beyond Innovation Tech. Co., 521 F.3d 1351, 1362 (2008) (“We, however, recognize that district courts are not (and should not be) required to construe every limitation present in a patent's asserted claims”). Rather, “[c]laim construction is a matter of resolution of disputed meanings and technical scope, to clarify and when necessary to explain what the patentee covered by the claims, for use in the determination of infringement.” Id. (quoting U.S. Surgical Corp. v. Ethicon, Inc., 103 F.3d 1554, 1568 (Fed. Cir. 1997); see also Vanderlande Indus. Nederland BV v. U.S. Int’l Trade Comm’n, 366 F.3d 1311, 1323 (Fed. Cir. 2004).

Section 337 Exclusion Order Administration

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. U.S. Int’l Trade Comm’n, 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. U.S. Int’l Trade Comm’n, 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. U.S. Int’l Trade Comm’n, 545 F.3d 1340, 1356. 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 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 still 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).”) (emphasis added); see also ClearCorrect Operating, LLC v. U.S. Int’l Trade Comm’n, 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.”) (emphasis added), reh’ng en banc denied by Clearcorrect Operating v. U.S. Int’l Trade Comm’n, 819 F.3d 1334 (Fed. Cir. 2016).

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. U.S. Int’l Trade Comm’n, 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 eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), opinion “does not apply to Commission remedy determinations under Section 337.” Spansion, Inc. v. U.S. Int’l Trade Comm’n, 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.”) (emphasis added).

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 Opinion 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.”) (emphasis added).

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 Opinion 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), (emphasis in original) (citing Sealed Air Corp. v. U.S. Int’l Trade Comm’n, 645 F.2d 976, 988–89 (C.C.P.A. 1981)).

This approach is supported by Federal Circuit precedent. See Hyundai Elecs. Indus. Co. v. U.S. Int’l Trade Comm’n, 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.”) (emphasis added) (internal citation omitted).

In the underlying investigation, the ITC determined that Sony infringed the ’891 patent through importation of the LTO-7 tapes. ID at 27–43. Accordingly, the burden is on Sony to establish that the products at issue do not infringe any of claims 1, 4–9, 11, or 14 of the ’891 patent.

Analysis

The present ruling is issued pursuant to 19 C.F.R. pt. 177, which requires that a ruling request be directed to a specifically described transaction. See 19 C.F.R. § 177.1(a)(1). Sony describes the transaction at issue as the importation of certain newly-redesigned magnetic data storage tapes, including newly redesigned Linear Tape-Open (“LTO”) LTO-7 and LTO-8 generation magnetic data storage tapes that have been prescreened with Sony’s verification plan (collectively, “products at issue”). See Ruling Request, at 1, 10–11, 16, 21-23; Exh. A (Ross Decl.) of Ruling Request at ¶ 85; and Exh. B (Nakashio Decl.) of Ruling Request at ¶ 50. In particular, the scope of the products at issue, i.e., the products that Sony intends to import, are limited to articles that are produced as described above in Section I.B.2.a and that have been prescreened by Sony’s verification plan as set forth in Section I.B.2.b.

The burden is on Sony to establish that the products at issue do not infringe any of claims 1, 4–9, 11, or 14 of the ’891 patent. See Hyundai Elecs. Indus. Co. v. U.S. Int’l Trade Comm’n, 899 F.2d 1204, 1210 (Fed. Cir. 1990). Independent claim 1 of the ’891 patent, the only independent claim at issue in the 1012 LEO, recites a magnetic recording medium that includes an essentially nonmagnetic lower layer and a magnetic layer. Independent claim 1 further recites that the magnetic layer has “coercivity equal to or higher than 159 kA/m.”

