UNITED STATES INTERNATIONAL TRADE COMMISSION
`WASHINGTON, D.C. 20436
`
`In the Matter of
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`CERTAIN SMART THERMOSTATS,
`SMART HVAC SYSTEMS, AND
`COMPONENTS THEREOF
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`Inv. No. 337-TA-1185
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`INITIAL DETERMINATION
`Administrative Law Judge David P. Shaw
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`Pursuant to the notice of investigation, 84 Fed. Reg. 65421 (Nov. 27, 2019), this is the
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`initial determination in Certain Smart Thermostats, Smart HVAC Systems, and Components
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`Thereof, United States International Trade Commission Investigation No. 337-TA-1185.
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`It is held that no violation of section 337 of the Tariff Act, as amended, has occurred in
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`the importation into the United States, the sale for importation, or the sale within the United
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`States after importation, of certain smart thermostats, smart HVAC systems, and components
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`thereof, with respect to asserted claims 1, 2, and 5 of U.S. Patent No. 8,131,497, asserted claims
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`1, 2, and 5 of U.S. Patent No. 8,423,322, and asserted claim 9 of U.S. Patent No. 10,018,371.
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`TABLE OF CONTENTS
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`Page
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`I.
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`Background ......................................................................................................................... 1
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`A.
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`B.
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`C.
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`D.
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`Institution of the Investigation; Procedural History.................................................1
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`The Parties ...............................................................................................................5
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`The Accused Products..............................................................................................6
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`The Domestic Industry Products ..............................................................................7
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`II.
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`III.
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`IV.
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`Jurisdiction .......................................................................................................................... 7
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`Importation .......................................................................................................................... 8
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`General Principles of Law ................................................................................................ 13
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`A.
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`B.
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`Claim Construction ................................................................................................13
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`Infringement ...........................................................................................................16
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`1.
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`2.
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`Direct Infringement ....................................................................................16
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`Indirect Infringement .................................................................................18
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`a.
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`b.
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`Induced Infringement .....................................................................18
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`Contributory Infringement .............................................................18
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`C.
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`Validity ..................................................................................................................19
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`1.
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`2.
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`3.
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`4.
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`Anticipation................................................................................................19
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`Written Description ....................................................................................22
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`Enablement ................................................................................................23
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`Indefiniteness .............................................................................................24
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`D.
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`Domestic Industry ..................................................................................................25
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`V.
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`Claim Construction ........................................................................................................... 28
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`A.
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`Level of Ordinary Skill in the Art ..........................................................................28
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`B.
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`TABLE OF CONTENTS (CONT’D)
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`Page
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`Disputed Constructions ..........................................................................................29
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`1.
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`2.
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`3.
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`4.
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`5.
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`6.
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`7.
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`8.
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`9.
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`“HVAC System” / “heating, ventilation and air conditioning (HVAC)
`system” / “heating, ventilation and air conditioning system” (collectively,
`“HVAC system”) (’497 patent, claims 1, 2, 5; ’322 patent, claims 1, 5;
`’371 patent, claim 9) ..................................................................................29
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`“operational efficiency” / “operational efficiency of an HVAC system” /
`“operational efficiency of a heating, ventilation, and air conditioning
`(HVAC) system” / “operational efficiency of the HVAC system” (’497
`patent, claim 1; ’322 patent, claim 1) ........................................................32
`
`a.
`
`b.
`
`Whether the Preambles of Claim 1 of the ’497 Patent and ’322
`Patents Are Limiting ......................................................................33
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`Construction of “operational efficiency” .......................................36
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`“measurements of outside temperatures” / “outside temperature
`measurements” / “outside temperatures” (’497 patent, claims 1, 2; ’322
`patent, claims 1, 2) .....................................................................................43
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`“programmable thermostat” (’497 and ’322 patent, claim 5) ....................46
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`“status of the HVAC system is ‘on’” / “status of the HVAC system is
`‘off’” (’497 patent, claim 1) and “status [of said HVAC system]” (’322
`patent, claim 1)...........................................................................................49
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`“one or more rates of change in temperature” (’497 patent, claim 1) ........54
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`“one or more processors” / “said one or more processors” (’497 patent,
`claim 1; ’322 patent claim 1) .....................................................................59
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`“actual setpoint” (’371 patent, claim 9) .....................................................61
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`“thermostatic controller” (’371 patent, claim 9) ........................................65
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`VI.
