(2) GRANTING IN PART AND DENYING IN PART PRESIDIO'S MOTION FOR POST TRIAL REMEDIES [Doc. No. 307];
(3) DENYING ATC'S MOTION FOR JMOL OR FOR A NEW TRIAL WITH RESPECT TO PRESIDIO'S FALSE MARKING BEFORE OCTOBER 24, 2008 [Doc. No. 308];
(4) GRANTING IN PART AND DENYING IN PART ATC'S MOTION FOR JMOL AND FOR A NEW TRIAL [Doc. No. 309];
(5) GRANTING IN PART AND DENYING IN PART ATC'S MOTION FOR ENTRY OF ATC'S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW WITH RESPECT TO PRESIDIO'S FINES FOR FALSE MARKING [Doc. No. 310];
(6) DENYING ATC'S MOTION FOR ENTRY OF ATC'S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW REGARDING INDEFINITENESS [Doc. No. 311]; and
(7) DENYING ATC'S MOTION FOR ENTRY OF ATC'S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW REGARDING UNENFORCEABILITY OF THE '356 PATENT FOR INEQUITABLE CONDUCT [Doc. No. 312].
IRMA E. GONZALEZ, Chief Judge.
Currently before the Court are the parties' post-trial motions. Having considered the parties' arguments, and for the
In this patent infringement case, Presidio Components Inc. ("Presidio") alleges American Technical Ceramics Corp. ("ATC") infringed U.S. patent number 6,816, 356 ("the '356 patent"), titled "Integrated Broadband Ceramic Capacitor Array." A capacitor is a device conventionally comprising two metal plates separated by a non-conductor of electric current. This non-conductive material is known as the "dielectric," which is usually composed of air or ceramic.
Capacitors are passive electronic components used in cellular phones, video cassette recorders, televisions, general purpose computers, and audio amplifiers. These devices use capacitors in one of two ways: (1) to filter out undesirable ripples or spikes in a power supply, or (2) to store energy and provide charge to transistors on a printed circuit board.
A capacitor is charged by coupling its plates to an electrical source. Since electricity passes easily through the conductors, but not the dielectric, a positive electrical charge accumulates on one plate and a negative charge accumulates on the other plate. When charged, the capacitor stores energy that can be released by connecting the plates via an external path, permitting current to flow from one plate to the other. The electrons flow off the negatively charged plate and onto the positively charged plate, bringing the two plates to equal relative voltage. The amount of energy a capacitor stores is its "capacitance," which depends on the orientation and spacing of the conductive plates, and the properties of the dielectric material.
Frequently, multiple capacitors are connected to form a capacitive network. One way to create a capacitive network is to build a "multilayer capacitor," which is formed by layering multiple conductive and non-conductive materials. Each individual layer has a separate capacitance that effects the overall capacitance of the multilayer capacitor.
The '356 patent discloses and claims a multilayer capacitor consisting of a network of capacitors. The '356 patent has a total of thirty-four claims, but only claims 1-5, 16, and 18-19 are the asserted claims in this case. Out of those, only asserted claim 1 is an independent claim.
('356 patent, col. 12:58-13:5.) Asserted claims 2 and 4 also add one or two "insulating layer[s]" disposed between the external contacts and "inhibiting electrical conduction" between those contacts. (Id. col. 13:6-13:9, 13:17-13:25.)
The application process for the '356 patent spanned over two years. On May 17, 2002, Presidio submitted a parent application to patent the technology underlying the '356 patent with the United States Patent and Trademark Office ("USPTO" or "PTO"). This parent application resulted in U.S. patent number 6,587,327 ("the '327 patent"). On April 14, 2003, Presidio submitted the base application for the '356 patent, which was a continuation in part of the parent application. The USPTO issued the '356 patent on November 9, 2004.
During the pendency of Presidio's patent application, ATC initiated development of the 545L series of monolithic, multilayered capacitors. In September 2002, ATC engineers first expressed interest in developing a monolithic capacitor. During development, in April 2003, ATC allegedly dissected and analyzed Presidio's Buried Broadband Capacitors ("BB capacitors"). The BB capacitors were monolithic, multilayered capacitors developed for broadband usage. During the litigation, Presidio conceded the BB capacitors do not embody the claims of the '356 patent. Nonetheless, Presidio asserts the BB capacitors at the very least employ the "substantially monolithic dielectric body" as used in the claims of the '356 patent, and as such served as the background to the inventions ultimately claimed in the '356 patent.
In September 2003, ATC substantially completed the 545L capacitor's design and filed a provisional patent application. In March 2004, ATC reviewed Presidio's published patent application. The parties dispute the importance of ATC's review. Presidio asserts ATC engineers believed the patent application covered their capacitor. ATC asserts the engineers believed the '356 patent was both invalid and inapplicable to the 545L capacitor.
In September 2004, ATC filed a non-provisional patent application for the 545L capacitor. In February 2006, the USPTO rejected the application, citing the '356 patent as prior art. Notwithstanding this rejection, ATC began selling the 545L capacitor in June 2006. In August 2006, ATC requested the USPTO reconsider the application, arguing the '356 patent does not have orientation insensitivity, which is a feature of the 545L capacitor. That same month, the USPTO reconsidered and held the '356 patent did not bar ATC's application. On July 2007, the USPTO issued U.S. Patent No. 7,248,458 ("the '458 patent") for the 545L capacitor.
Beginning in May 2007, Presidio began marking its BB capacitors with the '356 patent number. On October 24, 2008, Presidio admitted the BB capacitors were not covered by the '356 patent, but claims it marked the capacitors with a mistaken belief they embodied the patent. Prior to the marking, Presidio did not perform a legal analysis. Presidio continued to mark the BB capacitors with the '356 patent until some time in April 2009.
Presidio filed the complaint in this case on February 21, 2008, alleging ATC is infringing claims 1-5, 16, and 18-19 ("asserted claims") of the '356 patent by producing the 545L capacitor. [Doc. No. 1]. ATC answered on May 28, 2008, bringing numerous counterclaims against Presidio. [Doc. No. 10]. On June 20, 2008, Presidio filed an answer to ATC's counterclaims. [Doc. No. 21].
On June 11, 2008, 2008 WL 2397488, the Court issued a Claim Construction Order, construing many of the disputed terms of the'356 patent. [Doc. No. 24]. Among others, the Court construed the term "a substantially monolithic dielectric body" as "a dielectric body largely but not wholly without seams from the inclusion of plates within the dielectric body." The Court construed the term "the second contact being located sufficiently close to the first contact to form a first fringe-effect capacitance with the first contact" as "an end of the first conductive contact and an end of the second conductive contact are positioned in an edge-to-edge relationship in such proximity as to form a determinable capacitance." On July 30, 2009, the Court granted ATC's Motion to Resolve a Fundamental Dispute over Claim Scope, finding "determinable capacitance" to mean "a capacity that is capable of being determined in terms of a standard unit." (Order Resolving Fund. Dispute, at 5.) In doing so, the Court rejected Presidio's interpretation that attempted to use the term "insertion loss" as a proxy for a previously rejected term "high frequency performance." (Id. at 4.)
On August 25, 2008, 2008 WL 3925723, the Court issued an order denying ATC's summary judgment motion for a declaration of indefiniteness. [Doc. No. 32]. The parties then filed cross-motions for summary judgment. On April 30, 2009, the Court issued an order on the cross-motions for summary judgment, granting some and denying others. As relevant here, the Court granted summary judgment in favor of ATC on its counterclaim 5 with regard to false marking that occurred after October 24, 2008, and denied summary judgment for false marking that occurred before October 24, 2008. (MSJ Order, at 9-11.) In determining Presidio's potential liability for false marking, the Court adopted the "continuous act" test set forth in London v. Everett H. Dunbar Corp., 179 F. 506 (1st Cir.1910), concluding that "each time Presidio marked a shipment, it committed a false marking offense." (MSJ Order, at 12-13.)
On July 23, 2009, ATC submitted to the USPTO a replacement request for reexamination of the '356 patent. On October 20, 2009, the USPTO granted the request for reexamination, noting there were substantial new questions of patentability with respect to all of the asserted claims in light of nine prior art references identified by ATC. The reexamination proceedings are still ongoing.
The case was tried to a jury in December 2009. The jury returned a verdict
The Court heard oral argument on the parties' post-trial motions on March 12, 2010. After the motions were taken under submission, ATC filed two notices with the Court. First, ATC alerted the Court to the Federal Circuit's recent en banc decision in Ariad Pharms., Inc. v. Eli Lilly & Co., 598 F.3d 1336 (Fed.Cir.2010) (en banc), arguing it supported ATC's motion for judgment as a matter of law and motion for a new trial with respect to invalidity for lack of written description in the '356 patent. [Doc. No. 343]. Second, ATC notified the Court of the First Office Action by the USPTO in the reexamination proceedings, which rejected all of the asserted claims of the '356 patent based on anticipation and obviousness. [Doc. No. 346]. Presidio filed responses in opposition to both of these notices. [Doc. Nos. 345, 347].
For issues not unique to patent law, such as sufficiency of the evidence on issues tried to the jury, the Court applies the law of the regional circuit in which it sits, here the Ninth Circuit. See Duro-Last, Inc. v. Custom Seal, Inc., 321 F.3d 1098, 1106 (Fed.Cir.2003) (citations omitted). Otherwise, for all substantive issues of patent law, the Court applies the law of the Court of Appeals for the Federal Circuit. See id. (citations omitted).
In the Ninth Circuit, a judgment as a matter of law ("JMOL") pursuant to Federal Rule of Civil Procedure 50(a) is proper only "if the evidence, construed in the light most favorable to the nonmoving party, permits only one reasonable conclusion, and that conclusion is contrary to the jury's verdict." Pavao v. Pagay, 307 F.3d 915, 918 (9th Cir.2002) (citation omitted). Phrased otherwise, a JMOL should be granted only if "`there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue'" and the verdict reached by the jury is "`against the great weight of the evidence.'" Hangarter v. Provident Life & Acc. Ins. Co., 373 F.3d 998, 1005 (9th Cir.2004) (citations omitted). "`Although the court should review the record as a whole, it must disregard evidence favorable to the moving party that the jury is not required to believe, and may not substitute its view of the evidence for that of the jury.'" Pavao, 307 F.3d at 918 (citation omitted). Thus, the Court must keep in mind that "credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge." Hangarter, 373 F.3d at 1005 (internal quotation marks and citations omitted).
The Court may grant a new trial pursuant to Federal Rule of Civil Procedure 59(a) only if "`the verdict is contrary to the clear weight of the evidence, or is based upon evidence which is false,'" or if a new trial is necessary "`to prevent ... a miscarriage of justice.'" Hangarter, 373 F.3d at 1005 (citation omitted). The Court "has the duty to weigh the evidence as the court saw it, and to set aside the verdict of the jury, even though supported by substantial evidence, where, in the court's conscientious opinion, the verdict is contrary to the clear weight of the evidence." Molski v. M.J. Cable, Inc., 481 F.3d 724, 729 (9th Cir.2007) (internal quotation marks and citations omitted).
As an initial matter, the Court addresses ATC's arguments that Dr. Ewell was unqualified to render an opinion as a person of ordinary skill in the art, that he relied on his undisclosed opinion, and that in any event his testimony was legally irrelevant and could not support the verdict of no invalidity. The Court also addresses ATC's argument that Presidio improperly referred to "insertion loss" in its closing argument.
The parties have previously agreed that "[t]he level of ordinary skill in the art of the '356 patent is medium. The ordinary artisan would hold a masters or similar degree, or the experiential equivalent thereof, in Electrical Engineering or a similar field, and would have at least two years of industry experience in designing multilayer capacitors." (Pretrial Order, at 5 [Doc. No. 182].) ATC argues Dr. Ewell does not meet this criteria because he admitted that he has "never from scratch designed" a capacitor in his entire career. (See Trial Tr. Day 7, at 93:8-93:9.) Presidio responds that Dr. Ewell is well-qualified as an expert witness because he has more than three decades of work experience relating to capacitors, including experience relating to the review of and consultation regarding designs of multilayer capacitors. (See id. at 69:14-73:5.) Moreover, Presidio argues ATC did not object or attempt to voir dire Dr. Ewell at trial.
ATC correctly notes that one who is not qualified in the pertinent art may not testify as an expert on technical issues such as validity, anticipation, or scope of the prior art. See Sundance, Inc. v. DeMonte Fabricating Ltd., 550 F.3d 1356, 1364 (Fed. Cir.2008). However, the Court retains considerable discretion in allowing testimony if the expert witness has "sufficient relevant technical expertise." See SEB S.A. v. Montgomery Ward & Co., Inc., 594 F.3d 1360, 1373 (Fed.Cir.2010). In the present case, although Dr. Ewell does not meet the requirement agreed to by the parties that a person qualified in the art "would have at least two years of industry equivalent in designing multilayer capacitors," Dr. Ewell clearly has "sufficient relevant technical experience." See id. Dr. Ewell testified that he has been working in the field of electronic components, of which the primary component has been multilayer ceramic capacitors, for over thirty years, including ten years at the Hughes Aircraft Company and twenty-five years at the Aerospace Corporation. (Trial Tr. Day 7, at 69:16-70:7.) As part of his job, Dr. Ewell served on the technical audit team which evaluated manufactured multilayer capacitors, "along with the designs used to produce the parts and the testing given them to ensure that they were adequately reliable." (See id. at 70:23-71:3.) Accordingly, Dr. Ewell is more than qualified to render an opinion in the pertinent art of designing multilayer ceramic capacitors. Moreover, Presidio correctly points out that ATC did not object or attempt to voir dire Dr. Ewell at trial.
