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UNITED STATES COURT OFAPPE~FOR THE FED~fU!f.~m~hOoU!s rr,· "", ;- (- .

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Spansion, Inc. and Spansion, LLC, Appellants, FEOER;\~ C·lf{Ccif i

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v.

International Trade Commission, Appellee.

On Appeal from the United States International Trade CommissionInvestigation No. 337-TA-605

EMERGENCY MOTION FOR STAY PENDING APPEAL ANDIMMEDIATE TEMPORARY STAY

Appellants Spansion, Inc. and Spansion, LLC (collectively "Spansion")

move, pursuant to Fed. R. App. P. 18 and Fed. Cir. R. 18, for an order staying the

International Trade Commission's ("lTC's") Limited Exclusion Order and Cease

and Desist Order pending appeal of the lTC's decision. Spansion also requests an

immediate temporary stay while the Court considers whether to grant a stay

pending appeal. Judge Bryson recently granted such an immediate administrative

stay in a similar case, Vizio v. lTC, No. 2009-1386 (June 10, 2009), and that result

should follow a fortiori here, especially in light of the distinct irreparable injury

facing Spansion. Spansion is filing this motion today because the lTC's orders do

not become final until the President has had 60 days to review them, 19 U.S.C.

§ 13370)(4), and today is therefore the first day that Spansion could file an appeal

and the first day that Spansion faces irreparable harm.

Here as in Vizio, the ITC orders enforce patent claims that the Patent and

Trademark Office ("PTO") rejected on reexamination. An expert panel of three

experienced examiners found the claims unpatentable following an exhaustive

review and after considering the patent holder's numerous requests for

reconsideration. In total, the examiners issued 10 separate opinions totaling more

than 1,900 pages. Nonetheless, the ITC gave PTO's analysis no consideration and

provided no reasoned explanation of why the Commission considered it

appropriate, and consistent with the public interest, to enter injunctive relief

enforcing patent claims that PTO had previously found to be unpatentable.

The PTO reexamination and the lTC's failure even to address its relevance

show not only the likelihood that Spansion will succeed on appeal, but also that

enforcement of the lTC's orders pending appeal would not serve the public

interest. Enforcement of invalid patents is self-evidently not in the public interest

because it impedes competition for no legitimate purpose. In the relatively unusual

circumstance where, as here, PTO examiners have already found patent claims to

be unpatentable, it makes little sense for the ITC or district courts subsequently to

proceed to enter injunctions. And when they nonetheless do so, it falls on this

Court to protect the public interests in orderly adjudication and sound patent policy

by entering a stay while this Court decides, on the merits, whether the ITC was

right to disagree with PTO's reexamination. Otherwise, there is an unacceptably

high risk that an invalid patent will be enforced to the public's detriment.

2

Under the traditional stay criteria, a stay pending appeal IS especially

appropriate here. Spansion will likely prevail on appeal because it has strong

arguments not only that the patent claims are invalid, as PTO determined, but also

that the claims were not infringed, as the lTC's own ALl concluded. As to the

equities, the lTC's orders would have "a devastating impact on Spansion." Exh. B.

~3. Spansion is already in a reorganization bankruptcy proceeding. The lTC's

orders would cost Spansion $500 million in sales and force it to shut down

production facilities. As Spansion's CEO has attested, "[t]hese consequences will

be too much for Spansion to bear." Id. ~14.

Because the products of the struggling domestic semiconductor industry

pervade the United States economy, the harm would hardly be limited to Spansion

or even the other Appellants, but would ripple through other domestic industries,

including the automobile industry. It would make no sense to impose those

irreparable consequences in order to enforce patent claims that PTO has

determined to be unpatentable and that this Court has yet to review. That course

would make even less sense in light of Tessera's status as a mere licensor that

could be made whole by damages relief in a pending district court case in the

unlikely event that the patent claims were later determined on appeal to be valid.

Tessera and the ITC oppose this motion and will file responses.

3

BACKGROUND

Tessera alleges that Spansion, along with Qualcomm, Inc.; ATI

Technologies; ULC Freescale Semiconductor, Inc.; and ST Microelectronics N.V.