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`The ’497 Patent ................................................................................................................. 68
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`A.
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`B.
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`Overview of the ’497 Patent ..................................................................................68
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`Infringement ...........................................................................................................69
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`1.
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`Claim 1 .......................................................................................................69
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`TABLE OF CONTENTS (CONT’D)
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`Page
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`Google Products .............................................................................69
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`ecobee Products ...........................................................................110
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`Vivint Products ............................................................................153
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`a.
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`b.
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`c.
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`2.
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`Claim 2 .....................................................................................................190
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`a.
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`b.
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`c.
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`Google Products ...........................................................................190
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`ecobee Products ...........................................................................192
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`Vivint Products ............................................................................195
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`3.
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`Claim 5 .....................................................................................................196
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`a.
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`b.
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`c.
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`Google Products ...........................................................................196
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`ecobee Products ...........................................................................199
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`Vivint Products ............................................................................202
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`C.
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`Domestic Industry (Technical Prong) ..................................................................204
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`1.
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`Claim 1 .....................................................................................................205
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`a.
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`b.
`
`c.
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`d.
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`e.
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`A system for calculating a value for the operational efficiency of a
`heating, ventilation, and air conditioning (HVAC) system
`comprising: ..................................................................................205
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`at least one HVAC control system that receives temperature
`measurements from at least a first location conditioned by at least
`one HVAC system; ......................................................................210
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`one or more databases that store at least said temperatures measured
`at said first location over time;.....................................................213
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`temperature
`that receive outside
`one or more processors
`measurements from at least one source other than said HVAC
`system; .........................................................................................213
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`wherein said one or more processors are configured to calculate one
`or more rates of change in temperature at said first location for
`periods during which the status of the HVAC system is “on” and
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`wherein said one or more processors are further configured to
`calculate one or more rates of change in temperature at said first
`location for periods during which the status of the HVAC system is
`“off”, and to relate said calculated rates of change to said outside
`temperature measurements...........................................................216
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`2.
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`Claim 2 .....................................................................................................221
`
`a.
`
`b.
`
`A system as in claim 1 .................................................................221
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`temperatures for
`in which said processors receive outside
`geographic regions based on ZIP codes from sources other than said
`HVAC system. .............................................................................221
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`3.
`
`Claim 5 .....................................................................................................223
`
`a.
`
`b.
`
`A system as in claim 1 .................................................................223
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`said
`thermostat and
`further comprising a programmable
`programmable thermostat is the sole source for current data
`regarding temperature inside said location conditioned by said
`HVAC system. .............................................................................223
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`VII. The ’322 Patent ............................................................................................................... 225
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`A.
`
`B.
`
`Overview of the ’322 Patent ................................................................................225
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`Infringement .........................................................................................................226
`
`1.
`
`Claim 1 .....................................................................................................226
`
`a.
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`b.
`
`c.
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`Google Products ...........................................................................226
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`Alarm.com Products ....................................................................264
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`Vivint Products ............................................................................304
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`2.
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`Claim 2 .....................................................................................................327
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`a.
`
`b.
`
`c.
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`Google Products ...........................................................................327
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`Alarm.com Products ....................................................................329
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`Vivint Products ............................................................................331
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`TABLE OF CONTENTS (CONT’D)
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`Claim 5 .....................................................................................................332
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`3.
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`a.
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`b.
`
`c.
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`Google Products ...........................................................................332
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`Alarm.com Products ....................................................................335
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`Vivint Products ............................................................................338
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`C.