The Court also rejects ATC's argument that Dr. Ewell relied on undisclosed expert opinion during his testimony. ATC argues Dr. Ewell never opined in his report on the propriety of Dr. Dougherty's testing of the August 2000 capacitors, or that there would be only a "parallel-plate capacitor left" in the fragment after shaving. However, there is sufficient analysis in Dr. Ewell's expert report on the impropriety of the testing done by Dr. Dougherty and why that fails to demonstrate fringe-effect capacitance. (See Pl. Rebuttal Expert Report of Gary J. Ewell, at 65-78 [Doc. No. 320-8].) Dr. Ewell's report also sufficiently covers the other issues objected to by ATC.
Finally, there is also no merit to ATC's argument that Presidio improperly referred to "insertion loss" in its closing argument. (See Trial Tr. Day 8, at 59:18-59:24.) Contrary to ATC's argument, Presidio did not attempt to define "fringe-effect capacitance" with the term "insertion loss" contrary to the Court's claim construction and in limine ruling. Rather, Presidio merely indicated that "insertion loss" has been mentioned during the trial. In light of the fact that the specifications of the '356 patent extensively discuss "insertion loss," there was no error in referring to this term. Moreover, the reference to "insertion loss" was so minute and isolated, there is no reason to believe it was even noticed by the jury, not to mention influenced its decision. Accordingly, the Court denies ATC's objection on this ground as well.
ATC seeks a judgment as a matter of law that certain prior art anticipated the asserted claims of the '356 patent. Anticipation under 35 U.S.C. § 102 "requires
First, ATC argues there is nothing new about "fringe-effect capacitance" because, according to the laws of physics, it is always present in multilayer capacitors wherever two conductive contacts are positioned in an edge-to-edge relationship. Thus, one can always use the universally known equation of C=kA/d to measure the capacitance, no matter how small.
Despite ATC's arguments to the contrary, there was substantial evidence before the jury to conclude that "fringe-effect capacitance" is not always present— i.e., that it is not always determinable or "capable of being determined in terms of a standard unit" as required by the Court's claim construction. For example, Dr. Huebner testified that in order to demonstrate whether this claim limitation is met, one could and should analyze the thickness of the external contacts, the separation distance, and the dielectric. (Trial Tr. Day 4, at 77:14-85:7.) Likewise, Dr. Ewell testified that even if fringe-effect capacitance is always present, such capacitance is not always determinable. (Trial Tr. Day 7, at 108:18-109:9.)
ATC argues the capacitor described in Figure 12 of the Figueroa patent, U.S. patent number 6,483,692 ("Figueroa patent") anticipates the asserted claims. ATC points to the "striking resemblance" of the Figure 12 of the Figueroa patent to Figure 15A of the '356 patent. According to ATC, "[i]f fringe-effect capacitance is reportedly created in the 2 mil gap of the '356 patent
There was legally sufficient evidence before the jury to conclude the Figueroa patent did not anticipate all of the elements of the asserted claims. As Presidio notes, the Figueroa patent never mentions "fringe-effect capacitance" or provides the necessary information needed to conclude whether any such capacitance in Figure 12 exists and/or is determinable. ATC's argument that fringe-effect capacitance must exist in the 2.56 mils or less gap in Figure 12, since it exists in the 2 mil gap in Figure 15A of the '356 patent, is unavailing. Viewing the evidence in favor of the verdict, the jury was free to accept Dr. Ewell's detailed explanation as to why there was insufficient data on whether there was determinable capacitance in Figure 12. (See Trial Tr. Day 7, at 108:7-116:21.)
The cases relied upon by ATC are inapposite. First, in the part of Constant v. Advanced Micro-Devices, Inc., 848 F.2d 1560, 1569 (Fed.Cir.1988), cited by ATC, the Federal Circuit only decided whether a prior reference was enabling. Answering this question in the affirmative, the court noted that the disclosure in the prior art was "at least at the same level of technical detail as the disclosure in the [patent-in-suit]." Id. Similarly, in the part of SRI Int'l, Inc. v. Internet Sec. Sys., Inc., 511 F.3d 1186, 1193-94 (Fed.Cir.2008), cited by ATC, the court was only concerned with whether a particular reference qualified as a "prior art." In the present case, there has been no suggestion that the Figueroa patent is not enabling or that it does not qualify as prior art. Rather, the issue here is whether the Figueroa patent anticipates the asserted claims of the '356 patent because it teaches or describes "fringe-effect capacitance." See id. at 1192 ("`A patent claim is anticipated only if each and every element as set forth in the claim is found, either expressly or inherently described, in a single prior art reference.'" (citation omitted)). As already noted, the Figueroa patent nowhere mentions the "fringe-effect capacitance," nor does it provide the necessary information needed to conclude whether any such capacitance in Figure 12 exists and/or is determinable.
Accordingly, there was legally sufficient evidence for the jury to conclude that the Figueroa patent does not anticipate the asserted claims of the '356 patent because it does not by itself describe each and every limitation of the asserted claim 1. See Dickson Indus., 333 Fed.Appx. at 517.
ATC next argues the capacitor described in Figure 7 of the Heron patent, U.S. patent number 4,931,901 ("Heron patent") anticipates the asserted claims of the '356 patent, at least as illustrated in Figure 10A of the '356 patent. Heron measured fringe-effect capacitance on actual capacitors and also used the standard
Nonetheless, there was substantial evidence for the jury to find that the Heron patent does not anticipate claim 1 of the '356 patent. First, the Heron patent itself describes only fringe-effect capacitance between internal electrodes. There is nothing in Heron that would, by itself, teach fringe-effect capacitance between the external points of the C-shaped plates. Moreover, Presidio presented testimony of Dr. Ewell that the Heron patent did not teach fringe-effect capacitance between external contacts. (See Trial Tr. Day 7, at 89:24-90:6, 128:19-128:24, 129:8-129:13, 130:9-130:23.) Although this testimony was contradicted by Dr. Dougherty, the Court must disregard that testimony in determining whether there is "substantial evidence" supporting the jury's verdict. See Pavao, 307 F.3d at 918. Accordingly, in light of Dr. Ewell's testimony, the Court finds there was substantial evidence for the jury to find that the Heron patent does not anticipate the asserted claims of the '356 patent because it does not by itself describe each and every limitation of the asserted claim 1.
ATC next argues the capacitors from Presidio's Lot No. 00126-18A that were sold to JDS Uniphase ("JDSU") in August 2000 ("August 2000 capacitors") also anticipate all of the asserted claims, except claims 2 and 4. Dr. Dougherty confirmed that fringe-effect capacitance existed in the August 2000 capacitors by using three different methods (Walker formula, C=kA/d formula, and capacitance meter). However, to test the capacitance, Dr. Dougherty admitted that he had to "polish back and cut away" almost all of the capacitor, so as to leave only the area where the fringe-effect capacitance was supposed to exist. (See Trial Tr. Day 5, at 159:3-159:22.) By doing so, Dr. Dougherty in effect shaved off almost 90% of the August 2000 capacitor. (See Trial Tr. Day 6, at 42:3-45:11.) In light of this, Presidio argues Dr. Dougherty did not really test the August 2000 capacitor itself, but rather some other new part with different structure and electrical performance. (See Trial Tr. Day 7, at 87:7-88:13.) Moreover, according to
Once again, it was up to the jury to decide how much weight to give to the respective testimony by Dr. Dougherty and Dr. Ewell. By finding no anticipation by the August 2000 capacitors, the jury must have believed Dr. Ewell that Dr. Dougherty's method of testing for capacitance in the August 2000 capacitor was improper. Or they could have credited Dr. Ewell's testimony that only parallel capacitance-if any-would have remained in the August 2000 capacitor after shaving. In any event, Dr. Ewell's testimony provides legally sufficient evidence to support either of those conclusions, and it is not the job of the Court to second-guess the jury on the issues of credibility of the witnesses or the weighing of the evidence. See Hangarter, 373 F.3d at 1005. Accordingly, there was legally sufficient evidence for the jury to find that the August 2000 capacitors do not anticipate the asserted claims of the '356 patent. See Dickson Indus., 333 Fed.Appx. at 517.
ATC next argues the asserted claims of the '356 patent were obvious to a person of ordinary skill in the art in light of the prior art. Obviousness is a legal question, whereby the court must determine whether the subject matter of the claimed invention "would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." 35 U.S.C. § 103(a); see also KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 415-16, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007); Lucent Tech., Inc. v. Gateway, Inc., 580 F.3d 1301, 1310 (Fed. Cir.2009). "Underpinning that legal issue are factual questions relating to the scope and content of the prior art, the differences between the prior art and the claimed invention, the level of ordinary skill in the art, and any relevant secondary considerations [of non-obviousness], such as commercial success, long-felt need, and the failure of others." PharmaStem Therapeutics, Inc. v. ViaCell, Inc., 491 F.3d 1342, 1359-60 (Fed.Cir.2007) (citations omitted); accord Graham v. John Deere Co., 383 U.S. 1, 17-18, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966).
The burden at trial is on the patent challenger to show by clear and convincing evidence that "a person of ordinary skill in the art would have had reason to attempt to make the composition or device, or carry out the claimed process, and would have had a reasonable expectation of success in doing so." PharmaStem, 491 F.3d at 1360 (citations omitted). Thus, "a patent composed of several elements is not proved obvious merely by demonstrating that each of its elements was, independently, known in the prior art." KSR, 550 U.S. at 418, 127 S.Ct. 1727 (citing United States v. Adams, 383 U.S. 39, 86 S.Ct. 708, 15 L.Ed.2d 572 (1966)). Rather, the court must "look to interrelated teachings of multiple patents; the effects of demands known to the design community or present in the marketplace; and the background knowledge possessed by a person having ordinary skill in the art, all in order to determine whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue." Id.
ATC argues there is no dispute that prior art teaches: (1) multilayer ceramic
However, the issue before the Court is much narrower than ATC makes it appear. At trial, the jury was asked only: (1) whether all of the asserted claims of the '356 patent were obvious in light of the combination of the Heron patent with the Aoyagi patent,
In any event, even if ATC's request for a JMOL as to obviousness based on other combinations is procedurally proper, ATC has not carried its burden of demonstrating that a person of ordinary skill in the art would have had the reason to combine the known elements and would have had a reasonable expectation of success in doing so. See PharmaStem, 491 F.3d at 1360. Notably, ATC does not point to any testimony at trial that would suggest any reason to extend the fringe-effect capacitance to the external contacts in Figure 7 of the Heron patent or any motivation to bring the internal contacts to the surface. As the Supreme Court has recently stated, the fact that both of those concepts were "obvious" independently does not make their ultimate combination obvious. See KSR, 550 U.S. at 418-19, 127 S.Ct. 1727. Rather, it is
Id. In the present case, ATC's rhetorical questions notwithstanding, there was no testimony presented at trial to show any reason for combining those elements.
In the alternative, ATC argues obviousness is demonstrated by the fact that similar edge-to-edge design was conceived by Charles Rosier, a JDSU engineer, no later than January 15, 2001, and ATC's engineer Richard Monsorno in August 2001. (See Def. Motion for JMOL, Exs. CL, AGN.) Presidio responds there is no evidence that Mr. Rosier conceived all of the limitations of all of the claims, and, in any event, the jury already rejected any such argument. Likewise, according to Presidio, there is no evidence that anything conceived by Dr. Monsorno was "remarkably similar to the capacitors in the '356 patent," and, in any event, those designs were presented to the USPTO during the prosecution of the '356 patent, and the USPTO proceeded to issue the '356 patent.
