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`UNITED STATES INTERNATIONAL TRADE COMMISSION
`Washington, D.C.
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`In the Matter of
`CERTAIN SEMICONDUCTOR DEVICES,
`SEMICONDUCTOR DEVICE PACKAGES,
`AND PRODUCTS CONTAINING SAME
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`Investigation No. 337-TA-1010
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`TESSERA’S STATEMENT ON THE PUBLIC INTEREST
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`Tessera’s Statement on the Public Interest
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`Investigation No. 337-TA-1010
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`Tessera Technologies, Inc., Tessera, Inc. and Invensas Corporation (“Invensas”)
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`(collectively “Tessera”) respectfully submit this Statement on the Public Interest in response to
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`the Commission’s notice (82 Fed. Reg. 32584) and to statements filed by Respondents.
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`I.
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`The Public Interest Favors Robust Enforcement of Section 337
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`The purpose of Section 337 is to protect U.S. industries against unfair methods of
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`competition and unfair acts in the importation and sale of foreign-manufactured articles into the
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`United States. As the Commission has correctly recognized, Section 337’s remedies are not
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`restricted to any particular industry, nor limited to entities of a particular size or type. In 1988,
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`Congress “liberalized the domestic industry requirement by allowing that requirement to be
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`satisfied by proof of non-manufacturing activity, such as licensing and research.”1 These
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`amendments to Section 337 were purposefully designed to “strengthen the effectiveness of
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`section 337 in addressing the growing problems being faced by U.S. companies from the
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`importation of articles which infringe U.S. intellectual property rights.”2
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`More specifically, the 1988 amendments to the domestic industry requirement of Section
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`337 were specifically intended to give U.S. companies such as Tessera that are part of the
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`nation’s world-class, information-based economy access to justice when companies such as
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`Broadcom and the other Respondents import foreign-manufactured infringing products:
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`[W]e are more and more an information based economy. For those who make
`substantial investments in research, there should be a remedy. For those who
`make substantial investments in the creation of intellectual property and then
`license their creations, there should be a remedy.
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`133 Cong. Rec. S9,964 (1987). Tessera, like other U.S. patent owners, has been granted a
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`temporary statuory right, guaranteed by the Constitution, to exclude all others from exploiting its
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`1 John Mezzalingua Assoc.’s v. Int’l Trade Comm’n, 660 F.3d 1322, 1327 (Fed. Cir. 2011)
`(citing H.R. Rep. No. 100–40, at 157).
`2 H.R. Rep. No. 100-40 at 155 (1987).
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`Tessera’s Statement on the Public Interest
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`intellectual property. As Congress explained: “The importation of any infringing merchandise
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`derogates from the statutory right, diminishes the value of the intellectual property, and thus
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`indirectly harms the public interest.” S. Rep. No. 100-71 at 128 (1987). Tessera conducts R&D;
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`its technology is contained in products manufactured by others. There is no requirement that the
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`intellectual property holder itself manufacture a competing product. Sale or importation of an
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`infringing good violates a Constitutionally-guaranteed right, and the enforcement and protection
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`of Constitutional rights is in the public interest.3
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`II.
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`Tessera Is Entitled to Protection against Respondents’ Section 337 Violations
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`Following the evidentiary hearing, the final ID found a violation of Section 337 by
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`Broadcom and all of the other Respondents based on infringement of U.S. Patent No. 6,849,946
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`(“’946 patent”) by more than 2,100 Broadcom semiconductor devices spanning multiple product
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`families and technology nodes, and products containing one or more of those chips. The ALJ
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`recommended a limited exclusion order, cease-and-desist orders, and a 100% bond during the
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`Presidential review period. Respondents’ arguments that Tessera should be deprived of these
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`remedies because the ‘946 patent is supposedly “trivial,” and because Tessera is supposedly a
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`non-practicing entity, have no basis in fact or law and must be rejected.
