united states court of appeals for the federal...

UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

MOTIVA, LLC, Appellant,

v.

INTERNATIONAL TRADE COMMISSION, Appellee,

AND

NINTENDO CO., LTD. AND NINTENDO OF AMERICA INC.,

Intervenors

2012-1252 On appeal from the United States International Trade Commission in Investigation No. 337-TA-743.

MOTIVA LLC’S APPEAL FROM THE INTERNATIONAL TRADE COMMISSION IN INVESTIGATION

NO. 337-TA-743 Christopher D. Banys Daniel W. Bedell

The Lanier Law Firm 2200 Geng Road, Suite 200 Palo Alto, CA 94303 Tel: (650) 322-9100 Attorney for Appellant, Motiva LLC June 15, 2012

Case: 12-1252 Document: 27-1 Page: 1 Filed: 06/20/2012Case: 12-1252 Document: 29-1 Page: 1 Filed: 06/20/2012

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Table of Contents

I. STATEMENT OF RELATED CASES .............................................................. 1

II. JURISDICTION .................................................................................................. 1

III. STATEMENT OF THE ISSUES ........................................................................ 1

IV. STATEMENT OF THE CASE ........................................................................... 3

A. Procedural History ........................................................................................... 3

V. STATEMENT OF FACTS ................................................................................. 6

A. Appellant Motiva ............................................................................................. 6 B. Intervenors ....................................................................................................... 6 C. The Asserted Patents........................................................................................ 6 D. The Accused Products ..................................................................................... 7 E. The Inter Partes Reexaminations of the Asserted Patents .............................. 7

VI. SUMMARY OF THE ARGUMENT ................................................................. 8

VII. ARGUMENT .................................................................................................... 10

A. Standard of Review and Applicable Law ...................................................... 10 B. Claim Construction ........................................................................................ 12

1. The Proper Construction of “Movement Information” ..............................12

a. “Movement” is a change in position and/or orientation. ........................12 b. “Movement information” is not limited to 3D Movement Information. 15 c. A System for “Tracking” Movement is a System that Determines Movement Information. .................................................................................17

2. The Proper Construction of “Position Information” ..................................18

3. The Commission Improperly Limited “Movement Information” and “Position Information.” .....................................................................................21

a. The Commission’s Construction of “Movement Information” is Unclear. ..........................................................................................................21

(1) The Commission’s Apparent Application of Nintendo’s Three-Part Test that It Previously Rejected is Improper. .............................................24

b. The Commission’s Construction Improperly Limits “Position Information” to Information Specifying a Location in 3D Space. ................26


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c. The Commission Mistakenly Excluded Highly-Relevant Evidence that Supports Motiva’s Constructions. .................................................................26

(1) The ALJ Mistakenly Concludes that it is “Improper to Consider an Incomplete Reexamination Record when Construing the Claims.” ..........26 (2) The Commission Mistakenly Concluded that the Patent Examiner’s Statements are “Not Persuasive.” ...............................................................31

4. The Record Supports Reversal of the Commission’s Constructions. ........31

C. Infringement .................................................................................................. 33 1. The Wii Determines “Movement Information.” ........................................33

a. The Commission’s Findings Establish that the Wii Determines “Movement Information.” .............................................................................33 b. The Evidence Adduced at Trial Establishes that the Wii Determines “Movement Information.” .............................................................................35

2. The Evidence Adduced at Trial Establishes that the Wii Determines “Position Information.” .....................................................................................37

D. Domestic Industry: Economic Prong ............................................................. 39 1. Motiva Was In The Process Of Establishing A Domestic Industry From 2003-2007. .........................................................................................................39

2. Motiva Continued To Invest In Establishing A Domestic Industry From 2007-2010. .........................................................................................................41

3. Motiva Has A Substantial Likelihood Of Establishing A Domestic Industry In The Future, But Only If It Can Protect Its Rights. .........................44

4. The Commission Erred By Holding Motiva To The Standard Of A Product Manufacturer. .......................................................................................45

5. The Commission Erred By Ignoring Nintendo’s Role In Preventing Motiva From Establishing A Domestic Industry. .............................................48

6. The Commission Erred By Ignoring Motiva’s Necessary And Tangible Steps Toward Establishing A Domestic Industry From 2007-2010. ................51

7. The Commission Erred By Ignoring The Effect That Nintendo’s Infringement Has On Motiva’s Ability To Succeed In The Future. .................58

VIII. CONCLUSION AND STATEMENT OF RELIEF SOUGHT ..................... 61

The material that has been deleted from this brief is information regarding the operation of the Accused Products from documents that Nintendo has labeled "Confidential."


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Table of Authorities Page(s) CASES

Alloc, Inc. v. Int’l Trade Comm’n, 342 F.3d 1361 (Fed. Cir. 2003) .................................................................... 11, 33

Bally/Midway Mfg. Co. v. U.S. Int’l Trade Comm’n, 714 F.2d 1117 (Fed. Cir. 1983) .................................................................... 50, 52

Beneficial Innovations, Inc. v. Blockdot, Inc. 2010 WL 2246291 (E.D. Tex.) (E.D.Tex. 2010) ................................................ 30

Certain Coaxial Cable Connectors and Components Thereof, Inv. No. 337-TA-650, Comm’n Op. at 44 (March 31, 2010) ............................. 53

Certain Digital Processors and Digital Processing Systems; Components Thereof and Products Containing Same, Inv. No. 337-TA-559, Final Initial Determination at 93 (May 11, 2007) (“Digital Processors”) ....................................................................................... 48

Certain Digital Satellite System Receivers and Components Thereof, Inv. No. 337-TA-392 .......................................................................................... 53

Certain Male Prophylactic Devices, Inv. No. 337-TA-546, Comm’n Op. at 39 (June 22, 2007) ................................ 12

Certain Multimedia Display and Navigation Devices and Systems, Components Thereof, and Products Containing the Same ................................. 52

Certain Probe Card Assemblies, Components Thereof & Certain Tested DRAM & NAND Flash Memory Circuits,

Inv. No. 337-TA-621, Initial Determination, USITC Pub. No. 4149 (June 29,2009)…………………………………………………………………29

Certain Silicon Microphone Packages, Inv. No. 337-TA-695, Initial Determination on Complainant’s Motion for Temporary Relief, 2010 WL 1413232 (Mar. 24, 2010) ................... 58, 59, 60, 61

Certain Stringed Musical Instruments and Components Thereof, Inv. No. 337-TA-586, Comm’n Op. at 13, USITC Pub. No. 4120 (Dec. 2009) ....................................................................................................... 12, 46, 47


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Enercon GmbH v. Int’l Trade Comm’n, 151 F.3d 1376 (Fed. Cir. 1998) .......................................................................... 11

F5 Networks Inc. v. A10 Networks, Inc., 2011 WL 268112 (W.D. Wash. July 8, 2011) .............................................. 30, 31

In re Katz Interactive Call Processing Patent Litigation, 2008 WL 4952454 (C.D. Cal. 2008) (“Katz II”) ................................................ 29

In re Katz Interactive Call Processing Patent Litigation, 639 F.3d 1303 (Fed. Cir. 2011) (“Katz I”) ......................................................... 29

John Mezzalingua Assocs., Inc. v. Int’l Trade Comm’n, 660 F.3d 1322 (Fed. Cir. 2011) .......................................................................... 48

Northrop Grumman Corp. v. Intel Corp., 325 F.3d 1346 (Fed. Cir. 2003) .......................................................................... 20

On Demand Machine Corp. v. Ingram Industries, 442 F.3d 1331 (Fed. Cir. 2006) .......................................................................... 32

Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) .................................................................... 27, 28

Proctor & Gamble Co. v. Kraft Foods Global, Inc., 549 F.3d 842 (Fed. Cir. 2008) ...................................................................... 29, 30

Purdue Pharma L.P. v. Endo Pharms. Inc., 438 F.3d 1123 (Fed. Cir. 2006) .......................................................................... 28

