The Federal Circuit has recently decided the case of Power Integrations, Inc. v. Fairchild Semiconductor International, Inc.  Power Integrations, Inc. (Power) sued Fairchild Semiconductor International, Inc.  (Fairchild) in the U.S. District Court for the District of Delaware, alleging infringement of Power’s four patents covering chargers for mobile phones.   In a bifurcated trial, the claims of the patents were found valid, and Fairchild was found to have willfully infringed and assessed $33 million in damages, which was subsequently remitted to $12 million.  Fairchild appealed to the Federal Circuit, arguing that the district court’s claim construction of two terms—“frequency variation signal” and “soft start circuit”—was erroneous, and that the district court’s denial of its JMOL of non-obviousness was in error.  Power cross-appealed the district court’s determination that the jury’s original damages award of was contrary to law, seeking the original $33 million in damages. 

Claim Construction

Fairchild argued on appeal that the district court’s construction of the “frequency variation signal” language improperly imported limitations from the preferred embodiments provided in the patent specification.  Fairchild sought a much broader construction, based on what it argued was the plain and ordinary meaning, thereby eliminating any need to turn to the disclosures of the patent.  The Federal Circuit concluded that the testimony of Power’s expert that there was no plain and ordinary meaning and in the absence of contrary evidence from Fairchild, the expert opinion was dispositive.  The court then confirmed the district court’s reading of the specification, ultimately concluding the construction of “frequency variation signal” was proper.

Fairchild also argued that the district court’s construction of “soft start circuit” as a means-plus-function limitation was erroneous because the claim did not use the term “means” and provided sufficient structure to preclude application of 35 U.S.C. § 112, paragraph 6.  The court concluded that the recitation of a “circuit” in conjunction with a sufficiently definite structure for performing the identified function was adequate to bar means-plus-function claiming. 

Obviousness

With respect to obviousness, Fairchild argued that the Power patents were obvious in light of the prior art, because the only difference compared to the patents-in-suit was that the prior art included erasable programmable read only memory (EPROM) absent from the patents and it would have been obvious to a person of skill in the art to simply remove the EPROM.  The court found that a person of skill in the art would understand that the EPROM in the prior art was used to achieve a different result than, and was thus unnecessary for, the “frequency-jittering” achieved by the claimed invention of the patent-in-suit.   However, the court also found that there was substantial evidence of “objective considerations of non-obviousness”—that is, secondary indicia—to support the jury’s verdict that Power’s patent would not have been obvious to the ordinarily skilled artisan.  Specifically, the court focused on:

(1) testimony that the EPROM in the prior art added expense and imposed design constraints as “a good indication that removing the EPROM provided otherwise unexpected benefits”;

(2) testimony that “each and every one of [the prior art] references . . . included [EP]ROMs,”

(3) more than 11 years having passed between issuance of the obviousness reference and the filing of the patent-in-suit without anyone disclosing removing the EPROMs;

(4) testimony that no one in the industry was able to come up with the patented invention;

(5) evidence of commercial success; and significantly (6) Fairchild competed with Power by reverse engineering and copying of Power Integrations’ products.  

The court concluded that this evidence was sufficient to support the verdict of non-obviousness.

Damages

The court also considered the “underlying question [of] whether Power Integrations is entitled to compensatory damages for injury caused by infringing activity that occurred outside the territory of the United States.”  The court answered that question with an emphatic “No.” 

Finally, the court considered whether the district court improperly precluded Power from introducing evidence of price erosion that occurred prior to notifying Fairchild of its infringing activity.  The court held that the district court’s decision to exclude the evidence was incorrect because “a price erosion analysis relating to damages arising from post-notice infringement must measure price changes against infringement-free market conditions, and thus the proper starting point of such a price erosion analysis is the date of first infringement.”

The court remanded the case for the district court to construe those claims and determine what effects the new constructions have on validity and infringement, and for a new trial on damages resulting from Fairchild’s direct infringement.

·         In Power Integrations, Inc. v. Fairchild Semiconductor International, Inc. the Federal Circuit clarified several points relating to claim construction, determinations of non-obviousness, and calculation of damages.   The court confirmed that claiming a “circuit” in conjunction with a sufficiently definite structure for performing the identified function is adequate to bar means-plus-function claiming.  The court also confirmed that secondary considerations of non-obviousness could constitute evidence sufficient to support a finding of non-obviousness.  Finally, the court held that plaintiffs are not entitled to compensatory damages for injury caused by infringing activity that occurred outside the territory of the United States, regardless of any foreseeability of world-wide damages.  A more in-depth analysis of this case will be posted shortly.

·         In Rubin v. The General Hospital Corp., Dr. Berish Y. Rubin and Dr. Sylvia L. Anderson (collectively, Rubin) sued The General Hospital Corporation (GH Corp.) in the U.S. District Court for the District of Massachusetts requesting correction of inventorship of two patents assigned to GH Corp., or alternatively invalidation of the two patents.  Rubin alleged that the inventors named in the patents used confidential information—from a manuscript and abstract submitted by Rubin to the American Journal of Human Genetics—to complete the inventions described and claimed in the patents.   The district court granted summary judgment to GH Corp.