The testimony pointed to by ATC is insufficient to establish by clear and convincing evidence that the asserted claims of the '356 patent are rendered obvious by the Rosier and Monsorno drawings. There was extensive testimony by Alan Devoe that raised doubts as to any "contemporaneous conception" by Charles Rosier and whether he invented anything related to the '356 patent. (See, e.g., Trial Tr. Day 3, at 182:9-185:22; Trial Tr. Day 4, at 3:21-9:1, 15:18-20:19, 25:20-26:5; 32:20-33:3.) As for the Monsorno drawing, ATC fails to point to any testimony at trial that discussed whether it rendered obvious all of the asserted claims. Rather, the only testimony concerned the drawing's alleged "single-piece" construction. (See Trial Tr. Day 5, at 49:19-50:12.) Finally, the only testimony about "fringe-effect capacitance" concerned the Monsorno patent from 1996
The conclusion that ATC has failed to prove anticipation and obviousness by clear and convincing evidence is not affected by the USPTO's recent reexamination proceedings. As previously noted, on July 23, 2009, ATC submitted a replacement Request for Reexamination of the '356 patent. On October 20, 2009, the USPTO granted the request, noting there were substantial new questions of patentability with respect to the asserted claims in light of nine prior art references identified by ATC. Then, on March 23, 2009, the USPTO issued a First Office Action on the merits, rejecting all of the asserted claims on the grounds of anticipation and obviousness. However, just like its name implies, the First Office Action is only a preliminary determination by the USPTO—it is not a "final" action, and the examiner could still change his decision or completely reverse it before issuing the final action. See 37 C.F.R. §§ 1.112, 1.550; accord Heinl v. Godici, 143 F.Supp.2d 593, 598-99 (E.D.Va.2001). Accordingly, any such determination is not persuasive evidence of anticipation or obviousness. See Medtronic, Inc. v. Catalyst Research Corp., 547 F.Supp. 401, 410 (D.Minn.1982); accord Cimcore Corp. v. Faro Techs., Inc., Civil No. 03 CV 2355-B (WMc), 2007 WL 935665, at *2 (S.D.Cal. Mar. 12, 2007) ("The office action is a first office action, not a final rejection by the USPTO. Even if it were a final rejection, until the patentee addresses the rejections with argument or claim amendments and the reexamined patent issues, the prosecution history is incomplete and estoppel has yet to be determined.").
ATC next argues the asserted claims are invalid due to lack of enablement. The enablement requirement is set forth in Section 112, which provides that the patent's specification shall describe "the manner and process of making and using [the invention], in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use [the invention]." 35 U.S.C. § 112. "The enablement requirement is satisfied when one skilled in the art, after reading the specification, could practice the claimed invention without undue experimentation." AK Steel Corp. v. Sollac & Ugine, 344 F.3d 1234, 1244 (Fed.Cir.2003) (citation omitted). Factors to be considered in determining whether undue experimentation would be required include: "(1) the quantity of experimentation necessary, (2) the amount of direction or guidance presented, (3) the presence or absence of working examples, (4) the nature of the invention, (5) the state of the prior art, (6) the relative skill of those in the art, (7) the
First, ATC argues there is no definition of the phrase "substantially monolithic" provided in the specifications of the '356 patent, the term was never heard of or applied before by any of the technical experts in this case, and even if a dielectric body can be "monolithic," there can be no degrees of "monolithicness." ATC argues it would take great time, cost, and effort to determine what the '356 patent means by "substantially monolithic," especially in light of the medium level of skill, and the fact that the '356 patent does not disclose a working example or that Presidio never produced a single capacitor practicing the asserted claims. Thus, according to ATC, undue experimentation would be required, making the asserted claims invalid. See AK Steel, 344 F.3d at 1243-45.
ATC, however, cannot show by clear and convincing evidence that the phrase "substantially monolithic" is not sufficiently enabled, let alone that the jury verdict is "`against the great weight of the evidence.'" See Hangarter, 373 F.3d at 1005 (citation omitted). As previously noted, at the JMOL stage, the Court has to disregard evidence favorable to the moving party and must determine if the jury verdict is supported by legally sufficient evidence. See Pavao, 307 F.3d at 918. In the present case, Dr. Ewell testified that the phrase "substantially monolithic" is both "definite" and "clear and understandable" to one of ordinary skill in the art. (See Trial Tr. Day 7, at 73:21-74:9.) According to Dr. Ewell, one of ordinary skill in the art could use an objective test to determine whether a multilayer capacitor is substantially monolithic by measuring its reliability when subjected to thermal cycling or to vibration and shocks. (Id. at 74:10-75:2.) Similarly, the phrase was clear and understandable to Dr. Huebner, who would have relied on measuring the multilayer capacitor's durability and its ability to perform as a capacitor. (See Trial Tr. Day 4, at 129:2-130:22.)
ATC's objection on the ground that the '356 patent does not mention anything about reliability or durability misses the mark. Section 112 does not require the patent to define each and every word used-for if it did, then every patent would have to be "written as a comprehensive tutorial and treatise for the generalist, instead of a concise statement for persons in the field." See Verve, LLC v. Crane Cams, Inc., 311 F.3d 1116, 1119 (Fed.Cir.2002). Rather, a patent is sufficiently enabled if a person of ordinary skill in the art could make and use the invention without undue experimentation. See 35 U.S.C. § 112; AK Steel, 344 F.3d at 1244. In the present case, the jury was entitled to believe Drs. Ewell and Huebner in that little, if any, experimentation would be necessary to determine what the '356 patent meant by "substantially monolithic." (See, e.g., Trial Tr. Day 4, at 129:2-130:22; Trial Tr. Day 7, at 74:10-75:2.) The '356 patent also has a very detailed background section listing specific examples of known capacitors and explaining the industry's knowledge of their design and application, including detailed technical information, which would help one of ordinary skill in determining what the phrase "substantially monolithic" meant. Moreover, once the Court construed the phrase "substantially monolithic," all of the experts in this case were able to apply the definition to the capacitors and prior art at issue. Cf. Aero Products Int'l, Inc. v. Intex Recreation Corp., 466 F.3d 1000,
Finally, the use of the word "substantially" does not make the phrase "substantially monolithic" less enabling. As Presidio notes, the use of the claim term "substantially" has repeatedly been held to be proper, and definite. See, e.g., Kinzenbaw v. Case LLC, 179 Fed.Appx. 20, 29-31 (Fed.Cir.2006) ("substantially uniformly distributed" and "substantially on the center line"); Verve, 311 F.3d at 119-20 ("substantially constant wall thickness"); Ecolab, Inc. v. Envirochem, Inc., 264 F.3d 1358, 1366-67 (Fed.Cir.2001) ("substantially uniform"); Andrew Corp. v. Gabriel Elec., Inc., 847 F.2d 819, 821-22 (Fed.Cir. 1988) ("substantially equal"). As the Federal Circuit has noted, the term "substantially" is a descriptive term used in patent claims to "avoid a strict numerical boundary to the specified parameter." Ecolab, 264 F.3d at 1367 (term "substantially" used to avoid "the strict 100% nonuniformity boundary"); accord Verve, 311 F.3d at 1120 ("Expressions such as `substantially' are used in patent documents when warranted by the nature of the invention, in order to accommodate the minor variations that may be appropriate to secure the invention."). Such usage may indeed be necessary "to provide the inventor with the benefit of his invention" as well as "to distinguish the claimed subject matter from the prior art." See Verve, 311 F.3d at 1120. In the present case, the term "substantially" avoids the strict 100% "monolithicness" of the dielectric, which Dr. Ewell testified is not possible to achieve. (See Trial Tr. Day 4, at 130:4-131:4.)
Second, ATC argues the '356 patent lacks enabling information with respect to the phrase: "sufficiently close ... to form a first fringe-effect capacitance" because the patent does not disclose the thickness of the contacts, the voltage rating, the dielectric, or the dielectric constant. According to ATC, due to lack of this information, a person of ordinary skill in the art would not be able to tell whether any given capacitor fell within the scope of the asserted claims. Moreover, ATC argues that Presidio's failure to build a single capacitor practicing the asserted claims, as well as the four years it took ATC to develop its allegedly infringing 545L capacitor, demonstrate that this element cannot be practiced without undue experimentation.
Although ATC raises some good arguments, they are nonetheless insufficient to demonstrate that the jury's verdict was "`against the great weight of the evidence.'" See Hangarter, 373 F.3d at 1005 (citation omitted). Both Dr. Ewell and Dr. Huebner testified that the disputed term was clear and ascertainable. For example, Dr. Huebner testified that to determine whether the contacts were "sufficiently close" to form a fringe-effect capacitance, a person of ordinary skill in the art would analyze the thickness of the external contacts, the separation distance, the dielectric itself, and the dielectric constant. (See Trial Tr. Day 4, at 81:8-81:22.) Similarly, Dr. Ewell testified that one could readily
ATC's insistence that Presidio cannot "have its cake and eat it too" by requiring specific details from the prior art references and then ignoring those details when it comes to the '356 patent is misplaced. As Dr. Ewell explained on cross-examination, the details were not necessary for the '356 patent because it expressly claimed that a fringe-effect capacitance was there. (See Trial Tr. Day 7, at 114:3-115:14.) On the other hand, the details were necessary to confirm whether that fringe-effect capacitance was also formed in the allegedly anticipating prior art because those references did not expressly claim fringe-effect capacitance between external contacts. (See id.) Accordingly, the jury was entitled to credit this testimony, and ATC has failed to demonstrate that the jury's decision was "`against the great weight of the evidence.'" See Hangarter, 373 F.3d at 1005 (citation omitted).
Finally, as was discussed with regard to the term "substantially," the use of the term "sufficiently close" does not make the whole claim term less enabling. Just like the terms "about" or "substantially," the term "sufficiently close" appears to be a descriptive term that can be used in patent claims to "avoid a strict numerical boundary to the specified parameter." See Ecolab, 264 F.3d at 1367; accord Verve, 311 F.3d at 1120. Indeed, the use of the term may be necessary "to provide the inventor with the benefit of his invention" as well as "to distinguish the claimed subject matter from the prior art." See Verve, 311 F.3d at 1120. In the present case, there was substantial evidence presented to find that the novelty of the '356 patent was precisely the fact that once the external contacts are arranged "sufficiently close," a fringe-effect capacitance is formed. How "sufficiently close" they should be arranged would necessarily depend on the thickness of those external contacts and the type of dielectric used. (See Trial Tr. Day 4, at 81:8-81:22.) To specify any particular distance between the contacts would have been mere "guesswork" and would have unnecessarily limited the scope of the claimed invention. See Verve, 311 F.3d at 1120.
Accordingly, ATC has not shown by clear and convincing evidence that the use of the phrases "substantially monolithic" and "sufficiently close ... to form a first fringe-effect capacitance" made the '356 patent invalid due to lack of enablement. ATC has not shown that the jury's verdict in this regard was against the great weight of the evidence.
Section 112 also requires that the patent's specification contain a "written description of the invention." 35 U.S.C. § 112. This requirement is independent of the enablement requirement, and is necessary "`so that one skilled in the art can recognize what is claimed.'" Univ. of Rochester v. G.D. Searle & Co., Inc., 358 F.3d 916, 920-23 (Fed.Cir.2004) (citations omitted). While excessive description is not required, "generalized language may not suffice if it does not convey the detailed identity of an invention." Id. at 923. The purpose of the written description is to ensure that "the patentee had possession of the claimed invention at the time of the application, i.e. that the patentee invented what is claimed." LizardTech, Inc. v. Earth Res. Mapping, Inc., 424 F.3d 1336, 1344-45 (Fed.Cir.2005) (citations omitted); accord Ariad, 598 F.3d at 1351 ("In other words, the test for sufficiency is whether the disclosure of the application relied upon reasonably conveys to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date." (citations omitted)).
As the Federal Circuit sitting en banc recently stated, "the hallmark of written description is disclosure." Ariad, 598 F.3d at 1351. The test requires the court to look to the four corners of the specification from the perspective of a person of ordinary skill in the art and inquire whether the specification describes an invention understandable to that skilled artisan and shows that the inventor actually invented the invention claimed. Id. This inquiry is a question of fact and will necessarily vary depending on the context. Id. However, there are "a few broad principles that hold true across all cases." Id. at 1352. Thus, "the written description requirement does not demand either examples or an actual reduction to practice; a constructive reduction to practice that in a definite way identifies the claimed invention can satisfy the written description requirement." Id. (citation omitted). Conversely, "a description that merely renders the invention obvious does not satisfy the requirement." Id. (citation omitted). Finally, the Federal Circuit cautioned that "although written description and enablement often rise and fall together, requiring a written description of the invention plays a vital role in curtailing claims that do not require undue experimentation to make and use, and thus satisfy enablement, but that have not been invented, and thus cannot be described." Id. at 1352.
In the present case, there is substantial evidence to support the jury's verdict finding no lack of written description. As already noted, the '356 patent has a very detailed background section listing specific examples of known capacitors and explaining the industry's knowledge of their design and application, including detailed technical information. The '356 patent also provides a very detailed description of the invention, accompanied by twenty-three separate figures, that describes how the conductive contacts can be extended to the exterior, how that would affect the overall insertion loss and frequency performance of the capacitor, and what effect it would have on the overall capacitance. (See '356 patent, col. 6:19-12:57.) The claims that follow focus on these innovations by claiming the method of extending conductive contacts to the exterior and positioning them in such proximity to each other so as to form fringe-effect capacitance. (See '356 patent, col. 12:58-16:32.) Thus, unlike Ariad, upon which ATC relies, the scope of the claims
Finally, ATC's focus on "functional language" in the context of the written description requirement is misplaced.
