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PUBLIC VERSION

UNITED STATES INTERNATIONAL TRADE COMMISSION


WASHINGTON, D.C.

In the Matter of

CERTAIN MOBILE ELECTRONIC Investigation No. 337-TA-1065


DEVICES AND RADIO FREQUENCY AND
PROCESSING COMPONENTS THEREOF

RESPONDENT APPLE INC.’S WRITTEN SUBMISSION REGARDING THE


COMMISSION’S QUESTIONS ON THE ISSUES UNDER REVIEW, AND ON REMEDY,
BONDING, AND THE PUBLIC INTEREST

(83 Fed. Reg. 64875 (Dec. 18, 2018))


PUBLIC VERSION

TABLE OF CONTENTS

Page

I. INTRODUCTION ........................................................................................................... 1

II. RESPONSES TO QUESTIONS REGARDING THE ’490 PATENT .............................. 1

QUESTION A ................................................................................................................. 1

QUESTION B ................................................................................................................. 7

QUESTION C ............................................................................................................... 10

QUESTION D ............................................................................................................... 17

QUESTION E ............................................................................................................... 18

QUESTION F................................................................................................................ 19

QUESTION G ............................................................................................................... 21

QUESTION H ............................................................................................................... 22

QUESTION I ................................................................................................................ 26

III. RESPONSES TO QUESTIONS REGARDING THE PUBLIC INTEREST .................. 29

QUESTION A ............................................................................................................... 29

A. Hearing Evidence on Design Changes. ............................................................... 30

B. The Recent Design Change To The Accused Products—Which Qualcomm


Conceded Would Not Infringe............................................................................ 31

QUESTION B ............................................................................................................... 32

QUESTION C ............................................................................................................... 36

A. A Carve-Out For 5G-Capable iPhone Models Without A Delay Would


Not Prevent Intel’s Exit From The Market For Premium Baseband
Chipsets. ............................................................................................................ 37

1. A 5G Carve-Out Would Not Be Sufficient to Prevent Intel from


Losing Apple’s 4G Baseband Chipset Business. ..................................... 37

2. Without Apple’s 4G Business, Intel Would Lack Critical Revenue


And Access To The U.S. Market. ........................................................... 38

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B. A Carve-Out For Research And Testing Would Be Insufficient. ......................... 41

QUESTION D ............................................................................................................... 43

QUESTION E ............................................................................................................... 45

A. The Commission Should Consider National Security Concerns. ......................... 46

B. 5G Presents Critical National Security Concerns. ............................................... 46

C. The Loss Of Intel As A Baseband Chipset Supplier Would Harm U.S.


National Security Interests. ................................................................................ 50

IV. REMEDY AND BONDING .......................................................................................... 53

A. Any Remedy Should Contain A Certification Provision And Exemptions


For Imported Spare Parts And Replacement Articles And Existing
Inventory. .......................................................................................................... 53

B. No Bond Should Be Required In Any Remedial Order. ...................................... 55

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TABLE OF AUTHORITIES

Page(s)

Federal Cases

Asyst Techs., Inc. v. Emtrak, Inc.,


402 F.3d 1188 (Fed. Cir. 2005)............................................................................................ 10

Augme Techs., Inc. v. Yahoo!, Inc.,


No. C 09-05386 JCS, 2011 WL 6048817 (N.D. Cal. Sept. 27, 2011),
aff’d, 755 F.3d 1326 (Fed. Cir. 2014) .................................................................................... 7

Auxilium Pharm., Inc. v. Watson Labs., Inc.,


No. 12-3084 JLL, 2014 WL 9859224 (D.N.J. Dec. 16, 2014) .............................................. 28

Certain Audio Processing Hardware, Software, And Products Containing Same,


Inv. No. 337-TA-1026, ID at 95 (Oct. 26, 2017) .................................................................. 54

Certain Baseband Processor Chipsets,


Inv. No. 337-TA-543 ........................................................................................................... 43

Certain Electronic Devices, Including Wireless Communication Devices,


Inv. No. 337-TA-794, Comm’n Op. at 114-15 (July 5, 2013)................................... 53, 54, 55

Certain Inclined-Field Acceleration Tubes & Components Thereof,


Inv. No. 337-TA-67, Comm’n Op. at 29 (Dec. 29, 1980) ..................................................... 46

Certain Ink Cartridges and Components Thereof,


Inv. No. 337-TA-565, Comm’n Op. at 7 (Sept. 24, 2009) ...................................................... 9

Certain Liquid Crystal Display Devices,


Inv. No. 337-TA-631, Comm’n Op. at 27 (July 14, 2009).................................................... 53

Certain Mobile Devices, Associated Software, and Components Thereof,


Inv. No. 337-TA-744, Comm’n Op. at 21-22 (June 5, 2012) .......................................... 53, 54

Certain Personal Data Devices,


Inv. No. 337-TA-710 ............................................................................................... 43, 44, 46

Certain Rubber Antidegradants, Components Thereof, and Products Containing


Same, Inv. No. 337-TA-533, Comm’n Op. at 39-49 (July 21, 2006) .................................... 55

In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litig.,


676 F.3d 1063 (Fed. Cir. 2012)............................................................................................ 27

Graham v. John Deere Co.,


383 U.S. 1 (1966) ................................................................................................................ 27

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PUBLIC VERSION

In re Huai-Hung Kao,
639 F.3d 1057 (Fed. Cir. 2011)............................................................................................ 28

MEMS Tech. Berhad v. Int’l Trade Comm’n,


447 F. App’x 142 (Fed. Cir. 2011)......................................................................................... 9

Merck & Cie v. Gnosis S.P.A.,


808 F.3d 829 (Fed. Cir. 2015).............................................................................................. 28

Neopost Industrie B.V., Neopost, Inc. v. PFE Int’l, Inc.,


No. 04 C 5047, 2005 WL 6266289 (N.D. Ill. Apr. 26, 2005) ................................................. 7

Perfect Web Techs., Inc. v. InfoUSA, Inc.,


587 F.3d 1324 (Fed. Cir. 2009)............................................................................................ 28

Praxair, Inc. v. ATMI, Inc.,


543 F.3d 1306 (Fed. Cir. 2008).............................................................................................. 9

Prometheus Labs., Inc. v. Roxane Labs., Inc.,


805 F.3d 1092 (Fed. Cir. 2015)............................................................................................ 27

Purdue Pharm. Prod. L.P. v. Actavis Elizabeth LLC,


No. CIV.A. 12-5311 JLL, 2015 WL 5032650 (D.N.J. Aug. 25, 2015) ................................. 28

Qualcomm Inc. v. Apple Inc.,


3:17-cv-01375 (S.D. Cal.) ................................................................................................... 45

Regents of Univ. of Cal. v. Broad Institute, Inc.,


903 F.3d 1286 (Fed. Cir. 2018)............................................................................................ 29

Schering Corp. v. Amgen Inc.,


18 F. Supp. 2d 372 (D. Del. 1998) ......................................................................................... 7

Texas Instruments Inc. v. U.S. Int’l Trade Comm’n,


988 F.2d 1165 (Fed. Cir. 1993)............................................................................................ 27

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PUBLIC VERSION

I. INTRODUCTION

An exclusion order should not issue because there is no violation of Section

337. Administrative Law Judge Pender’s findings regarding infringement, technical prong, and

validity for the ’490 patent were incorrect. As set forth in Section II in response to Questions A-I, the

Administrative Law Judge erred in both claim construction and application of the claims to the facts,

and his determination regarding the technical prong of the domestic industry requirement rests on

erroneous legal conclusions. Apple respectfully requests that the Commission find no violation.1

But, if the Commission affirms the Administrative Law Judge’s finding of a violation with

regard to the ’490 patent, Apple submits that, for the reasons described below in Section III in response

to Questions A-E and those set forth in the Administrative Law Judge’s Initial and Recommended

Determination, issuing an exclusion order poses grave harms to the public interest. The Administrative

Law Judge correctly found that “an exclusionary order will leave only one premium baseband chip

maker in the merchant market,” and “competition is necessary for quality, innovation, competitive

pricing, and … the preservation of a strong U.S. presence in the development of 5G and thus the

national security of the United States.” (ID at 195.)

II. RESPONSES TO QUESTIONS REGARDING THE ’490 PATENT

QUESTION A. With regard to the ʼ490 patent, please explain the plain and ordinary
meaning of the term “hold” in the context of claim 31 of this patent. In

1
On January 15, 2019, the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office
issued a decision instituting inter partes review (IPR) for claim 31 of the ’490 patent. IPR2018-01261,
Paper 8. In that decision, the Board concluded “there is a reasonable likelihood” that claim 31 is
unpatentable as obvious in view of the Heinrich and Balasubramanian prior art references discussed
below, id. at 2, 37—including because (1) a person of ordinary skill in the art would have been
motivated to combine Heinrich and Balasubramanian, which are “analogous art” and “in the same field
of endeavor as the ’490 patent—namely, power saving techniques in computing devices,” id. at 26-30,
31-32, and (2) “the ordinarily skilled artisan would have been motivated to add Balasubramanian’s
disclosure of pulling data to Heinrich’s disclosures to achieve the benefits of Balasubramanian and
thereby arrive at the claimed invention.” Id. at 30-31, 32-37. Although the Board’s IPR decision
addressed and departed from the Administrative Law Judge’s substantive analysis in certain key
respects, Apple has not relied on the IPR decision in responding to the specific questions below per
the Commission’s guidance to limit those responses to the hearing record.
PUBLIC VERSION

particular, explain whether the ordinary meaning of “hold” can mean


both “to store, buffer, or accumulate” data and “to prevent data from
traveling across the bus,” or whether “hold” must be limited to one
construction or the other.

At the hearing, Apple demonstrated that, in the context of claim 31 of the ’490 patent, the term

“hold” should be given its plain and ordinary meaning: i.e., to store, buffer, or accumulate data in a

memory.2 By contrast, there is no proper basis to construe “hold” as meaning “to prevent data from

travelling across the bus,” as the Administrative Law Judge incorrectly found—based on Qualcomm’s

flawed arguments that the “processor configured to hold” limitations can be met if data is stored by

any component located anywhere on the same side of the bus as the processor. (APre-HB at 56-58;

AIPost-HB at 30-32; ARespPost-HB at 30-32; APet at 45-50; RX-7C [Yalamanchili] at Q.52-61, 177-

89, 228; RX-1607C [Yalamanchili] at Q.94-106.) Even if the Commission determines that the “hold”

limitations of claim 31 should be construed to include a “to prevent data from traveling across the bus”

requirement, any such construction should also include the plain meaning “to store, buffer, or

accumulate” requirement that Apple has proposed.

Specifically, claim 31 of the ’490 patent requires “a modem processor … configured to hold

modem processor to application processor data until expiration of the modem timer,” and “an

application processor … configured to hold application processor to modem processor data.” (JX-3

[’490 patent] at claim 31.) As used in that context, the plain and ordinary meaning of “hold” requires

the application processor to be configured to store, buffer, or accumulate uplink data in its own

memory, and for the modem processor to be configured to store, buffer, or accumulate downlink data

in its own memory.3 In other words, the processor is what holds the data, just as claim 31 specifies.

2
Because the terms “store,” “buffer,” and “accumulate” are synonyms, in certain instances, Apple has
used the term “store” as a shorthand in this brief to refer to all three terms.
3
As the Administrative Law Judge found, a processor includes components for logic processing. (ID
at 76 (“[I]n the context of the ’490 patent, ‘processor’ refers to the system components responsible for
logic processing….”).) Processor circuitry can also include internal memory (such as SRAM) that can
store, buffer, or accumulate data, and claim 31 requires each processor to “hold” (i.e., store, buffer, or
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That same conclusion is reinforced by other language in claim 31 requiring the modem processor to be

“further configured [to] pull data from the application processor”—i.e., data is pulled “from the

application processor” because that is where it is stored. (Id.; RX-7C [Yalamanchili] at Q.177-89; RX-

1607C [Yalamanchili] at Q.98; RX-1484C [Krishna] at 125:8-126:8; Tr. [Krishna] at 682:3-683:17.)

The ’490 specification also uses the term “hold” consistently with the plain meaning that Apple

identified. For example, the patent attributes the power savings supposedly resulting from the claimed

invention to “holding or accumulating the data at a source processor.” (JX-3 [’490 patent] at 2:12-

15, 5:32-35; id. at 2:16-20 (describing “accumulated data transfer”); id. at 4:24-29 (referring to

“receipt of the accumulated data from the application processor”); id. at 10:50-53 (“the application

processor 34 may buffer uplink data packets into local memory”).) These references to “holding or

accumulating data at a source processor” and having the processor “buffer [data] into local memory”

unambiguously refer to storing data at the processor itself.

Applying the plain meaning of “hold” also is supported by the extrinsic evidence. For instance,

on cross-examination, ’490 named inventor Murali Krishna and Qualcomm’s expert Dr. Jacob Baker

both conceded that “hold” as used in the ’490 patent refers to storing, accumulating, or buffering data

in memory. (Tr. [Krishna] at 660:17-19 (agreeing “accumulation refers to buffering data in

memory”); Tr. [Baker] at 790:14-17 (agreeing “it’s possible to hold data on chip with a processor …

[because] [p]rocessors have memory”).)

Despite this intrinsic and extrinsic evidence, and without addressing it, the Administrative Law

Judge incorrectly adopted Qualcomm’s argument that “hold” merely means “to prevent data from

traveling across the bus.” (ID at 75.)

First, the Administrative Law Judge cited a sentence in the ’490 specification that uses

accumulate) data in this internal memory. (APre-HB at 7-8, 56-58; AIPost-HB at 30-32; ARespPost-
HB at 30-32; APet at 49-50.)

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“holding” as a synonym for “accumulating”: “By holding or accumulating the data at a source

processor in this fashion, unnecessary transitions between low power states and active states on the

PCIe bus are reduced and power is conserved.” (Id. (citing JX-3 [’490 patent] at 2:12-15, 5:32-35.)

But that statement in the patent is (1) consistent with Apple’s reading of claim 31 as requiring storing,

buffering, or accumulating data at the processors, i.e., the modem and application processors, and

(2) inconsistent with Qualcomm’s argument that the patent is agnostic as to where uplink and

downlink data is held. (ARespPost-HB at 30; APet at 46-47.)

