Tex. Advanced Optoelectronic Solutions, Inc. v. Renesas Elecs. Am., Inc.
| Citation | 888 F.3d 1322 |
| Decision Date | 01 May 2018 |
| Docket Number | 2016-2121,2016-2208,2016-2235 |
| Parties | TEXAS ADVANCED OPTOELECTRONIC SOLUTIONS, INC., Plaintiff-Cross-Appellant v. RENESAS ELECTRONICS AMERICA, INC., F/K/A Intersil Corporation, Defendant-Appellant |
| Court | United States Courts of Appeals. United States Court of Appeals for the Federal Circuit |
Jamil Alibhai, Munck Wilson Mandala, LLP, Dallas, TX, argued for plaintiff-cross-appellant. Also represented by Michael Andrew McCabe, Kelly P. Chen, Michael Craig Wilson, Robert D. Mccutcheon, Jessica Spaniol, Jordan C. Strauss.
Gregory A. Castanias, Jones Day, Washington, DC, argued for defendant-appellant. Also represented by Daniel Kazhdan ; Richard J. Johnson, Dallas, TX; Gregory Louis Lippetz, Palo Alto, CA.
Before Dyk, Bryson, and Taranto, Circuit Judges.
Texas Advanced Optoelectronic Solutions, Inc., (TAOS) and Intersil Corporation each develop and sell ambient light sensors, which are used in electronic devices to adjust screen brightness in response to incident light. In the summer of 2004, the parties confidentially shared technical and financial information during negotiations regarding a possible merger. The parties ultimately went their separate ways, but soon after, Intersil released new sensors with the technical design TAOS had disclosed in the confidential negotiations. TAOS then sued Intersil in federal district court for infringement of U.S. Patent No. 6,596,981, as well as for trade secret misappropriation, breach of contract, and tortious interference with prospective business relations under Texas state law. After a trial held in early 2015, a jury returned a verdict for TAOS and awarded damages on all four claims. The court ruled on the parties' post-trial motions and entered final judgment, and both parties appealed.
We now affirm in part, reverse in part, vacate in part, and remand. Among our rulings, we affirm liability for trade secret misappropriation, though on a more limited basis than TAOS presented to the jury, and we affirm liability for infringement of the asserted apparatus claims of the patent at issue. But we vacate the monetary awards, and we remand for further proceedings.
In the early 2000s, TAOS and Intersil were both developing ambient light sensors for electronic devices. Ambient light sensors use a silicon- or other semiconductor-based photodiode that absorbs light and conducts a current. The resulting photocurrent is detected by a sensor, and measurements of the current, a function of the ambient light, are used to adjust the brightness of an electronic screen display. One benefit is better visibility—e.g. , a brighter screen is more visible in a bright environment; another is improved battery efficiency—e.g. , a dimmer screen, sufficient in a dark environment, uses less power. To protect the ambient light sensor within an electronic device, the sensor is typically encased in clear packaging, such as glass or plastic.
A problem with using a silicon-based photodiode is that silicon absorbs not only visible light but also light, such as infrared light, that humans cannot see. If the sensor detects a change in infrared light, it may respond by making a corresponding adjustment in the screen's brightness, even though the adjustment does not improve, and may even impair, the screen's visibility to the human eye. For example, turning on an incandescent lamp, which emits much of its energy in the form of infrared light, would indicate to the sensor a much greater increase in ambient light than the human eye will detect. The screen brightness would then be greatly, rather than only slightly, increased, wasting power and possibly impairing visibility. '981 patent, col. 1, lines 22–29.
One solution to that problem was to place a filter over the sensor (synonymously, detector) to prevent infrared radiation from reaching it. Although effective, those filters add cost. Id. , col. 1, lines 37–42.
TAOS conceived another solution, one that does not require using such filters. In 2001 and 2002, TAOS began developing the ambient light sensor TSL2550. The technology used in the TSL2550 is featured in TAOS's '981 patent, applied for in January 2002 and issued in July 2003. TAOS's solution in the TSL2550, and in the '981 patent, was to include in the silicon substrate an array of diodes—some shielded from visible light (shielded diodes), some exposed to visible light (exposed diodes). Id. , col. 3, lines 33–36. In that design, only infrared light produces a photocurrent in the shielded diodes, while infrared and visible light do so in the exposed diodes. See id. , col. 2, line 49 through col. 3, line 30. A processor calculates the ratio of the photocurrents in exposed diodes to photocurrents in shielded diodes or vice versa and, based on that information, factors out the infrared light to determine the amount of visible light—which can then be used for screen brightness adjustments. Id. , col. 3, lines 24–27.