The Court previously denied ATC's motion for summary judgment of indefiniteness. [See Doc. No. 32]. ATC now renews its argument, stating that the Court should find the asserted claims indefinite
Id. (citations omitted). "By finding claims indefinite only if reasonable efforts at claim construction prove futile, we accord respect to the statutory presumption of patent validity, and we protect the inventive contribution of patentees, even when the drafting of their patents has been less than ideal." Id. (internal citation omitted).
As an initial matter, the Court rejects Presidio's argument that ATC's motion is procedurally improper. Presidio argues the current motion is untimely and improper because: (1) the Court previously deferred judgment on the issue of indefiniteness when it adopted ATC's construction of the disputed claim terms; (2) the Court subsequently denied ATC's motion for summary judgment on the issue of indefiniteness; and (3) after the close of all the evidence, the Court denied ATC's Rule 50(a) motion on the issue of indefiniteness. However, Rule 50(b) provides that where the court does not grant a motion under Rule 50(a), which was the case here, "the court is considered to have submitted the action to the jury subject to the court's later deciding the legal questions raised by the motion." FED. R. CIV. P. 50(b) (emphasis added). Accordingly, ATC's current motion on the issue of indefiniteness-which is a question of law—is properly before the Court.
ATC argues the claim terms "substantially monolithic" and "sufficiently close... to form a first fringe-effect capacitance" are indefinite. First, ATC argues the '356 patent does not disclose a workable, objective test for measuring either of those terms. Second, ATC argues the tests proposed by Presidio would cause the same capacitor to be "sometimes infringing and sometimes not" depending on how the capacitor is used and tested. Third, ATC argues the patent fails to differentiate itself from the prior art identified in Figure 2A. Fourth, ATC argues the claim "sufficiently close ... to form a first fringe-effect capacitance" is indefinite because the patent in effect uses "functional language" to define the alleged point of novelty.
To the extent ATC's first ground of indefiniteness raises the same arguments as with respect to enablement and written description, those arguments are rejected for the same reasons as set forth above. Specifically, as already noted, the use of the claim term "substantially" has repeatedly been held to be proper and definite. See, e.g., Kinzenbaw, 179 Fed.Appx. at 29-31 ("substantially uniformly distributed" and "substantially on the center line"); Verve, 311 F.3d at 1119-20 ("substantially constant wall thickness"); Ecolab, 264 F.3d at 1366-67 ("substantially uniform"); Andrew Corp., 847 F.2d at 821-22 ("substantially equal"). As the Federal Circuit has noted, the term "substantially" is a descriptive term used in patent claims to "avoid a strict numerical boundary to the specified parameter." Ecolab, 264 F.3d at 1367 (term "substantially" used to avoid "the strict 100% nonuniformity boundary"); accord Verve, 311 F.3d at 1120 ("Expressions such as `substantially' are used in patent documents when warranted by the nature of the invention, in order to accommodate the minor variations that may be appropriate to secure the invention."). In the present case, the term "substantially" avoids the strict 100% "monolithicness" of the dielectric, which Dr. Ewell testified is not possible in any case.
ATC next argues Dr. Ewell's "fracture test" does not cure the indefiniteness of the claim term, but rather confuses it even further. "The scope of claim language cannot depend solely on the unrestrained, subjective opinion of a particular individual purportedly practicing the invention." Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1350 (Fed.Cir.2005) (citation omitted). Rather, "[s]ome objective standard must be provided in order to allow the public to determine the scope of the claimed invention." Id. According to ATC, these criteria are not satisfied with respect to the term "substantially monolithic" because it is not based on an objective standard, but rather depends on a questionable "fracture test" pursuant to which a capacitor may infringe when used in one activity, but not infringe when used in another. See Paragon Solutions, LLC v. Timex Corp., 566 F.3d 1075, 1090-91 (Fed.Cir.2009); Halliburton Energy Services, Inc. v. M-I LLC, 514 F.3d 1244, 1254-55 (Fed.Cir.2008) ("When a proposed construction requires that an artisan make a separate infringement determination for every set of circumstances in which the composition may be used, and when such determinations are likely to result in differing outcomes (sometimes infringing and sometimes not), that construction is likely to be indefinite.").
However, contrary to ATC's arguments, a claim term is not indefinite just because
Similarly, to the extent ATC's first ground of indefiniteness raises the same arguments as with respect to enablement and written description, those arguments are rejected for the same reasons as set forth above. Specifically, the use of the term "sufficiently close" does not make the whole claim term less definite. Just like the terms "about" or "substantially," the term "sufficiently close" appears to be a descriptive term used in patent claims to "avoid a strict numerical boundary to the specified parameter." See Ecolab, 264 F.3d at 1367; accord Verve, 311 F.3d at 1120. Moreover, there was sufficient evidence presented at trial to find that the novelty of the '356 patent was precisely the fact that once the external contacts are arranged "sufficiently close," a fringe-effect capacitance is formed. How "sufficiently close" they should be arranged would necessarily depend on the thickness of those contacts and the type of dielectric used. (See Trial Tr. Day 4, at 81:8-81:22.) To specify any particular distance between the contacts would have unnecessarily limited the scope of the claimed invention, thereby depriving the inventors of the "benefit of [their] invention." See Verve, 311 F.3d at 1120.
ATC next argues Dr. Ewell's proposed "test" for whether a fringe-effect capacitance is "determinable" compounds rather than clarifies the ambiguity. As previously noted, "[t]he scope of claim language cannot depend solely on the unrestrained, subjective opinion of a particular individual purportedly practicing the invention." Datamize, 417 F.3d at 1350 (citation omitted). Rather, "[s]ome objective standard must be provided in order to allow the public to determine the scope of the claimed invention." Id. In the present case, that requirement is satisfied because
ATC has also failed to show by clear and convincing evidence that the '356 patent fails to differentiate itself from the prior art identified in Figure 2A. "[W]hether the patent expressly or at least clearly differentiates itself from specific prior art ... is an important consideration in the definiteness inquiry because in attempting to define a claim term, a person of ordinary skill is likely to conclude that the definition does not encompass that which is expressly distinguished as prior art." Halliburton, 514 F.3d at 1252. In the present case, the '356 patent adequately differentiates what is claimed from the prior art depicted in Figure 2A. For example, in describing Figure 10A, which depicts an embodiment of the claimed capacitor, the '356 patent notes that as compared to the capacitor in Figure 2A, "the external conductive plates
Finally, ATC's "functional language" argument fares no better. Particular scrutiny is required where a claim is defined "`by what it does rather than what it is.'" Halliburton, 514 F.3d at 1255. The vice of such "functional claiming" occurs "`when the inventor is painstaking when he recites what has already been seen, and then uses conveniently functional language at the exact point of novelty.'" Id. (quoting Gen. Elec. Co. v. Wabash Appliance Corp., 304 U.S. 364, 371, 58 S.Ct. 899, 82 L.Ed. 1402 (1938)). The Federal Circuit, however, has held that claim language is not necessarily indefinite for using functional language. See, e.g., Microprocessor Enhancement Corp. v. Texas Instruments Inc., 520 F.3d 1367, 1375 (Fed.Cir.2008). There is nothing intrinsically wrong with using functional language in claims, unless it fails to "provide a clear-cut indication of the scope of the subject matter embraced by the claim." Id. (internal quotation marks and citation omitted). In the present case, the '356 patent differentiates its invention from the prior art by requiring that there be external contacts that are located in such proximity to each other as to form a fringe-effect capacitance. In light of Dr. Ewell's testimony, this provides sufficient description of the scope of the asserted claims. See Halliburton, 514 F.3d at 1256.
Accordingly, ATC has failed to show by clear and convincing evidence that the phrases "substantially monolithic" and "sufficiently close ... to form a first fringe-effect capacitance" are indefinite as a matter of law.
Finally, ATC argues the '356 patent is unenforceable due to inequitable conduct. "`A patent may be rendered unenforceable for inequitable conduct if an applicant, with intent to mislead or deceive the examiner, fails to disclose material information or submits materially false information to the PTO during prosecution.'" McKesson Info. Solutions, Inc. v. Bridge Med., Inc., 487 F.3d 897, 913 (Fed.Cir. 2007) (citation omitted); see also 37 C.F.R. § 1.56(a) ("Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability as defined in this section.").
The "materiality" of information withheld during prosecution is judged by the "reasonable examiner" standard,
As for the "intent" element of the offense, it is "`in the main proven by inferences drawn from facts, with the collection of inferences permitting a confident judgment that deceit has occurred.'" Id. (citation omitted). "`However, inequitable conduct requires not intent to withhold, but rather intent to deceive. Intent to deceive cannot be inferred simply from the decision to withhold information where the reasons given for the withholding are plausible.'" Id. (citation omitted). "In addition, `a finding that particular conduct amounts to "gross negligence" does not of itself justify an inference of intent to deceive; the involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive.'" Id. (citing Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876 (Fed.Cir.1988) (en banc in relevant part)). "Whenever evidence proffered to show either materiality or intent is susceptible of multiple reasonable inferences, a district court clearly errs in overlooking one inference in favor of another equally reasonable inference." Scanner Tech. Corp. v. ICOS Vision Sys. Corp., 528 F.3d 1365, 1376 (Fed.Cir.2008).
Determination of inequitable conduct is a two-step process. The party asserting inequitable conduct must first prove a threshold level of "materiality" and "intent" by clear and convincing evidence. McKesson, 487 F.3d at 913. The court must then balance the levels of "materiality" and "intent"—with the greater showing of one factor allowing a lesser showing of the other—to determine whether the applicant's conduct before the PTO was "egregious enough to warrant holding the entire patent unenforceable." Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1365 (Fed.Cir.2008); McKesson, 487 F.3d at 913. "Thus, even if a threshold level of both materiality and intent to deceive are proven by clear and convincing evidence, the court may still decline to render the patent unenforceable." Star Scientific, 537 F.3d at 1365.
The Court first addresses ATC's continued insistence that the "point of novelty" of the '356 patent was the "fringe-effect capacitance" between the capacitor contacts. Contrary to ATC's arguments, in allowing the asserted claim 1, the patent examiner stated:
(See Pl. Opp. to Def. Findings & Conclusions on Inequitable Conduct, Ex. C.) The plain meaning of the above sentence is that the patent examiner considered the combination of all of the limitations of claim 1 to be the point of novelty, not just
Accordingly, the Court rejects ATC's erroneous interpretation of the examiner's reasons for allowance of claim 1 as well as ATC's arguments that rely upon that interpretation.
The first reference relied upon by ATC in support of its inequitable conduct charge is the Devoe patent, U.S. patent number 5,367,430 ("Devoe '430 patent"). The Devoe '430 patent is titled "Monolithic Multiple Capacitor," and describes that "it is impossible to eliminate all stray capacitance between pairs of electrical conductors in a monolithic ceramic capacitor" and that "[i]t is a further object of the present invention to provide a monolithic multiple capacitor in which stray capacitance between pairs of terminals is used to form useful circuit elements."
In granting the reexamination of the '356 patent, the USPTO noted that "a reasonable Examiner would consider [the Devoe '430 patent] important in making a decision as to the patentability of claim 1 of the '356 patent."
Nonetheless, ATC did not meet its burden of showing intent to deceive by clear and convincing evidence. First, ATC argues that necessary intent can be drawn from the materiality of the '430 patent combined with the fact that Alan Devoe allegedly thought in June 2001 that the capacitors made for JDSU were covered by the '430 patent. (See Def. Findings & Conclusions on Inequitable Conduct, Ex. PM.) However, "the fact that information later found material was not disclosed cannot, by itself, satisfy the deceptive intent element of inequitable conduct." Star Scientific, 537 F.3d at 1366 (citation omitted). Rather, ATC had the burden of separately demonstrating intent to deceive during the relevant time. See id. Moreover, the fact that information was known years ago does not mean that it was necessarily recognized as being material at the time the application was filed. In the present case, the fact that the Devoes were allegedly "concerned" about the '430 patent in June 2001 but then forgot to cite it during the patent application process in 2002, without more, amounts at most to "gross negligence" on their part, which is insufficient by itself to support intent to deceive.