The Federal Circuit affirmed the grant of summary judgment, reasoning that the dispute was fundamentally a question of priority of the invention.  The court ultimately agreed with the district court, concluding that Rubin and Anderson could not be added as joint inventors or be substituted for the named inventors of the patents because they did not meet the requirements of 35 U.S.C. § 116 for joint invention or §256 for correction of inventorship, and that the issue of priority is appropriately determined by PTO interference proceedings.    

·         The U.S. District Court for the Southern District of N.Y. has handed down its decision in Capitol Records, llc. V. ReDigi Inc.  ReDigi considers itself the "world's first and only online marketplace for digital used music."   ReDigi's website "invites users to sell their legally acquired digital music files, and buy used digital music from others at a fraction of the price currently available on iTunes."   ReDigi's website sold various records belonging to Capitol Records.  Capitol Records brought an action against ReDigi, alleging direct copyright infringement, inducement of copyright infringement, contributory and vicarious copyright infringement.  In its defense, ReDigi asserted that the “first sale” doctrine precluded a finding of copyright infringement.  The district court disagreed, however, holding that the very nature of transferring digital files over the internet constituted copyright infringement because in order to transfer a file, a copy of the file must be made on the transferring computer.  Because the “first sale” doctrine does not protect against reproduction of copyrighted material, ReDigi could not successfully assert the defense for the present action.   

·         In Wax v. Amazon Techs., the Federal Circuit upheld the TTAB’s denial of registration of the mark AMAZON VENTURES.  Applicant filed and intent-to-use application to register the mark for “investment management, raising venture capital for others, . . . and capital investment consultation.”  Amazon Technologies, Inc.—online retailer and owner of several AMAZON.COM marks—opposed the registration.  The TTAB concluded that Amazon Technologies, Inc. had priority in the AMAZON.COM marks, and that there was a likelihood of confusion between Amazon Technologies’ marks and those of the applicant.  The Applicant challenged the TTAB’s findings that (1) Amazon Technologies’ marks are famous, (2) the similarity of Amazon Technologies’ mark to AMAZON VENTURES, and (3) the similarity of the parties' services and channels of trade.  The Federal Circuit confirmed the TTAB’s findings, based in part on the wide latitude of protection afforded to Amazon Technologies’ on account of its fame within the buying public.  

·         The Eighth Circuit Court of Appeals affirmed a district court’s judgment and damages for Hallmark Cards, Inc. against a former employee for breach of contract and misappropriation of trade secrets.  The district court entered the jury’s award of damages in the amount of $860,000.  The Eight Circuit affirmed $735,000 of the damages as they related to breach of contract and disclosure of trade secrets, but overturned $125,000 the former employee earned in compensation from a competitor. 

·         The Supreme Court handed down its decision in Already, LLC v. Nike, Inc.  The Court held that Nike’s covenant not to sue Alreadyfor alleged infringement of Nike’s AIR FORCE 1 trademark—entered into after Nike had filed suit and Already had filed a counterclaim challenging the mark’s validity—rendered both Nike’s claims and Already’s counterclaims moot.  The Court held that because Already failed to show that it engages in or has sufficiently concrete plans to engage in activities that would arguably infringe Nike’s trademark yet not be covered by the covenant not to sue, its claims could not survive Nike’s motion to dismiss. 

Another billion dollar verdict has been handed out in a patent case.  Read the verdict in Carnegie Mellon University v. Marvell Technology Group, LTD. here.  This latest case continues a string of billion dollar verdicts highlighted by Jonathan Kennedy in the latest edition of MVS Briefs. 

Carnegie Mellon brought suit alleging infringement of two of its patents, Patent No. 6,201,839 and Patent No. 6,438,180, relating to integrated circuits for computer memory systems.  Marvell asserted that it did not infringe the patents, and in the alternative, the patents were invalid because they were anticipated or rendered obvious by the prior art.

The jury in the case found for Carnegie Mellon on all counts of infringement—including indirect infringement—and invalidity.  In addition to the large damages award, the jury determined that Marvell had engaged in willful infringement of two patents held by Carnegie Mellon because Marvell knew of the asserted patents before the lawsuit, had no reasonable defense for its actions, and knew or should have known that its actions would infringe the asserted patents.  The determination of willfulness by the jury could allow the presiding judge, U.S. District Judge Norra Barry Fischer, to triple the damages award. 

 A final judgment in the case is expected in May 2013, pending post-trial motions from both sides.  Marvell has already announced its intent to appeal the verdict should its post-trial motions prove unsuccessful. 

In a recent decision, the Federal Circuit reversed a district court's reduction of the jury's damages award, remanding the case for a new trial on damages, and affirmed the jury's verdict of willful infringement and the district court's award of attorney fees under § 285.

The district court held there was insufficient evidence as a matter of law to support the jury's damages award, so it reduced the award from over $1 million down to just over $50,000. However, the court did not offer the patentee the option of a new trial. The Federal Circuit held this violated the Seventh Amendment, which requires a new trial unless the award was based on legal error, not present here.