Retractable Technologies, Inc. v. Becton, Dickinson and Co, 653 F.3d 1296 (Fed. Cir. 2011) .......................................................................... 27

Rite-Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538 (1995) ............................................................................................ 56

St. Clair Intellectual Property Consultants, Inc. v. Canon Inc., 2011 WL 66166 (Fed. Cir. Jan. 10, 2011) .............................................. 27, 31, 32

Tesco Corp. v. Weatherford International, Inc., 722 F.Supp.2d 737, 2010 WL 1443540 (S.D. Tex. 2010) ................................. 30


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Tessera, Inc. v. Int’l Trade Com’n, 646 F.3d 1357 (Fed. Cir. 2011) .......................................................................... 33

Vita-Mix Corp. v. Basic Holding, Inc., 581 F.2d 1317 (Fed. Cir. 2009) .............................................................. 11, 32, 33

STATUTES

5 U.S.C. § 706 (2000) .............................................................................................. 11

19 U.S.C. § 1337 .......................................................................................... 11, 46, 63

28 U.S.C. § 1295(a)(6) ............................................................................................... 1

28 U.S.C. § 1404(a) ............................................................................................... 3, 4

35 U.S.C. § 284 ........................................................................................................ 56

OTHER AUTHORITIES

37 C.F.R. § 41.61 ..................................................................................................... 31

37 C.F.R. § 10.18 ....................................................................................................... 7

Fed. R. Civ. P. 65(c)................................................................................................. 57

H.R. Rep. No. 100-40 (1987) ................................................................................... 46

H.R. Rep. No. 40, 100th ........................................................................................... 52

IEEE 100, The Authoritative Dictionary of IEEE Standards Terms ....................... 21

Merriam-Webster Dictionary ................................................................................... 15

S. Rep. No. 71, 100th Cong., 1st Sess. (1987) ......................................................... 52

Wiley Electrical and Electronics Engineering Dictionary ...................................... 20


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CERTIFICATE OF INTEREST Counsel for appellant Motiva, LLC, certify the following in accordance with Fed. R. App. P. 26.1 and Fed. Cir. R. 47.4(a): The full name of every party represented by me is: Motiva, LLC. The names of the real parties in interest, if the parties’ names in the caption are not real parties in interest, represented by me are: The parties named in the caption are the real parties of interest. All parent corporations and publicly held companies that own ten percent or more of the stock of the parties or amicus curiae represented by me are:

Motiva, LLC has no parent corporation nor does any publicly-held company own 10% or more of its stock.

The name of all law firms and the partners and associates that have appeared for the parties now represented by me in the lower tribunal or are appearing in this Court are:

The Lanier Law Firm, P.C.: W. Mark Lanier; Christopher D. Banys; Dara G. Hagar, Daniel W. Bedell; Daniel M. Shafer

Brinks Hofer Gilson & Lione: Lyle Vander Schaaf; Jay Reiziss

STATEMENT REGARDING ORAL ARGUMENT Appellant Motiva LLC requests oral argument. This appeal presents questions of national importance, including a first-impression review of the standard for “establishing a domestic industry” under 19 U.S.C. § 1337(a)(3)(C).


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I. STATEMENT OF RELATED CASES

Motiva’s district court case against Nintendo (No. IO-CV-00349-RSL) in

the Western District of Washington is currently stayed pending resolution of this

Investigation and the inter partes reexamination of the ’151 patent.

II. JURISDICTION

The Federal Circuit has jurisdiction to review the final determination of the

International Trade Commission (“ITC”) under 28 U.S.C. § 1295(a)(6).

III. STATEMENT OF THE ISSUES

Claim Construction Errors 1. The evidence demonstrates that the proper construction of “movement

information” is “information about changes in position and/or orientation.” The Commission initially appeared to adopt this construction. But in direct conflict with its apparent construction and the evidence of record, the Commission changed its construction and added the very limitations it previously seemed to reject. Did the Commission apply an incorrect construction of “movement information?”

2. The evidence establishes that the proper construction of “position information” is “information about location relative to a reference location.” The Commission’s construction requires specifying a single location in space and excludes matter within the scope of the plain and ordinary meaning of the term contrary to the intrinsic and extrinsic evidence. Is the Commission’s construction of “position information” incorrect?

Legal Errors that Contributed to the Erroneous Claim Constructions 3. The Federal Circuit and district courts have affirmed the use of

reexamination records like the ones in this case for claim construction. Nevertheless, the Commission disregarded highly-relevant evidence from the reexamination of the Asserted Patents because it held that it is “improper to consider an incomplete reexamination record when construing the


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claims.” Was the Commission’s failure to consider highly-relevant evidence from the reexamination of the Asserted Patents improper?

4. The Federal Circuit has held that, “because an examiner in reexamination

can be considered one of ordinary skill in the art, his construction of the asserted claims carries significant weight.” But the Commission failed to give proper weight to the Examiner’s statements because the Commission found an examiner’s statements are “not persuasive” since the PTO “employs a broader standard for claim construction.” Was the Commission’s failure to give adequate weight to the Examiner’s statements improper?

Infringement Errors Based on Erroneous Claim Constructions 5. The constructions that the Commission applied for “movement information”

and “position information” were unduly narrow. Under the proper constructions and in light of the evidence before the Commission, the Accused Products meet these limitations. Did the Commission err in determining that the Accused Products do not infringe the Asserted Claims?

Domestic Industry Errors Based on Erroneous Claim Constructions 6. The Commission properly found that Motiva took necessary steps towards

the establishment of a domestic industry from 2003 to 2007. In 2007, shortly after Nintendo launched its wildly successful Wii product, Motiva decided to sue Nintendo because Motiva could not successfully market its inventions while Nintendo openly infringed its patents. But the Commission determined that Motiva’s decision to sue Nintendo was not related to Motiva’s industry, in part, because it failed to consider the effect Nintendo’s infringement had on Motiva’s ability to license its patent to manufacturers. If Nintendo is found to infringe Motiva’s patent, should the Commission reconsider the effect of that infringement on the necessary nature of Motiva’s decision to seek redress in court?

7. Motiva submitted substantial evidence to show that its litigation efforts against Nintendo were necessary and tangible steps in the process of establishing a domestic industry. But the Commission failed to analyze Motiva’s evidence under the “necessary and tangible” standard, applying instead the “substantial investment” standard from its prior analysis of


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whether Motiva’s had an existing domestic industry. Did the Commission err in failing to consider Motiva’s evidence under the “process of establishment” standard?

8. Public policy prevents an infringer from benefiting from its own unfair competition by arguing that the industry it harmed is too weak to qualify for protection under Section 337. Nintendo severely harmed Motiva’s ability to seek manufacturing partners for its inventions when it launched a very successful and widely publicized product that infringed Motiva’s patents. But the Commission found that Motiva did not deserve protection because it found that Nintendo did not infringe Motiva’s patents. If Nintendo is found to infringe Motiva’s patents, should the Commission re-evaluate the cause of Motiva’s difficulty in establishing a product-driven licensing industry?

IV. STATEMENT OF THE CASE

A. Procedural History

Motiva first sued Nintendo for infringement of the ’151 patent in November

2008, in the Eastern District of Texas. A9188. Motiva’s suit requested an

injunction against Nintendo to prevent it from continuing to sell the Wii, and also

asked for money damages to compensate Motiva for the harm Nintendo had caused

it. A9571-A9572 at Qs. 352-355; A9188. Trial was set for October 2010. In

January 2009, Nintendo moved to transfer under 28 U.S.C. § 1404(a), arguing that

the Western District of Washington was a clearly more convenient venue.

Nintendo lost its motion and the case proceeded in Texas.

On October 16, 2009, Nintendo petitioned the Federal Circuit for a writ of

mandamus commanding the Texas court to transfer the action. On December 17,

2009, the Federal Circuit issued a writ of mandamus transferring the case to the


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Western District of Washington. Id. On March 3, 2010, the Western District of

Washington docketed the case. Then Nintendo filed a petition for inter partes

reexamination of the ’151 patent and moved to stay the case.