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`First, the ’946 patent claims a fundamental semiconductor manufacturing process. The
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`public interest favors enforcement of intellectual property particularly where, as here, the ID
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`found widespread infringement of the ’946 patent.
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`3 Respondents suggest that Congress “has considered raising requirements for entities like
`Tessera to pursue alleged Section 337 violations,” citing the so-called “Trade Protection Not
`Troll Protection Act.” Tessera is not a “troll” under any definition of that term. In addition, this
`bill has been introduced in three different sessions of Congress, and each time Congress has
`shown no interest in discussing or enacting such amendments to Section 337, killing the bill in
`committee. See H.R. 2189, 115th Cong. (2017); H.R. 4829 ,114th Cong. (2015); H.R. 4763,
`113th Cong. (2014).
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`Second, Tessera is no “troll.” It is a Silicon Valley and American success story, and part
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`of the technology-based economy that Congress specifically intended Section 337 to protect.4
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`The Tessera Complainants are subsidiaries of Xperi Corporation, a U.S. publicly-traded
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`company based in San Jose, California with approximately 700 employees (including about 450
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`engineers), 27 offices, and a market capitalization of more than $2.1 billion. Since it was
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`founded as a startup more than 25 years ago, Tessera and its affiliates have innovated, developed,
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`and licensed cutting-edge technologies, including technologies that focus on audio (through
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`Xperi’s DTS subsidiaries, which make products such as HD Radio®), imaging (through its
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`FotoNation subsidiaries, which make smartphone camera features like face detection and red eye
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`removal), and semiconductor packaging, interconnect, and bonding (through Invensas). They
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`license their products and the patents that protect them to their customers, who use them in their
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`own products. Tessera and its affiliates generate about half their revenues from patent licensing,
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`and half from product licensing. Their licensed solutions are found in more than five billion
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`consumer electronics devices and 100 billion chips worldwide.
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`Tessera engages in extensive licensing efforts with respect to its patents, technologies,
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`software, and products. This licensing is an activity that Section 337(a)(3)(C) is designed to
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`protect, and there is no requirement that Tessera, or any complainant, be the one that practices its
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`patents. H.R. Rep. No. 100–40, at 157 (“The definition could, however, encompass universities
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`4 Protecting companies such as Tessera is critical to the U.S. economy: In 2014, for example, IP-
`intensive industries accounted for more than 38 percent of the entire U.S. economy and directly
`support more than 18 percent of all jobs in the U.S. economy. See Econ. & Stats. Admin. &
`USPTO, Intellectual Property & the U.S. Economy: 2016 Update, at 22, available at
`https://www.uspto.gov/sites/default/files/documents/IPandtheUSEconomySept2016.pdf. The
`export of technology is also one of the few areas in which the U.S. maintains a large trade
`surplus—over $80 billion in 2016. See U.S. Census Bureau, Bureau of Econ. Analysis, U.S. Int’l
`Trade in Goods and Services May 2017, at 1, 3–4, July 6, 2017, available at
`https://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf.
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`and other intellectual property owners who engage in extensive licensing … to manufacturers.”).
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`In addition, the Commission has correctly interpreted Section 337 to include licensing activities
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`regardless of whether the licensed product pre-dates or post-dates the license.5
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`III. The Commission’s Public Interest Questions
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`In requesting submissions on the public interest, the Commission set forth five subjects of
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`particular interest: (1) how the accused articles are used; (2) any implicated public health, safety,
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`or welfare concerns; (3) like or directly competitive articles made in the U.S. that could replace
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`accused articles; (4) whether others have the capacity to replace the volume of articles; and (5)
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`how the recommended orders would impact U.S. consumers. 82 Fed. Reg. 32,585. Respondents
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`barely address any of these issues, focusing instead on their results-driven policy argument about
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`the domestic industry requirement as well as their plea that the Commission give them a pass for
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`widespread infringement of the ’946 patent.