More importantly, the Devoes testified at trial that they believed the '430 patent was not relevant to the asserted claims of the '356 patent. For example, Daniel Devoe testified that the '430 patent was a "totally different kind of animal" because it dealt with a hearing-aid circuit device intended to operate at a range of a few cycles to 10,000 cycles, while the '356 patent was aimed at the much higher range of up to 40 billion cycles. (See, e.g., Trial Tr. Day 2, at 29:13-29:23; 55:24-56:10, 56:24-57:8, 57:20-57:24.) Likewise, Alan Devoe testified that by the time the patent application was finally drafted, the Devoes did not believe the '430 patent was relevant. (See, e.g., Trial Tr. Day 3, at 176:15-177:1.) While the inference of intent to deceive may properly be drawn from indirect and circumstantial evidence, it "must not only be based on sufficient evidence and be reasonable in light of that evidence, but it must also be the single most reasonable inference able to be drawn from the evidence to meet the clear and convincing standard." Star Scientific, 537 F.3d at 1366 (citation omitted) (emphasis added). In the present case, the above testimony by the Devoes prevents the Court from concluding that the only inference that can be drawn is that there must have been an intent to deceive the USPTO when the
The next reference relied upon by ATC is the Devoe patent, U.S. patent number 6,366,443 ("Devoe '443 patent"). The Devoe '443 patent deals with a "ceramic chip capacitor of conventional volume and external form having increased capacitance from use of closely-spaced interior conductive planes reliably connecting to positionally-tolerant exterior pads through multiple redundant vias." (See Def. Findings & Conclusions on Inequitable Conduct, Ex. ABT.) Among other things, the Devoe '443 patent discloses the aforementioned C=kA/d formula for measuring capacitance between parallel plates.
ATC's sole argument that the Devoe '443 patent was material is that it discloses "fringe-effect capacitance," which is the alleged "point of novelty" of the '356 patent. However, as noted above, the Court rejects ATC's insistence that the "fringe-effect capacitance" by itself is the point of novelty. (See supra Part I.H.i.) Nonetheless, even if not a "point of novelty," a prior reference with a potential fringe-effect capacitance would likely be material to a reasonable examiner. See, e.g., Hoffmann-La Roche, Inc. v. Promega Corp., 323 F.3d 1354, 1367 (Fed.Cir.2003) (finding material patentee's failure to disclose purity results, even though purity was not a claim limitation). In the present case, there was sufficient testimony presented to demonstrate that there might be fringe-effect capacitance between the external electrical connections in Figure 2b of the '443 patent. (See, e.g., Trial Tr. Day 2, at 33:1-33:12; Trial Tr. Day 5, at 186:8-188:5.) Accordingly, there is a substantial likelihood that a reasonable examiner would have considered the Devoe '443 patent material to the application. See McKesson, 487 F.3d at 913. However, because this does not relate to any "point of novelty," and because it does not invalidate the '356 patent, there is at most only a medium level of materiality.
Moreover, there was likely knowledge, at least on behalf of Daniel Devoe, that the '443 patent was relevant so as to give rise to an inference of intent. There was inconsistent testimony at trial regarding potential relevance of the '443 patent. On the one hand, Alan Devoe testified that the Devoe '443 patent was not relevant because it was not intended for "broadband" use, the resulting capacitors were "not surface mountable," and the external vias were merely used for beneficial purposes without really recognizing the "novelty of the invention" that would later crystalize. (See Trial Tr. Day 3, at 178:6-178:21.) Likewise, Daniel Devoe testified that the Devoe '443 patent was "a different kind of animal" because although it also uses a high-frequency capacitor, "it is disconnected from the broadband part that we're arguing about." (See Trial Tr. Day 2, at 60:6-60:15.) On the other hand, Daniel Devoe also testified that the structure of Figure 2b above resembles the structure claimed in the '356 patent. (See id. at 32:4-33:12.) Indeed, Daniel Devoe testified that the '443 patent discloses how to arrange "two connections on the top" and then bring them "close together" to achieve a "better frequency performance." (See id. 61:17-62:3.) At the very least, this presents a close case where Daniel Devoe recognized that the structure of the '443 patent was similar to what is claimed in the '356 patent, and yet decided not to disclose it because he believed it not to be relevant. If that is the case, he had the duty to disclose it to the examiner, and let the examiner determine whether or not the reference was material. See Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 1257 (Fed.Cir.1997) ("It is axiomatic that `close cases should be resolved by disclosure, not unilaterally by applicant.'" (citation omitted)). Accordingly, ATC has shown the threshold level of intent. However, in light of the conflicting testimonies as to the relevance the Devoes attached to the '443 patent, there is at most only a low level of intent.
The next reference put forth by ATC is the Trinh '854 patent, which is titled "Fringe-Field Non-Overlapping-Electrodes Discoidal Feed-Through Ceramic Filter Capacitor with High Breakdown Voltage." (See Def. Findings & Conclusions on Inequitable Conduct, Ex. AAG.) The Trinh '854 patent teaches that "[f]ringe-effect capacitance is always present" between exterior metal terminations of opposite polarity. (Id., col. 9:49-9:52.) It also teaches that when the voltage is small, that fringe-effect capacitance is "negligible" in comparison to the overall capacitance, and is "disregarded." (Id., col. 9:52-9:56.) On the other hand, in a high voltage multi-layer ceramic capacitor, the '854 patent teaches that "the fringe capacitance commences to be a sizable, measurable, portion of the total capacitance." (Id., col. 9:56-9:59.)
As with the Devoe '430 patent, the USPTO's grant of reexamination noted that "a
Nonetheless, ATC cannot show the threshold level of intent by clear and convincing evidence. First, as already noted, there is very little basis to ATC's argument that the words "conflict-existing patent" found in Daniel Devoe's notebook referred to any conflict due to the Trinh '854 patent, or were even related to the '356 patent application. (See, e.g., Trial Tr. Day 2, at 23:5-24:4, 29:1-30:3, 34:15-34:19.) Moreover, the mere fact that there is fringe-effect capacitance disclosed between internal plates in the '854 patent does not mean it was or should have been recognized as material to what is claimed in the '356 patent. On the contrary, the Devoes and their patent attorney testified that they believed the '854 patent not to be relevant to the '356 application, in part because it was designed to deal with reliability of voltage breakdown and because it would not make sense to use that invention with the high frequencies at which the BB capacitor and the 545L capacitor operate. (See, e.g., id. at 51:5-53:3; Trial Tr. Day 3, at 70:12-70:18.) In light of this testimony, the Court cannot conclude that the only inference that can be drawn is that there must have been an intent to deceive the USPTO when the patent applications were filed. See Star Scientific, 537 F.3d at 1366. Accordingly, the Court cannot say with confidence that ATC has proven by clear and convincing evidence that culpable intent existed at the relevant time. See McKesson, 487 F.3d at 913.
The last patent relied upon by ATC is the Seaman patent, U.S. patent number 4,661,884 ("Seaman '884 patent"). The Seaman '884 patent was filed by Harry V. Seaman of ATC on March 10, 1986, and is titled "Miniature, Multiple Layer, Side Mounting High Frequency Blocking Capacitor." (See Def. Findings & Conclusions on Inequitable Conduct, Ex. ABU.) The '884 patent was one of the patents cited by the Devoes in their '430 patent. Notably, the Devoe '430 patent acknowledged that the '884 patent "teaches a single capacitor in which external conductive terminals are brought out to be soldered to a circuit board." (Id., Ex. ABS, col. 1:66-2:1.)
Although it is a close question, the Court believes the Seaman '884 patent would have been material to a reasonable examiner. While it is unclear whether the '884 patent discloses fringe-effect capacitance as claimed in the '356 patent, the Devoes' own patent (the '430 patent) acknowledges that the '884 patent teaches about bringing out conductive terminals to the outside of the capacitor, which is an integral part of the '356 patent's claim limitations. Accordingly, there is a substantial likelihood that a reasonable examiner would have considered the Seaman '884 patent material to the application. See Hoffmann-La Roche, 323 F.3d at 1367 (finding material patentee's failure to disclose purity results, even though purity was not a claim limitation).
Nonetheless, ATC has not shown the necessary level of intent by clear and convincing evidence. ATC argues there was intent to deceive because the '884 patent was cited in the '430 patent, the Devoes were apparently "concerned" about it, and Daniel Devoe admitted the '884 patent discloses
ATC also argues the Devoes should have disclosed the sale of the August 2000 capacitors to the USPTO. First, ATC argues that the August 2000 capacitors were material because they anticipate most of the asserted claims as determined by Dr. Dougherty. However, even without deference to the jury's verdict on this issue, it is unclear whether the August 2000 capacitors anticipate the '356 patent. (See, e.g., Trial Tr. Day 6, at 42:3-45:11; Trial Tr. Day 7, at 87:7-88:23.) Moreover, there was testimony that the August 2000 capacitors were merely "generic" capacitors that Presidio makes in large quantities for a number of customers. (See Trial Tr. Day 2, at 63:10-63:18, 64:10-65:2.) In addition, there was testimony that the August 2000 capacitors were disclosed to the USPTO through prior art and figures identified as prior art, in particular Figure 2A. (See id. at 64:18-64:22; Trial Tr. Day 7, at 151:10-152:22, 156:25-157:1.) It is well-established that information or a reference is not material if it is merely cumulative to other information or references considered by the examiner. McKesson, 487 F.3d at 913. Accordingly, there is no substantial likelihood that a reasonable examiner would have considered the sale of the August 2000 capacitors material to the application. See id.
ATC next argues that there was inequitable conduct due to Presidio's failure to disclose the existence of an inventorship dispute with regard to Chuck Rosier. Misinformation about inventorship can be the basis for a claim of inequitable conduct. See, e.g., PerSeptive Biosystems, Inc. v. Pharmacia Biotech, Inc., 225 F.3d 1315, 1321-22 (Fed.Cir.2000) (finding material patentee's "intentional `misrepresentations, omissions and half-truths to the PTO,' made as a `persistent course' of conduct" regarding inventorship). In the present case, however, the jury has rejected any improper inventorship claim, and the Court has already denied ATC's motion for JMOL on that issue. (See Verdict Form, at 4; see also supra Part I.C.ii.) Moreover, as previously noted, there was extensive testimony by Alan Devoe that raised doubts as to whether Charles Rosier invented anything related to the '356 patent. (See, e.g., Trial Tr. Day 3, at 182:9-185:22; Trial Tr. Day 4, at 3:21-9:1, 15:18-20:19, 25:20-26:5; 32:20-33:3.) Accordingly, it is very unlikely that a reasonable examiner would have considered this issue material to the application. See McKesson, 487 F.3d at 913.
Furthermore, even if material, ATC cannot show by clear and convincing evidence the threshold level of intent. Relying on piecemeal portions of the exhibits, ATC argues the Devoes knew of the potential inventorship dispute and therefore should have disclosed it. (See Def. Findings &
Finally, ATC argues inequitable conduct charge is supported by the misrepresentations in the specifications of the '356 patent. Use of past tense or prophetic examples to describe an experiment, when that experiment was never actually performed as described, may be a misrepresentation actionable as inequitable conduct. See, e.g., Hoffmann-La Roche, 323 F.3d at 1363-66 (upholding a finding of inequitable conduct where "Example VI[was] written in the past tense" and "[f]rom the language used, a reader of the patent would conclude that the protocol was performed and that the [described] results were actually achieved"). In the present case, ATC first argues the use of phrases such as "have been extended" and "have been found" with respect to Figures 10A and 15A of the '356 patent suggests that the described steps were actually undertaken and that the described results were actually obtained. According to ATC, this is misleading because Presidio has conceded that it "has not previously designed or manufactured capacitors in accordance with [those figures]." (See Def. Findings & Conclusions on Inequitable Conduct, Ex. ABU.) ATC also argues the failure to disclose the presence of fringe-effect capacitance in Figure 2A amounted to a material misrepresentation.
The Court finds that the misrepresentations, if any, in the specifications of the '356 patent would not have been considered material by a reasonable examiner. With respect to the past tense language used, the instances in this case are significantly different from the charged conduct in Hoffmann on which ATC relies. In Hoffmann, each step of the disputed Example VI, over more than two columns of the patent, was described in the same fashion, using the past tense. 323 F.3d at 1363-64. Indeed, the past tense was used to describe the steps of Example VI on more than 75 occasions, and the patent provided specific numeric measurements used and results obtained, even though it was later admitted that Example VI was never performed as described. Id. In contrast, the '356 patent merely states that in Figure 10A, as opposed to Figure 9A, "the external conductive plates 72 and 74 in the lower section 62 of the device have been extended toward each other so as to create a capacitance between plates 72 and 74 based upon fringe electric field extending to and from the adjacent edges of those plates." ('356 patent, col. 7:21-7:26 (italics added).) As Mr. Humphrey testified, a comparison of Figures 9A and 10A from the original application confirms that this is indeed the case—i.e., the conductive plates in the drawing "have been extended" from where they were in Figure 9A to where they appear in Figure 10A. (See Trial Tr. Day 3, at 92:1-94:15, 95:2-96:21; see also Pl. Opp. to Def. Findings & Conclusions on Inequitable Conduct, Ex. E.)
Similarly, it is very unlikely that a reasonable examiner would have considered the use of past tense in the following sentence, which describes Figure 15A, material: "While the fringe effect capacitances
Finally, even if these alleged misrepresentations were material, there has been no showing of intent to deceive the USPTO. Contrary to Hoffmann, 323 F.3d at 1363-64, on which ATC relies, this is not the case where the patent describes extensive experiments with specific details that were never conducted as described. Likewise, there was no consistent effort by the Devoes to "hide the ball" as was the case in Semiconductor Energy, also relied upon by ATC. See Semiconductor Energy Lab. Co. v. Samsung Elec. Co., 204 F.3d 1368, 1373, 1377-78 (Fed.Cir. 2000) (upholding a finding of inequitable conduct where the patentee provided a misleadingly incomplete, partial translation of one of the references and a narrow and incomplete concise statement). Rather, as Mr. Humphrey testified, the past tense was used solely to denote what was done to the drawings and to indicate where fringe-effect capacitance would technically be present. Accordingly, ATC has failed to demonstrate by clear and convincing evidence any intent to deceive. See McKesson, 487 F.3d at 913.