On June 4, 2010, the PTO ordered reexamination of the ’151 patent.

Subsequently, on June 11, 2010, the Western District stayed the case pending

reexamination of the ’151 patent and exhaustion of all appeals. Id.

On September 30, 2010, Motiva filed its verified Complaint with the ITC

based on both of the Asserted Patents. A10137 at Qs. 180-181; A10164 at Qs.

132-135; A9194; A9221. The ITC subsequently instituted the Investigation at

issue here. Id.

Early in the Investigation, Nintendo moved for summary determination, and

on February 11, 2011, the ALJ granted Nintendo’s motion and terminated the

investigation. A7631. On April 13, 2011, the Commission reviewed and vacated

the summary ID and remanded the investigation to the ALJ to complete the

investigation. A7858. Specifically, the Commission found that the ALJ erred in

declining to consider Motiva’s activities that occurred prior to the issuance of the

asserted patents (A7863 at ¶2), that Motiva’s litigation activities and their relation

to a domestic industry required further investigation (A7865 at ¶3 and A7866), and

directed the ALJ to address a series of questions which are relevant to whether a


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domestic industry exists or is in the process of being established (A7867 at ¶3 and

A7868 at ¶1-4).

The parties participated in a five-day trial from August 1, 2011 to August 5,

2011, and completed post-hearing briefing on September 2, 2011. At the trial, the

Commission took no live direct testimony.

On November 2, 2011, the ALJ issued his Initial Determination finding that:

Nintendo’s products do not directly or indirectly infringe either the ’151 or ’268

patents; and Motiva does not satisfy the economic prong of the domestic industry

requirement as to either the ’151 or ’268 patents. A7796 at ¶1. The ALJ did not

issue formal findings of fact or conclusions of law supporting his Initial

Determination. A7656.

On, November 15, 2011, Motiva appealed the ALJ’s determination –

including the erroneous claim construction that led to the noninfringement finding

– to the Commission. Nintendo did not appeal any aspect of the ALJ’s

determination.

On, January 5, 2012, the Commission issued its final determination not to

review these aspects of the ALJ’s determination and terminating the Investigation.

A7870. The Commission’s final determination merely concluded that Motiva’s

appeal did not “warrant review,” but did not provide an analysis of the issues on

appeal. A7871 at ¶3.


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V. STATEMENT OF FACTS

A. Appellant Motiva

Appellant Motiva is a Dublin, Ohio company. Kevin Ferguson and Donald

Gronachan are the two principals of Motiva and the two co-inventors of the

Asserted Patents. A7907 at ¶2. Motiva is a product-driven licensing company,

that is, it focuses its efforts on inventing new technology and then marketing its

inventions to manufacturing partners and investors, rather than seeking to

manufacture its inventions itself. A8537 at ¶2.

B. Intervenors

Intervenor Nintendo Co. LTD (“NCL”) is a Japanese company that exports

and distributes video game machines. A7664 at ¶2. NCL has multiple

subsidiaries, including Intervenor Nintendo of America, Inc. (“NOA”).

C. The Asserted Patents

U.S. Patent No. 7,292,151 issued on November 6, 2007, and U.S. Patent No.

7,492,268 issued on February 17, 2009. The ’268 patent is a continuation of the

’151 patent, and the two patents (together the “Asserted Patents”) share the same

specification. The Asserted Patents cover systems and controllers for tracking a

user’s movement using a wireless handheld controller and a processing system or

base station.


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D. The Accused Products

The accused products in this Investigation are Nintendo’s Wii video game

system and associated video game controllers (collectively, the “Wii System”).

See A7652-A7653. The Wii System includes a Wii Console, Wii Remote, Wii

Nunchuk, and a Wii Sensor Bar. A8973. The Wii Remote and the Wii Nunchuk

are handheld controllers for the Wii System. A8990 (Figs. 1-2). The Wii Remote

and the Wii Nunchuk both contain motion sensors that output data that the Wii

Remote sends to the Wii Console. A8977. The Wii Remote contains a three-axis

gyroscope, a three-axis accelerometer, and a CMOS camera that Nintendo calls the

direct-pointing-device (DPD). A8998, A9006, A9008-A9013, A9036-A9039. The

Wii Console receives signals form the Wii Remote, decodes the signals, stores

them, and determines movement information for the Remote and Nunchuk.

A8998, A9006, A9008-A9013, A9036-A9039.

E. The Inter Partes Reexaminations of the Asserted Patents

Nintendo initiated inter partes reexamination for both of the Asserted

Patents in this Investigation. A775; A4786. Despite its duty of candor to the

Commission and the PTO (37 C.F.R. § 10.18), Nintendo proposed constructions to

the PTO that contradicted the constructions it proposed at trial. In the

reexaminations, the Examiner evaluated the claims and the cited prior art, and

rejected some claims and confirmed the patentability of others. A4663; A7599.


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Motiva canceled or amended the rejected claims instead of arguing that the

disputed terms should be construed more narrowly to overcome the cited art. At

the time of the trial, the PTO had closed prosecution in both reexaminations.

VI. SUMMARY OF THE ARGUMENT

On January 5, 2012, the Commission affirmed the finding that the Accused

Products meet nearly all limitations of the asserted claims. For the ’151 patent

claims, the Commission found that the only missing elements were “determining

movement information” and “tracking movement of a user.” A7772 at ¶¶3-5;

A7676 at ¶¶3. And for the ’268 patent claims, the Commission affirmed that the

only missing elements were “determining position information” and “tracking

position of a user.” A7792 at ¶¶5-7; A7792 at ¶¶5-7. The Commission’s

determination that the Accused Products do not infringe hangs entirely on these

conclusions.

For the “movement information” terms of the ’151 patent, the Commission

initially seemed to construe the terms properly but then modified its construction in

application by adding limitations that it seemed to reject in claim construction. For

the “position information” terms of the ’268 patent, the Commission also

improperly imposed a limitation unsupported by the record.

The Commission made two legal errors that contributed to its improper

constructions: (1) the Commission concluded that it is “improper to consider an


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incomplete reexamination record when construing the claims;” and (2) the

Commission concluded that an examiner’s statements are “not persuasive.”

Under the proper claim construction, the Commission’s findings establish

that the Accused Products determine “movement information” and infringe the

’151 patent claims. The additional evidence adduced at trial solidifies this

determination. Similarly, based on the complete record, the Accused Products

determine “position information” – and infringe the ’268 patent claims – when that

term is correctly construed.

The Commission’s determination that Motiva was not in the process of

establishing a domestic industry is equally flawed. First, the Commission properly

found that Motiva took necessary steps towards the establishment of a domestic

industry from 2003 to 2007. Thus, Motiva does not appeal that portion of the

Commission’s determination. But in its determination of whether Motiva was in

the process of establishing a domestic industry from 2007 to 2010, the Commission

made several critical errors. First, the Commission determined that Motiva’s

decision to sue Nintendo was not related to Motiva’s industry, in part, because it

failed to consider the effect Nintendo’s infringement had on Motiva’s ability to

license its patents to product makers. But if Nintendo is found to infringe, the

Commission should reconsider the effect of that infringement on the necessary

nature of Motiva’s decision to seek redress in court.


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Additionally, Motiva submitted substantial evidence to show that its

litigation efforts against Nintendo were necessary and tangible steps in the process

of establishing a domestic industry. But the Commission failed to analyze

Motiva’s evidence under the “necessary and tangible” standard, applying instead

the “substantial investment” standard from its prior analysis of whether Motiva had

an existing domestic industry. Thus, the Commission failed to consider the

evidence under the proper legal standard.

Finally, because of the Commission’s errors in infringement and in applying

the improper standard to the “process of establishing” analysis of domestic

industry, the Commission erroneously ignored the effect that Nintendo’s

infringement had on Motiva’s ability to succeed as a product-driven licensor. But

public policy prevents an infringer from benefiting from its own unfair competition

by arguing that the industry it harmed is too weak to qualify for protection under

Section 337. Therefore, if Nintendo is found to infringe Motiva’s patents, the

Commission should also re-evaluate the cause of Motiva’s difficulty in

establishing a product-driven licensing industry.

