Veeco Instruments Inc. v. SGL Carbon, LLC

• Decision Date: 02 November 2017
• Docket Number: No. 17-CV-2217 (PKC),17-CV-2217 (PKC)
• Parties: VEECO INSTRUMENTS INC., Plaintiff, v. SGL CARBON, LLC, and SGL GROUP SE, Defendants.
• Court: U.S. District Court — Eastern District of New York

VEECO INSTRUMENTS INC., Plaintiff, v. SGL CARBON, LLC, and SGL GROUP SE, Defendants.

No. 17-CV-2217 (PKC)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

November 2, 2017

MEMORANDUM & ORDER

PAMELA K. CHEN, United States District Judge:

Plaintiff Veeco Instruments Inc. ("Veeco") brings this action against Defendants SGL Carbon, LLC ("SGL Carbon") and SGL Group SE ("SGL Group") (collectively, "SGL"), seeking damages and injunctive relief for SGL's alleged infringement of Veeco patents in violation of the Patent Act, 35 U.S.C. § 271. Before the Court are (1) Veeco's motion for a preliminary injunction against SGL Carbon (Dkt. 23), and (2) Veeco's motion for expedited discovery (Dkt. 21). For the reasons stated below, the Court grants Veeco's motion for a preliminary injunction and denies Veeco's motion for expedited discovery as moot.

BACKGROUND¹

I. Overview

Plaintiff Veeco is a New York-based company that designs, manufactures, and services equipment that enables the manufacture of light-emitting diodes ("LEDs"), power electronics, hard drives, and other electronic components and devices. (Declaration of Sudhakar Raman ("RamanDecl."), Dkt. 26-13, ¶¶ 4-5.) In 2003, Veeco began obtaining patents related to metal-organic chemical vapor deposition ("MOCVD") reactors, a technology that enables high-volume fabrication of metal-organic semiconductor wafers, which can, in turn, be processed into LEDs. (Raman Decl. ¶¶ 8, 11; Dkt. 25-7.) Between 2003 and 2016, Veeco invested more than $475 million in research and development, and intellectual-property acquisitions, to develop its MOCVD technology, and further spent millions of dollars more on sales, advertising, personnel, and infrastructure for its MOCVD products. (Raman Decl. ¶ 9.) Veeco's sales of MOCVD products and services increased gradually over the same timeframe, and, since 2014, Veeco has accounted for roughly 60% of the global MOCVD market. (Raman Decl. ¶ 9.)

Veeco attributes its dominant share of the MOCVD market, in large measure, to a distinctive feature of Veeco's MOCVD reactors: a removable wafer carrier, typically made of graphite, that is mounted on a spindle centrally positioned within the reactor. (Raman Decl. ¶¶ 10, 14, 24.) According to Veeco, this distinctive assembly—i.e., a wafer carrier detachably mounted on a spindle—increases the throughput of Veeco's MOCVD reactors by up to 40% and confers additional advantages over MOCVD reactors that do not incorporate a similar assembly. (Raman Decl. ¶¶ 14-15; see also Reply Declaration of Dr. Alexander Glew ("Glew Reply Decl."), Dkt. 42-26, ¶ 83.) Veeco owns several patents related to this assembly, including U.S. Patent No. 6,726,769 (the '769 Patent), which is directed to Veeco's unique wafer carrier design. (Raman Decl. ¶ 11; see also Dkt. 20-1 (the '769 Patent).)

Although Veeco directly manufactures, sells, and services its MOCVD reactors, Veeco relies on third-party suppliers to manufacture and sell wafer carriers for those reactors. (Raman Decl. ¶¶ 18, 30.) To that end, Veeco has granted limited licenses to several suppliers, including SGL, authorizing them to manufacture and sell Veeco's proprietary wafer carriers to Veeco andVeeco's customers, typically in exchange for a reasonable royalty for each wafer carrier sold. (Raman Decl. ¶ 32.) In particular, under various written agreements, Veeco has authorized SGL to manufacture and supply wafer carriers to Veeco and Veeco's customers since at least 2010. (Raman Decl. ¶¶ 34, 39.)²

In or around 2013, while continuing to manufacture wafer carriers for Veeco's MOCVD systems, SGL began manufacturing wafer carriers for a new entrant into the MOCVD market, a China-based company called Advanced Microfabrication Equipment, Inc. ("AMEC"). (Declaration of Christoph Henseler ("Henseler Decl."), Dkt. 36-4, ¶ 15.) After struggling to break into the MOCVD market in 2013, 2014, and 2015, AMEC began to see market traction in 2016, finishing the year with a small but significant share of global sales. (Dkt. 26-18 (IHS Technology Q1 2017 Report); Declaration of Dr. Kenneth Serwin ("Serwin Decl."), Dkt. 36-6, ¶ 28; Dkt. 54-3 (September 2017 AMEC Presentation).) AMEC's upward trend has continued in 2017, with some (including AMEC itself) predicting that AMEC could overtake Veeco as the market leader in MOCVD systems by the end of the year. (Dkt. 54-3; see also Reply Declaration of Christopher Gerardi ("Gerardi Reply Decl."), Dkt. 42-2, ¶ 20.)

