International Rectifier v. Samsung Electronics

• Decision Date: 18 March 2004
• Docket Number: No. 02-1334.,No. 02-1370.,No. 02-1324.,No. 02-1428.,No. 03-1046.,02-1324.,02-1334.,02-1370.,02-1428.,03-1046.
• Citation: 361 F.3d 1355
• Parties: INTERNATIONAL RECTIFIER CORPORATION, Plaintiff-Appellee, v. SAMSUNG ELECTRONICS CO., LTD. and Samsung Semiconductor, Inc., Defendants-Appellants, and Ixys Corporation, Non Party-Appellant. International Rectifier Corporation, Plaintiff-Appellee, v. Samsung Electronics Co., Ltd. and Samsung Semiconductor, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

361 F.3d 1355

INTERNATIONAL RECTIFIER CORPORATION, Plaintiff-Appellee, v. SAMSUNG ELECTRONICS CO., LTD. and Samsung Semiconductor, Inc., Defendants-Appellants, and Ixys Corporation, Non Party-Appellant.

International Rectifier Corporation, Plaintiff-Appellee, v. Samsung Electronics Co., Ltd. and Samsung Semiconductor, Inc., Defendants-Appellants.

No. 02-1324.

No. 02-1334.

No. 02-1370.

No. 02-1428.

No. 03-1046.

United States Court of Appeals, Federal Circuit.

March 18, 2004.

Glenn W. Trost, Coudert Brothers LLP, of Los Angeles, CA, argued for plaintiffs-appellees in 02-1324, etc. and 03-1046. With him on the briefs for International Rectifier Corporation, was David E. Killough, Vinson & Elkins L.L.P., of Austin, TX.

Mark Fowler, Gray Cary Ware & Freidenrich LLP, of Palo Alto, CA, argued for defendants-appellants in 02-1324, etc. and 03-1046. With him on the briefs were John W. Schlicher and Michael G. Schwartz. Of counsel in 02-1234, etc., were Mary A. Lehman, Gray Cary Ware & Freidenrich LLP, of San Diego, CA; and Marcelle E. Mihaila, Gray Cary Ware & Freidenrich LLP, of Seattle, WA; and of counsel in 03-1046 was Marcelle E. Mihaila.

Roger L. Cook, Townsend and Townsend and Crew LLP, of San Francisco, CA, argued for non party-appellant Ixys Corporation in 02-1324, etc. With him on the brief was Nancy L. Tompkins.

Before NEWMAN, LINN, and PROST, Circuit Judges.

LINN, Circuit Judge.

This opinion addresses two appeals. Both appeals stem from contempt proceedings following the entry of a permanent injunction barring Samsung Electronics Co., Ltd., and Samsung Semiconductor, Inc. (collectively "Samsung"), from making, using, offering for sale, selling, or importing into the United States any components, devices, or products infringing U.S. Patent No. 4,959,699 ("the '699 patent"), owned by International Rectifier Corporation ("IR"). Int'l Rectifier Corp. v. Samsung Semiconductor, Inc., No. CV-98-00433-R (C.D.Cal. Jan. 8, 1999) ("Permanent Injunction"). The Permanent Injunction excepted from any finding of infringement products made by Samsung on a foundry basis for nonparty IXYS Corporation ("IXYS"), based on IXYS's designs. Id. at para. 3.

In the appeal first listed in the caption, Samsung and IXYS (collectively "appellants") appeal the district court's Interim Findings of Fact and Conclusions of Law regarding contempt and the district court's subsequent denial of IXYS's motion to clarify, vacate, or modify the injunction. Int'l Rectifier Corp. v. Samsung Semiconductor, Inc., No. CV-98-00433-R (C.D.Cal. Mar. 19, 2002) ("Findings of Fact"); Int'l Rectifier Corp. v. Samsung Semiconductor, Inc., No. CV-98-00433-R (C.D.Cal. Apr. 2, 2002) ("Denial Order"). In that appeal, the appellants assert that the district court abused its discretion by: (a) impermissibly expanding the scope of the Permanent Injunction to encompass activities of Samsung occurring wholly outside of the United States; (b) improperly entertaining summary contempt proceedings on the previously excepted IXYS-designed devices; and (c) holding IXYS bound to the Permanent Injunction as to the IXYS-designed devices. In the second listed appeal, Samsung appeals the district court's order holding Samsung in contempt of the Permanent Injunction. Int'l Rectifier Corp. v. Samsung Semiconductor, Inc., No. CV-98-00433-R (C.D.Cal. Oct. 2, 2002) ("Contempt Order"). Samsung argues, inter alia, that the district court's finding of contempt is an abuse of discretion for the reasons argued in the first appeal and because it is based, at least in part, on findings made in a separate lawsuit in which Samsung was not a party.

Because the district court abused its discretion in determining that Samsung's extraterritorial activities violated the Permanent Injunction, and because there is no evidence to support the district court's assertion that Samsung and IXYS had agreed to subvert the application of the injunction, nor is there any evidence to support the conclusion that IXYS was aiding, abetting, or otherwise acting "in active concert or participation with [Samsung]," Fed.R.Civ.P. 65(d), we: (1) reverse the district court's Contempt Order; (2) reverse the district court's denial of IXYS's motion to clarify, vacate, or modify the injunction; and (3) vacate any of the district court's findings of fact to the contrary, upon which the district court's Denial Order and Contempt Order were based.

