Power Integrations, Inc. v. Fairchild Semiconductor Int'l, Inc.

• Citation: 711 F.3d 1348
• Decision Date: 26 March 2013
• Docket Number: 2011–1238.,Nos. 2011–1218,s. 2011–1218
• Parties: POWER INTEGRATIONS, INC., Plaintiff–Cross Appellant, v. FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. and Fairchild Semiconductor Corporation, Defendants–Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

711 F.3d 1348

POWER INTEGRATIONS, INC., Plaintiff–Cross Appellant,

v.FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC. and Fairchild Semiconductor Corporation, Defendants–Appellants.

Nos. 2011–1218, 2011–1238.

United States Court of Appeals, Federal Circuit.

March 26, 2013.

Frank E. Scherkenbach, Fish & Richardson P.C., of Boston, MA, argued for plaintiff-cross appellant. With him on the brief were Craig E. Countryman, of San Diego, CA, and Howard G. Pollack and Michael R. Headley, of Redwood City, CA.

Blair M. Jacobs, McDermott Will & Emery LLP, of Washington, DC, argued for defendants-appellants. With him on the brief were Natalia V. Blinkova and David M. DesRosier; Leigh J. Martinson, of Boston, MA. Of counsel was Christina A. Ondrick, of Washington, DC.

Before LOURIE, O'MALLEY, and REYNA, Circuit Judges.

REYNA, Circuit Judge.

This is an appeal from a final judgment of the United States District Court for the District of Delaware finding that Fairchild Semiconductor International, Inc. and Fairchild Semiconductor Corporation (collectively, “Fairchild”) willfully infringed several valid patents belonging to Power Integrations, Inc. (“Power Integrations”). After two jury trials, a bench trial, and post-trial proceedings including a motion for remittitur, the district court entered final judgment in favor of Power Integrations and awarded compensatory and enhanced damages in the amount of $12,866,647.16. Fairchild on appeal asserts that the district court erred in its claim construction, in denying Fairchild's motion for judgment as a matter of law that one of Power Integrations' claimed inventions would have been obvious, in formulating its remitted damages award, and in finding Fairchild's infringement willful. On cross-appeal, Power Integrations argues that it was error for the district court to grant Fairchild's motion for remittitur, thereby reducing the jury's original damages award by eighty-two percent. Power Integrations asserts further error in the district court's exclusion of evidence related to price erosion prior to the date Fairchild was notified of its infringement, and in the district court's denial of Power Integrations' motion for a post-verdict accounting.

For the reasons set out below, we affirm the district court's finding of non-obviousness; we affirm-in-part and reverse-in-part on claim construction; we vacate the district court's order of remittitur and its attendant damages award; we find error in the district court's exclusion of evidence related to pre-notice price erosion and in its refusal to grant Power Integrations a postverdict accounting; we vacate the district court's finding of willful infringement; and we remand to the district court for further proceedings consistent with this opinion.

Procedural Posture

In 2004, Power Integrations sued Fairchild for infringement of four U.S. patents related to power supplies for electronic devices: U.S. Patent Nos. 6,249,876 (filed Nov. 16, 1998) (the '876 Patent); 6,107,851 (filed Aug. 20, 2000) (the '851 Patent); 6,229,366 (filed May 8, 2001) (the '366 Patent); and 4,811,075 (filed Apr. 24, 1987) (the '075 Patent). The patented technology is used in electric chargers for mobile phones.

In 2006, following its claim construction order, the district court bifurcated infringement and damages issues from those relating to validity of the asserted patents. The parties tried the issues before separate juries, and both juries rendered verdicts in favor of Power Integrations.

In the trial on infringement and damages, a first jury found that Fairchild had willfully infringed claim 1 of the '876 Patent, claims 1 and 4 of the ' 851 Patent, claims 9 and 14 of the '366 Patent, and claims 1 and 5 of the '075 Patent. The jury awarded Power Integrations lost profits due to lost sales ($14,981,828), lost profitsdue to price erosion ($1,952,893), future lost profits due to price erosion ($13,018,379), and a lump sum reasonable royalty ($4,028,681), for a total damages award of $33,981,781.

In the trial on validity, a second jury found all asserted claims valid. After the validity trial, the district court denied Fairchild's motion for judgment as a matter of law (“JMOL”) that the invention of Power Integrations' '876 Patent would have been obvious to one of ordinary skill in the art.

Fairchild subsequently moved for remittitur, JMOL, or in the alternative, a new trial on damages. Expressing concern over the testimony of Power Integrations' damages expert, the district court granted Fairchild's motion for remittitur and reduced the jury's combined damages award by 82%, resulting in a total award of $6,116,720.58. On the same day, the district court issued a permanent injunction covering all claims of the asserted patents. The court also granted Fairchild's motion for a new trial on willfulness in view of our decision in In re Seagate Tech., LLC, 497 F.3d 1360 (Fed.Cir.2007) (en banc).