(collectively "Appellants") infringed U.S. Patent Nos. 6,433,419 ("the '419

patent") and 5,852,326 ("the '326 patent"), which relate to a form of packaging

semiconductor chips. ALl's Initial Determination, at 2, 6-7 (attached as Exh. A)

("ID"). While Spansion manufactures its semiconductor chips domestically, it

must ship the chips outside the United States for packaging because there are no

domestic packaging facilities. Exh. B ,-r,-r6-8. The accused products are used

throughout the microelectronics industry, including in cellular phones, networking

devices, personal computers, and memory devices. Exh. C at 11-12.

A. The PTO Reexamination Proceedings

On February 9, 2007, before Tessera filed its complaint in the lTC, a

company that is not a party to the ITC investigation asked PTa to reexamine the

patents-in-suit. Exh. D at 2. Based on its determination that a "substantial new

question of patentability" had been raised, PTa separately instituted reexamination

proceedings for the two patents on April 20, 2007, and May 4,2007. 1

Reexaminations are undertaken by a panel of three experienced examiners in

Spansion has attached key pages from the PTa record for the '419 and '326patents as Exhibits E and F, respectively. The entire (and voluminous) record canbe found on-line at the PTa's public PAIR portal, http://portal.uspto.gov/extemal/portal/pair, as Reexamination Control Nos. 90/008,483 and 95/000,227.

4

PTO's Central Reexamination Unit ("CRU"), including a supervIsory patent

exammer. See PTO, Manual of Patent Examining Procedure §§ 2236, 2271

(2008). On June 5, 2007, shortly after the ITC investigation had begun on May 21,

2007, three highly experienced examiners issued a 220-page Office Action

rejecting all relevant claims of Tessera's '419 patent as unpatentable over prior art

patents and printed publications. Exh. E. Tessera subsequently filed numerous

responses and requests for reconsideration. The examiners carefully considered

and rejected each of Tessera's submissions, and on June 19, 2009, PTO issued a

final Right of Appeal Notice that marked the end of the reexamination phase. Id.

The '326 patent received similar rejections. On February 21, 2008, the same

three examiners issued an initial Office Action rejecting all relevant claims of the

'326 patent. Exh. F. After considering and rejecting numerous additional

submissions from Tessera, PTO issued a final Advisory Action on June 22, 2009,

setting the time for Tessera to appeal the examiners' decision. Id.

B. The lTC's Investigation

In 2005, Tessera filed a district court action against Spansion and another

defendant asserting that the companies were importing semiconductors that used

the patented packaging. Tessera, Inc. v. Advanced Micro Devices, Inc., et al., No.

05-4063 (N.D. Cal. Oct. 7, 2005) (attached as Exh. G). On April 17, 2007, Tessera

changed forums and filed a complaint with the ITC pursuant to 19 U.S.C. § 1337

5

("Section 337"). 72 Fed. Reg. 28521. On May 21, 2007, after PTO had granted

reexamination of both patents, the ITC initiated its investigation. ID at 2.

1. The ALJ's Grant and The Commission's Reversal of a Stay

After PTO finally rejected the '419 patent and initially rejected the '326

patent, the ALJ entered a stay of the ITe proceedings. Exh. H. The ALJ found it

"notabl[e]" that the PTO actions were "signed by three senior patent examiners,

two primary examiners and one supervisory patent examiner," and that "[i]n light

of the PTO's rejections of all of the claims at issue in this investigation, there

appears to be little chance that the claims will survive in their current form." Id. at

3, 8. As for the equities, the court observed that injunctive relief could cause

"significant" harm to Appellants, whereas, if the patent claims were later

determined to be valid and infringed, "monetary compensation should be an

adequate alternative" because Tessera "neither manufactures nor sells any

products." Id. at 10.

The Commission reversed the ALI's stay order, primarily because the

underlying patents will expire in September 2010, and thus "a stay effectively

terminates the investigation." Exh. D at 4. The Commission thereby rewarded

Tessera for waiting until after most of the patent term had expired, and after two

years of district court litigation had passed, before filing in the ITC.

6

2. The ALJ's Initial Determination of Non-infringement

The ALJ then presumed the patent claims to be valid and concluded­

without discussing PTO's reexamination determinations-that Appellants had not

proven the claims invalid by clear and convincing evidence. ID at 70. The ALJ

determined, however, that Appellants had not infringed the patents. Id. at 51-70.