BACKGROUND

This case dates back to 1998, when IR sued Samsung for, among other things, infringement of the '699 patent. The '699 patent is directed to vertical planar power metal-oxide semiconductor (VPPM) transistor devices, such as metal-oxide-semiconductor field effect transistors (MOSFETs) and insulated gate bipolar transistors (IGBTs). Following the entry of two preliminary injunctions against Samsung, directed first to a specific Samsung device and then to any Samsung power MOSFET covered by the '699 patent, the parties settled their dispute. Pursuant to the settlement, the parties proposed a consent judgment that was entered by the district court on January 8, 1999. The consent judgment included a permanent injunction. See Findings of Fact at paras. 1-5. In stipulating to the consent judgment and injunction, the parties resolved all infringement issues concerning Samsung's products but, in a written exception to the injunction, reserved for another day the issue of infringement as to products made by Samsung for IXYS on a foundry basis to IXYS specifications. See Permanent Injunction at para. 3. Following the entry of the consent judgment, Samsung ceased making, offering for sale, selling, or importing into the United States any power MOSFET devices.

Shortly after the Permanent Injunction became effective, Samsung sold its power MOSFET business to Fairchild Semiconductor. Following that sale, the only facet of Samsung's power MOSFET business that remained in Samsung's hands was the fabrication of IXYS-designed devices at Samsung's foundry in South Korea under an existing fabrication agreement between Samsung and IXYS. Although IXYS sought to have Samsung import these devices into the United States under the exception to the injunction, Samsung steadfastly refused. Instead, Samsung agreed to sell IXYS GmBH, an IXYS subsidiary located in Germany, uncut, unpackaged wafers that were precursors of the IXYS-designed MOSFET devices. These sales were made by Samsung in Korea, and the devices were delivered to IXYS in Germany. IXYS, or one of its vendors, subsequently diced the wafers into individual chips, packaged the wafers into commercial products, and performed any necessary testing. At least some of IXYS's completed devices were sold by IXYS to its customers in the United States.

Two years after the entry of the Permanent Injunction, IR initiated contempt proceedings against Samsung and IXYS for violating the injunction based on sales of the IXYS-designed and Samsung-manufactured devices in the United States. On February 15, 2001, the district court ordered Samsung and IXYS to show cause why they should not be found in contempt. Hearings were held in March 2001 and May 2001. On February 25, 2002, IXYS filed a motion to clarify, vacate or modify the Permanent Injunction as it pertained to IXYS-designed devices. In due course, the district court denied the motion in its Denial Order.

On March 19, 2002, the district court issued its Findings of Fact but specifically deferred findings and conclusions on the "substantial open issues and infringement questions" of whether the IXYS-designed devices infringed, pending the outcome of a separate lawsuit between IR and IXYS over the same alleged infringing activity. Findings of Fact at paras. 15, 59. Samsung was not a party to that litigation. On May 21, 2002, the district court entered summary judgment in favor of IR in the separate infringement lawsuit between IR and IXYS. Int'l Rectifier Corp. v. IXYS Corp., No. CV-00-6756-R (C.D.Cal. May 21, 2002). This judgment is the subject of a separate appeal before this court. Int'l Rectifier Corp. v. IXYS Corp., No. 02-1414. On October 15, 2002, the district court entered its Contempt Order, based on the March 19, 2002 Findings of Fact and the finding of infringement in the separate action between IR and IXYS, discussed above, to which Samsung was not a party. Subsequent to the entry of the Contempt Order, IR submitted a paper titled "Proposed Additional Findings of Fact and Conclusions of Law re Contempt," which the district court adopted on December 11, 2002. See Int'l Rectifier Corp. v. Samsung Semiconductor, Inc., No. CV-98-00433-R (C.D.Cal. Dec. 11, 2002) ("Additional Findings of Fact").

Samsung and IXYS filed timely appeals from the respective Denial Order and Contempt Order. This Court has jurisdiction under 28 U.S.C. § 1292(c)(1), (2) and § 1295(a)(1) (2000).

ANALYSIS

A. Standard of Review

A court may grant an injunction in a patent infringement case "in accordance with the principles of equity to prevent the violation of any right secured by patent, on such terms as the court deems reasonable." 35 U.S.C. § 283 (2000); Carborundum Co. v. Molten Metal Equip. Innovations, Inc., 72 F.3d 872, 881 (Fed. Cir.1995). District courts have broad discretion in determining the scope of injunctive relief, and this court reviews a district court's decision granting, denying, or modifying an injunction, in a patent case, for abuse of discretion, applying Federal Circuit law. Carborundum Co., 72 F.3d at 881. Likewise, we review a district court's finding of contempt of an injunction, by infringement, for an abuse of discretion, again applying Federal Circuit law. KSM Fastening Sys., Inc. v. H.A. Jones Co., 776 F.2d 1522, 1532 (Fed.Cir.1985). Clear and convincing evidence of infringement must support a district court's finding of contempt of an injunction. Id. An abuse of discretion may be established under Federal Circuit law by showing that the court made a clear error of judgment...