Second, the Administrative Law Judge relied on the patent’s statement that “as data is received

by a modem processor in a computing device, the data is held until the expiration of a modem timer.

The data is then passed to an application processor in the computing device over a peripheral

component interconnect express (PCIe) interconnectivity bus.” (ID at 75 (citing JX-3 [’490 patent] at

1:65-2:3).) But that description—which explains that downlink data is “held” as it “is received by a

modem processor”—only reinforces that the requirement for a processor to “hold” data refers to

storing the received data at the processor (until the modem timer expires). The other aspects of that

sentence concerning how the held data is “then passed” from the modem processor to the application

processor relates to the separate requirement of claim 31 involving “transmission of the modem

processor to application processor data.” (AIPost-HB at 30-31; APet at 46-47.)

Third, the Administrative Law Judge found that Qualcomm’s “to prevent data from traveling

across the bus” construction was warranted based on statements in the ’490 patent that held data is

“released,” including in the following sentence: “After arrival of the modem data at the application

processor 34, the application processor 34 releases any application data that has been held at the

application processor 34.” (ID at 75 (citing JX-3 [’490 patent] at 9:61-64).) But nothing in that passage

suggests that use of the word “releases” was intended to transform the plain meaning of “hold” into a

new “prevent” requirement. Rather, if anything, that passage confirms that data is first “held” (i.e.,

stored) at a processor—as Apple has proposed—and later “released” (i.e., transmitted). In other words,
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the sentence treats holding and releasing data as two separate concepts, consistent with the

requirements in claim 31 for a processor configured to hold data at the processor that later transmits

the held data across the bus (upon expiration of the modem timer).

The Administrative Law Judge also cited the specification’s related statements that: (1) for the

embodiment of Figure 4, “[i]f modem data is present, the modem data is released by the modem

processor 44 through the interconnectivity bus 36 to the application processor 34 (block 82)” (id. at

9:37-40); and (2) for the embodiment of Figure 6, “[i]f application data is present, the application data

is released by the application processor 34 through the interconnectivity bus 36 to the modem processor

44 (block 122).” (Id. at 11:12-14; ID at 75). But neither sentence bears on how (or where) uplink or

downlink data is “held.” That is because, as shown in Figure 4 below, the steps in which data is “held”

occur in block 76 (for the application processor) and block 78 (for the modem processor), while the

passage in column 9 that the Administrative Law Judge cited (about how data is “released”) involves

a different, later step in block 82 where data is “sent” after the modem timer expires:

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(Id. at Fig. 4; id. at 9:27-40 (“The application data is held at the application processor 34 (block 76),

and the modem data is held at the modem processor 44 (block 78) while the timers are running. …

The modem timer expires (block 80). If modem data is present, the modem data is released by the

modem processor 44 through the interconnectivity bus 36 to the application processor 34 (block

82).”).)4

It would be improper to re-define the “hold” limitations based on how the specification uses a

4
The same is true for the “released” reference that the Administrative Law Judge cited in column 11,
which involves a similar disclosure in connection with Figure 6. (Id. at 11:3-14 (“The application data
is held at the application processor 34 (block 116), and the modem data is held at the modem processor
44 (block 118) while the timers are running. … The application timer expires (block 120). If
application data is present, the application data is released by the application processor 34 through the
interconnectivity bus 36 to the modem processor 44 (block 122).”); id. at Fig. 6 (describing steps in
which data is “held” in blocks 116 and 118, and step to later “send” data in block 122).)

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different word (“released”) concerning an entirely different step from the “holding” steps. See Augme

Techs., Inc. v. Yahoo!, Inc., No. C 09-05386 JCS, 2011 WL 6048817, at *15 (N.D. Cal. Sept. 27, 2011)

(rejecting patentee’s “reliance on two unrelated portions of the specification” for proposed

construction), aff’d, 755 F.3d 1326 (Fed. Cir. 2014); Neopost Industrie B.V., Neopost, Inc. v. PFE Int’l,

Inc., No. 04 C 5047, 2005 WL 6266289, at *5 (N.D. Ill. Apr. 26, 2005) (rejecting proposed construction

“based entirely on an unrelated portion of the written description”); Schering Corp. v. Amgen Inc., 18

F. Supp. 2d 372, 398 (D. Del. 1998) (rejecting reliance upon portions of the specification “unrelated

to the disputed claim language”).

Nevertheless, to the extent the Commission determines that the “hold” limitations of claim 31

should be construed to include a “to prevent data from traveling across the bus” requirement, any such

construction should also include the “to store, buffer, or accumulate” construction that Apple has

proposed—which is a necessary component of any proper plain meaning definition of “hold” for the

reasons noted above.

QUESTION B. Assuming “hold” could be interpreted to mean “to store, buffer, or


accumulate” data and “to prevent data from traveling across the bus,” as
set forth in Question (A), explain whether that construction would affect
the ALJ’s findings on infringement or the technical prong of domestic
industry, and if so, how.

To the extent the Commission construes “hold” to mean “to store, buffer, or accumulate data”

and “to prevent data from traveling across the bus,” there would be no infringement or domestic

industry with respect to the ’490 patent for the following reasons.

First, if “hold” requires “to store, buffer, or accumulate data,” the “modem processor

configured to hold modem processor to application processor data” limitation of claim 31 only can be

met by a modem processor that stores, buffers, or accumulates downlink data in its own internal

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memory.5 At the hearing, Apple offered undisputed evidence that: (1) in the Apple iPhone products

accused of infringing the ’490 patent (“the Accused ’490 Products”), the Intel modem processor does

not store downlink data in its own internal memory (instead, a DRAM memory external to the

processor holds the downlink data), and (2) in the Qualcomm test phones that Qualcomm alleged as

practicing claim 31 (“the Alleged ’490 Domestic Industry Products”),

. Accordingly, under the modified construction presented in Question B, there would no

infringement or domestic industry for this reason alone. (APre-HB at 56-69; ARespPost-HB at 22-35,

45-46; APet at 39-51, 60-61.)

Second, for the same reasons, construing “hold” to impose a “store, buffer, or accumulate data”

limitation also would mean that the “application processor configured to hold application processor to

modem processor data” limitation can only be met by an application processor that stores, buffers, or

accumulates uplink data in a memory within the application processor. The hearing record confirms

that requirement would not be met by: (1) the Accused ’490 Products,

; or (2) the Alleged ’490

Domestic Industry Products, which

. Thus, there would be no infringement or domestic industry under the modified

construction for this reason as well. (APre-HB at 56-69; ARespPost-HB at 22-35, 45-46; APet at 39-

51, 60-61.)

Third, modifying the construction of “hold” to mean “to store, buffer, or accumulate data” and

“to prevent data from traveling across the bus” would require proof that, after the uplink or downlink

data is stored, buffered, or accumulated, the claimed modem and application processors also must be

5
Claim 31 expressly requires the storing of downlink and uplink data to occur at the “processor,” and
not in some component external to the processor. (APre-HB at 56-69; ARespPost-HB at 22-35, 45-
46; APet at 39-51, 60-61.)

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configured to take steps to stop (i.e., “prevent”) the stored uplink and downlink data from

crossing the PCIe bus. In each of the Accused ’490 Products, for example,

but the application processor never takes any additional steps to “prevent” that stored uplink data from

traveling across the bus. Instead,

(APre-HB at 15-16; ARespPost-HB at 33, 38-39; APet at 38-39,

57-58.) At the hearing, however, Qualcomm maintained that this limitation was met simply because

the source code and timing diagrams showed that

. For this reason, there is no infringement or domestic industry technical prong under the

modified construction proposed by Question B.6

Finally, Qualcomm cannot overcome the failures of proof detailed above under a doctrine of

equivalents theory. As an initial matter, Qualcomm waived any equivalents theory for the “hold”

limitations: (1) by failing to raise any such a theory in its Ground Rule 7.4 disclosures (for either its

infringement or domestic industry contentions); and (2) by failing to petition for review after the

Administrative Law Judge did not accept Qualcomm’s equivalents arguments under the “hold”

limitations (for either the Accused ’490 Products or Alleged ’490 Domestic Industry Products). See

Certain Ink Cartridges and Components Thereof, Inv. No. 337-TA-565, Comm’n Op. at 7 (Sept. 24,

2009); ALJ Pender Ground Rule 7.4. (APre-HB at 61, 68 n.11, 12; ARespPost-HB at 33; APet at 50

n.21, 51 n.22.)

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The Commission is not required to accept Qualcomm’s interpretation of its own “prevent”
construction. See MEMS Tech. Berhad v. Int’l Trade Comm’n, 447 F. App’x 142, 151, 153 (Fed. Cir.
2011) (rejecting argument that it was “improper for the Commission to adopt a construction that the
parties did not propose,” further finding “the fact that neither party advanced the claim construction
adopted by the Commission is not legal error”); Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306, 1323-24
(Fed. Cir. 2008) (“Because the court has an independent obligation to construe the terms of a patent,
we need not accept the constructions proposed by either party[.]”).

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Any equivalents argument also would fail on the merits because applying claim 31 such that

uplink and downlink data can be held anywhere and by anything would read “application processor

configured to hold” and “modem processor configured to hold” out of claim 31—which would

improperly vitiate those limitations. See Asyst Techs., Inc. v. Emtrak, Inc., 402 F.3d 1188, 1195 (Fed.

Cir. 2005) (“[D]octrine of equivalents does not apply if applying the doctrine would vitiate an entire

claim limitation.”). Likewise, Qualcomm has never explained how claim 31 could be met (for either

its infringement or domestic industry allegations) under a doctrine of equivalents theory if “hold” is

construed to mean both “to store, buffer, or accumulate” data and “to prevent data from traveling across

the bus.” (APre-HB at 61-62; ARespPost-HB at 33-34; APet at 50 n.21, 51 n.22.)

QUESTION C. Assuming “hold” could be interpreted to mean “to store, buffer, or


accumulate” data and “to prevent data from traveling across the bus,” as
set forth in Question (A), explain whether that construction would affect
the ALJ’s analysis of either the Heinrich patent (U.S. Patent No. 9,329,671)
or the Balasubramanian patent (U.S. Patent No. 8,160,000) or his findings
on obviousness, and if so, how.

At the hearing, Apple established that claim 31 of the ’490 patent is obvious in view of a

combination involving U.S. Patent No. 9,329,671 (“Heinrich”) and U.S. Patent No. 8,160,000

(“Balasubramanian”)—both under the plain meaning of “hold” as proposed by Apple (“to store, buffer,

or accumulate”) and alternatively under Qualcomm’s application of its proposed construction (“to

prevent data from traveling across the bus”). In general terms, (1) Heinrich discloses an inter-processor

communication system and power-saving scheduling techniques that meet all elements of claim 31,

with the possible exception of the “pull … after transmission” limitation; and (2) Balasubramanian

discloses this “pull … after transmission” limitation (along with all other limitations of claim 31, except

a “modem processor” and an “application processor”). Thus, in light of this combination, it would

have been obvious to have a modem processor hold downlink data until expiration of a timer and an

application processor hold uplink data until the modem processor “pulls data from the application

processor after transmission of the modem processor to application processor data”—just as claim 31

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requires. (APre-HB at 77-83; AIPost-HB at 25-38; ARepPost-HB at 9-15; APet at 63-80.)

For the reasons below, claim 31 would still be obvious in view of those same references if the

Commission construes “hold” to mean “to store, buffer, or accumulate” data and “to prevent data from

traveling across the bus.”

“to store, buffer, or accumulate”: Heinrich and Balasubramanian each renders the “hold”

limitations of claim 31 obvious to the extent those limitations are interpreted to require the claimed

modem and application processors “to store, buffer, or accumulate” data. Specifically, as shown in

Figure 1 below, within mobile device 102, Heinrich teaches baseband processor 104 (the claimed

“modem processor,” highlighted in blue) and application processor 102 (the claimed “application

processor,” highlighted in red) coupled by an “IPC” bus (the claimed “interconnectivity bus,”

highlighted in yellow):

(Heinrich [RX-1146] at Fig. 1 (highlighting added); id. at 4:18-50 (user device 102 may be a “mobile

phone”); Tr. [Baker] at 1385:15-1386:8 (admitting Figure 1 discloses a “modem processor,”

“application processor,” and a bus coupling the processors); RX-7C [Yalamanchili] at Q.307-08; ID at

87-88 (“Heinrich discloses a modem processor and an application processor connected by an

interprocessor communication (‘IPC’) bus ….”).)

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Just like the ’490 patent, Heinrich teaches a power-saving technique in which: (1) data received

by one of the processors that is intended for the other processor is stored in memory for a period of

time, rather than sending the data as soon as it is received over the IPC bus to the other processor—to

reduce the number of times the receiving processor (and the bus coupled to it) has to transition to an

active state to handle the data; and (2) under the control of scheduler 120 on the baseband processor,

the stored data is later transmitted “in both directions” upon expiration of a “lazy timer.” (RX-1146

[Heinrich] at 12:52-55 (“A scheduler may implement the same scheduling techniques as those

described above [for downlink data], but configured to schedule [uplink] IPC activities from the

application processor 106 to the baseband processor 104.”); id. at 7:19-21 (“The scheduler 120 may

control the scheduling of IPC activities in both directions between the processors 104 and 106.”); id.

at 3:29-42, 7:8-21, 5:18-39, 8:7-32, 9:1-21, Figs. 1, 3; Tr. [Baker] at 1386:9-16 (admitting “[t]he

baseband processor in Heinrich can hold downlink data for later transmission to the application

processor” and “the application processor in Heinrich can hold uplink data for later transmission to the

baseband processor”); id. at 1387:1-12 (admitting “yes, it does mention there would be scheduling in

both directions”); id. at 1387:20-1388:2 (agreeing “when the lazy timer [in Heinrich] expires, the

baseband processor will transmit its aggregated downlink data to the application processor”); RX-7C

[Yalamanchili] at Q.304-19.)