VII. ARGUMENT

A. Standard of Review and Applicable Law

The Federal Circuit reviews legal determinations in section 337

investigations, such as claim construction, without deference. Alloc, Inc. v. Int’l


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Trade Comm’n, 342 F.3d 1361, 1368 (Fed. Cir. 2003). This includes a lower

court’s application of a construction that is “inconsistent with its earlier claim

construction,” which the Federal Circuit reviews de novo to determine the correct

construction. Vita-Mix Corp. v. Basic Holding, Inc., 581 F.2d 1317, 1324 (Fed.

Cir. 2009).

The Federal Circuit reviews factual determinations for substantial evidence.

19 U.S.C. § 1337(c) (2000); 5 U.S.C. § 706 (2000). Factual determinations will be

upheld if supported by substantial evidence of record, which is defined to be “such

relevant evidence as a reasonable mind might accept as adequate to support a

conclusion.” Enercon GmbH v. Int’l Trade Comm’n, 151 F.3d 1376, 1381 (Fed.

Cir. 1998).

In patent-based proceedings under Section 337, the complainant must

establish that an industry “relating to the articles protected by the patent ... exists or

is in the process of being established” in the United States. 19 U.S.C. §

1337(a)(2). An industry is “in the process of being established” if the patent owner

is “taking the necessary tangible steps to establish such an industry in the United

States … and there is a significant likelihood that the industry requirement will be

satisfied in the future.” Certain Stringed Musical Instruments and Components

Thereof, Inv. No. 337-TA-586, Comm’n Op. at 13, USITC Pub. No. 4120 (Dec.

2009) (internal quotations and citations omitted). The threshold for satisfying this


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domestic industry requirement is “relatively low.” Certain Probe Card

Assemblies, Components Thereof & Certain Tested DRAM & NAND Flash

Memory Devices & Products Containing Same. The determination should not be

made according to “any rigid formula – there is no mathematical threshold test.

Instead, the determination is made by ‘an examination of the facts in each

investigation, the articles of commerce, and the realities of the marketplace.’”

Certain Male Prophylactic Devices, Inv. No. 337-TA-546, Comm’n Op. at 39

(June 22, 2007).

B. Claim Construction

1. The Proper Construction of “Movement Information”

The proper construction of “movement information” is the one the

Commission initially appeared to find: “information about changes in position

and/or orientation.” A7674 at ¶5, A7676 at ¶3. This construction properly (1)

construes “movement” as “changes in position and/or orientation” and (2) does not

require simultaneous measurements in three dimensions.

a. “Movement” is a change in position and/or orientation.

The word “changes” is critical to the proper construction because movement

is change. But position and orientation are static concepts that have to do with

where something is and the direction it is facing at a particular moment in time.

The speedometer in a car underscores the importance of this distinction. The


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speedometer measures the car’s velocity, or change in position over time, but it

cannot determine the actual location of the car. Thus, the speedometer can tell

when a car is moving and can provide accurate information about the speed at

which it is moving, but it cannot detect where the car is located at a particular

moment in time.

Similarly gyroscopic sensors detect angular velocity, or changes in

orientation over time, but do not directly detect the orientation of a device. A7776

at ¶4-A7777 at ¶1. In other words, a gyroscope can tell when an object is rotating

and can provide accurate information about the speed of rotation, but it cannot

detect where an object is facing at a particular moment in time.

The intrinsic evidence demonstrates that “movement” is a change in

position and/or orientation. For example, claim 5 of the ’151 patent uses the term

“movement direction of the first communication device.” A7926 at ¶4-A7927 at

¶1; A31 at 35:66-36:3 (emphasis added). Removing “changes” from the

construction for “movement,” would result in a term, “position and orientation

direction of the first communication device,” that does not make sense. Further,

claim 31 refers to “a user’s movement efficiency.” A7927 at ¶1; A3 at 37:36-44

(emphasis added). But the claimed device does not determine the efficiency of the

“position or orientation,” but rather the efficiency with which the position or

orientation is changed.


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Also, the specification describes tracking using “inertial” sensors. A7927 at

¶2; A14 at 1:20-21 and 2:48-50, A17 at 8:66, A28 at 30:43-31:5. And inertial

sensors, like accelerometers, determine changes in position or orientation. A7927

at ¶2; A9392-A9394; A9804 at Q. 418. The specification also states that the

invention determines the “velocity and acceleration components of motion.”

A7927 at ¶2; A31 at 31:42-45 and 32:5-14; A65 at 30:60-63 and 31:25-34.

Velocity describes the rate of change in position and/or orientation, and

acceleration describes the rate of change in velocity. A7927 at ¶2; A9357-A9358,

A9362. Each of these examples from the specification refers to changes in

position or orientation. Thus, the specification supports Motiva’s construction.

Further, in reexamination, the Examiner found that “movement information”

includes “acceleration, velocity, position, gyroscopic position, impact, inclination,

angular velocity and/or the like.” A7928 at ¶4; A1571-A1572; A1563, A1566

(adopting Nintendo’s assertions). Acceleration and velocity both refer to

“changes” in position or orientation. A7927 at ¶2. Thus, the reexamination

demonstrates that “movement information” includes “changes” in position or

orientation.

Extrinsic evidence likewise supports Motiva’s construction. The Merriam-

Webster Dictionary defines “move” as “to change or cause to change position or

posture.” A7928 at ¶4; A9350 (emphasis added). And, in the district court case,


15

Nintendo argued that “tracking movement of a user” meant “keeping track of

changing positions and orientations (poses) of a user.” A7927 at ¶3; A9365

(emphasis added). Moreover, Nintendo’s expert acquiesced that movement means

“changes in position and/or orientation.” A7927 at ¶3; A10317 at Q. 36 (emphasis

added). Therefore, the extrinsic evidence also supports Motiva’s construction.

b. “Movement information” is not limited to 3D Movement Information.

The number of dimensions that a system must simultaneously measure in

order to determine “movement information” is also critical to the term’s proper

construction. While we exist and move in three dimensions, motion sensors can

determine movement information for one, two, or three dimensions. A7932 at ¶1,

A7935 at ¶4. For example, a one-axis inertial sensor can only detect movement in

one dimension at a time, like up-and-down. And even though this one-axis inertial

sensor can only determine movement information in the up-and-down direction,

the fact that the sensor knows that an object is moving up or down is information

about movement. A sensor does not need to detect side-to-side movement in order

to provide some useful information about up-and-down movement. And the

Asserted Patents do not narrow movement from its plain and ordinary meaning.

Further, the specification says that “in the preferred embodiment, the

interactive hand-held transponders support a dual axis inertial sensor, which is

operably configured to provide tilt (pitch and roll) orientation in its horizontal


16

mounting plane.” A7931 at ¶4-A7932 at ¶1; A28 at 30:43-46 (emphasis added).

The dual axis inertial sensor can only provide orientation information in two

dimensions. And the specification describes a test for Limits of Stability for a

user’s stance that can be performed by tracking the angle of tilt in just two

dimensions: forward-backward and side-to-side. A7931 at ¶4, A7932 at ¶1; A21 at

16:45-55.

The prosecution history of the Asserted Patents also demonstrates that

“movement information” in the asserted patents is not limited to simultaneous

information about all three dimensions. In the first Office Action for the ’151

patent, the Examiner rejected claims for a “system for tracking movement of a

user” as being anticipated by a patent (A459) that discloses gait measurement to

determine the number of steps in a period but does not disclose measuring all

dimensions of position or orientation. A7932 at ¶2; A459.

Additionally, in reexamination, Examiner found that “movement

information” in the Motiva patents includes “acceleration … detected by an

acceleration sensor” including a “one-dimensional acceleration sensor.” A7929 at

¶2, A7932 at ¶2; A1878-1879, A1890 (emphasis added), A921-A922; A2563-

A2564, A2568-2569, A2572 (adopting Nintendo’s assertions).