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`Domestic Industry (Technical Prong) ..................................................................339
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`1.
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`Claim 1 .....................................................................................................339
`
`a.
`
`b.
`
`c.
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`d.
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`e.
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`A system for evaluating changes in the operational efficiency of an
`HVAC system over time comprising: ..........................................339
`
`at least one HVAC control system associated with a first structure
`that receives temperature measurements from at least a first
`structure conditioned by at least one HVAC system, and receives
`status of said HVAC system; .......................................................342
`
`one or more processors that receive measurements of outside
`temperatures from at least one source other than said HVAC system
`and compare said temperature measurements from said first
`structure, wherein said one or more processors compares the inside
`temperature of said first structure and the outside temperature over
`time; .............................................................................................345
`
`one or more databases that store at least said temperature
`measurements obtained from said first structure over time, ........349
`
`inside
`wherein said one or more processors compares an
`temperature recorded inside the first structure with an inside
`temperature of said first structure recorded at a different time to
`determine whether the operational efficiency of the HVAC system
`has decreased over time. ..............................................................349
`
`2.
`
`Claim 2 .....................................................................................................353
`
`a.
`
`b.
`
`A system as in claim 1 .................................................................353
`
`in which said processors receive measurements of outside
`temperatures for geographic regions such as ZIP codes from sources
`other than said HVAC control systems. .......................................354
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`Claim 5 .....................................................................................................355
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`3.
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`a.
`
`b.
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`A system as in claim 1 .................................................................355
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`in which said HVAC system includes a programmable thermostat
`and said programmable thermostat is the sole source for current data
`regarding temperature inside said first structure conditioned by said
`HVAC system. .............................................................................355
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`VIII. The ’371 Patent ............................................................................................................... 357
`
`A.
`
`B.
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`Overview of the ’371 Patent ................................................................................357
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`Infringement .........................................................................................................358
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`1.
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`2.
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`3.
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`4.
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`5.
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`6.
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`7.
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`A method for incorporating manual changes to one or more setpoints for a
`thermostatic controller, the method comprising: .....................................358
`
`providing a thermostatic controller operatively connected to a heating
`ventilation and air conditioning system, the one or more setpoints of the
`heating ventilation and air conditioning system being manually
`changeable; ..............................................................................................362
`
`calculating scheduled programming of automated setpoints in the
`thermostatic controller based on the scheduled programming comprising at
`least a first automated setpoint at a first time and a second automated
`setpoint at a second time to control the heating ventilation and air
`conditioning system; ................................................................................365
`
`recording, with the thermostatic controller, actual setpoints of the heating
`ventilation and air condition system; .......................................................371
`
`communicating the actual setpoints from the thermostatic controller to the
`at least one computer; ..............................................................................375
`
`comparing at least one of the actual setpoints at the first time for the
`thermostatic controller to the first automated setpoint for the thermostatic
`controller; .................................................................................................379
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`detecting a manual change to the first automated setpoint by determining
`whether the at least one of the actual setpoints and the first automated
`setpoint are the same or different; ............................................................384
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`changing the operation of the heating ventilation and air conditioning
`system by changing the second automated setpoint at the second time
`based on at least one rule for the interpretation of the manual change. ...390
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`Page
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`C.
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`Technical Prong ...................................................................................................393
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`1.
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`2.
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`3.
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`4.
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`5.
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`6.
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`7.
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`8.