In light of this disclosure, Heinrich alone discloses or renders obvious the portion of the

construction presented in Question C that requires the modem and application processors “to store,

buffer, or accumulate” data in memory. Heinrich discloses this limitation under Qualcomm’s incorrect

argument that claim 31 can be met if data is “held” anywhere on the processor’s side of the bus—given

Heinrich’s disclosure of a memory external to the baseband processor that stores held data. And the

limitation is obvious under the plain meaning of the claim as proposed by Apple, which requires the

processor itself to store the downlink data (which Heinrich does not explicitly disclose, but would have

been obvious). (Tr. [Baker] at 805:6-11 (“All we care about is holding data on each side of the bus. It
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doesn’t matter where it’s held….”); RX-1146 [Heinrich] at 4:42-43 (“[U]ser device 102 also includes

a memory 108 for storing data.”); id. at 11:57-58 (“[T]o delay file write accesses they are stored in a

cache memory of the baseband subsystem.”); id. at 11:58-66 (describing storage of data “in baseband

memory”); id. at Fig. 1 (showing external memory 108); RX-7C [Yalamanchili] at Q.360-69, 382-90.)7

Balasubramanian independently reinforces the obviousness of the “hold” limitations to the

extent they are construed to include a “to store, buffer, or accumulate” data requirement. Figure 1 from

Balasubramanian is shown below:

(RX-106 [Balasubramanian] at Fig. 1.) Balasubramanian explains that transceiver 110 (highlighted in

blue and found within user device 102) and network interface 112 (highlighted in red) can

7
The Administrative Law Judge’s findings about Heinrich confirm this conclusion. (ID at 88
(“Heinrich discloses the use of an IPC scheduler (computer program product) that may be used at a
first processor for delaying and grouping information … for sending to a second, remote processor at
a subsequent time period when the second processor will be in an active state, in order to allow the
second, remote processor to spend more time in a low power, sleep state where it does not process such
information”); id. at 88-89 (“By aggregating non real-time IPC activities at the first processor in this
manner, Heinrich’s device provides power savings by reducing the frequency with which the second,
remote processor must be woken up from a sleep mode where it is not able to receive remote processor
information.”); id. at 89 (“Heinrich teaches that delaying and grouping of non real-time sensitive IPC
activities can be done at either or both of the processors….”).)

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communicate with each other over communication link 116 (highlighted in yellow)—which the patent

explicitly states can be a wired bus. (RX-106 [Balasubramanian] at 4:43-57; Tr. [Baker] at 1388:25-

1389:8, 1395:16-1396:16 (admitting Balasubramanian discloses a transceiver and network interface

connected by a communication link and “teaches that the communication link … can be a wired

connection”); RX-7C [Yalamanchili] at Q.324-27.)

Balasubramanian further teaches that, when a processing node is in a “suspended state,” a

“portion of the apparatus” may be placed in a “reduced-power state.” When the processing node is in

that state, data packets are “queue[d]” (i.e., stored) in memory on both sides of the IPC bus when the

bus is not accessible, and upon expiration of a timer, the aggregated data is later transmitted in both

directions across the bus “during a single wake state.” (RX-106 [Balasubramanian] at 5:47-54 (“To

increase the amount of time the transceiver 110 is in the suspended state (and thereby conserve more

power), the user equipment 102 and/or the network interface 112 may be adapted to queue packets

while the transceiver 110 is in the suspended state. The equipment 102 and the interface 112 may be

adapted to group … the queued packets for transmission over the communication link 116 when the

transceiver 110 is in the active state.”); id. at 1:52-62, 6:46-57, 9:4-13; Tr. [Baker] at 1389:9-24

(conceding “Balasubramanian teaches that user equipment 102 can hold or store packets for later

transmission” and that “user interface 112 can hold or store packets for later transmission to the user

equipment 102”; id. at 1389:25-1390:14 (agreeing “when the transceiver 110 is transitioned to an

awake state, the network interface 112 can send its held packets to the transceiver,” and “transceiver

110 can transmit its stored data to the network interface after a configurable amount of time”; “a timer

is a reasonable way of determining that”); RX-7C [Yalamanchili] at Q.328-36.)

Thus, to the extent Qualcomm argues that a requirement “to store, buffer, or accumulate” data

is missing from Heinrich, then Heinrich in combination with Balasubramanian would render the

limitation obvious. Balasubramanian discloses this limitation under Qualcomm’s incorrect argument

that claim 31 can be met if data is “held” anywhere on the processor’s side of the bus—given
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Balasubramanian’s disclosure that user equipment 102 and network interface 112 may be adapted to

group data for later transmission across communication link 116. The limitation also is obvious under

Apple’s correct reading of the claim, which requires the processor itself to store the downlink data

(which is not explicitly disclosed, but would have been an obvious thing to do). Indeed, it would be

nothing more than practical common sense to have a processor store in a memory data intended for

another processor while the bus between the two processors is not active—and, thus, at a time when

the data cannot be transmitted across the bus. (RX-7C [Yalamanchili] at Q.383, 391-98.)

“to prevent data from traveling across the bus”: As noted in response to Question B above,

acceptance of Qualcomm’s “prevent” construction would require the claimed modem and application

processors each to take affirmative steps to stop (i.e., “prevent”) data from traveling across the bus

after the data is stored in the processor’s memory and until the modem timer expires—which simply

does not happen in Apple’s or Qualcomm’s products. Accordingly, Apple does not infringe and there

is no domestic industry under such a claim interpretation, as discussed above for Question B.

Perhaps for that reason, in connection with its infringement and domestic industry allegations,

Qualcomm argued that its “prevent” requirement can be met merely by proof that held uplink and

downlink data do not travel across the inter-processor bus until the modem timer expires. (QRespPet

at 47-48 n.19; CX-19C [Baker] at Q.73-100, 178-192.) But Heinrich and Balasubramanian both

explicitly teach that same requirement. As discussed above, both references describe how incoming

data received by a processor (in Heinrich) or a processing node (in Balasubramanian) is stored in a

memory until a timer expires—and only then does the stored data travel across the bus to the other

processor (in Heinrich) or processing node (in Balasubramanian). These disclosures meet the “to

prevent data from traveling across the bus” requirement under Qualcomm’s application of the claims.

Indeed, after adopting Qualcomm’s “to prevent data from traveling across the bus” meaning of

“hold,” the Administrative Law Judge did not identify the “processor configured to hold” limitations

as missing from Heinrich in combination with Balasubramanian. (ID at 75 (“I have determined to
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construe ‘hold’ in accordance with Qualcomm’s proposal, i.e., in the context of the ’490 Patent, ‘hold’

means to prevent data from traveling across the bus.”); id. at 87-90 (identifying allegedly missing

limitations from the prior art).) Rather, in applying Qualcomm’s construction, the Administrative Law

Judge made explicit findings that Heinrich’s modem processor and application processor each can

“group” or “aggregate” data intended for the other processor, such that transmission of that data across

the IPC bus is “delayed” until a “lazy timer” expires. (ID at 87 (“Heinrich discloses a modem processor

and an application processor connected by an interprocessor communication (‘IPC’) bus….”); id. at 88

(“Heinrich discloses the use of an IPC scheduler (computer program product) that may be used at a

first processor for delaying and grouping information … for sending to a second, remote processor at

a subsequent time period when the second processor will be in an active state….”); id. at 88-89 (“By

aggregating non real-time IPC activities at the first processor in this manner, Heinrich’s device

provides power savings by reducing the frequency with which the second, remote processor must be

woken up from a sleep mode where it is not able to receive remote processor information.”); id. at 89

(“Heinrich teaches that delaying and grouping of non real-time IPC activities can be done at either or

both of the processors….”).)

Thus, the Administrative Law Judge’s analysis confirms that Heinrich teaches having the

modem and application processors “prevent data from traveling across the bus,” as Qualcomm applied

the “prevent” aspect of that construction for its infringement and domestic industry arguments.

Moreover, although the Administrative Law Judge concluded (incorrectly) that

“Balasubramanian is not directed to inter-processor communications within a mobile device and thus

does not disclose any of the claim 31 limitations,” he correctly found that the reference teaches

“conserving device power by queueing transmission packets while transceiver components in the user

device remain in a suspended state (power save mode), and then transmitting the queued packets during

a single wake state for the transceiver.” (ID at 90; id. at 91 (“Balasubramanian teaches that the remote

‘network interface 112 may [] be adapted to queue packets destined for the user equipment 102 when
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the transceiver is in a suspend state. In this case, when the transceiver 110 is transitioned to an active

state, the network interface 112 may [] send the queued packets to the transceiver 110.”).)

This too confirms that both Heinrich and Balasubramanian disclose the “to prevent data from

traveling across the bus” limitation as Qualcomm has applied this “prevent” requirement. Accordingly,

in view of Heinrich in combination with Balasubramanian, claim 31 would have been obvious to a

person of ordinary skill in the art for this reason as well.

QUESTION D. The Heinrich patent, supra, explains that a scheduler may be implemented
either through software or hardware to control interprocessor
communications in both directions across a bus. See Heinrich at 4:44-50,
7:8-21, 8:1-5. Heinrich further teaches that the scheduler can monitor the
active state of the receiving processor by monitoring the active state of the
IPC bus. See id. at 9:50-62. Explain whether the active state of the bus
connecting the two processors in Heinrich coincides with or is otherwise
related to the active state(s) of the processor(s) receiving the transmission
across the bus. If so, explain whether monitoring the active state of the
receiving processor (by monitoring the bus) and timing data transmissions
to coincide with the active state of the receiving processor(s) will directly,
indirectly or inherently cause the transmissions to coincide with the active
state of the bus.

As the Commission correctly states, Heinrich teaches a scheduler implemented in software or

hardware on baseband processor 102 (a modem processor) that (1) can control inter-processor

communications in both directions across an IPC bus (e.g., Heinrich [RX-1146] at 7:8-21), and (2) can

determine the active state of the receiving processor by monitoring the active state of the IPC bus (e.g.,

id. at 9:50-62).

With respect to the first portion of this question, the active state of the bus in Heinrich

“coincides with or is otherwise related to the active state(s) of the processor(s) receiving the

transmission across the bus.” If one of Heinrich’s processors is receiving transmissions from the other

processor across the bus, then the bus connecting the processors necessarily must be in the active

state—otherwise transmission across the bus would not be possible. Further, an active bus state

indicates that at least portions of each processor are in the active state as well. (E.g., Heinrich [RX-

1146] at 5:30-37 (“Every time a quantum of data is sent over the IPC from the baseband processor 104
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to the Application Processor 106, the Application Processor 106 needs to be in, or enter into, a state

which allows for that communication to happen. If the Application Processor 106 is in the sleep mode

when the IPC activity is initiated then it is ‘woken up’, i.e. switched to operate in an awake mode in

order to process the IPC activity.”); RX-7C [Yalamanchili] at Q.420, 422 (explaining a communication

bus must be in the active state for data to flow over it and that Heinrich recognizes that both processors

and the bus need to be in active states to transmit and receive data across the bus); APet at 63-64, 73-

74; AIPost-HB at 34-35; APre-HB at 6-7, 82.)

With respect to the second part of the question, monitoring the state of the receiving processor

(by monitoring the bus) and timing data transmissions to coincide with the active state of the receiving

processor will necessarily and inherently cause the transmissions to coincide with the active state of

the bus. As detailed above, this is the case for two reasons: (1) if monitoring indicates that the bus is

in an active state, then at least portions of each processor coupled to the bus also must be in an active

state (because they power the bus); and (2) if transmissions across a bus to a receiving processor are

timed to coincide with the active state of the receiving processor (as determined by the active state of

the bus), then it is inherent that the transmissions will coincide with both the active state of the receiving

processor and the active state of the bus. (E.g., Heinrich [RX-1146] at 5:30-37; RX-7C [Yalamanchili]

at Q.44, 420, 422; APet at 63-64, 73-74; AIPost-HB at 34-35; APre-HB at 6-7, 82.)

QUESTION E. Based on your answer to Question (D), explain whether Heinrich’s


technique of grouping and scheduling transmissions to minimize the
number of times a receiving processor switches between its active and
sleep states will also minimize the number of times the bus switches
between its active and sleep states.

As set forth in response to Question D, there is an inherent dependency between the

transmission of data to a receiving processor and the state of the bus over which the data is sent: i.e.,

the bus must be in an active state for data to be transmitted across the bus and received at the processor.

It therefore follows that the more frequently a receiving processor transitions from an active state to an

inactive state, the more frequently the bus coupled to the processor must transition between active and
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inactive states as well (because the bus cannot remain active if one or both of the processors powering

the bus are not powered).

Heinrich addresses this correlation between data transmission and the power state of the bus

by having a transmitting processor hold data intended for a receiving processor, rather than waking the

receiving processor as soon as the data is ready to send. By “grouping” data in this manner, and then

scheduling transfer of the held data at a later time (when a lazy timer expires), Heinrich saves power

in part by minimizing the number of times that the receiving processor must switch between sleep and

active states (which also reduces the number of times the bus must switch between its sleep and active

states given the dependency between the state of the bus and processor(s)). (Heinrich [RX-1146] at

4:6-11 (“By grouping … IPC activities together and scheduling them for communicating to the second

processor … the number of times that the second processor enters and exits the second mode (e.g. sleep

mode) is reduced”); id. at 7:16-19 (“The scheduler 120 aims to reduce the power consumption

associated with the IPC activities by reducing the number of times that the remote processor enters and

exits the sleep mode.”); id. at 8:25-32 (explaining how “[t]he grouped IPC activities in the group are

then scheduled for communicating to the application processor 106 during a single awake phase”);

RX-7C [Yalamanchili] at Q.53, 310-11, 314, 431; APet at 31, 62-64, 75; AIPost-HB at 25-26, 35;

APre-HB at 82-83.)

QUESTION F. Taking into consideration the ALJ’s construction of “after transmission,”


explain whether a scheduler that monitors the active states of both
processors (i.e., the application and baseband processors) and controls
transmissions in both directions across the bus to coincide with the active
state of each receiving processor will, in the course of its operation,
directly, indirectly, or inherently “pull” uplink data from the application
processor after the scheduler has initiated transmission of downlink data
from the modem processor, as in claim 31.

Given a scheduler that monitors the active states of an application processor and a baseband

processor coupled together by a bus and that also controls transmissions in both directions across the

bus to coincide with the active state of each receiving processor, a person of ordinary skill in the art at

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the time of the ’490 patent filing would have found it obvious to have a modem processor initiate

transmission of its held downlink data and then pull held uplink data from the application processor.

(APet at 73-75; RX-7C [Yalamanchili] at Q.414-23, 429-31.)