Sony asserts that its redesigned LTO-7 and LTO-8 tapes do not literally infringe claim 1 of the ’891 patent because they each include a magnetic layer with a coercivity below 159 kA/m. Ruling Request at 16 and 20. In addition to changes to its manufacturing process (discussed above in Section I.B.2.a), Sony represents that it “developed a robust verification plan” (discussed above in Section I.B.2.b) “to ensure that no infringing products are imported into the United States.” Nakashio Decl. at ¶ 47. Sony states that its “redesign and quality testing ensures that its Redesigned LTO-8 [and LTO-7] Data Tapes’ coercivity values all fall below a threshold of [[ ]], one that is a full [[ ]] lower than the claimed coercivity range.” Ruling Request at 19 and 22 (citation omitted) (emphasis in the original); see also id. at 4 n.4 (“Sony’s manufacturing quality control process involves testing multiple portions of multiple magnetic tape ‘jumbo rolls’ in each production lot, and disqualifies cartridges measured with a coercivity above [[ ]] (i.e., [[ ]] less than the lower limit of the claims) from being imported into the United States.”); Nakashio Decl. at ¶ 47 (“Sony has developed a robust verification plan to implement this [[ ]] threshold and ensure that no infringing products are imported into the United States.”); Sony Reply at 10 (“Sony has designed a longitudinal magnetic tape with a coercivity value below 159 kA/m, and has created quality control procedures to disqualify any tape with a coercivity above [[ ]], thus avoiding infringement of the ‘891 patent.”); Sony Post-Hearing Brief at 19 (“The data shown below [referring to the coercivity test results of Sony’s redesigned tapes submitted throughout the course of this proceeding], combined with Sony’s rigorous and conservative quality control and voluntary disqualification procedure, ensures that the Redesigned LTO-7 and LTO-8 Data Tapes will not infringe the ‘891 patent.”).

Sony is unequivocal that the prospective Customs transaction at issue in this case is limited to articles that have passed through Sony’s verification plan:

In light of the slight (but non-infringing) variation Sony noted at the [[ ]], Sony has implemented a quality control procedure designed to disqualify pancakes of tape with coercivity higher than [[ ]]. Ex. B (Nakashio 1st Decl.) at ¶¶ 44-50. For each jumbo roll produced, Sony will take at least [[ ]] coercivity measurements spread across the roll in different channels and positions. Id. If any of the measurements of coercivity are greater than [[ ]], then Sony will disqualify that channel (i.e., will use it for internal tapes or tapes to be sold outside of the United States). Also in this instance, Sony will then test adjacent channels for the same. This process will continue until Sony is satisfied that the channels for importation into the United States have coercivity values below [[ ]], i.e., [[ ]] lower than the claimed threshold of 159 kA/m. This ensures that no tape from this channel (or, “pancake”) will be imported into the United States. While this quality control procedure was conceived after analyzing Sony’s first lot of Redesigned tapes, and its second lot was consumed for qualifications by the TPCs, Sony now has this quality control procedure firmly in place for commercial sales.

Sony Post-Hearing Brief at 23 (emphasis in original).

We note that it is irrelevant whether Sony believes that its verification plan is necessary to avoid infringement of the patent claims at issue – Sony has repeatedly limited the scope of the Customs transaction at issue in this ruling to the entry into the United States of articles that pass through Sony’s verification plan. For example, Sony states that “if any concern remained about Sony’s redesign process or the data provided about the tapes produced and tested during the course of this proceeding, such concern is alleviated by the strict quality control and voluntary disqualification procedure Sony certifies it will use before sending its Redesigned LTO-7 and LTO-8 Data Tapes across the U.S. border.” Sony Post-Hearing Submission at 3. Thus, the scope of this ruling is limited to articles that have been subjected to Sony’s verification plan. It is therefore Sony’s burden to demonstrate that magnetic tapes that are produced as described above in Section I.B.2.a and that have been prescreened by Sony’s verification plan as set forth in Section I.B.2.b do not infringe claim 1 of the ’891 patent.

Over the course of the inter partes proceeding, Sony submitted 240 coercivity measurements taken from seven jumbo rolls across two production lots of redesigned tape in support of its position that the products at issue have coercivity values below the claimed range. Sony Post-Hearing Brief at 3. However, none of the evidence submitted by Sony as part of the inter partes proceeding comes from redesigned magnetic data storage tapes that were subjected to prescreening by Sony’s verification plan. See Oral Arg. Tr. at 24:8-20.

A ruling request submitted under 19 C.F.R. pt. 177 must contain a complete statement of all relevant facts relating to the transaction and be described in sufficient detail to permit the proper application of relevant laws. See 19 C.F.R. § 177.2 (b)(1) and 19 C.F.R. § 177.2 (b)(2). We do not have all the relevant facts relating to the transaction at issue in this ruling to make a determination as to whether magnetic tapes that are produced as described above in Section I.B.2.a and that have been prescreened by Sony’s verification plan as set forth in Section I.B.2.b infringe claim 1 of the ’891 patent. Specifically, the evidence provided by Sony not only does not match the scope of the products at issue (i.e., the products that Sony indicates it will import), but also is not sufficient to allow us to determine with certainty, after the fact, whether the application of the Sony verification plan would have eliminated all potentially infringing articles.