According to Veeco, the recent surge in AMEC's market share is attributable in large part to SGL's infringement of certain U.S. patents that Veeco owns related to its spindle-mountable wafer carriers. (Pl.'s Br., Dkt. 26-1, at 2-3.) In particular, Veeco claims that SGL has infringed and, unless enjoined, will continue to infringe the '769 Patent by selling spindle-mountable wafer carriers to AMEC and AMEC's customers, in violation of 35 U.S.C. § 271. (Pl.'s Br. at 11-15.)In early 2017, prior to filing this action, Veeco informed SGL through in-person meetings and by letter that SGL is infringing Veeco's patents and requested that SGL cease sales of wafer carriers to AMEC and AMEC's customers. (Raman Decl. ¶ 42.) When SGL did not cease these sales, Veeco filed the above-captioned action to recover damages and to enjoin SGL Carbon³ from further infringement. (Raman Decl. ¶ 42; Compl., Dkt. 1 (filed April 12, 2017).)

II. Veeco's Patents

Veeco's claims of patent infringement against SGL Carbon are based on two U.S. patents that were obtained by Emcore Corporation ("Emcore") in 2001 and later acquired by Veeco through an acquisition of Emcore's MOCVD division in 2003. (Raman Decl. ¶ 8; Dkt. 25-7; Dkt. 20-1; Dkt. 20-2.) The two patents are U.S. Patent No. 6,506,252 (the '252 Patent, Dkt. 20-2), and U.S. Patent No. 6,726,769 (the '769 Patent, Dkt. 20-1), the latter of which is a "continuation" of the '252 Patent that "incorporates [the '252 Patent] by reference in its entirety" ('769 Patent 1:8-15). Both patents are titled "Susceptorless Reactor for Growing Epitaxial Layers on Wafers by Chemical Vapor Deposition," and both patents have the same specification. (Compare Dkt. 20-2, with Dkt. 20-1); see also Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 689-90 (Fed. Cir. 2008) (reviewing continuation patents "sharing the same specification"); AK Steel Corp. v. Sollac, 344 F.3d 1234, 1236 (Fed. Cir. 2003) (same).⁴

The '769 Patent gives a general description of the field of the invention and the general purposes of the invention. The specification states that, "[t]he present invention relates to makingsemiconductor components and more particularly relates to devices for growing epitaxial layers on substrates, such as wafers." ('769 Patent 1:18-20.) According to the specification, in the "typical" chemical vapor deposition process, a solid substrate, "usually a wafer, is exposed to gases inside a CVD reactor. Reactant chemicals carried by the gases are introduced over the wafer in controlled quantities and at controlled rates while the wafer is heated and usually rotated. . . . When the reactant gas reaches the vicinity of a heated wafer, the organic components [of the gas] decompose, depositing the inorganic components on the surface of the wafer in the form of . . . epitaxial layers." ('769 Patent 1:50-2:5.) Thereafter, "the coated wafers are subjected to well-known further processes to form semiconductor devices such as lasers, transistors, light emitting diodes, and a variety of other devices." ('769 Patent 1:33-36.)

A. Typical Prior Art

In relevant part, the '769 Patent specification describes the prior art as a "vertical CVD reactor" in which "a wafer 10 is placed on a wafer carrier 12, which is placed on a susceptor 14." ('769 Patent 2:33-35.) "The susceptor 14 is permanently mounted and supported by a rotatable spindle 16, which enables rotation of the susceptor 14, the wafer carrier 12 and the wafer 10." (Id. 2:39-42.) "A heating assembly 20, which may include one or more heating filaments 22, is arranged below the susceptor 14," such that "[t]he heating assembly 20 heats the susceptor 14, the wafer carrier 12 and, ultimately, the wafer 10." (Id. 2:44-49.) In the normal operation of the prior art, "[a]s the wafer-supporting assembly (spindle/susceptor/wafer carrier) rotates the heated wafer 10, the reactant gas is introduced into the reaction chamber 18, depositing a film on the surface of the wafer 10." (Id. 2:53-56.) This "typical" prior art is illustrated in the following diagrams from the '769 Patent, the components of which refer to the numbering stated in this paragraph.

FIG. 1

(PRIOR ART)

Image materials not available for display.

('769 Patent at ECF⁵ 3.)

FIG. 4

(PRIOR ART)

Image materials not available for display.

('769 Patent at ECF 6.)

The '769 Patent specification then describes certain shortcomings of the typical prior art, each of which relates to the prior art's incorporation of a "susceptor" as part of the "wafer-supporting assembly (spindle/susceptor/wafer carrier)" that rotates the substrate wafers during the deposition process. ('769 Patent 2:53-55.)

First, a CVD reactor "having both a susceptor and a wafer carrier contains at least two thermal interfaces": one interface between the heating assembly and the susceptor, and a second interface between the susceptor and the wafer carrier. ('769 Patent 2:66-3:3.) The drawback of this feature is that "the typical susceptor possesses a significant heat capacity, and thus a large thermal inertia, substantially increasing the time required to heat and cool down the wafer carrier 12. This results in a longer reactor cycle and consequent reduction in the productivity of the reactor." (Id. 3:13-18.)

Second, in CVD reactors with a susceptor, "the susceptor must withstand a large number of reactor cycles since it is permanently mounted in the reaction chamber, and typically may not be easily replaced without interrupting the reactor cycle, opening up the reactor and removing the...