Having considered the materiality and intent associated with each one of the grounds relied upon by ATC, the Court must next determine whether the '356 patent as a whole should be declared unenforceable. As previously stated, with respect to each asserted ground, ATC must first prove a threshold level of "materiality" and "intent" by clear and convincing evidence. See McKesson, 487 F.3d at 913. In the present case, only with respect to the Devoe '443 patent are both factors
In the present case, the Court concludes that on balance the equities do not make the Devoes' conduct before the USPTO "egregious enough to warrant holding the entire patent unenforceable." See Star Scientific, 537 F.3d at 1365 (citation omitted). There is only a medium level of materiality based on the alleged similarity between Figure 2b in the '443 patent and the asserted claims of the '356 patent. There is also only a low level of intent because both the Devoes and their patent counsel testified that they believed the '443 patent not to be relevant to the invention claimed in the '356 patent, even if some of them recognized the similarities in the structure. (See, e.g., Trial Tr. Day 2, at 60:6-60:15; Trial Tr. Day 3, at 91:1-91:19, 178:6-178:21.) Accordingly, even though threshold levels of both materiality and intent have been shown, the Court exercises its discretion in
ATC also moves for a JMOL on the issue of infringement. Because the Court previously granted ATC summary judgment on the issue of infringement under the doctrine of equivalents and on induced and contributory infringement, (see MSJ Order, at 17-18 [Doc. No. 165]), the only issue submitted to the jury was that of literal infringement. Literal infringement first requires the court to interpret the claims to determine their scope and meaning. Dynacore Holdings Corp. v. U.S. Philips Corp., 363 F.3d 1263, 1273 (Fed.Cir.2004). The court must then compare the properly construed claims to the allegedly infringing device. Id. The patentee must prove that the accused device contains each limitation of the asserted claims. Bayer AG v. Elan Pharm. Research Corp., 212 F.3d 1241, 1247 (Fed.Cir. 2000). "If any claim limitation is absent from the accused device, there is no literal infringement as a matter of law." Id. (citation omitted).
First, ATC argues there was no sufficient evidence to demonstrate that the 545L capacitor had a "substantially monolithic dielectric body" as required by the '356 patent, which the Court defined as "a dielectric body largely but not wholly without seams from the inclusion of plates within the dielectric body." ATC argues that Dr. Huebner allegedly admitted "there are no seams" in the 545L capacitor. (See Trial Tr. Day 4, at 112:24-113:14.) However, taking Dr. Huebner's testimony as a whole, he was only indicating that the word "seams" is not used by persons skilled in the art and that the word "substantially" is necessary only because no capacitor can be 100% monolithic. (See, e.g., id. at 100:18-101:8, 102:19-103:5, 105:17-105:23, 112:18-112:23.) Moreover, assuming the word "seam" referred to a boundary between a plate and the dielectric, as contended by ATC, Dr. Huebner
Second, ATC argues there was no sufficient evidence to demonstrate that the 545L capacitor had a "fringe-effect capacitance," which the Court initially defined as "a determinable capacitance" and then further defined as "a capacity that is capable of being determined in terms of a standard unit." Presidio, however, points to Dr. Huebner's detailed dissection and analysis of the 545L capacitor in arguing that he did conclude there was fringe-effect capacitance that was "determinable." (See Trial Tr. Day 4, at 56:1-67:5, 75:15-85:7.) The Court agrees. Notably, Dr. Huebner testified that he took detailed micrographs of the 545L capacitor, and that he also measured a determinable fringe-effect capacitance in the 545L capacitor by using the C=kA/d formula and inputting the actual thickness of the external contact, the actual separation distance, and a lower and upper boundary for what the dielectric constant might be. (See id. at 120:24-121:24.) Accordingly, there was sufficient evidence for the jury to credit Dr. Huebner's opinion and to find that the 545L capacitor had a "fringe-effect capacitance" between the external contacts.
For the foregoing reasons, and because ATC makes no objections with respect to any other claim terms, the Court finds there was sufficient evidence for the jury to conclude that Presidio demonstrated by preponderance of the evidence that the 545L capacitor infringes all of the asserted claims of the '356 patent.
ATC next challenges the jury's finding of willful infringement. To demonstrate willful infringement, a patentee must show at least "objective recklessness," which is a two-part process:
In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed.Cir.2007) (en banc) (internal citations omitted). The Court evaluates the totality of the circumstances to determine whether an infringement is "willful." ACCO Brands, Inc. v. ABA Locks Mfr. Co., 501 F.3d 1307, 1312-13 (Fed.Cir.2007).
In the present case, even if ATC "acted despite an objectively high likelihood that its actions constituted infringement of a valid patent," Presidio failed to show by clear and convincing evidence that ATC did so with the necessary subjective intent. See Seagate, 497 F.3d at 1371. At trial, ATC presented uncontested testimony from Robert Grossbach, ATC's Vice President of RF Engineering, and John Mruz that they independently concluded there was "nothing new" in the '356 patent. (See Trial Tr. Day 5, at 62:11-64:10; Trial Tr. Day 6, at 85:14-86:9.) Likewise, although the USPTO initially rejected the Mruz patent for the 545L capacitor in light of the '356 patent, the USPTO later reconsidered and allowed the Mruz patent, U.S. patent number 7,248,458 ("Mruz patent"). (See Trial Tr. Day 5, at 39:15-40:7, 64:17-65:10.) None of the arguments made by Presidio are sufficient to demonstrate that the jury's finding of willful infringement was supported by substantial evidence.
Presidio's first argument is that ATC had a duty to investigate and determine whether it had a good faith belief to market the 545L capacitors in light of the '356 patent. However, Presidio relies solely on pre-Seagate case law in support of this proposition. Prior to Seagate, a potential infringer who had actual notice of another's patent rights had "an affirmative duty to exercise due care to determine whether or not he is infringing." See Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F.2d 1380, 1389-90 (Fed.Cir.1983) (citation omitted); accord nCube Corp. v. SeaChange Int'l, Inc., 436 F.3d 1317, 1324 (Fed.Cir.2006); Johns Hopkins Univ. v. CellPro, Inc., 152 F.3d 1342, 1364 (Fed. Cir.1998). In Seagate, the Federal Circuit abandoned this approach and overruled the prior cases, concluding that a finding of willfulness "requires at least a showing of objective recklessness." 497 F.3d at 1371 ("Accordingly, we overrule the standard set out in Underwater Devices and hold that proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness. . . . [W]e abandon the affirmative duty of due care . . . ."); accord Eastman Kodak Co. v. Agfa-Gevaert N.V., 560 F.Supp.2d 227, 302 (W.D.N.Y.2008). Accordingly, there was no "affirmative duty of due care" imposed on ATC in this case; rather, the only duty it had to comply with was the duty to not act with objective recklessness. See Seagate, 497 F.3d at 1371.
Likewise, there is little merit to Presidio's argument that willfulness is demonstrated by ATC's copying of Presidio's unpatented BB capacitors. Evidence of copying may be relevant to Seagate's second prong, "as it may show what the accused infringer knew or should have known about the likelihood of its infringement." DePuy Spine, Inc. v. Medtronic Sofamor Danke, Inc., 567 F.3d 1314, 1336 (Fed.Cir.2009). At trial, however, Mr. Mruz adamantly denied any copying of the BB capacitors. (See, e.g., Trial Tr. Day 5, at 65:11-65:20.) Presidio has failed to point to any contrary testimony.
Finally, ATC's failure to present an opinion of a patent attorney — while a relevant factor — is not clear and convincing evidence of willfulness. Contrary to ATC's objections, the failure to obtain an opinion of counsel is a relevant factor post-Seagate. In Seagate, the Federal Circuit noted that over the years, its case law has erroneously established that accused infringer's failure to obtain an opinion of counsel gave rise to an "adverse inference" as to willfulness of infringement. 497 F.3d at 1370. The Seagate court conclusively rejected any such inference, concluding instead that "there is no affirmative obligation to obtain opinion of counsel." Id. at 1370-71. However, the Federal Circuit did not hold that failure to obtain opinion of counsel was legally irrelevant. Rather, the court noted that the issue of willfulness must be analyzed under the "totality of the circumstances" approach. Id. at 1369. Notably, the Federal Circuit stated that "[a]lthough an infringer's reliance on favorable advice of counsel, or conversely his failure to proffer any favorable advice, is not dispositive of the willfulness inquiry, it is crucial to the analysis." Id. (emphasis added).
Case law post-Seagate is split as to whether lack of opinion of counsel is still a valid factor that can be considered by the jury in determining willfulness of infringement. Many courts seem to have concluded that, while there is no longer any "adverse inference" from the failure to obtain opinion of counsel, it is still a factor to be
This one factor, however, is insufficient to demonstrate by clear and convincing evidence that ATC's infringement was willful — i.e., that the objectively-defined risk "was either known or so obvious that it should have been known" to ATC. See Seagate, 497 F.3d at 1371. Moreover, since there is no longer any affirmative duty to investigate, see id., ATC had no reason to obtain an opinion of counsel once two of its engineers have independently concluded that there was "nothing new" to the '356 patent. (See Trial Tr. Day 5, at 62:11-64:10; Trial Tr. Day 6, at 85:14-86:9.)
For the foregoing reasons, the jury's finding that Presidio demonstrated willful infringement by clear and convincing evidence is not supported by substantial evidence. Accordingly, because the jury's verdict on this issue was "`against the great weight of the evidence,'" the Court
ATC next moves for a JMOL on the issue of damages. [Doc. No. 309]. Presidio opposes ATC's motion, [Doc. No. 320], and separately moves for: (1) supplemental damages for ATC's continued infringement;
35 U.S.C. § 284. With regard to attorney's fees, Section 285 provides that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285.
At trial, Presidio advanced a lost-profits theory under the four-factor Panduit test, which requires a showing of: "(1) demand for the patented product, (2) absence of acceptable noninfringing substitutes, (3) manufacturing and marketing capability to exploit the demand, and (4) the amount of profit that would have been made." DePuy Spine, 567 F.3d at 1329 (citing Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156 (6th Cir.1978)). At the conclusion of the trial, the jury awarded Presidio $1,048,677 in lost profits. In its motion, ATC only challenges the sufficiency of the evidence on the first two Panduit factors, as well as the overall amount of damages awarded.
ATC first argues the award of lost profits was improper because the BB capacitors do not practice the '356 patent, and the '356 patent itself cannot qualify as the patented product. The first Panduit factor, however, is not limited to just patented products, but rather asks whether demand existed for a product that is "covered by the patent in suit" or that "directly competes with the infringing device." See DePuy Spine, 567 F.3d at 1330 (citing Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1548-49 (Fed.Cir.1995) (en banc)). The main inquiry is whether the patentee can demonstrate a "but for" causation traceable to patent infringement. See Rite-Hite, 56 F.3d at 1548.
In the present case, substantial evidence supported the jury's finding that demand existed for the BB capacitors, which compete with the 545L capacitors.
ATC argues it was improper to consider the BB capacitors because they and the 545L capacitors serve different markets. See BIC Leisure Prods., Inc. v. Windsurfing Int'l, Inc., 1 F.3d 1214, 1218-19 (Fed. Cir.1993) ("The first Panduit factor—demand for the patented product—presupposes that demand for the infringer's and patent owner's products is interchangeable.... This analysis assumes that the patent owner and the infringer sell substantially the same product."). According to ATC, the BB capacitors have a higher insertion loss of 0.9 dB at 40 GHz and were designed to compete in the lower level of performance market, while the 545L capacitors have a lower insertion loss of 0.3 dB at 40 GHz and were designed to compete in the higher performance market. As an initial matter, however, it is questionable whether the Court can determine consumer demand based solely on specific features of the device at issue. See DePuy Spine, 567 F.3d at 1330 ("[The first Panduit] factor does not require any allocation of consumer demand among the various limitations recited in a patent claim."). There was also substantial evidence before the jury for it to conclude that the BB capacitors and the 545L capacitors competed in the same "one-piece design" market, despite their different insertion loss statistics. (See, e.g., Trial Tr. Day 4, at 155:20-157:6, 162:17-162:23.) Accordingly, the Court finds the first Panduit factor satisfied.