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`A method for incorporating manual changes to one or more setpoints for a
`thermostatic controller, the method comprising: .....................................394
`
`providing a thermostatic controller operatively connected to a heating
`ventilation and air conditioning system, the one or more setpoints of the
`heating ventilation and air conditioning system being manually
`changeable; ..............................................................................................394
`
`calculating scheduled programming of automated setpoints in the
`thermostatic controller based on the scheduled programming comprising at
`least a first automated setpoint at a first time and a second automated
`setpoint at a second time to control the heating ventilation and air
`conditioning system; ................................................................................394
`
`recording, with the thermostatic controller, actual setpoints of the heating
`ventilation and air condition system; .......................................................394
`
`communicating the actual setpoints from the thermostatic controller to the
`at least one computer; ..............................................................................394
`
`comparing at least one of the actual setpoints at the first time for the
`thermostatic controller to the first automated setpoint for the thermostatic
`controller; .................................................................................................397
`
`detecting a manual change to the first automated setpoint by determining
`whether the at least one of the actual setpoints and the first automated
`setpoint are the same or different; ............................................................401
`
`changing the operation of the heating ventilation and air conditioning
`system by changing the second automated setpoint at the second time
`based on at least one rule for the interpretation of the manual change. ...401
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`IX.
`
`Indirect Infringement ...................................................................................................... 401
`
`A.
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`Google Products ...................................................................................................403
`
`1.
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`Inducement ...............................................................................................403
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`Contributory Infringement .......................................................................405
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`2.
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`B.
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`C.
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`D.
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`ecobee Products ...................................................................................................409
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`Vivint Products ....................................................................................................412
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`Alarm.com Products ............................................................................................417
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`X.
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`Invalidity ......................................................................................................................... 420
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`A.
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`Validity Under 35 U.S.C. § 101 ...........................................................................420
`
`1.
`
`The ’497 and ’322 Patents .......................................................................420
`
`a.
`
`b.
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`Alice Step One..............................................................................420
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`Alice Step Two .............................................................................423
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`2.
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`The ’371 Patent ........................................................................................427
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`a.
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`b.
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`Alice Step One..............................................................................427
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`Alice Step Two .............................................................................428
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`B.
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`Validity Under 35 U.S.C. §§ 102 and 103 ...........................................................430
`
`1.
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`The ’497 Patent ........................................................................................430
`
`a.
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`b.
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`c.
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`d.
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`e.
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`Anticipation – Ehlers ...................................................................430
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`Obviousness – Ehlers in View of Rosen ......................................438
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`Anticipation – Oswald .................................................................443
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`Obviousness – Oswald in View of Rosen ....................................453
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`Secondary Considerations ............................................................456
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`2.
`
`The ’322 Patent ........................................................................................459
`
`a.
`
`b.
`
`c.
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`Anticipation – Ehlers ...................................................................459
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`Obviousness – Ehlers in View of Rosen ......................................467
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`Anticipation – Hildebrand............................................................470
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`Obviousness – Hildebrand in View of Rosen ..............................477
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`Anticipation – Oswald .................................................................481
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`Obviousness – Oswald in View of Rosen ....................................488
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`Secondary Considerations ............................................................491
`
`d.
`
`e.
`
`f.
`
`g.
`
`3.
`
`The ’371 Patent ........................................................................................494
`
`a.
`
`b.
`
`c.
`
`d.
`
`e.
`
`f.
`
`g.
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`Anticipation – Fairless .................................................................494
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`Obviousness – Fairless in View of Proliphix ...............................501
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`Obviousness – Fairless in View of OpenJDK..............................503
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`Anticipation – Nicodem ...............................................................505
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`Obviousness – Nicodem in View of Proliphix ............................511
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`Obviousness – Nicodem in View of OpenJDK ...........................513
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`Secondary Considerations ............................................................514
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`C.
`
`Validity Under 35 U.S.C. § 112, ¶1: Written Description ...................................517
`
`1.
`
`2.
`
`The ’497 Patent ........................................................................................517
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`The ’322 Patent ........................................................................................527
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`D.
`
`Validity Under 35 U.S.C. § 112, ¶1: Enablement ................................................533
`
`1.
`
`2.
`
`The ’497 Patent ........................................................................................533
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`The ’322 Patent ........................................................................................538
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`E.
`
`Validity Under 35 U.S.C. § 112, ¶2: Indefiniteness ............................................542
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`XI.
`
`Economic Prong .............................................................................................................. 543
`
`A.
`
`B.
`
`C.