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`• Question 1: The articles potentially subject to the remedial orders are chips used for
`telecommunications, Internet access, cable and satellite television, Bluetooth, GPS, and
`network and infrastructure technologies. They are contained in products such as mobile
`devices, set-top boxes, routers, modems, gateways, Ethernet switches, and the like.
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`• Question 2: Respondents do not identify any of the articles as used in areas that would
`impact public health, safety, or welfare concerns in the U.S.
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`• Questions 3&4: The evidence introduced at the hearing in the context of Respondents’
`EPROMs contention established that all of the articles exist in highly-competitive
`markets with multiple sources of alternative chips and other products.
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`• Question 5: The Respondents offer no evidence supporting their claim that the requested
`remedy would impact U.S. consumers. While an exclusion order would prevent the
`importation of infringing set-top boxes, for example, nothing would prevent Comcast
`from sourcing its set-top boxes from a non-infringing source, or from continuing to
`provide internet and cable services to its existing customers. There would be little to no
`disruption to U.S. consumers, as the impacted articles all have readily available
`alternatives given the intense competition in the relevant markets.
`5 See, e.g., Certain Computers and Computer Peripheral Devices, and Components Thereof, and
`Products Containing Same, Inv. No. 337-TA-841, Comm’n Op. at 37 (Jan. 9, 2014) (“We reject
`the respondents’ invitation to impose a production-driven requirement on licensing-based
`domestic industries.”).
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`Finally, no delay is necessary in any exclusion order for “the circumstances of most
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`investigations do not justify a delay in effectuating statutory remedies against adjudged
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`infringers.”6 The Commission has recognized that vague protestations of harm are not enough to
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`overcome the strong public interest in speedy enforcement under Section 337, especially when
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`more than a year has passed since publication of the notice of investigation.7
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`There have only been three investigations where the public interest factors have
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`precluded the issuance of a remedy. In each situation, there were exigent circumstances not
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`present here: an overriding national policy in increasing the supply of fuel-efficient vehicles, an
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`overriding public interest in atomic research using articles that had uniquely superior
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`characteristics, and a proven inability to supply demand for medical devices without any
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`therapeutically comparable alternatives available.8 To deny Tessera relief on the grounds raised
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`by the Respondents’submissions would have the effect of reintroducing the injury requirement
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`eliminated by Congress from Section 337 through the guise of public interest.9
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`6 Certain Table Saws Incorporating Active Injury Mitigation Tech. & Components Thereof, Inv.
`No. 337-TA-965, Comm’n Op. at 16-17 (Feb. 1, 2017); see also Certain Card Data Imprinters
`& Components Thereof, Inv. No. 337-TA-104, Order No. 4, 1981 WL 178550 (June 29, 1981)
`(“Section 337 promises a swift remedy . . . delay of the Section 337 proceeding would lessen the
`effectiveness of the ultimate remedy”).
`7 See Certain Abrasive Prod. Made Using A Process for Powder Preforms, & Prod. Containing
`Same, Inv. No. 337-TA-449, Comm’n Op. at 9 (July 26, 2002); see also Certain Wireless
`Devices with 3G and/or 4G Capabilities and Components Thereof, Inv. No. 337-TA-868, ID at
`178 (June 13, 2014) (“While it is in [respondent’s] interest to continue to produce and import
`accused products . . . there would be no public interest served in delaying the implementation of
`the exclusion or cease and desist orders.”).
`8 See Certain Automatic Crankpin Grinders, Inv. No. 337-TA-60, USITC Pub. 1022 (1979);
`Certain Inclined Field Acceleration Tubes, Inv. No. 37-TA-67, USITC Pub. 1119 (1980);
`Certain Fluidized Supporting Apparatus, Inv. No. 337-TA-182/188, USITC Pub. 1667 (1984).
`9 H.R. Rep. No. 100-40 at 156 (“The Committee does not intend that the USITC . . . will
`reintroduce these requirements in making their public interest determinations.”).