In this arrangement, there are only three possibilities to transmit data between the processors:

(1) each processor can transmit its own data to the other processor (a “push” by both processors); (2)

each processor could receive data from the other processor in response to a request for the data (a

“pull” by both processors); or (3) one processor could push its data to the other processor, and pull the

other processor’s data. All three common-sense options were well known in the prior art, and all would

have been obvious to try. (RX-7C [Yalamanchili] at Q.70-72.)

As the Commission notes in Question D, Heinrich discloses that a single scheduler on the

modem processor can group and schedule data transmissions “in both directions” between an

application processor and a modem processor coupled by a bus. (Heinrich [RX-1146] at 7:19-21.)

Because the scheduler resides on the modem processor, a natural way for the scheduler to carry out

these transmission functions “in both directions” would involve having the modem processor both

(1) transmit its held downlink data to the application processor (using a push), and (2) request held

uplink data from the application processor (using a pull). (RX-7C [Yalamanchili] at Q.399-412, 414-

16, 432-40; APet at 63-64, 72-76; AIPost-HB at 25-26, 33-36; APre-HB at 77-83.)

If a processor both transmits data to and pulls data from another processor during the same

active state of a bus, there are only three options for the ordering of those transactions: (1) starting to

push data before starting to pull data; (2) starting to pull data before starting to push data; and (3)

starting to pull and push data at the same time. Given this limited menu of choices, each of which was

a known and common-sense option with known and predictable results, a person of ordinary skill

would have considered using the first option—a push/pull scheme—in connection with Heinrich’s

system. (RX-7C [Yalamanchili] at Q.70-71, 301.)

In sum, given Heinrich’s express disclosure of a scheduler residing on a modem processor that
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controls data transmissions “in both directions” with an application processor, and given the limited

possibilities for how and when those transmissions can occur, a person of ordinary skill in the art would

have found it obvious to have Heinrich’s modem processor pull uplink data from the application

processor after initiating transfer of held downlink data to the application processor, just as in claim 31

(under the Administrative Law Judge’s construction of the “after transmission” limitation). (APet at

73-75; RX-7C [Yalamanchili] at Q.414-23, 429-31.)

QUESTION G. Explain whether the scheduler and/or lazy timers in Heinrich may
comprise a “modem timer” and perform the functions of a modem
processor in claim 31.
The lazy timer disclosed in Heinrich (as implemented by scheduler 120) comprises a “modem

timer” and performs the same function as the modem timer of claim 31. (APre-HB at 77-79; AIPost-

HB at 25-26, 29; APet at 63-64, 68.)

In particular, as shown in Figure 1 below, Heinrich discloses a “centralized scheduler 120” that

“is implemented as a software module on the baseband processor 104”:8

(RX-1146 [Heinrich] at Fig. 1, 7:8-21.) Scheduler 120 “control[s] the scheduling of IPC activities” to

be transmitted from baseband processor 104 to application processor 106 (via the “IPC” bus), including

8
At the hearing, it was undisputed that Heinrich’s baseband processor is a “modem processor.” (APre-
HB at 25-26, 29-30; APet at 67-68; RX-1146 [Heinrich] at 4:30-33 (“The baseband processor 104 acts
as a Radio Frequency (RF) modem to process data for communication between the user device 102
and the network 110.”); QRespPost-HB at 33 (describing Heinrich’s baseband processor as a “modem
processor”); id. at 40-45; Tr. [Baker] at 1385:24-1386:1 (admitting “[t]he baseband processor of
Heinrich is a modem processor”); ORespPost-HB at 29.)

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certain types of data that the patent calls “non real-time sensitive IPC activities.” (Id. at 7:8-21, 9:2-

6.)

To save power, scheduler 120 does not permit non real-time sensitive IPC activities to travel

across the IPC bus as soon as a processor receives them. Instead, scheduler 120 allocates a “lazy timer”

to each of the received non real-time sensitive IPC activities, which it stores in a memory until one of

the lazy timers expires. Because the “firing” of one lazy timer causes all lazy timers to expire, and

because Heinrich teaches that the same scheduler and lazy timer techniques can be implemented on

both baseband processor 104 and application processor 106, the expiration of any lazy timer will cause

all held non real-time sensitive IPC activities to be sent over the IPC bus, and this can occur “in both

directions.” (Id. at 5:18-39, 7:8-21, 8:7-32, 9:1-21, 12:52-55, Figs. 1, 3; APre-HB at 77-79; AIPost-

HB at 25-26, 29; APet at 63-64, 68.)

As confirmed by this disclosure, Heinrich’s lazy timer (as implemented by scheduler 120) is a

“modem timer” that performs the same function as claim 31’s modem timer—i.e., data intended for

transmission from the baseband processor to the application processor is held while the lazy timer is

running, and that held data is then transmitted across the IPC bus to the application processor when the

lazy timer expires. (JX-3 [’490 patent] at claim 31 (“the modem processor configured to hold modem

processor to application processor data until expiration of the modem timer”).) Indeed, Qualcomm

does not dispute that Heinrich discloses the claimed “modem timer.” (QRespPost-HB at 40-43; Tr.

[Baker] at 1387:17-1388:2 (agreeing “when the lazy timer expires, the baseband processor will

transmit its aggregated downlink data to the application processor”).) Nor did the Administrative Law

Judge conclude in his Initial Determination that any aspect of the “modem timer” limitation was

missing from Heinrich. (ID at 88-90 (identifying limitations allegedly missing from Heinrich).)

QUESTION H. Explain whether the Balasubramanian patent includes any disclosures or


teachings relevant to Questions D-G for purposes of analyzing
obviousness.

Balasubramanian includes extensive disclosures relevant to Questions D-G for purposes of

analyzing the obviousness of claim 31. In fact, Balasubramanian teaches every element of claim 31,

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except that it does not expressly disclose a modem processor or application processor, and instead

discloses two processing nodes (a transceiver and network interface) coupled by a bus. (APre-HB at

78-83; AIPost-HB at 27-29; ARepPost-HB at 11-15; APet at 64-67.)

In Question D, the Commission inquired as to whether, in Heinrich, a relationship exists

between the power state of a processor receiving data across the IPC bus from another processor and

the power state of the bus itself—which it does for the reasons above (i.e., because at least portions of

a receiving processor and a transmitting processor must be active for the bus between them to be active,

and for the receiving processor to receive data over the bus, at least portions of each processor thus

will necessarily need to be active). The same relationship exists in Balasubramanian, as shown in

Figure 1 below—in which a first processing node (transceiver 110, in blue) controls the power state of

the bus (communication link 116, in yellow) coupling the transceiver to a second processing node

(network interface 112, in red):

Balasubramanian’s transceiver can be in an “awake state” or “suspended state.” Because the

transceiver drives the state of the bus (i.e., data can be transmitted over the bus only when the

transceiver is powered and “awake,” and not when the transceiver is powered down and “suspended”),

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the bus being powered and active will necessarily coincide with the transceiver being powered and

active (and when the network interface 112 is also active). (RX-7C [Yalamanchili] at Q.426; RX-106

[Balasubramanian] at 1:52-62, 5:47-54, 6:46-57, 9:4-13; Tr. [Baker] at 1389:25-1390:14 (agreeing

“when the transceiver 110 is transitioned to an awake state, the network interface 112 can send its held

packets to the transceiver”).)

In Question E, the Commission asked whether Heinrich’s grouping/scheduling techniques used

to minimize the frequency that a processor transitions between active and sleep states will also

minimize the frequency that the IPC bus transitions between active and sleep states—which it does, as

explained above. Balasubramanian similarly teaches (1) having the transceiver and network interface

processing nodes each hold data on their respective sides of the bus for a period defined by a timer

associated with the transceiver, during which the processing node(s) (and bus) are kept in a “reduced-

power state,” and (2) upon expiration of the timer, transitioning the processing nodes (and bus) to an

“awake state” when all held data is transmitted. (RX-106 [Balasubramanian] at 1:52-62, 5:47-54, 6:46-

57, 9:4-13; Tr. [Baker] at 1389:9-24 (conceding “Balasubramanian teaches that user equipment 102

[which includes transceiver 110] can hold or store packets for later transmission” and “user interface

112 can hold or store packets for later transmission to the user equipment 102”); id. at 1389:25-1390:14

(agreeing “when the transceiver 110 is transitioned to an awake state, the network interface 112 can

send its held packets to the transceiver” and “that transceiver 110 can transmit its stored data to the

network interface after a configurable amount of time”).)

By grouping incoming data in this manner—rather than waking the processing nodes each time

data is ready for transmission to the other processing node—Balasubramanian saves power by reducing

the number of power state transitions for the processing nodes. And because the bus will need to

transition from an active state to an inactive state each time a transmitting processing node transitions

from an active to an inactive state (because the node powers the bus), this approach also reduces the

frequency of power state changes for the bus connecting the two processing nodes. (RX-106
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[Balasubramanian] at 5:47-54 (“To increase the amount of time the transceiver 110 is in the suspended

state (and thereby conserve more power), the user equipment 102 and/or the network interface 112

may be adapted to queue packets while the transceiver 110 is in the suspended state. The equipment

102 and the interface 112 may be adapted to group … the queued packets for transmission over the

communication link 116 when the transceiver 110 is in the active state.”); RX-7C [Yalamanchili] at

Q.323, 328-35, 396-98; APre-HB at 77, 80-82; AIPost-HB at 28-29, 32-33; APet at 64-67, 71-75.)

In Question F, the Commission inquired whether a scheduler that monitors the active state of

application and baseband processors and controls transmissions in both directions to coincide with the

active state of the receiving processor will “directly, indirectly, or inherently” result in a pull “after”

the scheduler initiates transmission of downlink data from the modem processor. Balasubramanian

confirms that this type of scheme was well known in the prior art—by disclosing that, during the same

awake state, transceiver 110 can (1) transmit packets to network interface 112 (via the communication

link) that had been “queued” while the transceiver and link were inactive (i.e., a “push” of held data),

and (2) later receive packets from the network interface (in response to a message sent by the

transceiver) that the network interface had “queued” while the bus was inactive, (i.e., a “pull”):

[T]he transceiver 110 then transmits the queued uplink packets over the
communication link 116. Advantageously, the queued packets may be grouped for
transmission such that all of the packets are transmitted during a single wake state of
the transceiver 110…. [D]uring the same single wake state the transceiver 110 also
receives any downlink packets queued in the network interface 112…. [T]he
transceiver 110 may send a message to the network interface 112 requesting
transmission of all queued packets.

(RX-106 [Balasubramanian] at 6:63-7:11; id. at 6:46-49, 6:55-62.)

In Question G, the Commission asked about Heinrich’s disclosure of a scheduler and lazy timer

which, as discussed above, along with Heinrich’s baseband processor, teaches the limitation of claim

31 requiring a “modem processor configured to hold modem processor to application processor data

until expiration of the modem timer.” Balasubramanian further confirms that the “modem timer”

requirement was obvious. In the context of two processing nodes (rather than a modem processor and

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application processor), Balasubramanian discloses a scheme in which incoming packets on both sides

of the bus are held for a period defined by a timer associated with the first processing node (transceiver

110), and then transmitted to the second processing node (network interface 112) when the timer

expires. (RX-106 [Balasubramanian] at 1:52-62, 5:47-54, 9:4-13, 6:46-7:11 (disclosing how a “timer”

associated with transceiver 110 expires “once the configurable amount of time has elapsed”); Tr.

[Baker] at 1389:25-1390:14 (“[T]ransceiver 110 can transmit its stored data to the network interface

after a configurable amount of time”; “a timer is a reasonable way of determining that”).)

Balasubramanian’s timer therefore performs the same function as the “modem timer” in claim 31

(except the timer is associated with a first processing node rather than a modem processor).

In sum, Heinrich’s inter-processor communication system and scheduling techniques teach all

elements of claim 31, with the possible exception of the “pull … after transmission” limitation. But

as discussed above, Balasubramanian explicitly discloses this “pull … after transmission” limitation,

and also discloses all other limitations of claim 31 (including a timer) except for a “modem processor”

and an “application processor.” Thus, a person of ordinary skill in the art would understand from

Balasubramanian’s disclosure, in light of Heinrich, that it would have been obvious to have a modem

processor (e.g., a first processing node) hold data until expiration of a timer, and an application

processor (e.g., a second processing node) hold data until the modem processor “pulls data from the

application processor after transmission of the modem processor to application processor data”—just

as claim 31 requires. (APre-HB at 77, 81-82; AIPost-HB at 33-34; APet at 64-67, 72-75; ARespPost-

HB at 12-14 (responding to Qualcomm’s unfounded (and waived) argument that Balasubramanian

does not disclose a “pull”); RX-7C [Yalamanchili] at Q.336, 399-412.)

QUESTION I.9 Explain whether there is a long-felt but unmet need for the invention of
the ʼ490 patent, focusing particularly on evidence of a nexus between the

9
Although the Notice identifies this question under a heading labelled “F,” Apple assumes the
Commission intended to label it as question “I.”

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invention and this secondary consideration of non-obviousness.

In evaluating whether secondary considerations of non-obviousness exist, the Commission

must consider whether Qualcomm established a long-felt but unmet need for the claimed invention of

the ’490 patent. Graham v. John Deere Co., 383 U.S. 1, 18 (1966). The hearing record confirms that

Qualcomm failed to make that required showing for several reasons. See Prometheus Labs., Inc. v.

Roxane Labs., Inc., 805 F.3d 1092, 1101-02 (Fed. Cir. 2015) (explaining a “patentee has the burden of

going forward with rebuttal evidence” regarding secondary considerations “once a challenger has

presented a prima facie case of invalidity”).

First, to establish this secondary consideration, Qualcomm needed to prove at the hearing that

an “unmet need” existed in the prior art for the alleged invention of claim 31—i.e., for a way (1) to

have two processors hold data intended for the other processor while the bus between them was inactive

(i.e., at a time when no data could flow across the bus), and then (2) to synchronize a transfer of the

held data in both directions when the bus returned to an active state. See Texas Instruments Inc. v. U.S.