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`EcoFactor’s Investments in Plant and Equipment, or Labor and Capital ............548
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`EcoFactor’s Allocation of Domestic Industry Investments .................................554
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`EcoFactor’s Domestic Industry at the Time of Filing of the Complaint .............561
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`TABLE OF CONTENTS (CONT’D)
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`D. Whether EcoFactor’s Investments Are “Significant” and “Substantial” .............568
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`XII. Conclusions of Fact and Law .......................................................................................... 575
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`Jurisdiction .......................................................................................................................575
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`U.S. Patent No. 8,131,497................................................................................................575
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`U.S. Patent No. 8,423,322................................................................................................576
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`U.S. Patent No. 10,018,371..............................................................................................576
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`Domestic Industry ............................................................................................................577
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`XIII.
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`Initial Determination on Violation .................................................................................. 577
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`XIV. Order ............................................................................................................................. 578
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`The following abbreviations may be used in this Initial Determination:
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`ALJ
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`-
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`Administrative Law Judge
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`CDX -
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`Complainant’s Demonstrative Exhibit
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`CPX
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`CX
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`Dep.
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`-
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`-
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`-
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`Complainant’s Physical Exhibit
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`Complainant’s Exhibit
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`Deposition
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`EDIS -
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`Electronic Document Imaging System
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`JPX
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`JX
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`-
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`-
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`Joint Physical Exhibit
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`Joint Exhibit
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`MPEP -
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`Manual of Patent Examining Procedure
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`P.H.
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`PTO
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`-
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`-
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`Prehearing
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`U.S. Patent and Trademark Office
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`RDX -
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`Respondents’ Demonstrative Exhibit
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`RPX
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`-
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`Respondents’ Physical Exhibit
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`RWS -
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`Rebuttal Witness Statement
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`Respondents’ Exhibit
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`Transcript
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`Witness Statement
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`RX
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`Tr.
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`WS
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`-
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`I.
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`Background
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`
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`A.
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`Institution of the Investigation; Procedural History
`
`By publication of a notice in the Federal Register on November 27, 2019, pursuant to
`
`subsection (b) of section 337 of the Tariff Act of 1930, as amended, the Commission instituted
`
`this investigation to determine:
`
`[W]hether there is a violation of subsection (a)(1)(B) of section 337 in the
`importation into the United States, the sale for importation, or the sale within the
`United States after importation of certain products identified in paragraph (2) by
`reason of infringement of one or more of claims 1-12 of the ’497 patent [U.S. Patent
`No. 8,131,497]; claims 1-7 of the ’322 patent [U.S. Patent No. 8,423,322]; claims
`1-20 of the ’753 patent [U.S. Patent No. 8,498,753]; and claims 1-24 of the ’371
`patent [U.S. Patent No. 10,018,371]; and whether an industry in the United States
`exists as required by subsection (a)(2) of section 337.
`
`84 Fed. Reg. 65421 (Oct. 3, 2019).
`
`The Commission named as complainant EcoFactor, Inc. of Palo Alto, California
`
`(“EcoFactor” or “complainant”). Id.
`
`The Commission named as respondents ecobee Ltd. of Toronto, Canada and ecobee, Inc.
`
`of Toronto, Canada (collectively “ecobee”); Google LLC (“Google”) of Mountain View,
`
`California; Alarm.com Incorporated of Tysons, Virginia and Alarm.com Holdings, Inc. of
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`Tysons, Virginia (collectively “Alarm.com”); Daikin Industries, Ltd. of Osaka, Japan, Daikin
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`America, Inc. of Orangeburg, New York, and Daikin North America LLC of Houston, Texas
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`(collectively “the Daikin Respondents”); Schneider Electric USA, Inc. of Andover,
`
`Massachusetts and Schneider Electric SE of Rueil-Malmaison, France (collectively “the
`
`Schneider Respondents”); and Vivint, Inc. (“Vivint”) of Provo, Utah (collectively,
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`“respondents”). Id.
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`The Office of Unfair Import Investigations is also a party to this investigation. Id.