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`Dated: August 7, 2017
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` /s/ Dale A. Rice
`Sturgis M. Sobin (ssobin@cov.com)
`Daniel E. Valencia (dvalencia@cov.com)
`COVINGTON & BURLING LLP
`One CityCenter, 850 Tenth Street, NW
`Washington, DC 20001
`Telephone:
`(202) 662-6000
`
`Michael K. Plimack (mplimack@cov.com)
`Dale A. Rice (drice@cov.com)
`Nitin Subhedar (nsubhedar@cov.com)
`COVINGTON & BURLING LLP
`One Front Street
`San Francisco, CA 94111
`Telephone:
`(415) 591-6000
`
`Robert T. Haslam (rhaslam@cov.com)
`Thomas E. Garten (tgarten@cov.com)
`COVINGTON & BURLING LLP
`333 Twin Dolphin Drive
`Redwood Shores, CA 94065-1418
`Telephone:
`(650) 632-4700
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`Email: tessera-broadcom@cov.com
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`Counsel for Complainants Tessera Technologies,
`Inc., Tessera, Inc., and Invensas Corporation
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`In the Matter of Certain Semiconductor Devices,
`Semiconductor Device Packages,
`And Products Containing Same
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`CERTIFICATE OF SERVICE
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`I, the undersigned, certify that on August 7, 2017, copies of TESSERA’S
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`STATEMENT ON THE PUBLIC INTEREST were delivered, pursuant to U. S. International
`Trade Commission regulations, to the following interested parties as indicated:
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`The Honorable Lisa R. Barton
`Secretary to the Commission
`U.S. INTERNATIONAL TRADE COMMISSION
`500 E Street, SW, Room 112-A
`Washington, DC 20436
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`Via EDIS and 8 copies by overnight
`delivery
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`Via E-mail: edward.jou@usitc.gov
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`Via E-mail:
`Broadcom-
`TesseraITC@kilpatricktownsend.com
`FM-Broadcom-1010@fostermurphy.com
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`The Honorable Dee Lord
`U.S. International Trade Commission
`500 E Street, S.W., Room 317
`Washington, D.C. 20436
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`David E. Sipiora
`Kilpatrick Townsend & Stockton LLP
`1400 Wewatta Street, Suite 600
`Denver, CO 80202
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`David F. Nickel
`Matthew N. Duescher
`Foster, Murphy, Altman & Nickel, PC
`1899 L Street NW, Suite 1150
`Washington, DC 20036
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`Counsel for Respondents Broadcom Limited,
`Broadcom Corporation, Avago Technologies
`Limited, Avago Technologies U.S. Inc., Arista
`Networks, Inc., ARRIS International plc, ARRIS
`Group, Inc., ARRIS Technology, Inc., ARRIS
`Enterprises Inc., ARRIS Solutions, Inc., Pace Ltd.,
`Pace Americas, LLC, Pace USA, LLC, ASUSTeK
`Computer Inc., ASUS Computer International
`Comcast Cable Communications, LLC, Comcast
`Cable Communications, LLC, Comcast Cable
`Communications Management, LLC, Comcast
`Business Communications, LLC, HTC Corporation,
`HTC America, Inc., NETGEAR, Inc., Technicolor
`S.A., Technicolor USA, Inc., and Technicolor
`Connected Home USA LLC
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`CERTIFICATE OF SERVICE
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`In the Matter of Certain Semiconductor Devices,
`Semiconductor Device Packages,
`And Products Containing Same
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`David A. Hickerson
`Foley & Lardner LLP
`3000 K Street, N.W., Suite 600
`Washington, D.C. 20007
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`Counsel for Respondents Broadcom Limited and
`Broadcom Corporation
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`Via E-mail: Broadcom-Foley@foley.com
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`/s/ Melissa Sackin .
`Melissa Sackin
`Sr. IP Litigation Specialist
`Covington & Burling LLP
`One CityCenter, 850 Tenth Street, NW
`Washington, DC 20001-4956
`T +1 202 662 6677 | msackin@cov.com
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`CERTIFICATE OF SERVICE
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