ATC next argues that in the hypothetical "but for" market, the consumers would have chosen the noninfringing 540L capacitors over the BB capacitors due to: (1) better insertion loss of the 540L capacitors (0.5 dB at 40 GHz) versus the BB capacitors (0.9 dB at 40 GHz); and (2) standard industry size of the 540L capacitors (0402) versus non-standard size of the BB capacitors (0502). Moreover, according to ATC, consumers looking for lower insertion loss could have also resorted to purchasing DLI's Opti-Caps, or ATC's 520L or 530L capacitors. Consumers looking for a one-piece design could have resorted to purchasing ATC's one-piece Monsorno 500S capacitors.
However, the "[m]ere existence of a competing device does not make that device an acceptable substitute." TWM Mfg. Co. v. Dura Corp., 789 F.2d 895, 901 (Fed.Cir.1986). In the present case, most of the alternatives identified by ATC assume that consumers would have preferred a two-piece design with lower insertion loss over a one-piece design with higher insertion loss. However, there was substantial evidence presented for the jury
Finally, "[a] patentee need not negate every possibility that the purchaser might not have purchased a product other than its own, absent the infringement." Rite-Hite, 56 F.3d at 1545 (citation omitted); accord King Instrument Corp. v. Otari Corp., 767 F.2d 853, 864 (Fed.Cir.1985) ("[A patentee] need not meet the impossible burden of negating every possibility that a purchaser might not have bought another product or might not have bought any comparable product at all."). Rather, "[t]he patentee need only show that there was a reasonable probability that the sales would have been made 'but for' the infringement." Rite-Hite, 56 F.3d at 1545; accord King Instrument, 767 F.2d at 864. In the present case, for the reasons set forth above, Presidio has met its burden of showing "reasonable probability" that "but for" the 545L capacitors, the consumers would have purchased the one-piece BB capacitors. Accordingly, the Court finds the second Panduit factor satisfied.
ATC next alleges a number of errors committed by Mr. Newman in calculating Presidio's lost profits: (1) he did not account for the impact on the sales of BB capacitors caused by the recession; (2) he should have reduced the final amount by 10-20% to reflect the sales of the 545L capacitors that were made to ATC's largest customer, Richardson Electronics, with which ATC has an exclusive agreement; (3) lost profits should be reduced to account for any 540L capacitors that would have been sold in the hypothetical "but for" market at the 2006 manufacturing capacity level of 100,000; (4) it was improper to exclude large customers, rather than large shipments, from the calculations; and (5) based on Presidio's own financial statements, the miscellaneous incremental costs would have accounted for 10% as opposed to Mr. Newman's arbitrary selection of 3%.
The Court rejects all of these objections because there was sufficient evidence presented to the jury to support its lost profits verdict. For example, with respect to Richardson Electronics, although it is true that it buys exclusively from ATC, Mr. Newman testified that the focus should be on the customers that are buying the capacitors from Richardson. (See Trial Tr. Day 4, at 201:22-202:15.) Accordingly, there was evidence for the jury to conclude that with 545L capacitors unavailable, those customers could have purchased directly from Presidio rather from ATC through Richardson. (See id.) Likewise, as was already noted, it was for the jury to decide whether customers in the hypothetical "but for" market would have purchased any additional 540L capacitors. As for excluding largest customers, instead of largest shipments, ATC's own expert testified that this was not necessarily improper. (See Trial Tr. Day 6, at 121:6-121:18.) Finally, the jury was presented with two different ways to adjust for miscellaneous
For the foregoing reasons, substantial evidence in the record supports both the application of the first two Panduit factors and the overall amount of damages awarded. Accordingly, the Court
Presidio moves unopposed for supplemental damages in light of ATC's continued infringement. Under Section 284, a finding of infringement requires the Court to award damages that are "adequate to compensate" the plaintiff. 35 U.S.C. § 284. "`[S]upplemental damages are calculated consistent with the damages awarded in the jury verdict.'" Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., No. CV-03-0597-PHX-MHM, 2009 WL 920300, at *3 (D.Ariz. Mar. 31, 2009) (citation omitted). Accordingly, the Court
In light of the jury's finding of willful infringement, Presidio also moves for enhancement of damages. Upon a finding of infringement, Section 284 requires the court to award "damages adequate to compensate for the infringement." 35 U.S.C. § 284. The same section also gives the court discretion to "increase the damages up to three times the amount found or assessed." Id. However, for the damages award to be increased, the fact-finder must first determine "whether an infringer is guilty of conduct upon which increased damages may be based," such as an act of willful infringement or bad faith. Jurgens v. CBK, Ltd., 80 F.3d 1566, 1570 (Fed.Cir.1996); see also In re Seagate Tech., LLC, 497 F.3d 1360, 1368 (Fed.Cir. 2007) (en banc) ("Absent a statutory guide, we have held that an award of enhanced damages requires a showing of willful infringement." (citations omitted)). Only once culpable conduct is established, "the court then determines, exercising its sound discretion, whether, and to what extent, to increase the damages award given the totality of the circumstances." Jurgens, 80 F.3d at 1570 (citation omitted). Moreover, "an infringer may generally avoid enhanced damages with a meritorious good faith defense and a substantial challenge to infringement." Delta-X Corp. v. Baker Hughes Prod. Tools, Inc., 984 F.2d 410, 413 (Fed.Cir.1993) (citation omitted).
In the present case, in light of the JMOL on the issue of willfulness, the Court finds that Presidio is not entitled to enhanced damages. Prior to Seagate, the Federal Circuit has explicitly held that "`enhancement of damages must be premised on willful infringement or bad faith.'" See Beatrice Foods Co. v. New England Printing & Lithographing Co., 923 F.2d 1576, 1578 (Fed.Cir.1991) (citations omitted) (emphasis added). The majority of the en banc court in Seagate did not elect to overrule Beatrice Foods, and this Court remains bound by that decision. See Cohesive Tech., Inc. v. Waters Corp., 543 F.3d 1351, 1374 (Fed.Cir.2008). But see Sensonics, Inc. v. Aerosonic Corp., 81 F.3d 1566, 1574 (Fed.Cir.1996) (suggesting that whether to enhance damages despite a finding of non-willfulness is discretionary). Moreover, the Federal Circuit recently re-affirmed
Presidio moves for award of pre-judgment interest. Section 284 allows the Court to award pre-judgment interest "where necessary to afford the plaintiff full compensation for the infringement." Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 654, 103 S.Ct. 2058, 76 L.Ed.2d 211 (1983) (citing 35 U.S.C. § 284). According to the Supreme Court, "prejudgment interest should ordinarily be awarded" to compensate the plaintiff for the "use of the money between the time of infringement and the date of the judgment." Id. at 655-56, 103 S.Ct. 2058 (citing 35 U.S.C. § 284). The interest rate to be used, and whether to use simple or compounded interest, is left fully to the discretion of the court. Bio-Rad Labs., Inc. v. Nicolet Instrument Corp., 807 F.2d 964, 969 (Fed.Cir.1986). Finally, the court also retains discretion to limit or even deny prejudgment interest "where the patent owner has been responsible for undue delay in prosecuting the lawsuit." Gen. Motors, 461 U.S. at 656-57, 103 S.Ct. 2058 (citations omitted).
As an initial matter, the Court rejects ATC's argument of "undue delay." According to ATC, pre-judgment interest is inappropriate because despite knowing that ATC began selling its 545L capacitors in June 2006, Presidio did not bring the suit until May 17, 2007, and even when it did bring the suit, Presidio did not have standing to enforce the '356 patent until May 8, 2008. ATC, however, fails to point to any evidence showing that Presidio knew of ATC's sales as soon as they commenced. Presidio also argues persuasively that its position has always been that it was appropriately named as the plaintiff in this matter from the beginning, and that ATC has not demonstrated otherwise. Accordingly, ATC has failed to demonstrate any "undue delay."
Likewise, the Court rejects ATC's argument that the interest should be awarded at the prime rate of 5.9%, rather than the statutory rate of 7%. ATC alleges that "courts routinely award pre-judgment interest at the prime rate, which approximates the actual interest cost of borrowing money for businesses much better than the inflexible statutory rate requested by Presidio," but fails to cite any support for that proposition. (See Def. Opp. to Pl. Motion for Post-Trial Remedies, at 16-17.) On the contrary, California courts have found that a simple interest rate of 7% is usually appropriate to fully compensate the plaintiff for the infringement.
Accordingly, the Court awards Presidio pre-judgment interest in the amount of
The parties agree that pursuant to 28 U.S.C. § 1961, "[i]nterest shall be allowed
Presidio also argues it is entitled to attorney's fees pursuant to Section 295, which provides that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285. A determination whether to award attorney fees is a two-step process. Forest Labs., Inc. v. Abbott Labs., 339 F.3d 1324, 1327 (Fed.Cir.2003). First, the Court must determine whether the prevailing party has proved by clear and convincing evidence that the case is "exceptional." Id. Second, if the Court finds the case to be exceptional, it must then determine whether an award of attorney fees is "appropriate." Id. at 1328. The Federal Circuit, however, cautioned that Section 285 is an exception to the American Rule, and as such is "limited to circumstances in which it is necessary to prevent `a gross injustice.'" Id. at 1329 (reversing the district court's award of attorney fees that was based on "patentee's bad-faith business conduct toward an accused infringer prior to litigation") (citation omitted). Thus, a case is typically considered "exceptional" only if it involves "`inequitable conduct before the Patent Office; litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement.'" Id. (citations omitted).
None of the above factors are present here. As the Court already concluded, there was no willful infringement. Likewise, although "[l]itigation misconduct and unprofessional behavior are relevant to the award of attorney fees, and may suffice to make a case exceptional under § 285," Sensonics, 81 F.3d at 1574 (citations omitted), Presidio has failed to demonstrate this by clear and convincing evidence. The circumstances in the present case do not rise to the level of vexatious, unjustified, or frivolous litigation that have been found to satisfy an award of attorney's fees.
A successful plaintiff in a patent action may be entitled to recovery of its costs. See 35 U.S.C. § 284; FED. R. CIV. P. 54(d); CIV. L.R. 54.1. ATC does not oppose Presidio's recovery of costs, although it does challenge the propriety of some of the items for which Presidio seeks recovery. Accordingly, the Court
ATC separately moves for a JMOL with respect to the jury's finding that Presidio did not have the "intent to deceive" the public with its false marking prior to October 24, 2008. "Intent to deceive is a state of mind arising when a party acts with sufficient knowledge that what it is saying is not so and consequently that the recipient of its saying will be misled into thinking that the statement is true." Clontech Labs., Inc. v. Invitrogen Corp., 406 F.3d 1347, 1352 (Fed.Cir.2005) (citation omitted). The Federal Circuit has set forth the following standard:
Id. at 1352-53 (internal citations omitted).
ATC argues that because the Devoes formed no belief as to whether they were properly marking the BB capacitors, there is no way the jury could have found the Devoes had a "reasonable belief" that BB capacitors were properly marked. See id. ATC, however, fails to recognize that as a party alleging false marking, it has the burden of establishing "knowledge of falsity" by preponderance of the evidence. See id. ATC can satisfy its burden by affirmatively demonstrating "lack of reasonable belief." See id. (emphasis added). Notably, and fatal to ATC's motion, Presidio did not have to show anything, much less that it did have a "reasonable belief," unless ATC first met its burden.
In any event, there was substantial evidence in the present case to support the jury's finding that the Devoes did form a reasonable belief that BB capacitors were covered by the '356 patent. For example, Dan Devoe testified that although he did not inquire as to whether the BB capacitors practiced any of the claims of the '356 patent, he believed that they did practice the '356 patent. (Trial Tr. Day 2, at 44:7-44:19.)
For the foregoing reasons, there was sufficient evidence for the jury to find that the Devoes did not understand the intricacies of the marking process at the time the false marking took place, and that they actually believed they had to mark their products in order to assert their patents and to protect their rights. In light of this, there was substantial evidence before the jury to find that ATC has failed to demonstrate that prior to October 24, 2008, the Devoes lacked a "reasonable belief" that the '356 patent covered the BB capacitors. See Clontech, 406 F.3d at 1352-53. Accordingly, the Court
Section 292 provides: "Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word `patent' or any word or number importing that the same is patented, for the purpose of deceiving the public ... [s]hall be fined not more than $ 500 for every such offense." 35 U.S.C. § 292(a). This Court previously adopted the "continuous act" test set forth in London, 179 F. 506, concluding that "each time Presidio marked a shipment, it committed a false marking offense." (MSJ Order, at 12-13 (emphasis added).) The Federal Circuit subsequently clarified that Section 292 provides for false marking fines of any amount up to $500 per article. See Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295, 1304 (Fed.Cir.2009). The Bon Tool court noted, however, that the statute gives the court discretion to strike an appropriate balance "between encouraging enforcement of an important public policy and imposing disproportionately large penalties for small, inexpensive items produced in large quantities." Id. For example, the Federal Circuit explained that "[i]n the case of inexpensive mass-produced articles, a court has the discretion to determine that a fraction of a penny per article is a proper penalty." Id.