The contemporaneous references that Nintendo’s expert cited also show that

the “3D” limitation is improper. For example, A Survey of Tracking Technologies


17

for Virtual Environments by Rolland, Davis, and Baillot describes several

“tracking systems” that do not measure all three dimensions of position or

orientation. A7932 at ¶2; A9386, A9389, A9393-A9394.

c. A System for “Tracking” Movement is a System that Determines Movement Information.

A system for “tracking movement” is a system that determines movement

information. The claims state that a system for “tracking movement of a user”

determines “movement information” of a user. A31 at 35:39-54. And the

specification does not limit “tracking” systems. Indeed, the Commission held that

“the specification both refers to the ‘invention’ in terms of tracking pose and

tracking movement” and that to “limit the invention to tracking pose would

improperly limit the claims based on the specification.” A7624 at ¶3.

Further, the first result of a search for “tracking” in the Asserted Patents is

an article titled Computer-Aided Tracking of Body Motions Using a C.C.D.- Image

Sensor (Brugger, W., Med. Biol. Eng. & Comput., (Mar. 1978) 207-210). A3 at

“OTHER PUBLICATIONS.” The article states that “tracking of movements” can

be done “in one plane.” A289. The second result of a search for “tracking” is an

article titled Human Movement Tracking Technology (Mulder, A., School of

Kinesiology, Simon Fraser University (July 1994) 1-14). A3 at “OTHER

PUBLICATIONS;” A386. This article states that “human movement tracking

systems are systems that generate in real-time data that represent the measured


18

human movement.” A387. And this article describes several “human movement

measurement technologies” that measure only certain dimensions of position or

orientation. A392-A393.

Further, in reexamination, the Examiner found that two references

disclosed systems for “tracking movement of a user” because they taught systems

that (1) determine information based on “the movement of the hand controller” and

(2) systems that “can detect motion and posture.” A1877, A1980; A2563-A2564,

A2575-A2576 (adopting Nintendo’s assertions).

Thus, the intrinsic evidence establishes that “tracking movement”

encompasses systems that determine movement information, and the proper

construction of “movement information” is “information about changes in position

and/or orientation.”

2. The Proper Construction of “Position Information”

The correct construction for “position information” is “information about

location relative to a reference location.” This construction captures the scope of

the plain and ordinary meaning of “position information” including relative

position information. For example, knowing that an object is “above” or “to the

left of” another object is relative “position information.”

The specification discloses this kind of relative tracking. A7934 at ¶3; A15

at 3:15-17, 23-25 (an embodiment “supports relative and absolute tracking


19

capabilities … conversely, in another embodiment, the fixed transponder has

limited intelligence; supports only the absolute pose tracking capability”)

(emphasis added). And the specification discloses that the position of the

controller may be determined relative to another controller’s position. A7934 at

¶3; A14 at 2:21-23 (“In one embodiment, the invention provides functional

movement assessment based upon the relative measures of limb pose with respect

to two positions defined by the transponders”) (emphasis added). Thus, the

specification discloses position relative to another location (like “above” or “to the

left of”).

Further, the specification of the Asserted Patents describes tracking using

“mechanical, inertial, acoustical or electromagnetic radiation sensors.” A7927 at

¶2; A14 at 1:20-21; A50 at 1:21-22. These types of sensors can measure in one,

two, or three dimensions (A7929 at ¶2; A5299; A5723-5724). And, “absent a

clear disclaimer of particular subject matter, the fact that the inventor may have

anticipated that the invention would be used in a particular way does not mean that

the scope of the patent is limited to that context.” Northrop Grumman Corp. v.

Intel Corp., 325 F.3d 1346, 1355-1356, 1366 (Fed. Cir. 2003) (emphasis added).

Additionally, in reexamination, the Examiner found that “position tracking”

as used in the Asserted Patents includes using “one-, two- or three-dimensional”


20

velocity or acceleration sensors to “infer” position. A7935 at ¶4; A5299 (emphasis

added); A5723-5724 (affirming Nintendo’s assertions).

The specification also teaches calculating or inferring position information

based on velocity and/or acceleration data, which is done with reference to a

previously known position. A7934 at ¶4; A29 at 31:42-45 (“In other words, the

numerically derived velocity and acceleration components of motion are linearly

combined with the previously a priori position to estimate the new position”)

(emphasis added).

Extrinsic evidence also supports Motiva’s construction. First, the Wiley

Electrical and Electronics Engineering Dictionary defines “position” as “the

location of something relative to something else.” A7935 at ¶2; A335. Second, the

IEEE 100, The Authoritative Dictionary of IEEE Standards Terms defines

“position” as “the ordinal position of one value relative to another.” A7935 at ¶2;

A9343. Furthermore, Nintendo’s expert admitted that the dual axis inertial sensor

disclosed in the Asserted Patents “is for the purpose of position and orientation

tracking.” A7935 at ¶2; A10323 at Q. 46 (emphasis added) (citing A14 at 2:48-

50). Thus, Nintendo acknowledges that “position information” includes two-

dimensional position information.

The intrinsic and extrinsic evidence supports Motiva’s definition that can

include general “position information” “inferred” or “estimated” from sensor data


21

that may not necessarily specify a single exact location in space. And based on the

evidence, the proper construction of “position” is “location relative to a reference

location.”

3. The Commission Improperly Limited “Movement Information” and “Position Information.”

a. The Commission’s Construction of “Movement Information” is Unclear.

The Commission initially appeared to adopt the exact construction that

Motiva proposed for the “movement information” terms. A7675 at ¶2-4, A7676 at

¶ 1. The Commission appeared adopt Motiva’s construction and to agree that these

terms should include “changes” but should not include the “3D space” limitation.1

But, when it applied the constructions to determine infringement, the Commission

added the very limitations it appeared to previously rejected: (1) it removed

“changes” from its construction of “movement” and focused instead whether the

Wii can detect an object’s “position or orientation” at any moment in time; (2) it

imposed the “3D” limitation on “movement information.”

For example, in its infringement analysis of the “movement information”

terms, the Commission repeatedly conflated “position or orientation” with

“movement,” or “changes in position and/or orientation.” Based on that error, the

1 To the extent that the “3D space” term in Nintendo’s proposed construction merely describes the space in which we all move, it is superfluous. To the extent the “3D space” term describes movement and requires simultaneous measurement of all three dimensions of a change in position or orientation, it would improperly limit the claim term as described in Section VII.B.1.b.ction VII.B.1.b.


22

Commission evaluated infringement based on whether the Wii determines the

“position or orientation” of the user instead of changes in the position and/or

orientation of a user:

Excerpt from the Commission’s Infringement Analysis of “Movement Information” Cite

“Dr. Colgate testified that an accelerometer cannot be used to measure position. He said integration is necessary to determine position, and he opined that it is not possible to ‘double Integrate’ the Wii Remote and Nunchuk to determine position.”

A7774 at ¶4 (emphasis added)

“He said that, while the accelerometer can be used to estimate pitch and roll when there is no other acceleration, it cannot provide complete orientation.”


“Dr. Colgate testified that, next, the acceleration due to gravity must be somehow removed in order to double integrate the accelerometer to obtain position.”


“Dr. Singh admitted on cross examination that he has ... found nothing in the source code that would indicate that the Wii is able to calculate a three-dimensional position of the Wii remote in the real world.”


“He added, however, that the third component of orientation, yaw angle, can never be determined from an accelerometer.”


“Dr. Singh admitted, however, that he did not find precise real world position information (x, y, z coordinates) for the Wii controllers


“[W]hile [Motiva’s expert] asserts that the Wii accused products track movement of the user (i.e. position and/or orientation), he admits that he found no evidence that the Wii products in fact locate the Wii remote in the real world.”


Thus, even though the Commission appeared to construe “movement” to include

“changes in position and/or orientation,” in application, it limited “movement” to

an object’s “position and/or orientation” “in the real world.”