Int’l Trade Comm’n, 988 F.2d 1165, 1178 (Fed. Cir. 1993) (explaining evidence regarding long-felt

but unmet need “is analyzed as of the date of an articulated identified problem and [includes] evidence

of efforts to solve that problem.”); In re Cyclobenzaprine Hydrochloride Extended-Release Capsule

Patent Litig., 676 F.3d 1063, 1082 (Fed. Cir. 2012) (“Longfelt need is closely related to the failure of

others. Evidence is particularly probative of obviousness when it demonstrates both that a demand

existed for the patented invention, and that others tried but failed to satisfy that demand.”).

Yet Qualcomm offered no evidence that, before the ’490 patent, anyone had ever identified

that type of capability as involving an unsolved “problem” or ever taken any steps in an effort to “solve”

such a problem, or that anyone had even expressed a wish for such a feature. The reason for this lack

of proof is simple: as the hearing record confirms, it was already well known in the prior art that

bidirectional buses like PCIe (which was developed in the early 2000s and is used in the Accused ’490

Products and Alleged ’490 Domestic Industry Products today) specifically enable the simultaneous

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transfer of data in both directions between two processors. (Tr. [Krishna] at 62:24-66:22, 660:20-

661:4, 661:5-8, 661:15-662:1, 663:24-664:6, 664:12-15, 670:4-13, 670:18-21; Tr. [Baker] at 777:8-12,

823:14-824:3, 825:3-10, 826:6-9.)

In his Initial Determination, the Administrative Law Judge stated “that there was a long-

standing need in the art for technologies that provide power savings and improve the battery life for

mobile devices.” (ID at 95.) But this finding—directed to a generic supposed “need” for any

“technologies” that can improve battery life in mobile devices—lacks the required nexus to the specific

solution claimed by the ’490 patent (which, as discussed above, did not constitute an unmet need in

the prior art). See Perfect Web Techs., Inc. v. InfoUSA, Inc., 587 F.3d 1324, 1332 (Fed. Cir. 2009)

(affirming summary judgment on secondary considerations of non-obviousness where plaintiff failed

to show that alleged problems with the prior art approach “constituted a long-felt, unmet need

alleviated by the patent”); Merck & Cie v. Gnosis S.P.A., 808 F.3d 829, 837 (Fed. Cir. 2015) (“For

objective evidence of secondary considerations to be accorded substantial weight, its proponents must

establish a nexus between the evidence and the merits of the claimed invention.” (internal citation

omitted)); In re Huai-Hung Kao, 639 F.3d 1057, 1068 (Fed. Cir. 2011) (same).

Second, beyond the absence of any evidence of an unmet need, Qualcomm also failed to

establish that any supposed need for the claimed invention of the ’490 patent was “long-felt.” There

is no record evidence regarding a nexus as to when a need allegedly arose for the approach of the

claimed invention, or that such a need persisted without resolution for a long time. See Perfect Web

Techs., 587 F.3d at 1332 (affirming finding of no long-felt but unmet need where plaintiff “provided

no evidence to explain how long this need was felt, or when the problem first arose”); Purdue Pharm.

Prod. L.P. v. Actavis Elizabeth LLC, No. CIV.A. 12-5311 JLL, 2015 WL 5032650, at *49 (D.N.J. Aug.

25, 2015) (finding asserted need was “hardly long felt” where just four years passed between the “prior

art’s teaching of the ‘as needed’ treatment and the eventual preparation of a successful composition”);

Auxilium Pharm., Inc. v. Watson Labs., Inc., No. 12-3084 JLL, 2014 WL 9859224, at *28 (D.N.J. Dec.
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16, 2014) (concluding alleged need “was not ‘long-felt’” where only “two years passed” between the

origin of the need and filing of the patent).

In fact, the hearing record confirms just the opposite. When first developing a mobile device

that would couple an application processor and a modem processor with a power-hungry bidirectional

PCIe bus, engineers from Qualcomm, Apple, and Intel all independently developed their own version

of an uplink/downlink synchronization feature—in which the transfer of held processor-to-processor

data was synchronized, such that uplink and downlink data was transmitted in both directions during

the same active state of the PCIe bus. (RDX-18.152C (showing timeline of Apple’s and Intel’s

independent development); RX-1607C [Yalamanchili] at Q.278-89 (discussing development); RX-

1278C.00008; RX-1609C [Leucht-Roth] at Q.75-84; RX-1287C (discussing Intel’s independent

design work); CX-12C [Baker] at Q.234-35 (confirming Apple’s feature was developed before

Qualcomm first gave a “sneak peak” of its feature); Tr. [Baker] at 868:16-869:22 (same).)

This simultaneous and independent development only further reinforces that there was never a

long-felt, but unmet need for the claimed invention of the ’490 patent. See Regents of Univ. of Cal. v.

Broad Institute, Inc., 903 F.3d 1286, 1295 (Fed. Cir. 2018) (noting “simultaneous invention . . .

constitutes objective evidence that persons of ordinary skill in the art understood the problem and a

solution to that problem”).

III. RESPONSES TO QUESTIONS REGARDING THE PUBLIC INTEREST

QUESTION A. Assuming the Commission were to affirm the ALJ’s finding that only
claim 31 of ’490 patent is infringed and not invalid, please explain the
likelihood that Apple or Intel could design around the claimed invention
to avoid infringement and, if so, approximately how long it would take to
implement such a design-around in Apple’s accused products (if known).

Qualcomm’s presentation at the hearing crystallized its theories regarding the scope and

coverage of claim 31 of the ’490 patent. Against that backdrop, Apple recently changed its software

(i.e., iOS) to remove the functionality that Qualcomm has accused of infringing claim 31, by

implementing a design change that Qualcomm’s own witnesses conceded would fall outside the scope

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of the patent. Thus, although Apple’s Accused ’490 Products with Intel baseband chipsets and the

previous software do not infringe, products implementing the software change (included in iOS

versions 12.1 and later) leave no doubt on that score.

As set forth in response to Question D in this section below, Apple respectfully requests that,

in the event the Commission issues any exclusion or cease-and-desist order, the Commission should

delay the implementation of any such order for six months to allow Apple to seek review of the new

design from U.S. Customs and Border Protection. Further, Apple expects that it will take at least six

months to complete its roll-out of the new design via software updates and to sell existing inventory

of pre-design-change iPhones. However, the Commission need not reach these issues at all, given that

the finding of a violation with respect to the ’490 patent was incorrect, as explained in Section II above.

A. Hearing Evidence on Design Changes.

Before the hearing in this Investigation, Qualcomm had never suggested that any of the asserted

patents could be designed around—to the contrary, Qualcomm issued a press release characterizing

each of the patents as “vital to iPhone functions.” And in other contexts, Qualcomm has highlighted

the challenges with product changes, warning that if Qualcomm itself were found in litigation to

infringe intellectual property, it may be “required to redesign our products or services, which could be

costly.” (RX-1130 [Qualcomm 2017 10-K] at 32.)

The hearing evidence highlighted the challenges typically associated with making design

changes to complex products such as the accused iPhones, as well as the serious public interest risks

posed by an exclusion order absent such a design change. (E.g., Tr. [Leucht-Roth] at 750:21-751:10

(Intel engineer Ulrich Leucht-Roth explaining that even removing unimportant functionality can

present significant challenges because of the strict requirement for careful “align[ment]” of

communications between components in the iPhone: “[T]he design and any bit of pieces of design of

interprocessing communication done between application processor and modem is something which

needs to be carefully aligned.”); Tr. [Evans] at 1066:15-19 (“I mean, I’m an engineer with infinite time,

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resources and assuming our market window, I suppose so.”); ID at 195 (“[I]f the Commission does

issue an exclusion order as Qualcomm requests, it will do so with the near certainty there will be real

harm to the United States on a potentially very broad basis”).) Yet late in the hearing and in post-

hearing briefing, Qualcomm and its Chief Technology Officer James Thompson began suggesting that

design-around options were readily available, including specifically for the ’490 patent. With regard

to claim 31 of the ’490 patent, Qualcomm argued that removing the accused functionality would be

“relatively simple” (Tr. [Thompson] at 1570:17-1571:12) and that Apple and Intel could avoid any

infringement of claim 31 by “simply remov[ing]” the accused uplink (UL) / downlink (DL)

synchronization feature in response to an exclusion order. (QRespPost-HB at 46 n.20.)

The ultimate feasibility of a design-around with respect to the ’490 patent thus stands in stark

contrast to other patents, for which design-around options may be infeasible. This is especially true

where asserted patents implicate hardware—such as the patents at issue in the companion case between

Qualcomm and Apple, Investigation No. 337-TA-1093—changes to which might be either impossible

or practically infeasible. Qualcomm itself has acknowledged that in certain cases if it were found to

infringe, it may be “unable to redesign our products.” (RX-1130 [Qualcomm 2017 10-K] at 32.)

B. The Recent Design Change To The Accused Products—Which Qualcomm


Conceded Would Not Infringe.

This fall, after the close of the hearing record, Apple implemented a new software-based design

for its Accused ’490 Products that removed the accused UL/DL synchronization feature that

Qualcomm emphasized could be “simply remove[d]” to avoid infringement of the ’490 patent. To be

clear, the pre-change versions also do not infringe the ’490 patent, and thus there is no legal need to

“design around” it. But to moot any possible allegation of infringement from Qualcomm, Apple

changed its products to do precisely what Qualcomm’s own witnesses testified would not infringe the

’490 patent.

Accordingly, in the event the Commission concludes that a Section 337 violation has occurred

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with respect to the ’490 patent and that an exclusion order should issue, Apple will seek review of that

new design from U.S. Customs and Border Protection. Moreover, although Apple is now

implementing this new software design in products manufactured today, due to existing inventory

previously manufactured without this new software design, Apple expects that it will likely take an

additional six months before all accused iPhone products sold by Apple in the United States implement

the new design via software updates. Apple thus requests that any Commission order allow the

requisite time for U.S. Customs and Border Protection to assess Apple’s new software design and for

Apple to clear its inventory without the new software design.10

QUESTION B. Explain whether and to what extent Intel supplies the same chipsets used
in the accused Apple iPhones to any other U.S. merchant for use in any
other products that are made, used, or sold in the United States or
imported into the United States.

(Tr. [Evans] at 1112:16-1114:3.) The Intel XMM 7360 and XMM 7480 are “thin”

baseband chipsets, as opposed to the systems on a chip (SOC)—integrating a cellular modem and

applications processor—that other original equipment manufacturers (OEMs) use for some or all of

their premium smartphones. (See RX-8C [Evans] at Q.49-52, 74; Tr. [Blevins] at 636:19-25.) Apple

is the largest customer for premium thin baseband chipsets, with other OEMs requiring SOCs for some

or all of their baseband chipset purchases and/or self-supplying their own baseband chipsets for some

(Samsung) or all (Huawei) of their needs. Outside of smartphones, the current demand for premium

baseband chipsets is limited, with few sales opportunities. Given these dynamics,

10
Apple addresses additional requested carve-outs from any exclusion or cease-and-desist order in
response to Question C.

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Smartphone manufacturers are the largest purchasers of premium baseband chipsets.

(RX0271C [Strategy Analytics Report] (compare “SP,” “Tablet,” and “other” tabs); see also RDX-

10.1C [Eisenach]. RDX-11.2-6C [Scott Morton], Tr. [Scott Morton] 1298:3-16.) Of those purchasers,

the market is divided primarily between Apple and Samsung. (See Tr. [Thompson] at 1538:4-9; see

also RX-1461C [Amon] at 36-37 (“[I]n how we describe the premium segments, the share of Apple

and Samsung is disproportionately large versus every other OEM. So the market is highly concentrated

between Apple and Samsung.”) Indeed, on a worldwide basis,

Between these two OEMs, Apple represents an

even higher proportion of premium LTE baseband merchant market demand than its share of premium

smartphone sales would imply, as Samsung self-supplies a portion of its own premium LTE baseband

chipsets requirements. (RX-8C [Evans] at Q.11; RX-10C [Eisenach] at Q.20, 28; RX-11C [Scott

Morton] at Q.55-56, 131.)

Intel’s ability to sell to Samsung or to pursue the remaining 10% of premium smartphone sales

is also limited because those OEMs often purchase SOCs instead of the thin baseband chipsets that

11
Intel granted Apple permission to include in this submission sales data Intel produced in the 1093
Investigation, which is more recent than the sales data Intel produced in this Investigation. (1093 RX-
0997C [IMC sales data through Q4 2017].)

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Intel supplies, . (See RX-8C [Evans]

at Q.74

see also Tr. [Blevins] at 636:19-25.)

Further, as Apple’s economic expert Dr. Jeffrey Eisenach explained,

(RX-10C [Eisenach] at Q.89.)

The difficulty that Intel faces in winning smartphone sales outside of Apple is demonstrated

below. RDX-28.4 shows that for each of the representative products Qualcomm identified as

competitors of the accused iPhones, Qualcomm is the only third-party supplier of baseband chipsets

(as denoted by the Qualcomm logo beside each list of models from the competing OEMs; Qualcomm

also supplies the iPhone models listed and, accordingly, Qualcomm logos could also appear beside

those models):

(RDX-28.4; see also RX-1483C [Kressin] at 82; Tr. [Thompson] at 1541:5-1542:4, 1556:11-17; Tr.

[Sidak] at 515:9-516:5; Tr. [Mulhern] at 1456:25-1458:13; Tr. [Evans] at 1112:8-1114:3; Tr. [Scott

Morton] at 1329:4-1330:3.)

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Imposing an exclusion order without a period of delay to ensure that the new design described

in response to Question A is determined to be non-infringing also would have a chilling effect on

potential smartphone customers of Intel, furthering limiting Intel’s ability to pursue new business. As

Dr. Eisenach explained, if an exclusion order enters that costs Intel its business with Apple, “market

participants would rationally consider the persistent pattern of anticompetitive conduct in which

Qualcomm has already engaged … [and] Qualcomm’s demonstrated willingness to use its patent

portfolio as a club with which to coerce OEMs into buying chipsets from Qualcomm” and be “forced

to add a ‘risk premium’ to any deals with Intel to reflect the potential for supply disruption.” (RX-10C

[Eisenach] at Q.106.)