Turning first to the scope of the products at issue, Sony readily admits that it did not apply its verification plan to the articles that it tested or to those it made available for testing by Fujifilm as part of this proceeding. See Oral Arg. Tr. at 24:8-20. Indeed, Sony indicates that several of the redesigned articles that were tested under the direction of its expert and then submitted as part of the Ruling Request would have been disqualified as part of the Sony verification plan. Sony Post-Hearing Brief at 23-24.

Further, Sony has not provided us with the relevant evidence to determine whether its prescreening process would have been effective had it been in place. Sony’s verification plan “requires at least [[ ]] coercivity measurements for each jumbo roll, taken at different positions from each of at least channels [[ ]].” Sony Post-Hearing Brief at 3-4; Oral Arg Tr. at 26:4-5. According to Sony, if any of the measurements of coercivity are greater than [[ ]], then Sony will: (i) disqualify that channel (i.e., will use it for internal tapes or tapes to be sold outside of the United States), (ii) test adjacent channels for the same, and (iii) continue this process until Sony is satisfied that the channels for importation into the United States have coercivity values below [[ ]]. Sony Post-Hearing Brief at 4 and 23. However, as noted above throughout Section I.B.2.c, Sony did not take coercivity measurements from each of channels [[ ]] for any of the jumbo rolls used to produce cartridges for this ruling, although such measurement is required by Sony’s verification plan.

For the LTO-8 data tapes, Sony conducted internal testing involving 20 different redesigned LTO-8 tape samples. Ruling Request at 17. No coercivity measurements were taken from channel [[ ]] of the jumbo roll used to produce these tapes, although such measurement is required by Sony’s verification plan. See Nakashio Decl. at ¶ 35. For the LTO-7 data tapes, Sony’s internal testing results were based on 18 different sample LTO-7 tapes. Ruling Request at 21. Again, no coercivity measurements were taken from channel [[ ]] of the jumbo roll used to produce these tapes. See Nakashio Decl. at ¶ 33. Since the submission of Sony’s Ruling Request, Sony manufactured additional production lots of its Redesigned LTO-7 and LTO-8 Tapes, including a production lot consisting of ten additional jumbo rolls of Redesigned LTO-7 and LTO-8 Tapes. Sony Reply at 12. “Five of the ten jumbo rolls were tested for coercivity at multiple locations across the roll and at both the beginning and end of the roll.” Id. at 18 (citation omitted); see also Exh. T of Sony Reply (Nakashio Sec. Decl.) at ¶ 12. No coercivity measurements were taken from channels [[ ]] of any of the five jumbo rolls that were tested, although such measurement is required by Sony’s verification plan. See Sony Reply at 19 (citing Exh. T of Sony Reply (Nakashio Second Decl.) at ¶ 13.

For the evidence submitted with Sony’s Ruling Request, we are left to infer what the coercivity values could have been in channel [[ ]] based on coercivity values from other channels provided by Sony. Likewise, for the evidence submitted with Sony’s Reply, we are left to infer what the coercivity values could have been in channels [[ ]] based on coercivity values from other channels provided by Sony. However, the burden of proof is not on CBP, it is on Sony, who indicates in its post-hearing brief that “Sony now has this quality control procedure firmly in place for commercial sales.” Sony Post-Hearing Brief at 23. As such, the evidence that we need to make our determination rests in Sony’s hands, but was not provided as part of this proceeding. It is further noted the absence of channels [[ ]] from the results provided by Sony is not the same as the affirmative evidence Sony must provide to meet its burden in this matter – Sony does not make its case by simply eliminating the channels that it indicates it intends to measure as part of a verification plan to ensure that no infringing articles are imported into the United States.

In any event, even if Sony were to present us with a more complete set of evidence for after-the-fact review of a not-yet-implemented prescreening plan, it does not guarantee that we will approve the prescreening plan. An important aspect of demonstrating the efficacy of a prescreening plan is to demonstrate the plan in action – something Sony admits that it has not done in this case. See Oral Arg. Tr. at 24:8-20.

Accordingly, it would be purely speculative for us to make a determination as to the efficacy of the Sony verification plan in ensuring “that no infringing products are imported into the United States,” as Sony has asserted throughout the inter partes proceeding. See Ruling Request at 4 n., 19 and 22; Nakashio Decl. at ¶ 47; Sony Reply at 10; Sony Post-Hearing Brief at 19.