3. The Commission's Opinion

Like the ALJ, the Commission presumed that the patents were valid and

upheld their validity. Exh. C at 58-61. The Commission acknowledged that "a

final rejection has been issued against the asserted claims of the '419 patent and

prosecution has been closed in that reexamination proceeding." Id. at 76. But the

Commission gave no consideration to the reexamination on the ground that "it

would be premature to give undue weight to the reexamination proceedings until or

unless Tessera has exhausted its appeals." Id. at 76. The Commission also

reversed the finding of non-infringement. Id. at 78-79.

As remedies, the Commission entered a Limited Exclusion Order barring

relevant products from entering this country and ,a Cease and Desist Order that also

bars the distribution of products already in the country. Id. at 61, 70-73. Although

the ITC may not enter orders that would be contrary to public welfare and other

factors, 19 U.S.C. § 1337(d)(l), the Commission devoted only a paragraph of

analysis to whether its remedy was in the public interest. Exh. Cat 73-74.

7

Appellants moved the ITC to stay its orders pending this Court's review.

Exh. 1. The ITC has not acted on that motion.

ARGUMENT

The case for a stay pending appeal here is overwhelming. The expert

regulatory agency dedicated to patent validity has rejected the patents. That

determination can be tested in orderly proceedings that will ensure the licensor full

compensation at the end of the day if PTO's determination is overturned and will

involve minimal disruption in the interim. By contrast, the lTC's contrary

determination, accompanied by exclusion and cease-and-desist remedies, will,

unless stayed by this Court, inflict immediate and irreparable harm on a company

already in bankruptcy. The traditional four factors governing stays manifestly

favor stay in such circumstances.

In determining whether to grant a stay pending appeal, this Court considers:

"(1) whether the stay applicant has made a strong showing that he is likely to

succeed on the merits; (2) whether the applicant will be irreparably injured absent a

stay; (3) whether issuance of the stay will substantially injure the other parties

interested in the proceeding; and (4) where the public interest lies." Standard

Havens Prods., Inc. v. Gencor Indus., Inc., 897 F.2d 511, 512 (Fed. Cir. 1990)

(citation and punctuation omitted). Those factors are considered on "a 'sliding

scale approach. ", Id. at 513 (quoting Roland Mach. Co. v. Dresser Indus., 749

8

F.2d 380, 387-88 (7th Cir. 1984)). Thus, even without a "strong likelihood of

success on appeal," a movant is entitled to a stay if it demonstrates '''a substantial

case on the merits'" and "the other factors militate in movant's favor." Id. at 513

(emphasis in original). All of the factors strongly favor a stay here.

A. Spansion Will Likely Succeed On Appeal

Spansion has a strong likelihood of success on appeal, and certainly a

substantial case on the merits. PTO commences a reexamination only if it finds a

"substantial new question of patentability," 35 U.S.C. § 303(a), which is similar to

the "substantial case on the merits" standard for a stay. As this Court has held,

therefore, PTO's decision simply to "order[] reexamination" satisfies the first

factor for a stay pending appeal. Standard Havens, 897 F.2d at 514 (granting stay).

Here, of course, the case for a stay is far stronger. The examiners not only

began a reexamination, they determined that all of the relevant patent claims are

not patentable. In this circumstance as well, this Court has granted a stay pending

appeal because "there is a conflict between the PTO examiner's rejection.. . and

the district court's ruling of validity." E.!. DuPont De Nemours v. Phillips Petro.

Co., 835 F.2d 277, 278 (Fed. Cir. 1987).

As DuPont and Standard Havens reflect, PTO's reexamination determination

is entitled to considerable respect-especially for the equitable purpose of granting

a stay pending appeal. Congress intended the reexamination process to harness

9

"PTO's expertise" by "'allow[ing] the validity of a patent to be 'tested in the

Patent Office where the most expert opinions exist. '" Ethicon, Inc. v. Quigg, 849

F.2d 1422, 1426 (Fed. Cir. 1988) (quoting H. Rep. 1307(1), 96th Cong., 2d Sess. 4

(1980)). Reexamination also "'permit[s] efficient resolution of questions about the

validity of issued patents without recourse to expensive and lengthy infringement

litigation. '" Id. And when related litigation remains pending in the courts, the

reexamination procedure "facilitate[s] trial of that issue by providing the district

court with the expert view of the PTO." Id. (quoting Gould v. Control Laser Corp.,

705F.2d 1340, 1342(Fed.Cir.1983)).

