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Suprema, Inc. v. International Trade Commission

United States Court of Appeals, Federal Circuit

December 13, 2013

SUPREMA, INC. AND MENTALIX, INC., Appellants,
v.
INTERNATIONAL TRADE COMMISSION, Appellee, AND CROSS MATCH TECHNOLOGIES, INC., Intervenor. CROSS MATCH TECHNOLOGIES, INC., Appellant,
v.
INTERNATIONAL TRADE COMMISSION, Appellee, AND SUPREMA, INC. AND MENTALIX, INC., Intervenors

Page 1351

On appeal from the United States International Trade Commission in Investigation No. 337-TA-720.

DARRYL M. WOO, Fenwick & West, LLP, of San Francisco, California, argued for appellants Suprema, Inc., et al. With him on the brief were HEATHER N. MEWES, JAE WON SONG, ILANA S. RUBEL, BRYAN A. KOHM, DAVID M. LACY KUSTERS and ERIN SIMON.

CLINT A. GERDINE, Attorney, Office of General Counsel, United States International Trade Commission, of Washington, DC, argued for appellee. With him on the brief were DOMINIC L. BIANCHI, Acting General Counsel, and ANDREA C. CASSON, Assistant General Counsel for Litigation.

MAXIMILIAN A. GRANT, Latham & Watkins LLP, of Washington, DC, argued for intervenor Cross Match Technologies, Inc. With her on the brief were GABRIEL K. BELL, MICHAEL A. DAVID and GREGORY K. SOBOLSKI. Of counsel on the brief was CLEMENT J. NAPLES, of New York, New York.

DARYL JOSEFFER, King & Spalding LLP, of Washington, DC, for amicus curiae. With him on the brief was ADAM CONRAD.

MAXIMILIAN A. GRANT, Latham & Watkins LLP, of Washington, DC, argued for appellant Cross Match Technologies, Inc. With her on the brief were MICHAEL A. DAVID and GABRIEL K. BELL. Of counsel on the brief was CLEMENT J. NAPLES, of New York, New York.

CLINT A. GERDINE, Attorney, Office of General Counsel, United States International Trade Commission, of Washington, DC, argued for appellee. With him on the brief were DOMINIC L. BIANCHI, Acting General Counsel, and ANDREA C. CASSON, Assistant General Counsel for Litigation.

DARRYL M. WOO, Fenwick & West, LLP, of San Francisco, California, argued for intervenors Suprema, Inc., et al. With him on the brief were JAE WON SONG, ILANA S. RUBEL, BRYAN A. KOHM, DAVID M. LACY KUSTERS. Of counsel was HEATHER N. MEWES.

Before PROST, O'MALLEY, and REYNA, Circuit Judges. OPINION filed bye Circuit Judge O'MALLEY. Opinion concurring in part and dissenting in part filed by Circuit Judge REYNA.

OPINION

Page 1352

O'Malley, Circuit Judge.

We address related appeals from rulings of the U.S. International Trade Commission (" the Commission" ).

First, we consider the propriety of the Commission's limited exclusion order barring importation of optical scanning devices and a related cease and desist order. We vacate the cease and desist order, vacate the limited exclusion order in part, and remand so that the order can be revised to bar only a subset of the scanners at issue. Resolution of this appeal turns in part on our conclusion that an exclusion order based on a violation of 19 U.S.C. § 1337(a)(1)(B)(i) may not be predicated on a theory of induced infringement under 35 U.S.C. § 271(b) where direct infringement does not occur until after importation of the articles the exclusion order would bar. The Commission's authority under § 1337(a)(1)(B)(i) reaches " articles that... infringe a valid and enforceable United States patent" at the time of importation. Because there can be no induced infringement unless there has been an act of direct infringement, however, there are no " articles... that infringe" at the time of importation when direct infringement has yet to occur. The Commission's exclusion order must be revised, accordingly, to bar only those articles that infringe a claim or claims of an asserted patent at the time of importation.