Non-smartphone uses of premium baseband chipsets are currently minimal, and many of the

opportunities that may arise for broader use of baseband chipsets in 5G or the Internet of Things will

only be realized over the next 30 years. (See Tr. [Evans] at 1056:3-1057:6 (testifying about future

broader uses of 5G chips over the next 30 years).) Thus, Aicha Evans, formerly Intel’s Chief Strategy

Officer and head of Intel’s Communications and Devices Group,

(Id. at 1073:15-17.) Intel’s

opportunities to sell baseband chipsets for non-smartphone applications are also dependent on Intel

selling premium baseband chipsets for smartphones: “[T]he baseband chipset is really what we call a

gateway chipset. So it’s a base chipset that then we make some modification or some derivatives from

to take into different markets. And therefore, if we don’t have that socket, it would be kind of difficult.”

(Id. at 1084:19-24.) Thus, even if Intel could survive the loss of Apple’s business through an exclusion

order, not having Apple as a customer would further undermine the viability of Intel pursuing non-

smartphone sales opportunities.

Based on these facts, losing the ability to sell premium baseband chipsets to Apple for use in

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iPhones sold in the United States is nearly certain to be fatal to Intel’s business. As Ms. Evans testified,

Intel is nearly certain to abandon the market for LTE and future development of

5G chipsets if an exclusion order issues that costs Intel its sales to Apple. (See Tr. [Evans] at 1091:14-

21.) Without sales to Apple for the United States, Intel could not maintain sufficient scale and achieve

other essential benefits of being engaged in the U.S. cellular ecosystem and from working with Apple.

(RX-10C [Eisenach] at Q.17, 38-42, 90; RX-11C [Scott Morton] at Q.68-73, 80-82.) Indeed, as Dr.

Eisenach emphasized at the hearing, Intel’s baseband chipset business

(Tr. [Eisenach] at 1265:10-16.)

QUESTION C. Explain whether the “carve-outs” proposed by the Office of Unfair Import
Investigations would be practicable, feasible, and would effectively
balance enforcement of Qualcomm’s ʼ490 patent rights against the interest
of avoiding Intel’s exit from the relevant market for premium baseband
chipsets.

The Office of Unfair Import Investigations (“OUII”) proposed two carve-outs in this

Investigation: (A) an exemption for “any future versions of the iPhone that incorporate 5G

technologies”; and (B) an exemption for iPhones imported for research, development, and testing of

prototypes.12 (OIPost-HB at 71-74.) Absent a determination that the design change described in

response to Question A is non-infringing, OUII’s proposals would be insufficient to prevent Intel’s

exit from the market for premium baseband chipsets, leading to the same public interest harms that an

12
OUII also proposed “a certification provision allowing Apple to certify that particular imports are
not subject to an exclusion order and should be permitted entry.” (OIPost-HB at 74.) For the reasons
explained in Section IV.A below, any remedial order should include a standard certification provision.
However, a certification provision alone would not avoid public interest concerns, and must be coupled
with an appropriate delay to allow issuance of a ruling that the new design addressed in response to
Question A removes the functionality the Administrative Law Judge found to be infringing.

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untailored exclusion order would cause.

A. A Carve-Out For 5G-Capable iPhone Models Without A Delay Would Not


Prevent Intel’s Exit From The Market For Premium Baseband Chipsets.

OUII first proposes that an exclusion order be tailored to exempt “any future versions of the

iPhone that incorporate 5G technologies.” (OIPost-HB at 71-72.) This proposal reflects OUII’s

concern that Intel’s exit from 5G would endanger U.S. national security and the national interest, and

OUII offered this proposal in an effort to “preserve Intel’s ongoing role in 5G development.” (Id. at

71.) But absent a determination that the design change described in response to Question A is non-

infringing, OUII’s proposed 5G carve-out would not alleviate the harms to the public interest that the

Administrative Law Judge correctly identified. The viability of Intel’s baseband chipset business is

. An exclusion order with no delay

but with a 5G carveout would still cause Intel to lose Apple’s 4G business and deprive Intel of a path

to make 5G baseband chipsets.

1. A 5G Carve-Out Would Not Be Sufficient to Prevent Intel from Losing


Apple’s 4G Baseband Chipset Business.

A 5G carve-out would not prevent a global suspension of Intel’s baseband chipset sales to

Apple. Because of the need for testing and real-world feedback based on sales in the United States, if

Apple could not use Intel 4G chipsets for iPhones sold in the United States, it would be unable to use

those chipsets for new iPhone models sold in any global markets. Tony Blevins, Apple’s Vice

President of Procurement, confirmed that “[i]f Apple could no longer use chipsets from Intel for

iPhones in the United States,” “[p]ractically speaking, Apple would likely not be able to use Intel

baseband chipsets for any of its iPhones on a going-forward basis.” (RX-1C [Blevins] at Q.164.)

When Mr. Blevins was asked whether Apple could use Intel chips in other markets outside of the

United States if an exclusion order issues, he confirmed that “from a practical standpoint, we absolutely

could not.” (Tr. [Blevins] at 591:20-24.) In other words, a 5G carve-out would not protect Intel from

the loss of virtually all its sales of cutting-edge 4G baseband chipsets.

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The loss of those sales would not be fleeting. Instead, Intel would be shut out of the market

for at least a year. Although Intel has publicly announced its intent to commercially release a 5G

baseband chipset as early as 2019, (Tr.

[Evans] at 1127:11-1128:9.) Instead, as Ms. Evans testified,

13
(Id. [Evans] at 1132:12-25, 1127:11-1128:9,

1084:5-10.) This timeline is consistent with

. As OUII noted, “[a]n exclusion order tailored in this manner

would exclude Apple’s Intel-based 2018 iPhones, (OIPost-HB at

72 (citing RX-1C [Blevins] at Q.151-55).)

2. Without Apple’s 4G Business, Intel Would Lack Critical Revenue And


Access To The U.S. Market.

Faced with the disruption of losing Apple’s 4G business, Intel would not be able to generate

the kind of innovation and revenues necessary for durable success in the market for 5G chipsets. OUII

incorrectly argued that “it is reasonable to conclude that

”14 (OIPost-HB at 73.) Instead, Intel’s exit would be compelled by both

technological and financial imperatives.

First, Intel would be unable to develop and market competitive 5G chipsets without a

continuous presence in the market for premium 4G baseband chipsets. As Ms. Evans testified, “one

cannot be successful in 5G without being successful in [the] 4G [] market.” (Tr. [Evans] at 1115:8-

13
Mr. Blevins
(Tr. [Blevins] at 590:2-6.)
14
The reference to a delay of corresponds to the estimated time between imposition
of an exclusion order in January 2019 and
(Tr.
[Evans] at 1127:8-1128:9.)

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14.) Similarly, Steven Bowers, who helped to execute Intel’s 5G strategy, testified that Intel relies on

4G baseband chipset participation—both technologically and monetarily—to propel its business

towards 5G. (Tr. [Bowers] at 1153:13-15.) Indeed, OUII credited this testimony in its post-hearing

briefing, noting that 4G and 5G at Intel are “inextricably linked” and that “there is evidence that Intel’s

5G innovation relies on its success in 4G.” (OIPost-HB at 61-63.) Accordingly, as OUII concluded,

“[w]ithout a solid foundation of 4G wireless baseband sales to build on, it would be very difficult for

Intel to continue to make progress in its 5G efforts.” (Id. at 62.) Qualcomm’s own CEO, Steve

Mollenkopf, has spoken publicly about the need to participate in 4G to succeed in 5G:

I see the 5G transition being similar to what we did in 4G. 4G was a very good
transition for us. I think a lot of people thought Qualcomm wouldn’t be successful in
4G. That was the time when we were transitioning from being known so much for our
CDMA expertise and—but would we be successful in OFDMA. Would we have the
scale? And obviously, we did very well both in the chip business as well as in the
licensing business. We think it’s a similar transition occurring on 5G.

What’s interesting is just like in the 4G transition, I don’t think you’re going to be a
strong 5G player unless you were already a strong 4G and 3G player.

(Steve Mollenkopf, Citi 2017 Global Technology Conference (Sept. 8, 2017) (emphasis added).)15

Even a short absence from the baseband chipset market would deprive Intel of the hands-on, real-world

feedback necessary to develop competitive chipsets. (Tr. [Evans] 1127:11-1128:9

For these reasons, the Administrative Law Judge explained that “[s]ince

the premium base band chip is a ‘gateway’ product, Intel will disengage from 5G development and

supply efforts related to this kind of product.” (ID at 191.)

Second, Intel’s chipset business would not survive the loss of revenues from sales of premium

4G chipsets to Apple. The record makes clear, and the Administrative Law Judge agreed, that the

15
Transcript available at https://seekingalpha.com/article/4105481-qualcomms-qcom-ceo-steve
-mollenkopf-citi-2017-global-technology-conference-transcript?page=2.

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(ID at 190; see also RDX-10.2C [Eisenach]; RX-

976C [IMC Profit and Loss Data]; RX-10C [Eisenach] at Q.73-78.)

(Tr. [Evans] at 1127:16-

1128:13.) Because

. As the Administrative Law Judge concluded,

(ID at 190.)

Given these facts, Apple’s and Intel’s witnesses did not equivocate when explaining that the

proposed 5G carve-out would not prevent Intel’s market exit. In response to OUII’s proposal, Ms.

Evans explained that

. (Tr. [Evans] 1127:11-1128:9.) When asked if Intel would still

exit even if an exclusion order included a carve-out for future 5G chipsets, Ms. Evans testified, “I’m

nearly certain we would exit also, because I’ve explained that there is a link—one cannot be successful

in 5G without being successful in 4G in market.” (Tr. [Evans] at 1115:8-14.) Similarly, Apple’s

economic expert, Dr. Fiona Scott Morton, agreed that Intel’s exit from the baseband chipset market

would occur even if the carve-out reduced the amount of time Intel was out of the market, because 5G

is intertwined with the 4G standards and “those 4G standards keep improving. … [I]t’s not really

possible to stay abreast of 5G unless you’re also right on the frontier of 4G.” (Tr. [Scott Morton] at

1335:20-1336:6.)

For these reasons, the Administrative Law Judge saw “the Staff’s recommended tailored

exclusion order as being a guarantee: (1) of a Qualcomm monopoly; (2) of harm to everyone
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(especially the economy of the United States) involved but Qualcomm; and (3) of harm to the National

Security of the United States.” (ID at 197.) Such a carve-out, without a six-month delay of the type

described in response to Question A, would therefore not mitigate the harms to the public interest.

B. A Carve-Out For Research And Testing Would Be Insufficient.

OUII’s second proposed carve-out—an exemption for iPhones imported for research,

development, and testing of prototypes—would similarly not protect the public interest absent the six-

month delay described in response to Question A. This arrangement would not be viable for Apple or

Intel, both of which rely on U.S. sales—not merely U.S. research and testing—to improve their

products and generate demand in other global markets. Such a carve-out would be insufficient to

prevent the same harms to the public interest described above and recognized by the Administrative

Law Judge.

For Apple,

(Tr. [Blevins] at 645:5-22.) Mr. Blevins further explained that

(Id. at 646:4-9.) In sum,

(RX-1C [Blevins] at Q.165.)

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PUBLIC VERSION

Apple’s need for access to the U.S. market is not merely about testing in a laboratory

environment—it also relates to Apple’s need for real-world feedback, in collaboration with leading

U.S. carriers, as well as the credibility that U.S. sales generate for products offered in foreign markets.

As Mr. Blevins explained, “

(RX-1C [Blevins] at Q. 164-65.) And during the evidentiary hearing in the related 1093 Investigation,

in which Qualcomm requested an identical exclusion order, Mr. Blevins further explained how

(1093 Tr.

[Blevins] at 1399:6-9.)

. Ms. Evans explained

(Tr. [Evans] at 1132:11-22.) Those cellular operators do not test new equipment or otherwise operate

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PUBLIC VERSION

their businesses on a charitable basis—they are interested in certifying and improving Intel chipsets

based on the expectation that iPhones with such chipsets will be sold in the United States for use on

their networks. (See ID at 196 (“[T]he Staff did not appreciate the importance of the U.S. sales as

explained by Ms. Evans ….”) (emphasis added).) As with Apple,

For these reasons, a carve-out permitting the importation of iPhones only for research,

development, and testing purposes would not mitigate the harm to the public interest.

QUESTION D. Explain whether delaying implementation of a limited exclusion order or


cease-and-desist order for a fixed period of time (e.g., six months or one
year) would effectively balance enforcement of Qualcomm’s patent rights
against the adverse consequences alleged by the parties with respect to
industry competition, monopolization, the alleged exit of Apple’s chipset
supplier from the market for 5G technology, and other concerns. If not,
explain whether any other “carve-out” or limitation in a remedial order
can accomplish this objective.

A delay of six months, during which the new design described in response to Question A could

be determined as non-infringing and Apple could sell existing inventory of pre-design-change iPhones,

would be sufficient to avoid the adverse consequences on the public interest of an exclusion order or

cease-and-desist order.

The Commission has similarly tailored exclusion orders to avoid public interest harms in other

cases. For example, in Certain Baseband Processor Chipsets, Inv. No. 337-TA-543, the Commission’s

exclusion order included a “grandfather” provision to permit importation of cell phone models that

were already being imported. Certain Baseband Processor Chips and Chipsets, Transmitter and

Receiver (Radio) Chips, Power Control Chips, and Products Containing Same, Including Cellular

Telephone Handsets, Inv. No. 337-TA-543, Limited Exclusion Order (June 7, 2007). And in Certain

Personal Data Devices, Inv. No. 337-TA-710, the Commission delayed the exclusion order by four

months to allow wireless carriers to replace infringing smartphones with non-infringing devices from

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PUBLIC VERSION

other manufacturers, and also permitted the importation of refurbished models to satisfy service

contracts with consumers who already owned the infringing models. Certain Personal Data and

Mobile Communications Devices and Related Software, Inv. No. 337-TA-710, Comm’n Op. at 79-84

(Dec. 29, 2011).

Here, a delay of six months would similarly protect the public interest by allowing sufficient

time for a determination that Apple’s new design described in response to Question A does not infringe

the ’490 patent. Such a delay would ensure that the harms that an immediate exclusion order would

cause by eliminating Intel as a supplier to Apple could be avoided.