Further, the Federal Circuit held the district court's jury instruction on the issue of actual notice under § 287 was legally incorrect, as it improperly foreclosed a finding of actual notice before the discovery of the defendant's infringement. As a result, the Federal Circuit remanded the case for a new trial on damages to address both the amount and the date from which damages should be calculated.

More detail of Minks v. Polaris Indus., Inc. after the jump.

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The Federal Circuit recently affirmed a district court's finding of non-willful infringement for one product, reversed its claim construction and related finding of noninfringement of a second product, and vacated its judgment as a matter of law on the issue of anticipation.  The district court, at the charge conference near the end of the jury trial in this case, decided not to instruct the jury on anticipation, holding the defendant's anticipation argument was "iffy," and that the arguments were "best captured by obviousness."

The Federal Circuit held this determination was in error.  As stated by the court, "[a]n 'iffy' anticipation case, however, does not foreclose a favorable verdict."  Further, the court noted it is the party's right to make the strategic decision about which defenses to present to the jury, so long as there is sufficient evidence to generate a verdict in the party's favor.  The court rejected the contention that every anticipated claim is also obvious, and as a result of the lack of complete overlap between the defenses, remanded the case for a determination of whether the claims were anticipated.

Judge Mayer dissented on this issue.  In his opinion, the majority's conclusion regarding the overlap of anticipation and obviousness is incorrect.  He attacked the majority's citations as "unsupportable," observing the majority was "unable to cite a case remanding to the district court for consideration of anticipation, while at the same time sustaining a determination that the claims at issue are not obvious."

More detail of Cohesive Techs., Inc. v. Waters Corp. after the jump.

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The Seventh Circuit recently reversed the amount of damages in a district court's entry of default judgment in a trademark infringement dispute.  At issue was whether the Plaintiff was entitled to additional relief on the grounds that the district court applied the wrong standard to its claim for an accounting of profits.  The district court found the plaintiff's damage request to be "clearly excessive" and that it could not "be ascertained with reasonable certainty."

The Seventh Circuit reversed, finding that the claim at issue was a request for an equitable accounting of profits.  The proper standard for this type of damages claim placed the burden on the defendant to prove any reduction in damages, and the plaintiff's burden was only to show gross income on goods and services bearing the infringing mark.  Because the district court applied the wrong standard, the court reversed and remanded for a redetermination of the proper award.

More on WMS Gaming Inc. v. WPC Gaming Prods. Ltd. after the jump.

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In a decision Friday, the First Circuit affirmed a district court's summary judgment of trademark infringement and an associated award of the defendant's profits and attorney fees to the plaintiff.  The defendant used the plaintiff's registered marks in both the metatags of its website as well as in white text on a white background in the body of the site in an effort to cause consumers searching for the plaintiff's marks on an internet search engine to be more likely to go to the defendant's website instead.  Over the course of discovery, the defendant essentially admitted that seven of the eight Pignons factors weighed in favor of the plaintiff, and accordingly the district court granted summary judgment, awarding the plaintiff an equitable share of the defendant's profits and attorney fees.

The First Circuit affirmed, holding that even if the final factor, evidence of actual confusion, was neutral or favored the defendant, it was not error for the district court to grant summary judgment for the plaintiff given the admissions on the other seven factors.  Further, the court held the award of profits was proper, as the plaintiff only had to prove the defendant's gross sales under 15 U.S.C. § 1117(a).  Because the defendant did not offer evidence of its costs, the district court's award of profits was proper.  Further, the award of attorney fees was not an abuse of discretion, given the defendant's admission that it intentionally used the plaintiff's marks in order to divert traffic to its website.

This is an instance where companies would do well to remember that while how search engines work is generally secret, it is widely believed that metatags have no effect on search engine ranking, although some search engines may use them for indexing purposes.  However, if the point of their use is to increase the site's position in the search results (as it usually is, and was in this case), they are basically useless and, as shown here, a potential basis for liability.

More detail of Venture Tape Corp. v. McGills Glass Warehouse after the jump.

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In a decision Tuesday, the Federal Circuit vacated a district court's grant of summary judgment of non-infringement of a patent on the basis of claim construction.  Specifically, the district court had improperly imported limitations from nonasserted claims into the asserted claims, resulting in an unduly narrow claim construction.  

The court also vacated the district court's grant of summary judgment of no liability for damages for infringement.  The patentee had not marked articles with the patent number, and upon notice of the patent, the alleged infringer immediately took steps to redesign the accused products.  However, the redesign took over six months to complete.  The district court held that because the accused infringer took reasonable steps to cease infringement immediately upon notice, damages were unavailable.  The Federal Circuit disagreed, and noted there is no exception for liability when an accused infringer is "expeditious" in its efforts to cease infringing after notice is given, so the court remanded for a determination of damages if the patents are determined to be valid.  

More detail of DSW, Inc. v. Shoe Pavilion, Inc. after the jump.

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