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`The target date for completion of this investigation was originally set at fifteen months
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`and two weeks, i.e., March 15, 2021, with an evidentiary hearing scheduled to commence on
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`July 21, 2020. Order No. 3 (Dec. 19, 2019).
`
`On March 30, 2020, the administrative law judge issued Order No. 8, granting the
`
`parties’ joint motion to amend the procedural schedule in view of the COVID-19 pandemic.
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`Order No. 8 at 1. Accordingly, the administrative law judge postponed certain events in the
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`procedural schedule, including the evidentiary hearing scheduled to commence on July 21, 2020.
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`Id.
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`On May 4, 2020, EcoFactor and the Daikin Respondents filed a joint motion to terminate
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`the investigation as to the Daikin Respondents based on a settlement agreement. The
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`administrative law judge granted the motion in an initial determination. Order No. 10 (June 11,
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`2020). The Commission affirmed the initial determination. Notice of a Commission Decision
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`Not to Review an Initial Determination Granting a Motion for Partial Termination of the
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`Investigation as to Certain Respondents Based on Settlement (July 1, 2020) (EDIS Doc. No.
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`713726).
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`On July 14, 2020, EcoFactor and the Schneider Respondents filed a joint motion to
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`terminate the investigation as to the Schneider Respondents based on a settlement agreement.
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`The administrative law judge granted the motion in an initial determination. Order No. 15 (Aug.
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`10, 2020). The Commission affirmed the initial determination. Notice of a Commission
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`Decision Not to Review an Initial Determination Granting a Motion for Termination of the
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`Investigation in Part as to Certain Respondents Based on Settlement (Aug. 31, 2020) (EDIS
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`Doc. No. 718460).
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`On September 16, 2020, the administrative law judge issued Order No. 16, amending the
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`procedural schedule generally in the manner proposed in a joint motion filed by the parties with a
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`hearing to begin on November 16, 2020, although one additional hearing day was added
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`(November 23, 2020) for the express purpose of accommodating one of respondents’ expert
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`witnesses. Order No. 16 at 1-2 & n.2.
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`On October 8, 2020, the administrative law judge issued Order No. 17, which granted in
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`part respondents’ “Motion to Strike New Domestic Industry Products and Expert Opinions
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`Regarding Domestic Industry.” Order No. 17 addressed whether the witness statement of
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`complainant’s expert, Mr. Miguel Gomez, exceeded his expert report, in violation of Ground
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`Rule 4.b. See Order No. 17 at 3. In Order No. 17, the administrative law judge ruled, “The
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`Gomez statement may not seek to define or to analyze the alleged domestic industry or the
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`asserted domestic industry product or products beyond the EcoFactor platform alone or in
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`combination with the Simple Thermostat.” Id. at 9.
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`On November 2, 2020, in accordance with Order No. 16, the administrative law judge
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`issued an initial determination setting the target date at approximately 20 months and three
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`weeks (20.75 months), i.e., August 20, 2021, which makes the deadline for this initial
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`determination April 20, 2021. Order No. 22 (Nov. 2, 2020), aff’d, Notice of a Commission
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`Determination Not to Review an Initial Determination Extending the Target Date (Nov. 17,
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`2020) (EDIS Doc. No. 725366).
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`A prehearing conference was held on November 13, 2020, with the evidentiary hearing in
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`this investigation commencing on November 16, 2020. Complainant EcoFactor and respondents
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`ecobee, Google, Alarm.com, and Vivint participated in the hearing. The hearing concluded on
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`November 19, 2020. See Order No. 16 (Sept. 16, 2020); P.H. Tr. 1-38; Tr. 1-992. The parties
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`were requested to file posthearing briefs not to exceed 300 pages in length, and to file reply
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`briefs not to exceed 80 pages in length. Order No. 23 (Nov. 6, 2020).
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`On November 16, 2020, EcoFactor filed a motion to terminate the investigation as to
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`certain claims. The administrative law judge