Because of the importance of reexaminations, PTO has established a special

Central Reexamination Unit ("CRU") of highly trained examiners. As the ALl

observed, the reexaminations here were undertaken by "three senior patent

examiners, two primary examiners and one supervisory patent examiner." Exh. H

at 3. Reexaminations are highly reliable not only because they are handled by

trained examiners in the CRU, but also because they are more focused than a single

examiner's earlier review of the patent application. Instead of considering all

potential issues concerning all of the claims when a patent application is first filed,

the reexamination focuses on particular concerns that have come to light

concerning specific claims, sometimes with adversarial guidance.

Here, the examiners issued 10 separate opinions totaling more than 1,900

10

pages. After they issued a detailed 220-page Office Action rejecting all relevant

claims of the '419 patent, Tessera filed, and the examiners entertained, numerous

additional submissions. Ultimately, the examiners reaffirmed their determination

on six additional occasions, including a final Right of Appeal Notice. Exh. E. As

PTO's regulations explain, such a notice is "a final action, which comprises a final

rejection." 37 CFR 1.953(c). For the '326 patent, the examiners similarly issued

two non-final office actions, giving Tessera every opportunity to be heard, before

eventually issuing a Final Office Action finding the claims unpatentable, as well as

a subsequent Advisory Action confirming that the claims were finally rejected.

Exh. F.

Nonetheless, the ITC pointedly gave no consideration to PTO's careful,

expert determination. The ALl initially stayed the proceedings pending the

completion of the reexamination. But once that stay was reversed, the ALl

completely ignored PTO's decision. And the Commission stated only that,

although PTO had issued a "final rejection," "it would be premature to give undue

weight to the reexamination proceedings until or unless Tessera has exhausted its

appeals." Exh. C at 76. That observation is fair as far as it goes; there is no reason

to give "undue" weight to anything. But the Commission implicitly gave the

determination zero weight, without ever explaining why the proper weight "due" to

the considered views of the expert agency was zero. That would be an inexplicable

11

way to coordinate the views of the PTa and the ITC even in the absence of the

enormous practical consequences of an exclusion order. But the Commission here

went farther by exercising its discretion to enter such an order, without providing

any reasoned explanation for affording zero weight to PTa's determination.

It is true that the lTC, like a district court, is not bound by the examiners'

final determination, which is subject to appeal. But like most if not all other

agencies, the ITC must not act arbitrarily and capriciously. See 19 U.S.C.

§ 1337(c) (adopting Administrative Procedure Act ("APA") standards of review).

That means, at a minimum, that the ITC must not ignore relevant considerations

and must give a reasoned explanation for its decision. See Motor Vehicle Mfrs.

Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29,43,46-48 (1983). Saying

that the reexamination is not entitled to "undue" weight and then completely

ignoring it is, if anything, worse than failing even to acknowledge PTa's decision.

It is an acknowledged yet unreasoned dodge, and the APA does not reward an

agency for ignoring a relevant factor, but doing so explicitly. See id. at 52.

When district courts have decided whether to enter injunctions enforcing

patents, they have been a good deal more attentive to reexamination decisions by

PTO's examiners, even though, like the lTC, they are not bound to follow those

decisions. As the court explained on remand from EBay Inc. v. MercExchange,

L.L.C., 547 U.S. 388 (2006), "when the court considers a prospective motion in

12

equity, it would be imprudent not to consider the ongomg reexamination."

MercExchange, LLC v. EBay, Inc., 500 F. Supp. 2d 556,575 n.15 (E.D. Va. 2007)

(emphasis in original). In particular, it is "proper to consider . . . repeated

indications from the PTO that [the] patent is invalid . . . when considering the

public's interest in protecting the patent holder through injunctive relief." Id. at

586 (denying permanent injunction); see also Avery Dennison Corp. v. Alien Tech.