23

Moreover, as evidence of noninfringement, the Commission found that the

Wii can get to “changes in angular rotation” using its gyroscopes. A7777 at ¶1

(emphasis in original). But this is exactly what the Commission initially appeared

to say the claims to require: “determining information about changes in position

and/or orientation.” A7674 at ¶4, A7676 at ¶2 (emphasis added).

In addition to removing “changes,” the Commission required a three-

dimensional limitation in its infringement analysis that it also appeared to reject in

claim construction. Indeed, the Commission found that the Wii does not determine

“movement information” because the Wii can determine orientation in just two out

of three dimensions. A7775 at ¶3.


24

(1) The Commission’s Apparent Application of Nintendo’s Three-Part Test that It Previously Rejected is Improper.

In addition to removing “changes” and requiring a 3D limitation that it

previously appeared to reject, the Commission applied a restrictive three-part test

in its infringement analysis that it also appeared to reject in claim construction. To

support Nintendo’s proposed construction of “tracking movement of a user,”

Nintendo’s expert created a three-part test based on his understanding of what

“tracking movement” would mean to one of skill in the art. A10319 at Q. 39

(stating that Nintendo’s three-part test is what “tracking movement mean to one

skilled in the art”).

In his witness statement on “Claim Interpretation,” Nintendo’s expert

testified that this test supported Nintendo’s proposed construction of the term

“tracking movement of a user,” including (1) Nintendo’s proposed requirement of

both “position and orientation” instead of “position and/or orientation;” (2)

Nintendo’s proposed removal of “changes” from “movement, and (3) Nintendo’s

proposed imposition of a “three-dimensional” limitation.” A10319 at Q. 39,

A10328 at Q. 53. But in claim construction, the Commission rejected all three of

these aspects of Nintendo’s proposed construction. A7674 at ¶3-4; A7674 at ¶3-4.

Moreover, the Commission completely rejected the three-part test

Nintendo’s expert created when it excluded all extrinsic evidence regarding the


25

construction “tracking movement” of user: “I find that examination of the extrinsic

evidence offered by the parties is unnecessary because the intrinsic evidence is

sufficient to understand the meaning of ‘tracking movement of a user.’” A7674 at

¶4.

Further, the Commission rightly rejected Nintendo’s attempt to add the

limitations of its three-part test to its proposed construction: “regarding the new

claim construction, I note that, to the extent that Nintendo intends to modify its

claim construction, they are not going to be allowed to do so. They are bound by

the claim construction.” A20038 at 25-A20039 at 4.

But when the Commission turned to infringement, it appeared to require all

the elements of the three-part test it rejected in claim construction: “Dr. Colgate

testified that in order for a device to track movement, it must: (1) make complete

measurements of pose (position and orientation); (2) do so with reasonable

accuracy; and (3) keep a representation of the movement history in memory. Dr.

Colgate testified that the Wii System does none of these things.” A7777 at ¶3.

The Commission’s application of Nintendo’s three-part test is improper

because the Commission rejected the test in claim construction and because the test

directly contradicts the Commission’s apparent construction of “tracking

movement of a user.” What is more, the three-part test for “tracking movement of


26

a user” is contrary to the proper construction of the term according to the intrinsic

evidence. See Section VII.B.1 supra.

b. The Commission’s Construction Improperly Limits “Position Information” to Information Specifying a Location in 3D Space.

The Commission erred in construing “position information” as “information

specifying a location in 3D space.” A7675 at ¶5. The Commission’s construction

improperly requires that the “position information” specify a single location in

space. The Commission’s construction excludes one- or two-dimensional position

information. But “to disavow claim scope, the specification must contain

expressions of manifest exclusion or restriction, representing a clear disavowal of

claim scope.” Retractable Technologies, Inc. v. Becton, Dickinson and Co, 653

F.3d 1296, 1306 (Fed. Cir. 2011) (emphasis added). And as described above, the

intrinsic and extrinsic evidence demonstrate that the plain and ordinary meaning of

“position information” includes relative position information like knowing that an

object is “above” or “to the left of” another object. See Section VII.B.2 supra.

And the Asserted Patents do not clearly disclaim one or two dimensional relative

position information.

c. The Commission Mistakenly Excluded Highly-Relevant Evidence that Supports Motiva’s Constructions.

(1) The ALJ Mistakenly Concludes that it is “Improper to Consider an Incomplete


27

Reexamination Record when Construing the Claims.”

The Examiner’s interpretations in reexamination are highly-relevant:

“because an examiner in reexamination can be considered one of ordinary skill in

the art, his construction of the asserted claims carries significant weight.” St.

Clair Intellectual Property Consultants, Inc. v. Canon Inc., 2011 WL 66166, at *6

(Fed. Cir. Jan. 10, 2011) (emphasis added); Phillips v. AWH Corp., 415 F.3d 1303,

1317 (Fed. Cir. 2005) (“Like the specification, the prosecution history provides

evidence of how the PTO … understood the patent.”) (emphasis added).

And, Motiva’s own actions in reexamination are highly-relevant. Phillips v.

AWH Corp., 415 F.3d 1303, 1317 (Fed. Cir. 2005) (“Like the specification, the

prosecution history provides evidence of how … the inventor understood the

patent.”) (emphasis added). In reexamination, the Examiner rejected claims from

the Asserted Patents based on his interpretation of the “movement information”

and “position information” terms. In response, Motiva canceled or amended the

claims instead of arguing that the disputed terms should be construed more

narrowly to overcome the cited art. The “prosecution history can often inform the

meaning of the claim language by demonstrating how the inventor understood the

invention and whether the inventor limited the invention in the course of

prosecution, making the claim scope narrower than it would otherwise be.”

Phillips, 415 F.3d at 1317 (emphasis added). In response to the rejections, Motiva


28

did not limit the scope of the disputed terms. Certainly its actions militate against

a finding of a “clear and unmistakable disavowal” required to surrender certain

claim scope from the plain and ordinary meaning of these terms. Purdue Pharma

L.P. v. Endo Pharms. Inc., 438 F.3d 1123, 1136 (Fed. Cir. 2006).

Despite their relevance to claim construction, the Commission refused to

consider the reexaminations because the Commission mistakenly concluded that it

is “improper to consider an incomplete reexamination record when construing the

claims.” A7679 at ¶2.

But the Commission’s conclusion is contrary to law. A reexamination

proceeding is part of the prosecution history of a patent, and thus, is part of the

intrinsic evidence. See, e.g., Proctor & Gamble Co. v. Kraft Foods Global, Inc.,

549 F.3d 842, 848 (Fed. Cir. 2008); NAND Flash Memory Circuits, Initial

Determination at 13 (“The prosecution history, including the prior art cited, is part

of the intrinsic evidence . . . The prosecution history includes any reexamination

of the patent”). And the Federal Circuit has affirmed that a reexamination is part

of the intrinsic evidence even if the PTO has not issued a reexamination certificate.

See In re Katz Interactive Call Processing Patent Litigation, 639 F.3d 1303, 1324-

1325 (Fed. Cir. Feb. 18, 2011) (“Katz I”). In the Katz I, the Federal Circuit

affirmed the district court’s use of statements from an incomplete reexamination

for claim construction. Id.; In re Katz Interactive Call Processing Patent


29

Litigation, 2008 WL 4952454 (C.D. Cal. 2008) (“Katz II”). Indeed, like the

present case, the reexamination in Katz I was on appeal to the Board of Patent

Appeals and Interferences at the time the district court ruled and would not

conclude until years after the district court relied on the reexamination record for

claim construction. Id.; Katz II.

