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Latest Federal Circuit Court Cases, 7/9/18

July 9, 2018

Overview

PATENT CASE OF THE WEEK

Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., Appeal Nos. 2016-2691, 2017-1875 (Fed. Cir. July 3, 2018)

The Court affirmed a jury verdict of patent infringement and vacated a $140 million damages award.  At issue were two patents owned by Power Integrations related to power supply controller chips, which are integrated circuits used in power supplies such as mobile phone chargers.  Power Integrations asserted infringement of U.S. Patent Nos. 6,212,079, covering a “switching regulator” that directs the circuit’s transistor to turn on and off to supply the desired amount of power, and 6,538,908, covering a “power supply controller” that performs a variety of power regulation functions.  At trial, the jury found that defendant-appellant Fairchild Semiconductor literally infringed the ’079 patent and infringed the ’908 patent under the doctrine of equivalents.  The jury awarded $139.8 million in reasonable royalty damages, applying the entire market value rule.  The district court denied Fairchild’s motions for judgment as a matter of law, and Fairchild appealed.

As to the ’079 patent, at issue was whether the accused switching regulators used a “fixed switching frequency,” which the Court construed to mean “[a] non-varying number of switching cycles per second,” a claim construction not proposed by either party.  Fairchild argued that even during a “fixed” frequency mode (as advertised), its accused products operated with a 5-15% variance in frequency due to conditions such as temperature and input voltage.  The Federal Circuit rejected this argument, reasoning that to exclude the possibility of natural variation would impermissibly render the claims inoperable.  Instead, relying on expert testimony and marketing materials, the Court found that the plain and ordinary meaning of the word “fixed,” within the context of the patent, necessarily encompasses minor environmental variations.

Fairchild also disputed the district court’s sua sponte inclusion of “per second” in its construction.  The Court acknowledged that a claim construction argument ordinarily is not waived where the construction proposed on appeal is the same construction proposed during Markman proceedings, as Fairchild’s proposed construction was.  However, because the “per second” limitation was not raised or litigated during Markman proceedings, the Court found that Fairchild was obligated to object to the construction before trial in order to preserve its argument for appeal, and that it was therefore waived.

Concerning DOE infringement of the ’908 patent, the asserted claims required “receiv[ing] a signal… for adjusting a current limit,” with “current limit” construed to mean “a value of current that can be used… to turn off the power switch when the amount of current passing through the power switch reaches the threshold.”  Fairchild’s accused products used a voltage value (not a current value) as the signal to turn off the power switch, from which an associated current value could be calculated.  Fairchild argued that argument-based prosecution history estoppel precluded the claim term from encompassing its products, because Power Integrations distinguished “voltage” from “current” during prosecution of a related patent, with respect to a different claim term describing a different element of a power switch.  The Court found that while the functions of the two claimed elements were related, Fairchild failed to establish that any disclaimer was sufficiently clear to create an estoppel, and affirmed the finding of infringement.  The Court noted the fact that the claim of the related patent disclosed “a current representative of an input voltage,” distinguishing between “current” and “voltage” within the claim, while the ’079 patent did not.

The Court vacated the jury’s damages award, which relied on application of the entire market value rule, finding that the district court should have granted Fairchild’s motion for a new trial on this issue.  The Court held that for the EMVR to apply, “[w]here the accused infringer presents evidence that its accused product has other valuable features [(patented or unpatented)] beyond the patented feature, the patent holder must establish that these features are not relevant to consumer choice,” i.e., they did not influence purchasing decisions.  Because it was clear that the accused products contained other valuable features, and because Power Integrations had not offered proof that these features did not affect consumer demand, Power Integrations as a matter of law did not meet its burden to show the EMVR applied.

Opinion can be found here.

ALSO THIS WEEK

Adidas AG v. Nike, Inc., Appeal Nos. 2018-1180, -1181 (Fed. Cir. July 2, 2018)

In what appears to be a final resolution on the issue of whether the PTAB can institute an inter partes review on only certain grounds following the Supreme Court’s decision in SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018), the Federal Circuit held that IPRs must be instituted on all grounds asserted in the petition or not at all.  In these IPRs, following a final written decision on some grounds—but not others—Adidas moved to remand the appeal to the PTAB for further consideration of the non-instituted grounds.  The Federal Circuit granted the motion in a precedential order, and held that “[e]qual treatment of claims and grounds for institution purposes has pervasive support in SAS.”

For more on the SAS decision, see our write-up here.

Opinion can be found here.

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