Next, we consider a Commission order refusing to find a violation of § 1337 with respect to some of the same optical scanners. The proceeding giving rise to that appeal was premised on alleged infringement of U.S. Patent No. 7,277,562 (" the '562 patent" ), a different patent than the two patents at issue in the first appeal we

Page 1353

address today. The Commission concluded that the scanners at issue did not infringe the asserted claims of the '562 patent when properly construed. Because we agree with the Commission's claim construction and non-infringement finding, we affirm the Commission's ruling in this related appeal.

I.

A.

The Commission rulings before us arise from proceedings in which Cross Match Technologies, Inc. (" Cross Match" ) asserts that Suprema, Inc. and Mentalix, Inc. violated 19 U.S.C. § 1337(a)(1)(B)(i) by importing articles that infringe or are used to infringe U.S. Patent Nos. 7,203,344 (" the '344 patent" ), 7,277,562 (" the '562 patent" ), and 5,900,993 (" the '993 patent" ). The Commission found that Mentalix directly infringed method claim 19 of the '344 patent by using its own software with imported Suprema scanners and found that Suprema induced that infringement. The Commission also found that certain of Suprema's imported optical scanners directly infringe claims 10, 12, and 15 of the '993 patent. But the Commission found no infringement of the '562 patent. The Commission then held that Suprema and Mentalix failed to prove that the '993 patent was invalid as obvious over two prior art patents: U.S. Patent No. 3,619,060 (" the '060 patent" ) and U.S. Patent No. 5,615,051 (" the '051 patent" ). Based on these findings, on October 24, 2011, the Commission issued a limited exclusion order directed to certain scanning devices imported " by or on behalf of Suprema or Mentalix" and issued a cease and desist order directed to Mentalix only.

Suprema and Mentalix premised their appeal of the exclusion and cease and desist orders on their belief that the Commission erred because: (1) a § 1337(a)(1)(B)(i) violation may not be predicated on a theory of induced infringement under the facts of this case; (2) Suprema was not willfully blind to the existence of the '344 patent and, thus, did not induce infringement of that patent; (3) Mentalix did not directly infringe the '344 patent; (4) Suprema's scanners do not infringe the '993 patent under the correct claim construction; and (5) the asserted claims of the '993 patent were invalid as obvious. Cross Match, in turn, appeals the Commission's non-infringement ruling with respect to the '562 patent, challenging the claim construction upon which that ruling was based.

We vacate the infringement finding on the '344 patent because we hold that an exclusion order based on a violation of § 1337(a)(1)(B)(i) may not be predicated on a theory of induced infringement where no direct infringement occurs until post-importation. Given this conclusion, we do not reach the merits of the Commission's willful blindness or direct infringement findings on the '344 patent. Regarding the '993 patent, we affirm the Commission's finding of infringement and conclusion that Suprema failed to prove that the asserted claims were invalid as obvious. Finally, we affirm the Commission's non-infringement ruling regarding the '562 patent.

B.

The technology at issue pertains to biometrics (i.e., the science of analyzing biological characteristics) and the scanning of biometric objects. This case specifically involves fingerprint scanners. Fingerprint capture and recognition, probably the most common form of biometrics, is important technology because many industries and law enforcement increasingly rely on fingerprints

Page 1354

as biometrics to store, recognize, or verify identity.

C.

As explained above, these appeals concern three patents. Two are method patents, the '344 patent and the '562 patent. The '344 patent is at issue in the appeal by Suprema and Mentalix; the '562 patent is at issue in Cross Match's appeal. They relate to particular implementations of fingerprint image capture and processing. The third patent, the '993 patent, contains apparatus claims (over an " optical system" ) and is at issue in Suprema's appeal.