Corp., No. 08-795, 2009 WL 773825 (N.D. Ohio Mar. 18, 2009) (relying on initial

office action in denying injunction); Dusa Pharms., Inc. v. River's Edge Pharms.,

LLC, No. 06-1843,2007 WL 748448, at *2-3 (D.N.J. Mar. 7,2007) (same).

The lTC's refusal even to consider the reexamination before issuing

injunctive relief with enormous practical consequences is especially unreasonable

in light of Congress's express directive that the ITC "shall consult with, and seek

advice and information from . . . such other departments and agencies as it

considers appropriate." 19 U.S.C. § 1337(b)(2). While the ITC has discretion in

that regard, it beggars belief that, in the face of this directive, the lTC, unlike the

courts discussed above, would simply ignore PTO's prior determination of

unpatentability. Apparently the familiarity that comes from being housed in the

same Executive Branch has bred contempt. But as this Court has observed, PTO is

entitled to "the deference that is due to a qualified government agency that is

presumed to have properly done its job, which includes ... examiners." Am. Hoist

13

& Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1359 (Fed. Cir. 1984).

Simply put, "PTa's expertise does not exist elsewhere." Ethicon, 849 F.2d at

1427. The lTC's failure even to consider such an important factor as PTa's

rejection of the patent on reexamination is arbitrary and capricious and an abuse of

discretion. See State Farm, 463 U.S. at 43, 46-48.

Thus, even if this Court did not ultimately rule outright in favor of

Appellants (which it should and is likely to do), the Court should at least remand

for the ITC to consider PTa's determination and provide a reasoned explanation.

See, e.g., State Farm, 463 U.S. at 46-48, 52, 57. For that alternative reason as well,

Spansion will likely succeed on appeal.

The likelihood that Spansion and the other Appellants will prevail on appeal

is further confirmed by two other factors explained in the Stay Motion filed by the

other Appellants. The examiners' analysis is irreconcilable with the lTC's, and far

more persuasIve. And the Commission also erred in rejecting the ALl's

determination of no infringement. If one is looking for objective indicia that the

lTC's decision will likely be overturned on appeal, this case certainly has them.

B. The Public Interest Favors A Stay

The public interest is doubly relevant to this motion. First, it is one of the

traditional factors that governs the Court's decision to issue a stay. And second, it

is relevant to the lTC's decision to issue injunctive relief, because even if the ITC

14

finds that a company violated Section 337, it still must consider "the public health

and welfare, competitive conditions in the United States economy, the production

of like or directly competitive articles in the United States, and United States

consumers" in determining whether to enter an exclusionary order. 19 U.S.C.

§ 1337(d)(l). A critical public interest here is the interest in sound competition

policy. While protection of valid patents "encourage[es] innovation, industry and

competition," Atari Games Corp. v. Nintendo of Am., Inc., 897 F.2d 1572 (Fed.

Cir. 1990), efforts to enforce invalid ones "stifle, rather than promote, the progress

of useful arts," KSR InrI Co. v. Teleflex, Inc., 127 S. Ct. 1727, 1746 (2007).

Thus, as Justice Kennedy pointed out for four Justices in EBay, the "suspect

validity" of a patent may be relevant to the decision whether to enjoin compliance

with it. 547 U.S. at 397 (Kennedy, J., concurring).

This Court plays a unique and crucial role in protecting the public interest in

this area. The PTO, the lTC, and the district courts proceed on parallel tracks and

apply different legal standards. For example, on reexamination PTO does not

presume patents to be valid; in contrast, the ITC and the courts presume patents to

be valid and require proof of invalidity by clear and convincing evidence, unless

and until the reexamination appeals process concludes and PTa formally

withdraws the patent. Ethicon, 849 F.2d at 1427. That standard does not excuse

courts or the ITC from giving due (as opposed to zero) weight to a rejection still

15

subject to appeal, especially in awarding equitable relief. Indeed, the undeniable

oddity of the ITC presuming patents to be valid based on their issuance by a single

examiner after a panel of three experienced examiners determined them to be

unpatentable should make the ITC particularly reticent about ordering immediate

injunctive relief. As the decision here demonstrates, the ITC did not proceed with

any caution in this regard, which makes it particularly critical for this Court to

vindicate the public interest by granting a stay pending appeal.