In view of the foregoing, we find that: (i) the products at issue in this case are limited to articles that have passed through Sony’s verification plan, (ii) none of the evidence produced by Sony in this proceeding is the result of articles that were subjected to Sony’s verification plan, and (iii) Sony failed to provide the relevant evidence for us to determine whether its verification plan would have been effective had it been in place. Accordingly, Sony has failed to meet its burden to demonstrate that the products at issue are not subject to the 1012 LEO.

As Sony failed to meet its burden in the present case by failing to present the relevant evidence for the products at issue, CBP need not decide any of the other issues presented in the Ruling Request, including the proper direction for measuring coercivity or the proper testing protocol for coercivity as part of a prescreening process (the “point measurement” method versus the “stacking” method).

We note that requesting approval of a prescreening process without providing the relevant evidence for CBP to make a determination regarding the efficacy of the prescreening process is tantamount to a request to self-certify that an article falls outside the scope of an exclusion order. In general, CBP will not accept a certification that an allegedly redesigned article falls outside the scope of an exclusion order absent a determination, by CBP, the ITC, or other appropriate authority, that the redesigned article does not infringe the underlying right. See e.g., Certain Automated Mechanical Transmission Systems for Medium-Duty and Heavy-Duty Trucks, and Components Thereof, Inv. No. 337-TA-503, Enforcement Proceedings, Customs Request for Clarification, Doc ID 237130 (Aug. 2005); Id., Letter to Customs, Doc ID 237439 (Aug. 2005) (“An interpretation of the subject certification provision such that the provision would apply to redesigned AMTS for which no determination on infringement has been made by either the Commission or Customs would be contrary to the Commission’s long-standing practice. The Commission includes certification provisions in its exclusion orders only where Customs is unable to determine by inspection whether an imported product violates a particular exclusion order.”).

Any person who has a direct and demonstrable interest in determining whether an article, including a redesigned product, falls within the scope of an exclusion order issued pursuant to section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1337 may seek a prospective (i.e., pre-importation) determination from CBP by submitting a request for administrative ruling under 19 C.F.R. pt. 177. See 19 C.F.R. § 177.1(c). If CBP issues a ruling finding that the redesigned article falls outside the scope of the exclusion order, then a party may be permitted, at CBP’s discretion, to submit a certification at the time of importation of the redesigned article. The certification allows the importer of record to certify that articles seeking entry do not fall within the scope of a specific exclusion order because the articles seeking entry are the same as the article described in the ruling. Accordingly, the integrity of CBP’s certification process demands that the underlying ruling on which a certification is based be decided on facts, rather than speculation.

Should either of the parties wish to submit a new ruling request, we provide the following guidance. The ruling request should include a statement that clearly and unambiguously identifies the article at issue, including all the processes used to produce the article at issue and/or the technical features of the article at issue that are relevant to the question presented in the ruling request. For each claim at issue in the ruling request, the party requesting the ruling should identify each apparatus, product, device, process, method, act, or other instrumentality at issue in the ruling request. This identification should be as specific as possible. Each product, device, and apparatus should be identified by name or model number, if known. Each method or process should be identified by name, if known, or by any product, device or apparatus which, when used, allegedly no longer results in the practice of the claimed method or process. A complete identification of the article at issue should include a full description of any steps taken in the process used to produce the article at issue that are intended to separate the article at issue from articles produced in the manufacturing process that potentially violate the exclusion order, including a complete description of any testing procedures used to verify the omission of potentially violative articles. Finally, the evidence presented to CBP should be consistent in scope to the identification of the article at issue.

HOLDING

We find that Sony has not met its burden to establish that the products at issue do not infringe the intellectual property at issue in the 1012 LEO (i.e., claims 1, 4–9, 11, and 14 of U.S. Patent No. 6,641,891 (“the ’891 patent”)). Accordingly, we hold that the products at issue are subject to the 1012 LEO.

Accordingly, the products at issue are excluded from entry for consumption into the United States, entry for consumption from a foreign-trade zone, or withdrawal from a warehouse for consumption except as provided by law.

The decision is limited to the specific facts set forth herein. If M8 or LTO-8 tapes differ from the tapes at issue 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), Part 177.9(b)(1) and (2).

Sincerely,

/s/ Charles R. Steuart_________________
Charles R. Steuart
Chief, Intellectual Property Rights Branch

cc: Robert C. Scheinfeld
Baker Botts LLP
30 Rockefeller Plaza
New York, NY 10112-4498
[email protected]