Apple denies that it has ever infringed the ’490 patent—neither the prior design that was

addressed by the Administrative Law Judge nor the new design addressed in response to Question A

infringes the ’490 patent. Accordingly, Apple respectfully submits that the Commission need not

address how to “effectively balance enforcement of Qualcomm’s patent rights” against harms to the

public interest. But, to the extent that the Commission disagrees and affirms the Administrative Law

Judge’s finding of infringement of the ’490 patent, a delay of six months in the issuance of an exclusion

or cease-and-desist order would not undermine enforcement of Qualcomm’s patent rights. As the

Administrative Law Judge explained, “Qualcomm introduced no credible evidence that an

exclusionary order against the accused products is necessary to protect its domestic industry, its

incentive to innovate, or profitability.” (ID at 194.) Indeed, Qualcomm’s Chief Technology Officer,

Dr. James Thompson, testified at the hearing that Qualcomm’s global litigation strategy against Apple

is driven by a desire for royalties:

Q. And you know Qualcomm has sued Apple many times in Germany and China,
for example, seeking to shut down iPhones containing Intel chipsets?

A. Yeah. What I know is we have this global IP battle because they’re not paying.

Q. And I think what you said is you want money; is that right?

A. Well, they’re not paying us, yeah. I mean, it’s hurting our company a lot.

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PUBLIC VERSION

Q. You want royalties?

A. Right.

(Tr. [Thompson] at 1554:20-1555:5.)

If the Commission delays an exclusion order (or even denies it outright as against the public

interest), Qualcomm will not be left without a remedy. To the contrary, Qualcomm is asserting the

’490 patent (and others asserted in this Investigation) in district court and, if it prevails at trial beginning

March 4, 2019—a trial that is expected to conclude before the Commission’s March 26, 2019 target

date—it can obtain the very monetary damages that are motivating its litigation. (Qualcomm Inc. v.

Apple Inc., 3:17-cv-01375 (S.D. Cal.); Tr. [Sidak] at 508:25-509:10.) A bipartisan group of members

of Congress who submitted letters to the Commission supporting the Administrative Law Judge’s

public interest findings also emphasized that, if the Commission declined to issue an exclusion order,

Qualcomm would not be without a remedy because of the ongoing litigation in federal district court.

(Letter from Congressman Andy Biggs (R), AZ, Dec. 10, 2018; Letter from Congressman Darrell Issa

(R), CA, Dec. 18, 2018; Letter from Congresswoman Zoe Lofgren (D), CA et al., Jan. 10, 2019.)

For these reasons, a delay of six months would be sufficient to safeguard the public interest

from the harms that would be caused by immediate implementation of exclusion and cease-and-desist

orders. But absent some delay to allow for a determination of non-infringement, for the reasons

explained in response to Questions B and C, Intel is nearly certain to exit the baseband chipset business

given its dependence on sales to Apple for the United States. Apple is not aware of any other “carve

out” or limitation (other than those tied specifically to the recent design change) that would serve the

purpose of keeping Intel in the baseband chipset business—as discussed in the response to Question

C, OUII’s proposed carve outs would be infeasible.

QUESTION E. Explain whether national security concerns may be taken into


consideration for the purpose of evaluating the public interest and, if so,
whether and how such national security concerns would be implicated if a
limited exclusion order were to issue covering products that infringe claim
31 of the ʼ490 patent.

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PUBLIC VERSION

The Commission can and should consider national security concerns when analyzing the public

interest, and those concerns strongly weigh in favor of a six-month delay in an exclusion order, as

described in response to Question A to allow for a determination of non-infringement, or outright

denial of an exclusion order as against the public interest. If Intel exited the premium chipset baseband

market because of an exclusion order issued without delay, it would undermine U.S. competitiveness

in 5G, which has critical national security concerns. Intel’s exit would create a void—in

commercializing 5G baseband chipsets and developing the 5G standard—that could be filled by

foreign companies that may have an objective of harming U.S. interests.

A. The Commission Should Consider National Security Concerns.

It is entirely appropriate for the Commission to weigh national security concerns when

evaluating the public interest—and it should do so here. Consistent with its statutory mandate, the

Commission has previously determined that concerns about national security and competitiveness can

be central to the public interest inquiry. In Certain Inclined-Field Acceleration Tubes, for example,

the Commission determined that public interest considerations warranted denial of an exclusion order

of inclined-field acceleration tubes used for nuclear weapons development at Los Alamos National

Laboratory. See Certain Inclined-Field Acceleration Tubes & Components Thereof, Inv. No. 337-TA-

67, Comm’n Op. at 29 (Dec. 29, 1980). Similarly, in Certain Personal Data Devices, the Commission

delayed the imposition of an exclusion order for four months based on concerns about “competitive

conditions in wireless telecommunications services in the United States,” including because of

Presidential statements about the national interest in building out high-speed wireless coverage.

Certain Personal Data and Mobile Communications Devices and Related Software, Inv. No. 337-TA-

710, Comm’n Op. at 79-81 (Dec. 29, 2011).

B. 5G Presents Critical National Security Concerns.

If an exclusion order is issued without any delay to allow for a determination of non-

infringement or after the new design described in response to Question A is not determined to be non-

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PUBLIC VERSION

infringing, Intel remains nearly certain to exit the baseband chipset market and its absence would create

national security concerns. The United States has the benefit of having the only two merchant market

suppliers of premium baseband chipsets, a critical component for the development and deployment of

5G technology. An exclusion order in this case would reduce U.S. competitiveness in the adoption of

this next generation wireless standard. U.S. leadership in the race to 5G is critical to national security,

a fact acknowledged by the U.S. government, OUII, and the Administrative Law Judge.

U.S. leadership in 5G is critical to national security because 5G will represent a vast increase

in the speed, frequency, and volume of data being carried on cellular networks for increasingly

sensitive applications. Thus, while 5G will present new opportunities for using cellular technology, it

will also present significantly more opportunities to exploit vulnerabilities in those communications.

When Intel’s Ms. Evans was asked to identify why U.S. leadership in 5G technologies is important,

she emphasized how fundamental wireless communications have become and will continue to be to

our national infrastructure:

(Tr. [Evans] at 1089:13-

17.) Dr. Eisenach similarly explained that 5G is not simply about cell phone communication: 5G will

be at the nexus of the digital and tangible world. (Tr. [Eisenach] at 1268:5-21.) As a result, 5G will

implicate not just the communication of digital information, but “as digital technologies have moved

more deeply into the economy and into the Internet of Things,” cellular communication is increasingly

connecting and potentially controlling “our electric grids, our hospitals, our cars, our drones, [and]

ships at sea.” Id.

The United States is, of course, not alone in pursuing 5G. The risk that U.S. companies will

be outpaced by foreign companies that either would act against the United States or, at least, would

not have U.S. interests in mind raises national security concerns. Influence over emerging 5G

technologies has become a “national priority” in other nations, particularly China, where the
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PUBLIC VERSION

government is directing efforts to lead and develop 5G. (Tr. [Thompson] at 1546:14-1547:6; see also

SX-11 [Global Race to 5G] at 91 (noting “government commitment to achieving 5G success”).)

For these reasons, the U.S. government has already identified 5G as a critical national security

issue, including as it relates to baseband chipsets and preventing dependence on foreign-supplied

equipment that may pose security risks:

• In his February 6 State of the Union speech, President Trump stressed the need “to
deliver new and important infrastructure investment, including investments in the
cutting-edge industries of the future. This is not an option. This is a necessity.”16 As
the Wall Street Journal reported, this reference “foreshadows a larger effort” aimed at
“boosting the U.S. strength in advanced technology.” In particular, these efforts
include “looking to encourage new corporate competitors into the 5G race, fearful that
Chinese competitors could gain an insurmountable global lead in the years to come.”17

• In March 2018, President Trump prohibited Broadcom’s proposed acquisition of


Qualcomm. In advance of that decision, the Committee on Foreign Investment in the
United States (CFIUS) investigated the proposed acquisition and observed that harm
to an important U.S. 5G innovator’s “technological competitiveness and influence in
standard setting would significantly impact U.S. national security.” (CX-1929 [CFIUS
Letter] at 2.) CFIUS further explained that “[g]iven well-known U.S. national security
concerns about Huawei and other Chinese telecommunications companies, a shift to
Chinese dominance in 5G would have substantial negative national security
consequences for the United States.” (Id. at 2-03.) A bipartisan group of Congressmen
from Colorado, Texas, North Carolina, Florida, and Arizona wrote to the Commission
explaining that “[e]liminating Intel from the U.S. baseband chipset marketplace poses
similar concerns for our national security and competitive interests” as those expressed
by CFIUS when blocking the Broadcom-Qualcomm acquisition. (Letter from
Congressman Ken Buck (R), CO, et al., Jan. 22, 2019.)

• In April 2018, the Federal Communications Commission (“FCC”) issued a notice of


proposed rulemaking emphasizing that America’s communication networks are “[a]
critical element of our national security,” and seeking to address the deeply held
concern that certain government-controlled foreign companies will use the roll out of
new communication technology to threaten the United States.18

16
Remarks by President Trump in State of the Union Address, Feb. 6, 2019, available at
https://www.whitehouse.gov/briefings-statements/remarks-president-trump-state-union-address-2/.
17
Trump Preparing Plan to Boost AI, 5G Technology, WALL STREET JOURNAL, Feb. 6, 2019,
available at https://www.wsj.com/articles/trump-preparing-plan-to-boost-ai-5g-technology-
11549474459.
18
Protecting Against National Security Threats to the Communications Supply Chain Through FCC
Programs, Notice of Proposed Rulemaking, 33 FCC Rcd 4058 (6), FCC18-42 (Apr. 18, 2018).

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PUBLIC VERSION

• Reflecting concerns about security vulnerabilities, the National Defense Authorization


Act for Fiscal Year 2018 passed by Congress prohibits the Department of Defense from
using equipment supplied by Huawei or ZTE, another Chinese company.19

• In a recent order, the President stated that “it is imperative that America be first in fifth-
generation (5G) wireless technologies.”20

Additionally, a number of members of Congress have submitted letters in this Investigation

emphasizing the national security concerns posed by an exclusion order and expressing support for

Administrative Law Judge Pender’s findings on the public interest. (Letter from Congressman Andy

Biggs (R), AZ, Dec. 10, 2018 (“As with our economic interests, our national security interests also

benefit from two U.S. baseband chipset suppliers engaged in the process of setting 5G standards and

making trusted 5G chipsets.”); Letter from Congressman Darrell Issa (R), CA, Dec. 18, 2018 (“5G is

a matter of national security . . . .The vacuum created by Intel’s absence would invite greater American

dependence on foreign suppliers that have no stake in promoting out interests.”); Letter from Senator

Ron Wyden (D) OR, et al., Dec. 21, 2018 (agreeing with the Administrative Law Judge’s assessment

that “5G is crucial to U.S. national security. . . and thus Intel’s exit would harm the national interests

of the United States.”); Letter from Congressman Ken Buck (R), CO, et al., Jan. 22, 2019 (“Continued

U.S. leadership in 5G technology advancement . . . raises critical national security risks, especially as

countries like China seek to control 5G development.”).)

The United States is not alone in its concern about efforts by foreign government-controlled

entities providing equipment for 5G. In August, the Australian government banned Huawei and ZTE

from providing 5G technology for the country’s wireless networks.21 In December, German

telecommunications carrier Deutsche Telekom announced that it was reevaluating its purchasing

19
See Pub. L. 115-91, 131 Stat. 1283, 1762, Sec. 1656.
20
Donald J. Trump, “Presidential Memorandum on Developing a Sustainable Spectrum Strategy for
America’s Future” (Oct. 25, 2018), https://tinyurl.com/ya7mfmon (emphasis added).
21
Huawei and ZTE handed 5G network ban in Australia, BBC NEWS, August 23, 2018, available at
https://www.bbc.com/news/technology-45281495.

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PUBLIC VERSION

strategy amid growing security concerns regarding Huawei.22 The head of Britain’s intelligence

agency has urged British lawmakers to consider whether to ban Huawei equipment.23

Contrary to Qualcomm’s arguments here, concerns about Huawei and other foreign 5G leaders

are not limited to infrastructure: in early 2018, the heads of six major U.S. intelligence agencies warned

U.S. citizens not to use consumer cellular products and services made by Huawei and ZTE because the

government was “deeply concerned about the risks of allowing any company or entity that is beholden

to foreign governments … to gain positions of power inside our telecommunications networks,” which

would provide “the capacity to maliciously modify or steal information … [a]nd … conduct undetected

espionage.”24 These domestic and global concerns regarding foreign-government control and potential

for abuse in cellular communication are magnified in the context of 5G, where both the breadth of the

technology and the potential for interference at the foundation phase of standard development pose

unique and real national security threats.

C. The Loss Of Intel As A Baseband Chipset Supplier Would Harm U.S. National
Security Interests.

Intel is an important 5G chipset innovator, and its exit would undermine U.S. competitiveness.

Intel is currently working on commercializing a 5G baseband chipset. (Tr. [Evans] at 1059:7-18.) Intel

is also a leader in standard-setting organizations developing the specifications and parameters of 5G,

as Mr. Bowers explained:

Intel has actively contributed to 5G standard-setting efforts and has made many
technical contributions to 5G standard specifications under development, culminating
in the release of 3GPP Release 15 last year. Intel also has developed and deployed new
hardware prototypes to promote rapid 5G adoption, including 5G-specific Mobile Trial

22
Stefan Nicola, Deutsche Telekom to Review Purchases in Wake of Huawei Concern, BLOOMBERG,
December 13, 2018, available at https://www.bloomberg.com/news/articles/2018
-12-13/deutsche-telekom-re-evaluates-purchasing-after-huawei-s-troubles.
23
Id.
24
Sara Salinas, Six top U.S. intelligence chiefs caution against buying Huawei phones, CNBC,
February 13, 2018, available at https://www.cnbc.com/2018/02/13/chinas-hauwei-top-us-intelligence-
chiefs-caution-americans-away.html.

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PUBLIC VERSION

Platforms. And Intel is designing and creating components to enable expedited


consumers access to 5G networks.

(RX-9C [Bowers] at Q.10-14, 29.) Outside of formal standards, Intel has also been a leading

contributor in 5G development efforts in collaboration with other industry participants, such as through

the Verizon 5G Technology Forum. (RX-10C [Eisenach] at Q.126-34; RX-11C [Scott Morton] at

Q.161-65; RX-9C [Bowers] at Q.24-55.) As Ms. Evans explained, Intel is uniquely positioned to

contribute to 5G because “Intel has significant experience across almost the full range of technologies

that are relevant to 5G.” (RX-8C [Evans] at Q.79.) Intel’s position as an “end to end” company makes

it a unique and valuable potential contributor to the developing 5G ecosystem. (Tr. [Evans] at 1085:23-

1086:12.)