The somewhat unusual nature of Section 337 proceedings makes it

especially important for this Court to be vigilant in exercising its responsibility to

stay the lTC's orders pending appeal in cases like this. The ITC is understandably

reluctant to stay its proceedings based solely on the filing or grant of a

reexamination request, because filing reexaminations could otherwise become a

common delay tactic. But once a reexamination determines a patent to be

unpatentable, and especially once that decision becomes final, the calculus ought to

change. At that point, it is, at bare minimum, likely that the patent is invalid and

that enforcing it would therefore hurt the public interest in competition. By then,

however, the ITC may feel invested~specially since, unlike a court, the ITC only

has power to enter injunctive (and not monetary) relief. Thus, while courts can

stay their proceedings or deny injunctive relief in this circumstance knowing that

they can award monetary relief later in the unlikely event that a reexamination

16

determination is overturned on appeal, the ITC may feel that it must enter

injunctive relief immediately if it is to do anything at all. Indeed, the ITC declined

to stay its proceedings here precisely because it felt that a stay would be

tantamount to a denial of any relief, considering that the patents are set to expire in

October 2010. Exh. D. at 4.

From the perspective of the broader public interest, that is simply not a

legitimate basis for entering immediate injunctive relief. No matter how much

time previously went into an investigation, it simply makes no sense prospectively

to harm the public interest by enforcing a patent that is very likely invalid,

especially considering that a court could award monetary relief (which provides

make-whole relief to a licensor) in the event that the patent was later upheld on

appeal. The ITC may well disagree with the PTa's determination, but entering

injunctive relief in these circumstances creates a very substantial risk of harming

the public interest in sound competition policy.

Moreover, to the extent that the ITC was concerned about the expiration date

of these patents, it was Tessera that delayed filing the ITC action until the patent

terms were drawing to a close. Indeed, Tessera filed an action in district court two

years earlier and changed venues to the ITC only after waiting to see how that

action proceeded. Above all else, however, the public interest lies in sound

competition policy, not in rushing to enjoin compliance with dubious patents.

17

C. The Balance Of The Equities Favors A Stay

While the public interest weighs unusually heavily here in favor of a stay

pending appeal, a stay is also warranted based on a traditional balancing of the

equities. A stay pending appeal would not cause irreparable harm for Tessera

because, as the ALJ observed in granting the stay that the Commission later

overturned, Tessera is just a licensor, not a competitor. Exh. H at 10. Thus, in the

unlikely event that the patent claims are eventually determined to be valid and

infringed, Tessera's alleged harm from a stay is fully compensable by damages for

infringement. Indeed, in DuPont, this Court found the fact that the plaintiff was

only a licensor to be of "great importance" in granting a stay pending appeal. 835

F.2d at 278; see also Standard Havens, 897 F.2d at 514 (noting that this fact was

"nearly dispositive" in DuPont).

In contrast, denial of a stay pending appeal would "have a devastating

impact on Spansion." Exh. B ~ 3. The semiconductor industry as a whole is

contracting and "is still in the midst of the longest slump in its 50-year history."

Exh. I, Pearson Decl. ~2; see also id. ~3. The Semiconductor Industry Association

projects a 21.3 percent decline in sales between 2008 and 2009. Exh. B ~10.

Spansion is already in a Chapter 11 reorganization bankruptcy, and earlier

this year it announced plans to layoff approximately 3,000 employees-more than

a third of its work force. See Exh. B ~9; Exh. C at 75; Exh. J. If the lTC's order

18

went into effect, Spansion would lose an additional $500 million in sales and

would be forced to shut down production facilities. Exh. B ~3. As Spansion' s

CEO explained in an affidavit attached to this filing, "[t]hese consequences will be

too much for Spansion to bear." ld. ~14. Of course, such evidence concerning a

company that is already in bankruptcy "make[s] a strong showing[] of irreparable

harm." Jacobson v. Lee, No. 93-1082 et aI., 1993 U.S. App. LEXIS 14264, at

**11-14 (Fed. Cir. May 5, 1993); accord Standard Havens, 897 F.2d at 515.

Moreover, the harm would not be limited to Spansion or even the other

Appellants. Many of the products covered by the lTC's orders are sole-sourced,

high-technology items. Exh. B ~13. Spansion custom-tailors applications and

designs for more than 800 customers, many of whom use just-in-time inventory

practices. ld. ~12. Under the lTC's injunctions, Spansion could not fill those

customers' orders, and those customers could not finish production of their end

products. ld. Re-designing custom chips would be a lengthy process-a year or

more-because a time-consuming requalification process is required for new

components in the automobile, defense, and other critical industries. Id. ~~17-18,

24-25. Thus, the lTC's orders would have substantial downstream consequences.

