Chip Law : Semiconductor Lawyer & Attorney : Perkins Coie Law Firm : Intellectual Property, Patent Litigation

The US ITC staff has endorsed a proposed settlement between Multitest Electronic Systems Inc. and Cognex Corp. in a patent infringement case over machine vision software. Multitest was the first the nearly 20 named respondents to reach a settlement with Cognex.

Interestingly, several of the other respondents, including MVTec and Delta Design Inc., filed confidential partial oppositions to the motion. Some possible reasons for opposition can include keeping as many respondents in the case as possible to dilute complainant's efforts moving forward, overbroad language in the proposed settlement, or other tactical and strategic considerations.

The complaint alleges that MVTec Software GmbH manufactures machine vision software that infringes Cognex patents. The software is then sold to third parties, including Multitest, who incorporate the software into their manufacturing equipment products. The case is In the matter of Certain Machine Vision Systems, Software and Products Containing Same, investigation number 337-TA-680, in the U.S. International Trade Commission.

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We've covered the value of ITC 337 actions in prior posts, and the recent events have continued the trend. MagnaChip has settled its patent dispute before the ITC with LSI and Agere Systems. On July 21, the Administrative Law Judge issued an initial determination terminating the investigation against MagnaChip after it reached a settlement and patent licensing agreement. Just the previous week, two respondents, Microchip Technology and Dongbu HiTek Semiconductor were also dropped from the suit based on a settlement with the complainants.

The settlement terms are all confidential, which makes it difficult to analyze any settlement trends. With flat to sequential growth in the semiconductor industry, respondents may be more open to settlement in order to conserve resources and capitalize on market opportunities. On the other hand, complainants may be more open to settlement in light of the fact that many competitors are struggling and are unable to pay out large settlements.
 

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ITC exclusion orders and cease and desist letters have teeth. Faced with an uncertain economic outlook, an unfavorable ITC decision, and unclear appeal prospects, Motorola signed a license with Tessera settling all outstanding litigation. Under the worldwide licensing agreement, Motorola will pay Tessera royalties on shipments into the U.S. of certain electronic products incorporating semiconductor chips that use Tessera's technology. In a statement Wednesday, Motorola called the licensing deal a "prudent business action" allowing the company to continue to meet its customers' needs.

With the addition of two administrative law judges in the last 2 years (Carl. C. Charneski in April ’07 and Robert K. Rogers in July ’08 - bringing the total to five administrative law judges), the ITC is an attractive option for US patentees seeking to protect their IP in the post-eBay world. For patentees finding injunctions difficult to obtain, an ITC exclusion order almost as effective.

As this case illustrates, ITC exclusion orders and cease and desist letters put an inordinate amount of pressure on respondents to settle, or risk being unable to import infringing goods into the US. In today's distributed world, preventing the importing of infringing products can be almost as good as a injunction.

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