What is more, in a case the Federal Circuit remanded back to the district

court, the Federal Circuit instructed the court to monitor an incomplete

reexamination proceeding to determine the reexamination’s impact on claim

construction: “Additionally, we note that, on remand, the district court’s

consideration of the four factors may require it to interpret the claims, which are

presently under review by the PTO. The district court should monitor the

proceedings before the PTO to ascertain whether its construction of any of the

claims has been impacted by further action at the PTO or any subsequent

proceedings.” Procter & Gamble Co. v. Kraft Foods Global, Inc. 549 F.3d 842,

848 (Fed. Cir. 2008) (emphasis added). Further, district courts have held that “a

court may look to incomplete reexamination proceedings during claim

construction.” Tesco Corp. v. Weatherford International, Inc., 722 F.Supp.2d 737,

2010 WL 1443540, *4 (S.D. Tex. 2010); Beneficial Innovations, Inc. v. Blockdot,

Inc. 2010 WL 2246291, 2 (E.D. Tex.) (E.D.Tex. 2010).


30

The Commission relied on the F5 Networks case from the Western District

of Washington for his conclusion that it is “improper to consider an incomplete

reexamination record when construing the claims.” A7679 at ¶2 (citing F5

Networks Inc. v. A10 Networks, Inc., 2011 WL 268112, at *4 (W.D. Wash. July 8,

2011)). But the Commission misunderstands the holding of F5 Networks. In F5

Networks, the defendant requested reexamination of the asserted patents, and after

an initial reexamination process, the PTO denied each of the defendant’s requests.

The defendant appealed the PTO’s denial. But the defendant then submitted the

very findings it was appealing to the court as evidence for claim construction.

Thus, the court in F5 Networks said that it would not consider the “particular

evidence [defendant] submitted in this instance.” F5 Networks, 2011 WL 268112,

at *4.

And unlike F5 Networks, prosecution closed in the reexaminations of

Motiva’s patents months before trial, and no party disputed or appealed the

Examiner’s findings that Motiva cited. A775 (’151 reexamination prosecution

history); A786 (’268 reexamination prosecution history); 37 C.F.R. § 41.61; MPEP

§ 2673.02. Thus, even following the rationale of F5 Networks, the Commission

should have considered Motiva’s evidence from the reexaminations of the Asserted

Patents.


31

(2) The Commission Mistakenly Concluded that the Patent Examiner’s Statements are “Not Persuasive.”

The Commission also mistakenly concluded that an Examiner’s statements

during prosecution are “not persuasive” because the PTO “employs a broader

standard for claim construction.” A7679 at ¶2. The Commission’s conclusion

runs contrary to law. The Federal Circuit has held that “because an examiner in

reexamination can be considered one of ordinary skill in the art, his construction of

the asserted claims carries significant weight.” St. Clair Intellectual Property

Consultants, Inc. v. Canon Inc., 2011 WL 66166, at *6 (Fed. Cir. Jan. 10, 2011)

(emphasis added). Indeed, Federal Circuit case law is replete with examples in

which the court considered the Examiner’s claim interpretations in re-examination

as a significant part of the claim construction analysis. See, e.g., St. Clair

Intellectual Property Consultants, Inc. v. Canon Inc., 2011 WL 66166, *6 (Fed.

Cir. 2011); On Demand Machine Corp. v. Ingram Industries, 442 F.3d 1331,

1338–39 (Fed. Cir. 2006). Thus, the Commission should have considered and

given “significant weight,” to the evidence that Motiva presented regarding the

Examiner’s construction of Motiva’s claims in reexamination.

4. The Record Supports Reversal of the Commission’s Constructions.

The record before the Court supports reversal of the Commission’s

construction of the “movement information” and “position information” terms.


32

This Court reviews a lower court’s application of a construction that is

“inconsistent with its earlier claim construction” de novo to determine the correct

construction. Vita-Mix Corp. v. Basic Holding, Inc., 581 F.2d 1317, 1324 (Fed.

Cir. 2009). In Vita-Mix, the trial court construed the claim to include the limitation

“not including a method of stirring to disperse, dislodge, or break-up an air pocket

after it has begun to form.” Id. at 1323 (emphasis added). But in its infringement

analysis, the court found that the claims should exclude “all stirring.” Id. at 1324

(emphasis in original). On review, the Federal Circuit held that the trial court’s

mistake was a mistake in claim construction and therefore a matter of law subject

to de novo review. Id. at 1324.

Like the trial court in Vita-Mix, in this case the Commission applied a

construction for “movement information” that was inconsistent with its initial

construction. Thus, as in Vita-Mix, the Court should review the Commission’s

construction of the “movement information” terms de novo to determine the

correct construction.

This is not merely a “disagreement over the Commission’s application” of

its construction to the Accused Products. Cf. Tessera, Inc. v. Int’l Trade Com’n,

646 F.3d 1357, 1364 (Fed. Cir. 2011). In Tessera, the court’s application of its

construction did not contradict the construction, thus this Court reviewed the

infringement analysis for substantial evidence. Id. at 1364-65. In this


33

Investigation, the Commission initially appeared to construe the “movement

information” terms as (1) including “changes in position and/or orientation” and

(2) as not having the three-dimensional (3D) limitation Nintendo proposed. But

contrary to its apparent construction, the Commission then eliminated “changes”

from its construction and added a 3D limitation when it applied its construction.

As discussed above, the evidence demonstrates that the proper construction

of “movement information” is “information about changes in position and/or

orientation” without a 3D limitation. See Section VII.B.1 supra.

The Court should also review the Commission’s construction of “position

information” without deference. See Alloc, 342 F.3d at 1368. And, considering all

of the evidence before the Court, the proper construction for “position

information” is “information about location relative to a reference location.” See

Section VII.B.2 supra.

C. Infringement

1. The Wii Determines “Movement Information.”

a. The Commission’s Findings2 Establish that the Wii Determines “Movement Information.”

Under the proper construction of “movement information,” the

Commission’s findings establish that the Accused Products infringe. For example,

the Commission found that the Wii determines [

2 The Commission did not issue any Findings of Fact or formally state the facts on which it based its conclusions.


34

] Angular velocity is the change in orientation over

time, or how fact the angle is changing. A7949 at ¶3-A7950 at ¶1. Thus, angular

velocity itself is movement information. Further, the Commission found that the

[

] A7776 at ¶4-A7777 at ¶1 (emphasis in original);

A9792 at Q. 401. Thus, the Wii determines [

] And because the proper construction of “movement”

includes “changes in orientation,” the Wii “determines movement information.”

What is more, because the proper construction of these terms does not

include a three-dimensional limitation, the [

] The Commission also found that the Wii detects [

] A7776 at ¶1 and 5. And yaw is

a measure of orientation in one dimension. A9792 at Q. 401. Thus, the

Commission’s findings demonstrate that the Wii determines changes in orientation

– or movement information – in the yaw axis.

Even if the term “movement” is mistakenly construed as “position and/or

orientation” instead of “changes in position and/or orientation,” the Commission’s

findings demonstrate that the Accused Products determine “movement

information.” The Commission found that the Wii determines [


35

] A7776. And the Commission found that the Wii determines

[

] A7776 at ¶4-A7777 at ¶1. With the initial pitch

and roll, and changes in pitch and roll, the Wii determines [

] A7777. Thus, even under the unduly

narrow construction of “movement information” requiring orientation at a moment

in time (instead of just determining the changes in orientation), the evidence the

Commission cited in the ID shows that the Wii meets this limitation by

determining the orientation in two dimensions – pitch and roll.

b. The Evidence Adduced at Trial Establishes that the Wii Determines “Movement Information.”

Further, a review of the entire record confirms that the Accused Products

determine “movement information.” For example, the record establishes that the

Wii Remote contains a rate gyroscope that measures “angular velocity in the pitch,

yaw, and roll directions.” A2949 at ¶3; A9035. And the record shows that the Wii

Console determines [(

.]

A7949 at ¶3-A7950 at ¶1; A9036; A10221-A10223; A20409 at 3-A20418 at 7;

A10547.


36

Angular velocity is movement information: the change in angle with time.

A7949 at ¶1-A7950 at ¶3. Thus, because the Wii Console [

] A7950 at ¶1; A9036. [

] A7950 at ¶1; A9036; A20399 at 24-A20400 at 22, A20411 at 7-

A20412 at 3. Thus, the Wii System also tracks changes in orientation of the Wii

Remote.