The '344 patent contains claims drawn to methods used by an optical scanning system to detect fingerprint images based on shape and area, and to determine fingerprint quality based on the detected shape and area. '344 patent col. 19 ll. 24-38. Claim 19 (the only claim of the '344 patent found infringed) recites such a process:

A method for capturing and processing a fingerprint image, the method comprising:
(a) scanning one or more fingers;
(b) capturing data representing a corresponding fingerprint area;
(c) filtering the fingerprint image;
(d) binarizing the filtered fingerprint image;
(e) detecting a fingerprint area based on a concentration of black pixels in the binarized fingerprint image;
(f) detecting a fingerprint shape based on an arrangement of the concentrated black pixels in an oval-like shape in the binarized fingerprint image; and
(g) determining whether the detected fingerprint area and shape are of acceptable quality.

Id. col. 19 ll. 24-37.

The '993 patent claims an optical system for forming a real image of a biometric object that corrects for field curvature using a three-lens system. Claims 10, 12, and 15 were found infringed. Claims 12 and 15 depend from claim 10. The three claims read:

10. An optical system having an optical axis, said system forming an image of an object and comprising:
a) a prism having a first surface for contacting the object and a second surface, said first surface being oriented with respect to the optical axis at an angle greater than the angle of total internal reflection of the surface;
b) an aperture stop;
c) a first lens unit having a positive power between the aperture stop and the prism for forming a telecentric entrance pupil;
d) a second lens unit having a positive power for forming a real image of the object, said second lens unit being on the image side of the first lens unit; and
e) a third lens unit for correcting the field curvature of the image contributed by the first and second lens units.
12. The optical system of claim 10 wherein the first lens units consist of a single lens element.
15. The optical system of claim 10 wherein the third lens unit has a negative power.

'993 patent col. 10 ll. 18-45. The debate over the '993 patent centers on whether the optical system described in claim 10 can include within it non-lens elements, such as the mirrors that are included in the lens units of the Suprema scanners.

Page 1355

While Suprema says claim 10 and those claims that depend therefrom exclude the use of such mirrors, the ALJ and the Commission found they did not.

The '562 patent claims methods aimed at " reliably capturing print images." The parties' dispute regarding the '562 patent centers on an issue of claim construction--in particular, the determination by the ALJ and Commission that " capture," within the meaning of the asserted claims, cannot occur until after the print quality and number of prints have been determined and detected.

D.

Cross Match, the complainant and intervenor, is a global provider of fingerprint acquisition technology. It is a domestic company headquartered in Florida, and it develops and manufactures a variety of biometric identification products for verifying a person's identity, such as fingerprint and palm print scanners. It supplies products to the U.S. government and private industry. Cross Match is the sole assignee of the three patents-in-suit.

The respondents below are Suprema, a Korean company that manufactures and imports hardware and software for scanning fingerprints, and Mentalix, a domestic importer of Suprema scanners. Specifically at issue are Suprema scanners marketed under the trade-name RealScan and software development kits (" SDKs" ) packaged along with those scanners. Mentalix imports Suprema's scanners and integrates them with its own software in the United States. The specific Mentalix software involved in this case is called FedSubmit. Mentalix's accused software can be used with fingerprint scanners sold by other companies, including Cross Match. In the Commission investigation, Cross Match contended that its system claims are infringed by Suprema optical systems and that the method claims at issue are infringed when Suprema's scanners are used in combination with both respondents' software (i.e., Suprema's SDKs and FedSubmit).

E.

Suprema appeals the Commission's finding that it violated § 337(a)(1)(B)(i) by infringement of the '344 and '993 patents, and asks that the related exclusion orders be vacated. The ALJ found that a number of Suprema's scanners (RealScan-10, RealScan-D, RealScan-10F, and RealScan-DF), when used with Mentalix's FedSubmit software, directly infringe claim 19 of the '344 patent and recommended an exclusion order relating to those scanners on that ground. The Commission agreed that the '344 patent was infringed, but clarified the controlling infringement theories--it concluded that Mentalix directly infringes method claim 19 of the '344 patent when it combines Suprema products with its own software and that Suprema induces that infringement.