The struggling automobile industry is a prime example. Spansion is a world

leader in automobile electronics, supplying its products to General Motors, Ford,

Chrysler, and original equipment manufacturers ("OEMs") that manufacture

19

equipment for the automobile industry. Id. ,-r19 Semiconductors are more

important to the future of automobiles than rubber or steel. Id. ,-r20. One-quarter

of the average car's value is comprised of electrical and electronics components,

including semiconductors. See Exh. B ,-r20; see also Exh. K.

The lTC's orders would cause significant harm to OEMs and automobile

manufacturers. For example, Delphi, an OEM, informed Spansion "that its

production lines will be stopped for up to several months as it tries to find a

solution for the exclusion of Spansion's NOR Flash memory." Exh. B ,-r25. "This

likely will have a cascading effect and force auto manufacturers' lines to shut

down for a period of time as well." Id. As Spansion's CEO has explained, "[i]t is

highly unlikely that [Spansion's] OEM customers would want to continue to do

business with [Spansion] if faced with this substantial delay that will be caused by

the Orders." Id. ,-r27. It would be absurd to impose such devastating consequences

for the sake of enforcing a patent that PTO has found to be unpatentable, especially

considering that Spansion could be made whole by monetary relief in the unlikely

event that the patents were later found valid on appeal.

CONCLUSION

This Court should enter a stay pending appeal of the lTC's Limited

Exclusion Order and Cease and Desist Order, as well as an immediate temporary

stay while the Court considers whether to grant the stay pending appeal.

20

.'! f\

Dated: July 20, 2009 Respectfully submitted,

Paul D. Clement, Attorney of RecordDaryl L Joseffer, Of CounselGilbert B. Kaplan, Of CounselKING & SPALDING LLP1700 Pennsylvania AveNW, Suite 200Washington, D.C. 20006-2706(202) 737-0500

Ethan Horwitz, Of CounselKING & SPALDING LLP1185 Avenue of the AmericasNew York, NY 10036(212) 55-2100

Charles A. Pannell, III, Of CounselKING & SPALDING1180 Peachtree St., NEAtlanta, GA 30309-3521(404) 572-4600

2009-

UNITED STATES COURT OF APPEALS FOR THE FEDERALCIRCUIT

Spansion, Inc. and Spansion, LLC, Appellants,

v.

International Trade Commission, Appellee.

On Appeal from the United States International Trade CommissionInvestigation No. 337-TA-605

EXHIBIT LIST TO EMERGENCY MOTION FOR STAY PENDINGAPPEAL AND IMMEDIATE TEMPORARY STAY

Exhibit DescriptionA AU's Initial Determination on Violation of Section 337 and Recommended

Determination on Remedy and Bond (December 1, 2008)B Affidavit of John Kispert, CEO Spansion, Inc.C International Trade Commission Opinion (June 3, 2009)D International Trade Commission Opinion re: ALJ Stay (May 27, 2008)E Key Pages from PTO Reexamination of the '419 Patent (including final

right of appeal notice (June 19,2009»F Key Pages from PTO Reexamination of the '326 Patent (including PTO

issued final advisory action (June 22, 2009»G Complaint, Tessera, Inc. v. Advanced Micro Devices, Inc., et al. No. 05-

4063 (N.D. Cal. October 7, 2005)H ALl's Initial Determination Granting Respondents' Motion for Stay

Pending Reexamination, Order No. 52 (February 26, 2008)I Respondents' Joint Motion and Memorandum to Commission for Stay

Pending Appeal (June 2, 2009)J Spansion Bankruptcy Petition (March 1, 2009)K Strategic Analytics, Freescale Loses Lead in Automotive Semiconductor

Market, Business Wire (May 19, 2009)