At this stage of the proceedings, the Court is faced with two questions: (1) how many of the BB capacitors were "falsely marked" in violation of the statute, and (2) what should be the amount of the fine for each violation. With regard to the first question, the Court rejects ATC argument that there was a million BB capacitors shipped between October 24, 2008 and April 23, 2009. This figure is based mostly on a single statement made by Lambert Devoe on cross-examination. (See Trial Tr. Day 2, at 123:14-123:17.) Rather, the Court adopts Presidio's figure of 483,385, which is based on Presidio's statements of the actual number of capacitors shipped.
In this context, the Court also rejects Presidio's proposal that the Court only assess fines for those capacitors that were shipped with a falsely marked label. As ATC correctly points out, during the relevant time, Presidio also advertised the BB capacitors in its catalog and on its website as practicing the '356 patent. (See, e.g., Trial Tr. Day 2, at 125:16-126:18; Def. Findings & Conclusions on False Marking, Exs. 12, RD, AHY_0004). Under Section 292, liability is imposed for "mark[ing] upon," "affix[ing] to," as well as for "us[ing]" the patent in advertising. See 35 U.S.C. § 292(a). Accordingly, just because Presidio did not mark all of the shipped BB capacitors with the '356 patent does not change the fact that it violated the statute by using the '356 patent in advertising all of those BB capacitors.
Finally, with respect to the amount of the fine, the Court rejects the suggestions from both of the parties.
Presidio next moves for a permanent injunction in light of the jury's verdict finding the '356 patent to be valid and infringed. The decision to grant or deny injunctive relief rests within the equitable discretion of the district court, and such discretion "must be exercised consistent with traditional principles of equity, in patent disputes no less than in other cases governed by such standards." eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 394, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006). Accordingly, to be entitled to a permanent injunction, a plaintiff must satisfy the traditional four-factor test by demonstrating:
Id. at 391, 126 S.Ct. 1837 (citations omitted). A patentee who does not practice the claimed invention can still obtain an injunction, provided the above four-factor test is satisfied. See Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 703 (Fed. Cir.2008) (citations omitted).
In their moving papers, the parties appear to dispute whether Presidio is entitled to a presumption of irreparable injury in light of the jury's finding that the '356 patent is valid and infringed. Presidio alleges numerous courts have granted permanent injunctions in similar circumstances, by following the Federal Circuit's pronouncement that "[i]n matters involving patent rights, irreparable harm has been presumed when a clear showing has been made of patent validity and infringement." See Richardson v. Suzuki Motor Co., 868 F.2d 1226, 1247 (Fed.Cir.1989) ("This presumption derives in part from the finite term of the patent grant, for patent expiration is not suspended during litigation, and the passage of time can work irreparable harm."). ATC argues that many of those cases were decided before the Supreme Court clarified the state of the law with respect to permanent injunctions in eBay, 547 U.S. 388, 126 S.Ct. 1837.
The parties also cite to conflicting post-eBay Federal Circuit case law on this issue. On the one hand, Presidio argues the Federal Circuit has recently indicated that "[i]t remains an open question `whether there remains a rebuttable presumption of
The question of presumption aside, Presidio's assertion of irreparable injury can be broken down into several distinct arguments. First, Presidio alleges that ATC and it are direct competitors who compete in the same market for some of the same customers. As previously noted, however, there was conflicting testimony at trial on whether the BB capacitors and the 545L capacitors competed for the same customers, and whether this was solely a two-competitor market. At most, Presidio has only shown that: (1) some of ATC's customers for the 545L capacitors are the same as Presidio's customers for the BB capacitors; (2) the two products are sold in some of the same markets; and (3) Presidio was at times seen as ATC's only true competitor. In opposition, ATC has presented evidence that: (a) the BB capacitors are only competitive at the lower level of performance market (i.e., insertion loss of 0.9 dB at 40GHz) at lower prices; (b) at that level they really compete only with DLI's Opticap and Millicap; and (c) ATC's 545L capacitors are more superior (insertion loss of 0.3 dB at 40GHz), and ATC offers them at a higher price. In light of this testimony, the Court cannot say that Presidio has carried its burden of demonstrating that ATC and it were direct competitors. See Adv. Cardiovascular Sys., Inc. v. Medtronic Vascular, Inc., 579 F.Supp.2d 554, 558 (D.Del.2008) ("Courts awarding permanent injunctions typically do so under circumstances where plaintiff practices its invention and is a direct market competitor."); Amado v. Microsoft Corp., Case No. SA CV 03-242 DOC (ANx), 2007 U.S. Dist. LEXIS 96487, at *39 (C.D.Cal. May 13, 2007) (finding no irreparable injury where the evidence at trial demonstrated that the patentee did not compete with the alleged infringer, did not sell a product covered by the patent, and was no longer even attempting to commercialize or license the patent), affirmed in relevant part, 517 F.3d 1353, 1360-61 (Fed.Cir.2008).
Second, even if the Court accepts Presidio's allegations of a two-competitor market, that does not automatically lead to the conclusion that there is irreparable injury. Rather, Presidio still has to provide at least some data on any specific sales or customers lost, or what its share of the market is. See, e.g., Adv. Cardiovascular Sys., 579 F.Supp.2d at 558 (finding no irreparable injury where, inter alia, the patentee "has not identified any specific customers it has lost, or stands to lose, directly as a result of [the infringing sales]"); Am. Calcar, Inc. v. Am. Honda Motor Co., Case No. 06cv2433 DMS (CAB), 2008 U.S. Dist. LEXIS 106476, at **2-3 (S.D.Cal. Nov. 18, 2008) (finding no irreparable injury where the patentee's arguments were purely speculative and where the patentee failed to submit any
Third, to the extent Presidio argues that irreparable injury can be established solely on the basis of the statutory right to exclude, see 35 U.S.C. § 154(a)(1), that argument is foreclosed by the Supreme Court's decision in eBay. See 547 U.S. at 392, 126 S.Ct. 1837 (rejecting the Federal Circuit's approach, pursuant to which the "statutory right to exclude alone justifies its general rule in favor of permanent injunctive relief"); accord IMX, Inc. v. LendingTree, LLC, 469 F.Supp.2d 203, 225 (D.Del.2007).
Finally, Presidio's unwillingness to license the '356 patent does not change the Court's determination. In eBay, 547 U.S. at 393, 126 S.Ct. 1837, the Supreme Court stated that the patentee's "willingness to license its patents" and "its lack of commercial activity in practicing the patents" cannot be used as categorical bars to finding irreparable injury. However, nothing in eBay precludes the Court from considering these as part of the totality of factors in determining whether the plaintiff carried its burden in demonstrating that it will suffer an irreparable injury. In the present case, Presidio's failure to practice the '356 patent weighs against the finding of irreparable injury. On the other hand, Presidio's unwillingness to license the '356 patent weighs in favor of finding irreparable injury. See Adv. Cardiovascular Sys., 579 F.Supp.2d at 560-61 ("[P]ermanent injunctions are typically granted in two-competitor situations where the patentee has demonstrated an unwillingness to part with the exclusive right" (citations omitted)). However, the "unwillingness to license" is not sufficient by itself to outweigh the other factors discussed above that weigh against the finding of irreparable injury.
Section 283 provides that "[t]he several courts having jurisdiction of cases under this title may grant injunctions 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 (emphases
"While money damages are generally considered inadequate to compensate for the violation of a patentee's right to exclude, [the patentee] nonetheless [has] a burden to iterate specific reasons why [the] infringement can not be compensated for with a money award." Praxair, 479 F.Supp.2d at 444 (citation omitted) (emphasis added). In the present case, Presidio has not carried its burden. Presidio argues that the effects of future infringement cannot be fully measured in dollars, but fails to explain why money damages would not adequately compensate it for any alleged "lost market share" or any future lost opportunities. See id. (rejecting similar arguments). As already noted, Presidio's "desire to become a monopoly supplier [of innovative solutions] in its product's market is hardly unique, and is not conclusive of any factor." See id. In addition, "`loss of market share and price erosion are economic harms and are compensable by money damages.'" See Graceway, 697 F.Supp.2d at 608, 2010 WL 892195, at *6 (citation omitted).
Many of Presidio's arguments to the contrary are based on its assertion that injury to "tangential benefits"—such as reputation and good will—cannot be compensated with monetary damages. See, e.g., Polymer Techs., Inc. v. Bridwell, 103 F.3d 970, 975-76 (Fed.Cir.1996) ("Years after infringement has begun, it may be impossible to restore a patentee's (or an exclusive licensee's) exclusive position by an award of damages and a permanent injunction."); Atlas Powder Co. v. Ireco Chems., 773 F.2d 1230, 1233 (Fed.Cir.1985) ("The patent statute further provides injunctive relief to preserve the legal interests of the parties against future infringement which may have market effects never fully compensable in money."); Fisher-Price, Inc. v. Safety 1st, Inc., 279 F.Supp.2d 526, 528 (D.Del.2003) ("In addition, there are certain tangential benefits associated with patent rights, such as a marketplace reputation for enforcing one's patents, the value of which cannot be quantified in monetary damages." (citation omitted)). However, as previously noted, Presidio provides no evidence that it lost or will lose any specific customers or sales due to ATC's infringement, or that it has suffered any "lost market share" or "price erosion." Likewise, there is no evidence demonstrating that Presidio's reputation as a provider of unique solutions has been damaged by the infringement. In any event, the Court believes that Presidio can be adequately compensated for any "tangential benefits associated with patent rights," including any damage to reputation and good will, by an "ongoing royalty," which is appropriate in cases where the patentee does not practice the patent in suit or the infringing product serves the public interest, both of which are true here. See Paice, 504 F.3d at 1314.
Finally, the Court is not persuaded by Presidio's argument that awarding it damages instead of an injunction would essentially force Presidio to grant a license to ATC after it has made a strategic choice not to license its patent. See 3M Innovative Props. Co. v. Avery Dennison Corp., Case No. 01-1781 (JRT/FLN), 2006 WL 2735499, at *1 (D.Minn. Sept. 25, 2006)
The balance of hardships in this case tips in Presidio's favor. On the one hand, in light of the fact that Presidio does not practice the '356 patent or has any intention to do so in the future, the only harm that it will suffer is based on the already-rejected "tangential benefits." On the other hand, ATC asserts that an abrupt termination of the 545L capacitor product line would be detrimental to its business and to the business of its customers. However, as Presidio correctly points out, "`[o]ne who elects to build a business on a product found to infringe cannot be heard to complain if an injunction against continuing infringement destroys the business so elected.'" Broadcom, 543 F.3d at 704 (citation omitted). Accordingly, the Court cannot accept as a hardship the mere fact that ATC would have to abruptly stop selling its infringing 545L capacitors. Moreover, if ATC's argument is to be believed, with 545L capacitor off the market, its 540L capacitor should generate a good demand, thereby minimizing potential damages to ATC.
The public interest factor in this case tips in ATC's favor. "Successful exploitation" of the patent by the infringer does not allow the infringer to avoid a permanent injunction. See Broadcom, 543 F.3d at 704. Rather, public interest is implicated only where the product at issue is of unusual social benefit. See Adv. Cardiovascular Sys., 579 F.Supp.2d at 560. In the present case, ATC argues persuasively that enjoining the sale of 545L capacitors will hurt important government, military, space, and infrastructure projects, as well as many critical civilian industries. Presidio's arguments to the contrary are unavailing. According to Presidio, the grant of an injunction would serve the following three public interests: (1) "[t]he interest in maintaining a strong patent system;" (2) "the interest in fair and healthy competition;" and (3) "the interest in discouraging future wrongdoing." I-Flow Corp., 2010 WL 141402, at *7. However, those three public interests are always present in a patent case! If they were sufficient by themselves for an injunction to issue, then a patentee would be entitled to an injunction any time a patent is found to be valid and infringed. The Supreme Court has rejected any such notion, noting that each of the factors in the traditional four-factor test must be separately analyzed. See eBay, 547 U.S. at 391-94, 126 S.Ct. 1837.
Accordingly, because Presidio has failed to carry its burden in demonstrating that it will suffer an irreparable injury in the absence of an injunction or that money damages are inadequate to compensate it, and because the public interest tips in ATC's favor, the Court
Accordingly, the Court
To the extent ATC also seeks a new trial on the issues of validity, infringement, lost profit damages, [Doc. No. 309], and false marking before October 24, 2008, [Doc. No. 308], the Court
For the foregoing reasons, the Court rules as follows:
(1) Presidio's Motion for Permanent Injunction is
(2) Presidio's Motion for Post Trial Remedies is
(3) ATC's Motion for JMOL or for New Trial with Respect to Presidio's False Marking Before October 24, 2008 is
(5) ATC's Motion for Entry of ATC's Proposed Findings of Fact and Conclusions of Law with Respect to Presidio's False Marking is
(6) ATC's Motion for Entry of ATC's Proposed Findings of Fact and Conclusions of Law Regarding Indefiniteness is
(7) ATC's Motion for Entry of ATC's Proposed Findings of Fact and Conclusions of Law Regarding Unenforceability of the '356 Patent for Inequitable Conduct is