Fairchild filed an emergency request to stay the injunction pending appeal. In support of its request, Fairchild cited favorable actions taken by the U.S. Patent and Trademark Office (“Patent Office”) in the reexaminations of three Power Integrations patents.¹ The district court denied the stay request, Fairchild appealed to this court, and we dismissed for lack of jurisdiction. Power Integrations, Inc. v. Fairchild Semiconductor Int'l, Inc., 345 Fed.Appx. 563 (Fed.Cir.2009).

In June 2009, following a bench retrial of the issue of willfulness, the district court concluded in view of Seagate that Fairchild's infringement was willful. The district judge who had been presiding over the case retired, and a new judge assumed the bench. In January 2011, the district court reaffirmed its willfulness finding, and pursuant to its authority under 35 U.S.C. § 284, the court granted Power Integrations' motion for enhanced damages. The court awarded Power Integrations enhanced damages for willful infringement by doubling its remitted damages award of $6,116,720.58, for a total award of $12,233,441.16, not including interest.

These appeals followed. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

Standards of Review

We review issues of claim construction without deference. See Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456 (Fed.Cir.1998) (en banc). Whether a claim limitation invokes means-plus-function claiming under 35 U.S.C. § 112, ¶ 6 (now 35 U.S.C. § 112(f)), is an exercise in claim construction which we review without deference. Inventio AG v. ThyssenKrupp Elevator Ams. Corp., 649 F.3d 1350, 1356 (Fed.Cir.2011).

We review a district court's denial of a JMOL motion under the law of the regional circuit, in this case the Third Circuit. See Therasense, Inc. v. Becton, Dickinson & Co., 593 F.3d 1325, 1330 (Fed.Cir.2010) (en banc). The Third Circuit reviews a district court's denial of a JMOL motion without deference. Rinehimer v. Cemcolift, Inc., 292 F.3d 375, 383 (3d Cir.2002).

Obviousness is a question of law based on underlying factual findings. KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 427, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007); In re Cyclobenzaprine Hydrochloride Extended–Release Capsule Patent Litig., 676 F.3d 1063, 1068 (Fed.Cir.2012). We review a jury's ultimate conclusions on obviousness without deference, but review the jury's findings of fact for substantial evidence. LNP Eng'g Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347, 1353 (Fed.Cir.2001). Objective evidence of secondary considerations of patentability are fact determinations which we review for substantial evidence. Para–Ordnance Mfg., Inc. v. SGS Importers Int'l, Inc., 73 F.3d 1085, 1088 (Fed.Cir.1995).

We review admissibility of evidence under the law of the regional circuit. Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456, 1465 (Fed.Cir.1998). The Third Circuit reviews a district court's ruling on admissibility of expert testimony for abuse of discretion. In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 749 (3d Cir.1994). To the extent the district court's ruling turns on an interpretation of a Federal Rule of Evidence, our review is plenary. DeLuca v. Merrell Dow Pharm., 911 F.2d 941, 944 (3d Cir.1990).

We review a district court's decision to set aside a jury's damages award by applying the standard of review applicable in the regional circuit. Siemens Med. Solutions USA, Inc. v. Saint–Gobain Ceramics & Plastics, Inc., 637 F.3d 1269, 1289 (Fed.Cir.2011). The Third Circuit will not disturb a jury's damages award unless unsupported by substantial evidence, Thabault v. Chait, 541 F.3d 512, 532 (3d Cir.2008), or contrary to the limits established by law, Scott v. Baltimore & O.R. Co., 151 F.2d 61, 65 (3d Cir.1945). We consider issues regarding what types of damages are legally compensable in an action for patent infringement under the law of our own circuit, without deference to the trial court. See Rite–Hite Corp. v. Kelley Co., Inc., 56 F.3d 1538, 1544 (Fed.Cir.1995) (en banc).

We review a district court's decision to grant or withhold a remittitur under the law of the regional circuit. The Third Circuit has held that “[a] remittitur is in order when a trial judge concludes that a jury verdict is ‘clearly unsupported’ by the evidence and exceeds the amount needed to make the plaintiff whole.” Starceski v. Westinghouse Elec. Corp., 54 F.3d 1089, 1100 (3d Cir.1995). The Third Circuit has emphasized that it is not the function of the appellate court to assess what would constitute fair recompense for the injuries sustained by the plaintiff, but rather to ascertain whether the trial judge, weighing all the evidence on damages, “has exercised his considered judgment as to a rational verdict in a judicial manner.” Russell v. Monongahela Ry. Co., 262 F.2d 349, 352 (3d Cir.1958). Thus, “[t]he trial judge's decision to grant or withhold a remittitur cannot be disturbed absent a manifest abuse of discretion.” Starceski, 54 F.3d at 1100;accord 2660 Woodley Rd. Joint Venture v. ITT...