While the ALJ had not considered inducement and made no factual finding on its elements, the Commission nevertheless concluded that the record evidence supported a finding that Suprema (1) was willfully blind to the '344 patent, (2) studied and emulated Cross Match's products before willfully blinding itself to the infringing nature of Mentalix's activities, and (3) actively encouraged those activities. Therefore, it found that Suprema had induced infringement of the patented method under 35 U.S.C. § 271(b), and that this inducement formed the basis for a § 337(a)(1)(B)(i) violation.

Regarding the underlying direct infringement, the Commission found that Mentalix's FedSubmit software, when integrated with the imported Suprema scanners,

Page 1356

and upon execution of the software, practiced method claim 19 of the '344 patent under the ALJ's claim constructions.[1] The Commission adopted those constructions and the subsequent infringement findings.

With respect to the '993 patent, the Commission fully adopted the ALJ's infringement analysis. Specifically, the Commission found that the claimed optical systems need not exclude non-lens elements (such as distortion correcting prisms or holographic optical elements) or off-axis optics. The Commission then concluded that all the recited elements of claims 10, 12, and 15 were met by the accused scanners.

The Commission also found that the asserted prior art, the '060 and '051 patents, did not render the asserted claims of the '993 patent obvious. Based on the evidentiary record, the ALJ determined that the respondents failed to offer clear and convincing evidence that the combination of the '060 and '051 patents renders asserted independent claim 10, as well as asserted dependent claims 11-12, 15, and 17-18, obvious under § 103(a). The ALJ concluded that the '060 patent did not disclose element 10(c) (a first lens unit having a positive power between the aperture stop and the prism for forming a telecentric entrance pupil), element 10(d) (a second lens unit having a positive power for forming a real image of the object), or element 10(e) (a third lens unit for correcting field curvature). The ALJ also noted that, although the '051 patent disclosed a triplet lens that was well suited for use with photographic cameras, the patent did not pertain to fingerprint scanners and did not disclose a telecentric condition. The ALJ also found no motivation to combine the two references. The Commission adopted each of these findings.

F.

In its separate appeal, Cross Match challenges the Commission's determination that claims 1, 5-7, 12, and 30 of the '562 patent are not infringed by either Suprema's scanners or use of those scanners in conjunction with the FedSubmit software. The ALJ adopted Cross Match's proposed construction of " capture" as it appears in step (f) of the asserted independent claims, namely, that " capture" means " acquiring, by the scanner, for processing or storage." The Commission adopted that construction and, based on it, also adopted the ALJ's finding that the accused products do not infringe the asserted claims.

Specifically, the Commission found that the " capture" limitation was not met because the record evidence showed that the accused scanners do not perform the steps of claim 1 in the required order. The Commission found that Claim 1 requires that the scanned fingerprint image be captured after both a determination of the expected number of prints under step (e) and a determination of the quality of the prints under step (d) have been made. But the accused products capture the fingerprint image before software determines the number of prints as required by step (e) and before assessing their quality as required by step (d). The Commission also found the accused products do not perform step (f) of claim 30, since that step is substantially the same as step (f) of claim 1.

Page 1357

II.

We turn first to Suprema's appeal regarding the '344 patent and the threshold issue it raises--specifically, whether a § 337(a)(1)(B)(i) violation may be predicated on a claim of induced infringement where the attendant direct infringement of the claimed method does not occur until post-importation. We conclude that § 337(a)(1)(B)(i), by tying the Commission's authority to the importation, sale for importation, or sale within the U.S. after importation of articles that infringe a valid and enforceable U.S. patent, leaves the Commission powerless to remedy acts of induced infringement in these circumstances. Accordingly, we vacate the Commission's rulings regarding the '344 patent.[2]

A.

On appeal, Suprema contends it does not import " articles that infringe," as required under ยง 337(a)(1)(B)(i). The accused devices are imported scanners which Cross Match concedes do not directly infringe the method of claim 19 of the '344 patent at the time of importation. The alleged infringement only takes place when the scanners are combined with domestically developed software after the scanners are imported. Cross Match does not dispute that the scanners have substantial non-infringing uses, and Suprema contends its other customers have put them to such uses. On these facts, Suprema contends that no ...


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