The '981 patent specification describes an embodiment in which the silicon substrate consists of two wells, one shielded and one exposed, id. , col. 1, lines 44–52, where each well is a photodiode, see id. , col. 2, lines 56–57 (the well/substrate junction is a diode junction). See also id. , col. 6, lines 42–49 (claim 1 covers a substrate with two wells, one shielded and one exposed). The specification also discloses an embodiment in which the photodiode array structure of the silicon substrate is a repeating pattern of shielded and exposed wells in a 3:1 ratio. See id. , col. 4, lines 5–8 & Fig. 2. TAOS used the latter embodiment in the TSL2550, released by TAOS in 2002.
In 2003 and 2004, TAOS began developing its second-generation product, the TSL2560. TAOS changed the photodiode array structure from the repeating pattern of shielded and exposed wells in a 3:1 ratio (TSL2550) to a repeating pattern of shielded and exposed wells in a 1:1 ratio (TSL2560). The parties refer to the latter pattern as an "interleaved" or "alternating" array. TAOS found that the interleaved 1:1 ratio design improved light sensitivity.
Meanwhile, Intersil was working on its own ambient light sensors. Its EL7900 used a colored filter over the detector to reflect all infrared light. Intersil also began developing the EL7903, which it later renamed ISL29001. By early February 2004, the design for the EL7903 included a color filter and plastic packaging.
In February 2004, Intersil approached TAOS to ask for a license to the TSL2550 technology (repeating 3:1 photodiode array). TAOS was not interested in granting such a license, but it was willing to consider a potential merger. On June 3, 2004, TAOS and Intersil executed a Confidentiality Agreement "in order to allow both parties to evaluate the Possible Business Relationship" by disclosing to the other "information relating to our respective businesses and operations (‘Confidential Information’)." J.A. 23828. Under that Agreement, a "Permitted Use" of "Confidential Information" was use "for the limited purpose of enabling the recipient of such information (the ‘Recipient’) to investigate and evaluate the business and financial condition of the other (the ‘Provider’) in connection with such discussions and negotiations." Id. The Agreement included familiar clarifications of what did not constitute "Confidential Information": information publicly available as of the date of the Agreement; information publicly available after the date of the Agreement, as long as it was not made publicly available by the Recipient in violation of the Agreement; and information that "was known by the Recipient prior to the date of [the Agreement] and such knowledge was documented in the Recipient's written records prior to such date." J.A. 23828–29.
TAOS and Intersil engaged in diligence meetings throughout June 2004. During those meetings, TAOS disclosed the technical aspects of the not-yet-released TSL2560 with the 1:1 interleaved diode array structure. TAOS also disclosed that it planned to use glass rather than plastic packaging for its sensors, glass being more expensive but also more reliable and more useful for especially small sensors. And TAOS provided financial information, including information about prices it paid for inputs into its products. Intersil used that financial information to prepare an internal "Build vs. Buy analysis" to decide whether Intersil should build up its own optoelectronics program or instead buy TAOS.
At the end of the June 2004, Intersil offered to buy TAOS. But after a series of offers and counter-offers, the parties failed to come to an agreement. Negotiations ended in August 2004.
On August 31, 2004, Intersil decided to pursue a design of interleaved photodiodes in a 1:1 ratio for the EL7903/ISL29001, a product already in development. In 2005, while Intersil was redesigning the EL7903/ ISL29001, TAOS released the TSL2560. In early 2005, TAOS also won a contract from Apple to supply ambient light sensors—specifically, the TSL2561, a derivative of the TSL2560—for use in Apple's iMac computers. Intersil reverse-engineered the TSL2560 in late January 2006.
Between late 2005 and late 2006, Intersil put its EL7903/ISL29001 and next-generation ISL29003 into the market. In September 2006, Intersil won a contract from Apple to supply the ISL29003 for the Apple iPod, and it began selling its products to Apple in June 2007. Apple later solicited bids for ambient light sensors for use in the iPhone 3G smartphone; by March 2008, Apple selected Intersil's product. In contrast, TAOS had won the supply contract for ambient light sensors in the original Apple iPhone, before the 3G version, and it won the Apple supply contracts for iPhones after the 3G version.
On November 25, 2008, TAOS sued Intersil in the U.S. District Court for the Eastern District of Texas for infringement of the '981 patent and, under Texas law, for trade secret misappropriation, breach of contract, and tortious interference with contractual relations. TAOS invoked the court's patent, diversity, and...
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