The Wii Console also uses the other motion sensors in the Remote, the

accelerometers and DPD, to [

] A7950 at ¶2; A8084 at ¶4-5-A8085 at ¶1; A10221-A10223; A9036;

A20477 at 10-17, A20481 at 17-A20485 at 18.

Several of the games demonstrated at trial illustrate that the Wii uses the

tracked orientation information to control on-screen actions. A7950 at ¶3; A20174

at 2-A20178 at 14, A20181 at 7-A20187 at 3, A20388 at 21-A20394 at 24.

Thus, the record demonstrates that the accused Wii products “determine

movement information” and “track a user’s movement” under the proper

construction of these terms. The Commission’s infringement analysis for

“movement information” is unsupported by substantial evidence because (1) the


37

Commission’s infringement analysis directly contradicts its apparent construction;

(2) the Commission’s factual findings establish infringement under the correct

construction; and (3) the complete record established that the Accused Products

infringe under the proper construction.

2. The Evidence Adduced at Trial Establishes that the Wii Determines “Position Information.”

As discussed above, the proper construction for “position information” is

“information about location relative to a reference location.” The evidence

establishes that the Accused Products determine “position information” under this

construction.

First, Nintendo’s own documents demonstrate that the DPD device

determines “position information.” [

] A7952

at ¶3; A8995, A8998; A9897 at Q. 552, A9972 at Q. 690. [

] A7952 at ¶3; A8998.

And while the DPD may not always calculate the exact distance of the

Remote from the Sensor Bar, it calculates a value indicative of relative distance


38

sufficient to determine whether the user is moving the Remote forward or

backward and to sufficient determine how fast the distance between the Remote

and Sensor Bar is changing as demonstrated at trial with Wii Billiards. A20189 at

11-A20191 at 10; A9908 at Q. 586.

Indeed, the DPD has several purposes that rely on tracking position of the

Remote. [

] A7953 at ¶

3; A8824. [ ]

Numerous other Nintendo technical documents as well as trial testimony

show that the Wii System determines “position information” for the Wii Remote.

See, e.g., A20428 at 16-A20430 at 16 ([

]); A21624 at 6-A21625 at 7 ([

]);

A8940-8955; A8998 ([

]); A9000; A9415-A9416 at 33:3-34:8 ([

]); A9489 at 45:21-48:24; A7955.


39

Based on the evidence in the record, the Wii System determines “position

information” under the proper construction of that term, and the Commission’s

finding of noninfringement is unsupported by substantial evidence.

D. Domestic Industry: Economic Prong

1. Motiva Was In The Process Of Establishing A Domestic Industry From 2003-2007.

Motiva is a product-driven licensing company; like many other start-ups and

institutions, Motiva has focused its efforts on inventive work with the express

desire to see its inventions put to use in the real world. In particular, Motiva has

focused on creating human movement measurement technology that allows users

to interact physically with a virtual world in a video game environment. A7810 at

¶4; A8553 at ¶2. Motiva’s goal was to combine gaming and physical activity in a

way that is fun – and makes everyone from children to the elderly want to get up

and play. A20937 at 3-15. The system consists of one or two handheld devices

that communicate wirelessly with a base station. A7810 at ¶4, A9519 at Q. 48.

The handheld devices contain motion sensors, allowing the system to determine

movement information and render the user’s movements in a virtual environment.

As the user, holding the controllers, moves her hands, an avatar or other animation

moves accordingly in the virtual world.

Motiva spent hundreds of hours building prototypes to demonstrate the

invention to potential business partners. A7819; A8556-A8557. Part of the


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demonstration prototype was computer video game software that the inventors

coded themselves to highlight the movement-based interface. A8572 at ¶2-3;

A9577 at Qs. 265-269. One such game was a “Brick-breaker” style game where

the user would move his hand side-to side to get a bar on the screen to move in

time to bounce a ball towards a series of animated bricks. Id. Another involved an

avatar that would move side-to-side, forward and aft, and would jump up and

down, based upon the user’s own movements of the handheld controllers. A9364 at

¶1.

But Motiva did not endeavor to be a manufacturing company. A9518-

A9519 at Q. 47. Instead, Motiva looked for business partners that would license

Motiva’s technology and work with Motiva to productize its inventions. Id. In

essence, Motiva’s inventions are its products because Motiva seeks its revenue

through the licensing and other marketing of its inventions, not by selling finished

products. Indeed, the record reflects Motiva’s concerted efforts to do exactly that

from 2003 to 2007, a period of time during which the Commission found that

“Motiva was taking tangible steps to establish an industry in the United States.”

A7833 at ¶4.

For example, Motiva spent significant time developing demonstration

prototypes and presentations to investors and business partners. A7810 at ¶5-

A7814 at ¶2. And, even before its patent had issued, Motiva presented its


41

technology to several potential business partners, with an eye towards joining with

them to develop a product once the patent issued. A7811 at ¶3-A7812 at ¶1,

A7813 at ¶3-A7814 at ¶2.

2. Motiva Continued To Invest In Establishing A Domestic Industry From 2007-2010.

But the landscape changed in late 2006, when Nintendo launched its own

human movement gaming system, the Wii, with great publicity and to wide

acclaim. A10160 at Qs106-108; A9216; A9219; A9233; A9234. Motiva was

stunned and dismayed by the Wii’s release. A10131 at Qs. 144-145. To Motiva’s

principals, the Wii captured the very essence of their invention. A9563 at Q. 305-

A9564 at Q. 309. Like Motiva’s invention, the Wii too used handheld controllers

with embedded motion sensors that communicated wirelessly with a base station.

Id. And also like Motiva’s invention, the Wii’s processing system would render a

virtual environment in the form of simple video games, with an avatar or object on

the screen responding to and reflecting the user’s movements. Id. As Nintendo

itself described the Wii to the world: “as [the user] is subtly rotating her wrist, that

precise action is being reflected on screen in real time at the exact angles she is

moving. And as she moves her hand in front of her in space, it knows exactly

where her hand is. That’s what the Wii Motion Plus does.” A10549; 21634 at 14-

20 (transcription of A10549 Video [mistranscribing “subtly” as “suddenly”]).


42

And Nintendo launched its Wii product at a critical time for Motiva – shortly

before Motiva’s patent issued and before it had secured a deal with a

manufacturing partner to productize its invention. A9562-A9563 at Qs. 300-303.

Because Motiva was selling an invention – not a finished product – the Wii’s high-

profile entrance cast doubt on the value of Motiva’s invention. A9564 at Qs. 307-

309. Because the value of Motiva’s invention came from its patent rights, potential

licensees were left to wonder: if Nintendo can so prominently and successfully use

Motiva’s technology without buying a license, why would any manufacturing

partner invest in a license from Motiva? A8579 at ¶3-A8581 at ¶3. In fact, the

record shows that, in the eyes of Motiva’s principles, and in the eyes of Motiva’s

business contacts, Nintendo’s Wii directly competed with Motiva’s product,

namely the then-patent-pending technology embodied in the patents in suit. Id.

Still Motiva did not give up. It scheduled a meeting with a company, Koko

Fitness, that held the possibility of leading Motiva to new partnership

opportunities, even in the face of the Wii. A7816 at ¶2. But the meeting did not

go well. Koko Fitness’ president commented that:

Nintendo had just introduced ... what I would consider a conceptually similar product. Similar technology might be a better way to put it.... [A10459 at 40-17:21]. So you’ve got a very large, strong competitor already in the market with a good product and a low-priced product, so I asked him [Gronachan] the question: How would he compete? And then I offered him advice: I think it's going to be difficult to bring a product to market with that market dynamic.... [A10457 at 21:19-24]. [I]f you were going to try to do a joint development with another company or if you were going to try to


43

license this or if you were going to try to raise money to launch/manufacture this product, that will be a question that will need to be answered. [A10461 at 43:5-15]. Thus, based upon their own perception that their invention was

unmarketable in the face of the infringing Wii, and the confirmation of that view

they received from Koko Fitness, Motiva made the business judgment that it would

not be successful unti

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