An exclusion order without a delay of six months for Apple to obtain a determination that the

new design discussed in response to Question A is not infringing would undermine Intel’s 5G

contribution and leadership. Declining baseband chipset revenues, lack of access to the critical U.S.

ecosystem, the destruction of customer relationships, and engineering impediments would force Intel

from the baseband chipset market and impact Intel’s overall 5G contribution. (See Tr. [Bowers] at

1153:8-1158:21; RX-8C [Evans] at Q.83.) Without Intel, the U.S. market would be dominated by a

single U.S. premium baseband chipset supplier: Qualcomm. A Qualcomm monopoly in the market

for premium baseband chipsets would harm the baseband chipset market directly, and accordingly

harm 5G innovation more broadly.

Intel and Qualcomm are both focused on developing 5G technologies, standards, and

components and competition drives innovation. (RX-9C [Bowers] at Q.25-55, 61-63; RX-8C [Evans]

at Q.78-81.) Mr. Bowers explained that in the event of an exclusion order causing Intel to exit, “[t]he

pace of 5G innovation would slow down considerably, and the United States would lose a key domestic

5G innovator.” (RX-9C [Bowers] at Q.78; see also Tr. [Evans] at 1119:3-7.) Dr. Scott Morton testified

that without another U.S. innovator, “Qualcomm would face less competition and would have reduced

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PUBLIC VERSION

incentives to continue to innovate at the current pace, including on 5G.” (RX-11C [Scott Morton] at

Q.166.) As Dr. Eisenach put it: “[O]ne runner in a race … has the luxury of loping along. Put a

second runner in the race, and all of a sudden, they both run faster.” (Tr. [Eisenach] at 1269:13-19.)

Further, the harm to the market for baseband chipsets would not be limited to the premium tier: while

the market for 5G chipsets is broader than the premium tier, other technologies will “waterfall” from

those premium chipsets. (Tr. [Evans] 1084:16-24, 1106:13-22 (premium baseband chipsets for

smartphones are the locus of cellular innovation and the “gateway” to developing other 5G products).)

And while the market for chipsets is global, the United States is the proving ground for chipset

innovation.

An exclusion order without a six-month delay for a determination that the new design described

in response to Question A is non-infringing, would imperil U.S. leadership in 5G, and pose a national

security threat. OUII agrees that an exclusion order causing Intel’s exit could cause the United States

to lose its competitive edge in 5G, raising national security concerns. (OIPost-HB at 56, 62-65.)

Qualcomm’s Dr. Thompson also agreed that it is “important to have United States leadership as we

move into 5G” (Tr. [Thompson] at 1545:21-25), while acknowledging that Intel and Qualcomm are

the only U.S. premium chipset makers. (Id. at 1550:17-19.) Based on this evidence, the Administrative

Law Judge was correct to conclude that “5G is crucial to U.S. national security and competitiveness in

the national economy and thus Intel’s exit would harm the national interests of the United States.” (ID

at 193.)

* * *

In sum, if the Commission concludes that Apple infringed the ’490 patent based on the

functionality at issue before the Administrative Law Judge and issues an exclusion order—though it

should not—Apple respectfully requests that the Commission delay its imposition for six months. This

period of delay would be sufficient for the Commission, an Administrative Law Judge, or Customs to

determine that Apple’s new design described in response to Question A does not infringe (and would
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PUBLIC VERSION

also allow Apple to sell inventory that predates the new design described in Question A) and,

consequently, to avoid the significant public interest harms that the Administrative Law Judge correctly

identified would occur if Intel were driven from the baseband chipset market by an exclusion order.

IV. REMEDY AND BONDING

In addition to the remedy issues addressed in Apple’s responses to public interest Questions A

and C-D, Apple submits that, if a violation is found and a remedial order issues, any remedy should

include (1) a certification provision, (2) an exemption for imported spare parts and replacement

devices, and (3) an exemption for sales of existing inventory to allow installation of the redesigned

software. Further, no bond should be required during the Presidential review period

A. Any Remedy Should Contain A Certification Provision And Exemptions For


Imported Spare Parts And Replacement Articles And Existing Inventory.

In his Initial and Recommended Determination, the Administrative Law Judge concluded that

neither an exclusion order nor a cease and desist order should issue because the statutory public interest

factors weighed against the imposition of any remedy. (ID at 199-200.) The Administrative Law

Judge therefore had no occasion to address Apple’s separate request (ARespPost-HB at 69) that any

remedial order that does issue should contain both a certification provision and an exemption for

imported spare parts and replacement articles. Notably, neither Qualcomm nor OUII opposed Apple’s

request on these points in their reply briefs. (QRepPost-HB passim; ORepPost-HB passim.)

Apple’s iPhones are sold with a standard warranty providing for repair or replacement of

articles with manufacturing defects, and consumers may purchase an extended warranty through the

AppleCare program. See https://www.apple.com/legal/warranty/products/ios-warranty-document-

us.html; https://www.apple.com/legal/sales-support/applecare/applecareplus/docs/

applecareplusnaen.html. Under these warranty programs, consumers expect repair or replacement with

Apple parts or products. Id. The Commission has recognized in prior cases involving iPhones and

other mobile devices that the public interest weighs in favor of a service and repair exception to protect

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PUBLIC VERSION

consumers and to prevent disruption to the domestic business operations of innocent third parties. See

Certain Electronic Devices, Including Wireless Communication Devices, Inv. No. 337-TA-794,

Comm’n Op. at 114-15 (July 5, 2013) (adopting an exception for imports of refurbished iPhone

handsets as replacement products for previously purchased, identical infringing handsets); Certain

Mobile Devices, Associated Software, and Components Thereof, Inv. No. 337-TA-744, Comm’n Op.

at 21-22 (June 5, 2012) (providing exemption for service and replacement parts); see also Certain

Liquid Crystal Display Devices, Inv. No. 337-TA-631, Comm’n Op. at 27 (July 14, 2009) (“the public

interest weighs in favor of an exemption to allow importation of service and replacement parts”).

Accordingly, any remedial order should except service parts or replacement articles imported for use

in servicing, repairing, or replacing the accused Apple products for an identical article that was

purchased prior to the effective date of the remedial order. See Certain Electronic Devices, Inv. No.

337-TA-794, Comm’n Op. at 114-15 (July 5, 2013).

Any cease and desist order (CDO) should also permit the sale of products in existing inventory

with a software update to be downloaded upon initial use by a consumer. See Certain Audio Processing

Hardware, Software, And Products Containing Same, Inv. No. 337-TA-1026, ID at 95 (Oct. 26, 2017)

(recommending CDO with exception for sales of products with software update upon first use by the

customer). As the Administrative Law Judge recognized in the 1026 Investigation, no purpose would

be served by requiring Apple to perform an unnecessarily burdensome and environmentally wasteful

process of unwrapping, unboxing, updating, reboxing, and rewrapping each product to install the

update before the sale to the consumer. This limited exception would mitigate harm to the public

while—if the Commission affirms the Administrative Law Judge’s finding of infringement—still

preventing unauthorized use of patented technology.

Finally, where practice of a patent is not easily determined by visual inspection, the

Commission’s exclusion orders normally authorize U.S. Customs and Border Protection (CBP) to

accept a certification that the importer’s products are not covered by the order. Certain Mobile
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PUBLIC VERSION

Devices, Inv. No. 337-TA-744, Comm’n Op. at 21 (June 5, 2012) (“it has been Commission practice

for the past several years to include certification provisions in its exclusion orders to aid CBP”).

Practice of the patents asserted in this Investigation is not readily determined by visual inspection, and

therefore any remedy should contain a certification provision. A certification provision would also

assist CBP in the administration of the exemption for repair and replacement articles. Certain Mobile

Devices, Inv. No. 337-TA-744, Comm’n Op. at 21.

B. No Bond Should Be Required In Any Remedial Order.

The Administrative Law Judge appropriately recommended that a zero bond be set during the

Presidential review period, finding that (1) “Qualcomm does not seek a bond,” (2) Qualcomm does not

sell products that directly compete with Apple’s accused iPhone products, (3) there is no evidence in

the record of what “a reasonable royalty rate would be for Qualcomm’s patented technology,” and (4)

“Apple and Staff agree that no bond should be required.” (ID at 201.) As the complainant, Qualcomm

bears the burden of demonstrating both the need for and amount of a bond. Certain Rubber

Antidegradants, Components Thereof, and Products Containing Same, Inv. No. 337-TA-533, Comm’n

Op. at 39-49 (July 21, 2006); Certain Electronic Devices, Inv. No. 337-TA-794, Comm’n Op. at 117

(July 5, 2013). Qualcomm has expressly waived the imposition of a bond, and it presented no evidence

to meet its burden of demonstrating both the need for and amount of any bond. Accordingly, no bond

should be required.

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PUBLIC VERSION

Respectfully submitted,

Dated: February 7, 2019 /s/ William F. Lee


William F. Lee
Dominic E. Massa
Joseph J. Mueller
Richard W. O’Neill
Louis W. Tompros
Timothy D. Syrett
WILMER CUTLER PICKERING
HALE AND DORR LLP
60 State Street
Boston, MA 02109
Telephone: (617) 526-6000
Facsimile: (617) 526-5000

Nina S. Tallon
Michael D. Esch
WILMER CUTLER PICKERING
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Telephone: (202) 663-6000
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James M. Dowd
WILMER CUTLER PICKERING
HALE AND DORR LLP
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Suite 2100
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Telephone: (213) 443-5300 (t)
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Ruffin B. Cordell
Lauren A. Degnan
Thomas S. Fusco
FISH & RICHARDSON P.C.
901 15th Street, NW, 7th Floor
Washington, DC 20005
Telephone: (202) 783-5070
Facsimile: (202) 783-2331

Betty H. Chen
FISH & RICHARDSON P.C.

- 56 -
PUBLIC VERSION

500 Arguello Street, Suite 500


Redwood City, CA 94063
Telephone: (650) 839-5070
Facsimile: (650) 839-5071

Benjamin C. Elacqua
FISH & RICHARDSON P.C.
One Houston Center, 28th Floor
1221 McKinney Street
Houston, TX 77010
Telephone: (713) 364-5300
Facsimile: (713) 3652-0109

Counsel for Respondent Apple Inc.

- 57 -
UNITED STATES INTERNATIONAL TRADE COMMISSION
WASHINGTON, DC
Before the Honorable Thomas B. Pender
Administrative Law Judge

CERTIFICATE OF SERVICE

I, Lanta M. Chase, hereby certify that on February 8, 2019, copies of the foregoing,
RESPONDENT APPLE INC.’S WRITTEN SUBMISSION REGARDING THE
COMMISSION’S QUESTIONS ON THE ISSUES UNDER REVIEW, AND ON
REMEDY, BONDING, AND THE PUBLIC INTEREST (Public Version), were filed and
served on the following as indicated:

Lisa R. Barton, Secretary  Via EDIS


U.S. INTERNATIONAL TRADE  Via Hand Delivery
COMMISSION  Via Federal Express
500 E Street, S.W.
Room 112
Washington, DC 20436

The Honorable Thomas B. Pender  Via First Class Mail


Administrative Law Judge  Via Hand Delivery
U.S. INTERNATIONAL TRADE  Via Federal Express
COMMISSION  Via email
500 E Street, S.W. Patricia.Chow@usitc.gov
Washington, DC 20436
Lisa Murray, Esq.  Via First Class Mail
Claire Comfort, Esq.  Via Hand Delivery
Office Unfair Import Investigation  Via Federal Express
U.S. INTERNATIONAL TRADE  Via email
COMMISSION Lisa.Murray@usitc.gov
500 E Street, S.W. Claire.Comfort@usitc.gov
Rooms 401
Washington, DC 20436

Ruffin B. Cordell, Esq.  Via First Class Mail


Lauren A. Degnan, Esq.  Via Hand Delivery
Thomas S. Fusco, Esq.  Via Federal Express
FISH & RICHARDSON P.C.  Via email
1000 Maine Avenue, S.W. FRservice-Apple1065@fr.com
Suite 1000
Washington, D.C. 20024

Betty H. Chen, Esq.


FISH & RICHARDSON P.C.
500 Arguello Street
Suite 500
Redwood City, CA 94063

Benjamin C. Elacqua, Esq.


FISH & RICHARDSON P.C.
1221 McKinney Street
Suite 2800
Houston, TX 77010
S. Alex Lasher, Esq.  Via First Class Mail
QUINN EMANUEL URQUHART &  Via Hand Delivery
SULLIVAN, LLP  Via Federal Express
777 6th Street N.W.  Via email
11th Floor qequalcommitc@quinnemanuel.com
Washington, DC 20001 qcom-8@adduci.com

David A. Nelson, Esq.


Stephen Swedlow, Esq.
QUINN EMANUEL URQUHART &
SULLIVAN, LLP
191 N. Wacker
Suite 2700
Chicago, Illinois 60606

Richard W. Erwine, Esq.


Alexander Rudis, Esq.
QUINN EMANUEL URQUHART &
SULLIVAN, LLP
51 Madison Avenue
22nd Floor
New York, NY 10010

Sean S. Pak, Esq.


QUINN EMANUEL URQUHART &
SULLIVAN, LLP
50 California Street
22nd Floor
San Francisco, CA 94111

Tom M. Schaumberg, Esq.


Deanna Tanner Okun, Esq.
Beau Jackson, Esq.
Michael R. Doman, Jr., Esq.
ADDUCI, MASTRIANI & SCHAUMBERG,
LLP
1133 Connecticut Avenue, N.W.
12th Floor
Washington, DC 20036
Evan R. Chesler, Esq.
Keith R. Hummel, Esq.
Richard J. Stark, Esq.
Gary A. Bornstein, Esq.
J. Wesley Earnhardt, Esq.
Yonatan Even, Esq.
Vanessa A. Lavely, Esq.
CRAVATH, SWAINE & MOORE LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019

/s/ Lanta M. Chase


Lanta M. Chase